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TMI Blog2017 (1) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the mandate of Sections 11(2) of the DVAT Act and Rule 12 of the CST Rules, overriding all other concerns and suspending as it were, the obligation to frame the assessments and process refunds within the timeframe prescribed under Section 38(3) is misplaced and rejected as unacceptable. There is nothing in the language of these provisions compelling the dealers to provide original certificates in the physical format. Interest for delay in filing documents as required - Held that: - for the period beyond what is stipulated u/s 38(3), the Revenue would be under an obligation to pay interest till the point of time the refund claim is adjudicated and allowed. If, for any reason, during the processing of the refund claim (but after the two month period), the assessee is called upon to furnish particulars relating to any inter-state transactions for the purposes of verification of any of the central forms, that time would stand excluded. A direction is issued to the respondents to process all the pending refund claims of the petitioners in respect of the documents by calling specific details within reasonable time - The respondents/DVAT shall ensure that the dealers shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Versus COMMISSIONER, TRADE TAXES ANR. W.P.(C) 10807/2016, 10856/2016 10858/2016, 10859/2016, 10947/2016, 11008/2016, 11009/2016, 11010/2016, 11011/2016, 11012/2016, 11014/2016, 11015/2016, C.M. APPL.43072/2016, 11017/2016, 11018/2016, 11021/2016, 11030/2016, C.M. APPL.43098/2016, 11031/2016, C.M. APPL.43099/2016, 11032/2016, C.M. APPL.43100/2016, 11050/2016, C.M. APPL.43143/2016, 11051/2016, C.M. APPL.43144/2016, 11063/2016, 11251/2016, 11253/2016, 11254/2016, 11260/2016, C.M. APPL.44061/2016, 11265/2016, C.M. APPL.44068/2016, 9730/2016, C.M. APPL.38894/2016, W.P.(C) 9732/2016, 9734/2016, C.M. APPL.38897/2016, 9739/2016, C.M. APPL.38902/2016, 9740/2016, C.M. APPL.38903/2016, 9778/2016, C.M. APPL.39026/2016, 9782/2016, C.M. APPL.39030/2016, 9783/2016, 9784/2016, 9787/2016, 9794/2016, C.M. APPL.39047/2016, 9916/2016, 9920/2016, C.M. APPL.39476/2016, 9922/2016, 9923/2016, 9924/2016, 10001/2016, C.M. APPL.39674/2016, 10004/2016, C.M. APPL.39682/2016, 10005/2016, C.M., APPL.39683/2016, 10007/2016, C.M. APPL.39685/2016, 10009/2016, C.M. APPL.39688/2016, 10077/2016, 10078/2016, 10080/2016, C.M. APPL.39952/2016, 10087/2016, C.M.APPL.39961/2016, 10090/2016, C.M. APPL.39964/2016, 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocate, for petitioner, in Item Nos.86, 87. Sh. Gautam Narayan, ASC with Sh. R.K. Iyer, Advocates, for respondents, in Item Nos.1-2, 6, 9, 16, 19, 20, 21, 22, 24, 25, 26, 32, 33, 34, 35, 39, 44, 45, 46, 49, 53, 54, 56, 58, 59, 65, 66, 67, 68, 71 Sh. Satyakam, ASC, GNCTD, for respondents, in Item Nos.1, 2, 3, 4, 5, 6, 7, 8, 9, 10, , 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 22-38, 40-43, 47-48, 5052, 57, 60-64, 69-70, 72-73, 75-76, 79, 84-85, 87, 96, 98, 99, 101 102. Sh. Anuj Aggarwal, ASC with Ms. Deboshree Mukherjee, Advocates, for respondents, in Item No.3-5, 13-14, 31, 55, 74, 77-78, 80-83, 86, 91 93. Sh. A.K. Babbar, Sh. Surinder Kumar, Sh. Atul Babbar, Ms. Ruchi Babbar, Ms. Amita Babbar, Sh. Bharat Tripathi, Sh. Sushil Gaba, Sh. Bharat Tripathi and Sh. Promod Kumar Jain, Advocates, for petitioner, in Item Nos.2, 7-9, 10, 11, 12, 13, 15, 16, 17, 23, 24-26, 30, 36-38, 40, 42-44, 50-51, 60, 97. Sh. Peeyosh Kalra, ASC with Sh. Shiva Sharma, Advocate, for VAT Dept. in Item Nos. 88, 89, 94 95, 97, 100. Sh. Peeyosh Kalra, ASC with Ms. Sona Babbar, Advocate, for respondent, in Item No.105, 110 Sh. Gautam Narayan, ASC with Sh. R.A. Iyer, Advocate, for respondents, in Item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be appropriate to notice the relevant provision, which deals with refunds. It is Section 38 of the DVAT Act; it reads as follows: 38. Refunds (1) Subject to the other provisions of this section and the rules, the Commissioner shall refund to a person the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him. (2) Before making any refund, the Commissioner shall first apply such excess towards the recovery of any other amount due under this Act, or under the CST Act, 1956 (74 of 1956). (3) Subject to sub-section (4) and sub-section (5) of this section, any amount remaining after the application referred to in subsection (2) of this section shall be at the election of the dealer, either - (a) refunded to the person, - (i) within one month after the date on which the return was furnished or claim for the refund was made, if the tax period for the person claiming refund is one month; (ii) within two months after the date on which the return was furnished or claim for the refund was made, if the tax period for the person claiming refund is a quarter; or (b) carried forward to the next tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged for the goods is expressed not to include an amount of tax payable under this Act the amount may be refunded to the seller or may be applied by the seller under clause (b) of subsection (3) of this section without the seller being required to refund an amount to the