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TMI Blog2023 (8) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... pertained to FY 2012-13 as well as the period for April 2013 to December 2013 had been duly considered and ultimately disposed of by the respondents themselves in terms of the order of the OHA dated 31 October 2019. As would be evident from a bare perusal of Rule 34, a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself. This clearly emerges from Rule 34(1) which uses the expression except claimed in the return . The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam [ 2023 (4) TMI 4 - DELHI HIGH COURT] and Consortium of Sudhir Power Projects [ 2023 (2) TMI 290 - DELHI HIGH COURT] . Once a claim for refund stands embodied in the return itself, there is no additional obligation placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a)(ii) of the DVAT Act. It had asserted that in the absence of any valid claim in respect of an amount due existing at the time when the said application was made, the respondents were bound to acknowledge the same and ensure that the refund was granted within two months. The petitioner also questions the validity of the impugned order dated 31 May 2022 and submits that any claim for refund which had fructified in accordance with the timelines prescribed by Section 38(3)(a)(ii) of the DVAT Act could not have been nullified by any demand of tax that may have either sprung into existence post the period of two months from the filing of the return nor could such an adjustment have been effected during the pendency of objections made by the petitioner with reference to Section 35 of the DVAT Act. The petitioner contends that Section 35(2) of the DVAT Act restrains the respondents from enforcing the payment of any amount of tax which formed subject matter of contestation before the Objection Hearing Authority [OHA] and thus such an amount cannot be viewed as an amount due and payable under the DVAT Act as envisaged in terms of Section 38(2). 4. In order to appreciate the question whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment proceedings for FY 2012-2013 are stated to have been undertaken resulting in a fresh and revised demand of Rs. 4,92,09,468/- inclusive of interest and penalty coming to be raised against the petitioner. These assessments were again challenged before the OHA with objections being filed on 16 October 2017 and additionally on 14 December 2017 and 15 December 2017. 8. Pursuant to the order of the OHA dated 08 November 2016, reassessment proceedings were also undertaken with respect to the period starting from April 2013 to March 2014. The aforesaid proceedings were concluded between 23 November 2017 to 28 November 2017. The revised assessment orders framed in respect thereof were again questioned before the OHA by way of objections which were filed on 15 January 2018. The aforesaid narration thus concludes the events relating to the returns filed with respect to FY 2012-2013 and April 2013 to December 2013. 9. The writ petitioner has also adverted to the additional demands which came to be created thereafter pertaining to FY 2014-2015, January 2013 as well as for the period between April 2013 to June 2013. However, insofar as the original refund application relating to FYs' 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition came to be filed sometime in April 2022. 12. Mr. Gulati, learned senior counsel appearing for the petitioner, submitted that the return for the quarter ending 31 March 2014 which had been duly filed on 31 March 2015 had itself claimed a refund of Rs. 11,40,97,349/-. It was pointed out that between the filing of the return for the said quarter initially on 09 May 2014 and the revised return on 31 March 2015, only two notices for default assessment pertaining to the period April 2012 to March 2013 had come to be issued. It was his submission, however, that since those had been questioned by filing objections before the OHA, the mere issuance of those notices could not have constituted a valid ground to deny refund as claimed by the petitioner and as it stood embedded in its return. Mr. Gulati pointed out that the period of two months as prescribed in Section 38(3)(a)(ii) of the DVAT Act had clearly expired on 31 May 2015 and undisputedly at least till that date no enforceable demand existed and which may have justified the respondents in withholding the amount as claimed to be refundable. 13. It was further pointed out that the objections which had been preferred before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents. The details as set out in that chart are extracted hereinbelow: - SR.NO. PERIOD ONLINE PHYSICAL FILING 1. Annual 2014-15 06.03.2019 P 40/pg. 345 08.03.2019 P41/Pg. 347 2. 