purchaser. (11) Notwithstanding anything contained to the contrary in Sub-section (3) of this section, no refund shall be allowed to a dealer who has not filed any return due under this Act. Section 59, which finds reference in Section 38 (7), reads as follows: (1) All records, books of accounts, registers and other documents, maintained by a dealer, transporter or operator of a warehouse shall, at all reasonable times, be open to inspection by the Commissioner. (2) The Commissioner may, for the proper administration of this Act and subject to such conditions as may be prescribed, require (a) any dealer; or (b) any other person, including a banking company, post office, a person who transports goods or holds goods in custody for delivery to, or on behalf of any dealer, who maintains or has in his possession any books of accounts, registers or documents relating to the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision and held as follows: 13. Such a situation does not arise in the present case inasmuch as the provisions of Section 38 do not contemplate a situation where the Commissioner does not grant a refund within the stipulated period. The decision in Behl Construction [2009] 21 VST 261 (Delhi) : [2009] 162 ECR 110 (Delhi) was in the context of the provisions of Section 74 and those circumstances do not arise in the present case. As pointed out above, what this Court has to determine is: what is the legislative intent behind the provisions of Section 38? It is this intent which shall determine whether the stipulations as to time are merely directory or they are mandatory as suggested by the use of the word shall . On going through all the Sub-sections of Section 38 of the said Act, the legislative intent that is clearly discernible is that refunds must be granted to a person entitled within the specific time period stipulated in Sub-section (3) thereof. This intention is further fortified by a look at the provisions of Sub-section (7) of Section 38 which stipulates that for calculating the period prescribed in Clause (a) of Subsection (3), the time taken to furnish the securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 58 of the DVAT Act or for seeking information under Section 59 (2) of the DVAT Act, to just 15 days from the date of filing of the return claiming refund. The recent instructions issued by the Commissioner, VAT on 21st July 2016 regarding speedy disposal of refund claims also emphasises the mandatory nature of the instructions. There is therefore no question of the DT T, and in particular the VATO concerned, not responding immediately to the refund claim made. Where it is felt that more information should be called for then the notice under Section 59(2) DVAT Act has to necessarily be issued within fifteen days thereafter. 12. In the instant case, the return for the fourth quarter of 2010-11 was filed on 28th April, 2011. Yet, the notice under Section 59 (2) of the DVAT Act was issued only on 10th September 2011, well beyond the 15 day time limit in term of Circular No. 6 of 2005. The return for the first quarter of 2011-12 was filed on 27th July, 2011. The notices under section 59 (2) DVAT Act was issued on 10th September, 2011 again beyond the 15 day time limit. In both instances the notices of default assessments were issued on 14th October, 2011. It is another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged, then the Petitioner could have been asked to furnish the information or particulars as envisaged under section 38 (7). If there was a failure by the Petitioner thereafter to provide the information or documents then possibly the question of the time limit under Section 38 (3) being correspondingly postponed might arise. 16. As regards the other periods for which refunds have been claimed, viz., the third and fourth quarters of 2011-12 and the second and fourth quarters of 2012-13 and the fourth quarters of 2013-14 and 2014-15, it is not disputed even by the Respondent, that the claims were not processed within the time limit set out under Section 38 of the DVAT Act. It appears that in relation to the return filed for the second quarter of 2012-13, a notice under Section 59(2) was issued on 25th July, 2016. Clearly, therefore it is way beyond the two months period envisaged under Section 38(3)(a)(ii) within which refund had to be processed and issued. 17. Mr. Satyakam urged the Court to grant the Respondent sufficient time so that entire exercise pursuant to the notices issued under Section 59 of the DVAT could be completed. The Court is not, in these petitions, conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was enacted in furtherance to the power traceable to Entry 92A of the Union List (List 1) of the Seventh Schedule of the Constitution of India. Both operate in separate fields and are independent of each other. It was contended that applicability of the local or State mechanisms in the adjudication and enforcement of Central Sales Tax liabilities does not in any manner detract from the independent nature of these enactments and their distinct levies. The Central Sales Tax brings to tax inter-State transactions; the State/local Acts such as the VAT prevail only in respect of intra-State sales. Learned counsel rely upon