1st Qtr 2015-16 24.12.2019 P42/Pg. 349 24.12.2019 P43/Pg. 357 3. 2nd Qtr 2015-16 4. 3rd Qtr 2015-16 5. 4th Qtr 2015-16 6. Annual 2015-16 22.04.2020 P44/Pg. 358 26.06.2020 P45/Pg. 360 7. 1st Qtr 2016-17 01.04.2021 P46/Pg. 378 05.04.2021 P47/Pg. 356 8. 2nd Qtr 2016-17 9. 3rd Qtr 2016-17 10. 4th Qtr 2016-17 11. 1st Qtr 2017-18 (was not available on portal. Only on request was provided on 09.06.2022) 20.06.2022 P51/Pg.397 21.06.2022 P51/Pg. 397 18. It becomes pertinent to note that the said issue itself arises in the backdrop of the respondent having asserted in its original counter affidavit that those objections were not traceable. Mr. Gulati pointed out that the respondents had neither questioned nor doubted the online submission of objections for FY 2014-2015 as well as for the various quarters pertaining to FYs' 2015-2016, 2016-2017 and the first quarter of FY 2017-2018. It was submitted by Mr. Gulati that the submission of those objections on the online portal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent to determine upon examining the claim of refund is whether there is any amount due from the dealer either under the DVAT Act or the CST Act. Such amount should already be found to be due. This is not an occasion, therefore, for the Department to start creating new demands either under the DVAT Act or the CST Act. In any event, even if the Department seeks to initiate the process for creating any fresh demand, that process cannot defeat the time period under Section 38(3)(a)(i) or (ii) for processing the refund claim." 20. Mr. Gulati also drew our attention to the succinct observations as rendered by the Court in New Age Generators v. The Commissioner, Value Added Tax Order dated 12.07.2016 passed in W.P.(C) 5250/2016, where the imperatives of the timelines prescribed in Section 38 of the DVAT Act was underlined in the following terms:- "3. The Court is unable to appreciate the above submission. There are clear time limits set out for making the refund set out under Section 38 (3) of the Delhi Value Added Tax Act, 2004 ('DVAT Act'). There is nothing therein or in the Delhi Value Added Tax Rules, 2005 that permits staggering of the refund payments due to an Assessee. Once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e OHA ruled on the legal tenability of the order dated 02.08.2017, concerning objections filed under Section 74 of the 2004 Act, it could not have stymied the accrual of interest which was based on a claim lodged by the assessee via its revised return. The assessee's right to refund accrued on completion of the timeframe given in Section 38(3)(a)(ii) of the 2004 Act, i.e., on 10.09.2015. The proceedings taken out thereafter, i.e., issuance of notice under Section 59(2) of the 2004 Act on 11.09.2015 followed by a default assessment order dated 02.08.2017 and the adjustment order dated 25.08.2017, were non-est in the eyes of law. The fact that the OHA via order dated 26.08.2019 set aside the notice of default assessment dated 02.08.2017, brought to life the claim for refund embedded in the assessee's return with the removal of the clog placed upon it by the assessment order dated 02.08.2017. As a matter of fact, in our view, Rule 34(4) should be read in consonance with the provisions of Section 39 and Rule 34(5)(a) of the 2005 Rules. As correctly argued by Mr. Rajesh Jain, even if the refund is withheld, the assessee would be entitled to interest under Section 42(1) of the 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 38(2), Mr. Gulati referred to the following observations as rendered in Bhupindra Auto International v. Commissioner, Trade & Taxes & Anr. Order dated 10.11.2016 passed in W.P.(C) 9521/2016. "The petitioner had claimed a direction for refund of excess VAT amounts for certain previous periods. This Court had issued notice and required the respondents to ensure that appropriate orders are made. It is submitted on behalf of the VAT Department and the Govt. of NCT of Delhi that the petitioner is entitled to refund in the first instance but that sometime in January 2016, further liabilities arose on account of the later period. This, according to the VAT authorities, entitled them to adjust the amounts payable. They were accordingly withheld under Section 38(2) of the DVAT Act, 2004 [hereafter "the Act"]. It was in these circumstances that on 27.10.2016, the VAT authorities apparently sought to adjust these amounts. In the meanwhile, it was discovered that the petitioner had preferred a petition to the Objection Hearing Authority (OHA) sometime in March, 2016. By virtue of Section 35(2) of the Act, this automatically suspended the order of adjustment of refund amounts. Conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had to approach and make a predeposit to the appellate authority-that such deposit sums would not amount to depositing or paying excise duty but rather to avail remedy of an appeal. The Bombay High Court observed as follows in Suvidhe Ltd. v. UOI 1996 (82) ELT 177 (Bom): 1. Rule. By consent rule is made returnable forthwith. Heard parties. 2. Show cause notice issued by the Superintendent (Tech.) Central Excise to the petitioner to show cause why the refund claim for Excise Duty and Redemption fine paid in a sum of Rs. 14,07,410/- should be denied under Section 11B of the Central Excise Rules and Act, 1944 (sic) is impugned in the present petition. The aforesaid amount is deposited by the Petitioners not towards Excise Duty but by way of deposit under Section 35F for availing the remedy of an appeal. Appeal of the petitioners has been allowed by the Appellate Tribunal by its Judgment and order passed on 30th of November, 1993 with consequential relief. Petitioners' prayer for refund of the amount deposited under Section 35F has not received a favourable response. On the contrary the impugned show cause notice is issued why the amount deposited should not be forfeit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Kerala High Court in Alwaye Sugar Agency v. Commercial Tax Officer, Alwaye 2011 (42) VST 517 also dealt with a similar controversy as is involved in the present case and under the provision of 'Amnesty Scheme' announced in Kerala in the Budget Speech of 2010, the learned Single Judge directed that a sum of Rs. 75,000/- deposited by the petitioner-assessee under the said Scheme, cannot be adjusted against the interest portion under Section 55C of the Act, which is also akin to Section 42(6) in KVAT Act and the Court allowed the Writ Petition with the following observations:-- "More so since, once the Scheme is announced and specified to be commenced from the 1st day of the relevant financial year, for a specified period, it may not be proper for the State/Department to augment the revenue collection by resorting to coercive steps before the defaulters get an opportunity to apply for and obtain the benefit of the Scheme, which otherwise can only defeat or frustrate the Scheme itself and in turn, the 'Policy' of the Government. In the above circumstances, this Court finds that the course pursued by the respondents; issuing Ext. PA rejecting Ext. P2 preferred by the petitioner see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the amended Section 35FF (i.e. amended w.e.f. 06.08.2014) were to be treated as prospective, it would be arbitrary as it would deny the benefit of interest upon amounts which never bore the character of tax. 4. This court is of the opinion that the petitioners are entitled to relief in view of the consistent view taken in this regard by the courts. In Suvidhe Ltd. v. UOI, 1996 (82) ELT 177 (Bom), it was held that the amount paid as pre-deposit, for pursuing the appellate remedy or for any other reason mandated by law, cannot be treated as a tax as that is only a condition for pursuing the appellate remedy. This view was affirmed by the Supreme Court in Union of India v. Suvidhe Ltd., 1997 (94) ELT A 159 (SC). In Nestle India Ltd. v. Assistant Commissioner of Central Excise, 2003 (154) ELT 567 also, a similar view was adopted. The latest judgment of the Karnataka High Court in M/s W.S. Retail Services v. State of Karnataka, W.P.(C) No.33176/2017 and connected cases (decided on 14.11.2017) referred to all these decisions as well as the decision of this court in Voltas Ltd. v. Union of India & Ors., 1999 (112) ELT 34 Del. 5. We notice that recently in MRF Ltd. v. The Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhe Limited was assailed before the Supreme Court. While dismissing the appeal of the Union, the Supreme Court in Union of India Vs. Suvidhe Limited (2016) 11 SCC 808 held as follows:- "3. The show-cause notice issued by the Superintendent (Tech.), Central Excise to the petitioner to show cause why the refund claim for excise duty and redemption fine paid in a sum of Rs 14,07,410 should not be denied under Section 11-B of the Central Excise Act, 1944 is impugned in the present petition. The aforesaid amount is deposited by the petitioners not towards excise duty but by way of deposit under Section 35-F for availing the remedy of an appeal. Appeal of the petitioners has been allowed by the Appellate Tribunal by its judgment and order passed