the judgment of this Court reported as Navbharat Enterprises v. Sales Tax Officer 1987 (66) STC 252 (Del) and R.H. Enterprises v. Commissioner Sales Tax 1992 (85) STC 251. It is urged that while adjudicating refund applications under the DVAT Act, recourse to provisions of Central Sales Tax Act and demands made thereunder are not only inapt, but unwarranted. It is further highlighted that under the Central Sales Tax regime, if some forms are not received by the date of assessment, a very high rate of 15% is charged. Learned counsel emphasized that if the interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reconciliation return can be extended by the Commissioner under proviso to Rule 4(3) of the Central Sales Tax (Delhi) Rules, 2005. Learned counsel highlighted that the Commissioner had been extending the time for furnishing reconciliation return from time to time and rely upon the various extensions granted on 28.11.2014, 09.01.2015, 05.02.2015, 31.03.2015, 31.10.2015, 15.12.2015, 15.01.2016 and 29.02.2016 which continued till 30.09.2016. This meant that the period for furnishing the forms for the year 2012 till date was available to all dealers. 8. Learned counsel next rely upon various circulars issued by the Commissioner DVAT (Circular Nos.6 of 2014-15; 8, 12, 37 and 38 of 201516). Each of these emphasize that firstly the concerned VAT officers were under an obligation to adhere to the timelines and that filing of hard copy of the CST forms is no longer essential and thirdly that statutory central forms could be verified from TINXSYS mode for authentication of the claims. It was thus emphasized that the legislature in its wisdom did not subordinate the provision for refund under Section 38 (3) to the requirement of forms under Sections 38(7) (c) and (d) and consequently th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable sale takes place. These are relevant for the purpose of granting exemptions or deductions from the sales tax by a dealer. Section 11 of the DVAT Act also provides for calculation of net VAT liability for every dealer. Section 11(2) enacts that if the net tax of the dealer calculated under the DVAT Act is negative, then he is to adjust the amount in the same tax period against the tax payable under the CST Act, if any, and be entitled to either carry forward balance or claim refund. The Commissioner is obliged to deal with the refund thereafter in the manner prescribed under Section 38 of the DVAT Act. Learned counsel states that majority of refund claims arising are on account of the CST transactions either at a concessional rate of 2% under Section 3 or at NIL rate under Sections 4, 5 or 6A of the CST Act. In respect of these, various documents such as Forms-C, E1, E2, F, H and I have been prescribed in connection with different kinds of transactions. Form-C relates to inter-State sales for which accounting provisions are Section 8(4) of the CST Act and Rule 12(1) of the Central Sales Tax (Registration and Turnover) Rules. Form-C as well as Forms E-1 and E-2 relate to Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a conjoint reading of Section 3(3), Section 7, Section 11(2) and Section 38(3) read with Section 38(7) of DVAT Act, 2004 along with Section 3, Section 4, Section 5, Section 6A and Section 8 of the Central Sales Tax Act, 1956 read with CST (Registration and Turnover) Rules, 1957 and in particular Rule 12, what emerges is that the time limit prescribed under Section 38(3)(a) is subject to the exclusion of time taken by the dealer in furnishing the declaration or certificate forms as required under Central Sales Tax Act, 1956 (which the dealer is obligated under Central Sales Tax Act, 1956 and Central Sales Tax Rules, 1957) by virtue of Section 38(7)(d). Elaborating on this, it is argued that Section 8 (4) of the CST Act provides that the rate of tax (concessional rate of 2%) in Section 8 (1) of the Act is applicable only upon furnishing of the said Declaration(s)/certificate(s) in statutory forms to the prescribed authority within a specified period. In other words, no concession in the rate of the tax shall be applicable to the dealer/s who fail to furnish such prescribed form obtained from prescribed authority. The tenor of other provisions: Section 6 (2), Section 6 (4), Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roversy requiring determination in these cases is a narrow one, which is, does Section 38(7)(d) - introduced on 18.06.2012 prevail over, and carve out an exception in respect of the binding period prescribed by Section 38(3) for processing refunds in completed VAT assessments. The interpretation in Swarn Darshan Impex (supra) is not denied. But the Revenue's submission is that the judgment was rendered before introduction of Section 38(7)(d) and that the later judgment in Prime Papers Packers (supra) did not consider the interface between Sections 8(1) and 8(4) of the CST Act with the obligation to furnish declarations under Rule 12 of the Central Sales Tax Rules, and the refund provisions of Sections 11(2) and 38(3) of the DVAT Act. 16. To recapitulate - both Swarn Darshan Impex (supra) and Prime Papers Packers (supra) authoritatively ruled that the 1-2 months' period provided for examining and granting refunds is absolute and that the transgression of these time limits means that the Revenue has to bear interest liability as long as the refund claims are not fully settled. At the outset, this court notices that the Prime Papers Packers (supra) did consider Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DVAT Act. The said statutory notification is in the following terms: No.F.7(450)/Policy/VAT/2012/336-347 Dated: 12-7-2012 NOTIFICATION Whereas, I, Rajendra Kumar, Commissioner, Value Added Tax, Government of National Capital Territory of Delhi, consider it necessary that quarter wise details relating to Central Declaration Forms received against the stock transfer or central sales made on concessional rates, Central Declaration Forms missing and tax deposited on account of missing forms are submitted online by the dealers. Now, therefore, in exercise of the powers conferred on me by sub-section (1) read with subsection (2) and sub-section (3) of section 70 of Delhi Value Added Tax Act, 2004,I direct that the details relating to Central Declaration Forms received against the stock transfer or central sales made on concessional rates, Central Declaration Forms missing and tax deposited on account of missing forms shall be submitted by the dealers quarter wise, online using his login id and password, for all quarters beginning 01.04.2011 onwards. For this purpose, Form CD-1 annexed with this Notification shall be used. The detailed method of access and u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse assessment and penalty at a later date, vide Circular No.5 of 2012-13 issued on 29/06/2012. Representatives of various Trade Associations and Market Associations have approached the Department and requested that the last date for online filing of this information should be extended by ten days so that maximum number of dealers may benefit from this initiative of the Department. Keeping this in view, the last date for online filing of information regarding Central Declaration Forms for the years 2009-10 and 2010-11 is extended up to 31/07/2012. Similar circulars and notifications were issued - on 06.11.2013 and 12.12.2013.The Circular No.31 of 2013-14 in fact stated as follows: CIRCULAR NO. 31 OF 2013-14 Sub: Filing of information in block R.10 of CST return Form 1. Block R.10 of CST return Form 1 pertains to filing of the information for receipt and pendency of central statutory forms/declarations in lieu of concessional sale/stock transfer for the preceding 4 years. The block has been inserted in the return through recent amendment in Central Sales Tax (Delhi) Rules, 2005. Second quarter return of the year 2013-14 was the first return to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these provisions compelling the dealers to provide original certificates in the physical format. Once both the parties agree that the DVAT mechanism through the provisions of the Act and the Rules would prevail and apply for assessments in regard to both DVAT and CST liabilities and obligations, there is no warrant for the submission that the regime in CST has to be read in a manner different from the one understood in DVAT. Khemka (supra) and India Carbon (supra) are authorities for the proposition that although the principles of taxation and the rate of tax are dictated by the Central enactment, the mechanism for adjudication, assessment, recovery, refund etc. and all other related acts are to be found in the local law. So seen, the understanding of the Revenue, which has issued a statutory notification under Section 70 stating that online certificates alone and none others would be entertained effective from 12.07.2012, i.e. after introduction of Section 38(7)(d) and further details that Form 9 itself comprehends four years' details- the time for the submission of which was extended repeatedly, undermines and negates the Revenue's arguments. 21. During the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two month period), the assessee is called upon to furnish particulars relating to any inter-state transactions for the purposes of verification of any of the central forms, that time would stand excluded. It is however, clarified that only such time as is consumed by the dealer beyond the period given in the notice (say 15 days or so) in regard to details of specific transactions would be excluded. In other words, a general notice calling for documents relating to transactions would not do, having regard to the fact that the CST forms are also verifiable online. It is only where the Show Cause Notice specifies a particular transaction or transactions in relation to specific quarters and provides the time limits within which the dealer has to furnish details and where such dealer exceeds the time limit would the actual time (taken by the dealer in excess of the time provided) be excluded from the calculation. Thus, if a dealer is issued a notice to provide C-forms for the first quarter of 2012-13 and given 15 days for the purpose, and he does provide those details, which can be verified within 15 days, the time will not be excluded. If on the other hand, the dealer takes additi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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