on 30-11-1993 with consequential relief. The petitioners' prayer for refund of the amount deposited under Section 35-F has not received a favourable response. On the contrary, the impugned show-cause notice is issued as to why the amount deposited should not be forfeited. In our judgment, the claim raised by the Department in the show-cause notice is thoroughly dishonest and baseless. In respect of a deposit made under Section 35-F, provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n allowed by the Appellate Tribunal by its judgment and order passed on 30-11-1993 with consequential relief. The petitioners' prayer for refund of the amount deposited under Section 35-F has not received a favourable response. On the contrary the impugned show-cause notice is issued why the amount deposited should not be forfeited. In our judgment, the claim raised by the Department in the show-cause notice is thoroughly dishonest and baseless. In respect of a deposit made under Section 35-F, provisions of Section 11-B can never be applicable. A deposit under Section 35-F is not a payment of duty but only a predeposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief." (emphasis in original) 18. By another Circular No. 802/35/2004-CX dated 8-122004 issued by the Board, the Board emphasised that such amounts should be refunded immediately as non-returning of the deposits attracts interest that has been granted by the courts in a number of cases." 17. A Division Bench of our Court in Xerox India Ltd. vs. Assistant Commissioner, Ward-114 (Special Zone) Department of Trade & Taxex Government of NCT 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it dated 04 August 2023 dealing with the various objections which are stated to have been filed before the OHA by the petitioner. The subsequent affidavit filed makes the following disclosures with respect to the objections filed for FY 2014-15 and leading up to the first quarter of FY 2017-18. From the averments made in paragraph 4 of the said affidavit, it would appear that the respondents take the position that the objections which stand placed as Annexure P-42, P-43, P-44 and P-45 of the writ petition had not been submitted. The said averment is itself based on a Status Report which has been appended to that affidavit. From the Status Report of 02 August 2023, we note that the Assistant Commissioner (HQ), Soha has observed that the objections relating to the period commencing from the first quarter of FY 20152016 to the first quarter of FY 2017-2018 though filed online could not be disposed of since the petitioner had failed to appear before the concerned OHA for hearing. The second Status Report of 03 August 2023 refers to certain objections filed for the four quarters of FY 2015-2016 and discloses that those objections had not been filed physically. The said Status Report fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,42,248 11,93,282 4,42,248 4,42,248 March 29,89,791 20,49,440 29,89,791 80,29,022 29,89,791 29,89,791 1,78,58,003 1,34,93,462 1,78,58,003 4,92,09,468 1,78,58,003 15,00,000 1,78,58,003 1,14,375 (1,79,72,378) CST Orders FY 2012-13 January 86,301 74,479 86,301 2,47,081 (2,47,081) VAT Orders FY 2013-14 Ist Qtr. 71,48,215 46,56,132 71,48,215 1,89,52,562 71,48,215 15,00,000 71,48,215 2nd Qtr. 6,91,153 4,25,201 6,91,153 18,07,507 6,91,153 6,91,153 3rd Qtr. 70,53,413 40,72,624 70,53,413 1,81,79,450 70,53,413 70,53,413 4th Qtr. 6,42,882 3,47,685 6,42,882 16,33,449 6,42,882 6,42,882 1,55,35,663 95,01,642 1,55,35,663 4,05,72,968 1,55,35,663 15,00,000 1,55,35,663 (1,55,35,663) CST Orders FY 2013-14 Ist Qtr. 37,14,191 29,82,546 37,14,191 1,04,10,928 (1,04,10,928) VAT Orders FY 2014-15 Ist Qtr. 3,17,968 2,05,155 - 5,23,123 2nd Qtr. 5,37,830 3,26,977 - 8,64,507 3rd Qtr. 4,23,658 2,41,311 - 6,64,969 4th Qtr. 32,45,566 17,28,598 - 49,74,164 70,26,763 70,26,763 (70,26,763) Refund due 6,29,04,536 Subtract: Refund sanctioned as per order dt. 03.12.2018 66,30,131 Net Refund Pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 period as a tax credit in that period. (4) Where the Commissioner has issued a notice to the person under Section 58 of this Act advising him that an audit, investigation or inquiry into his business affairs will be underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount to the purchaser. [(11)] Notwithstanding anything contained to the contrary in subsection (3) of this section, no refund shall be allowed to a dealer who has not filed any return due under this Act." 36. The subject of refund is also dealt with by Rules 34 and 57 of the DVAT Rules 2005, which are extracted hereinbelow: "34. Refund of excess payment.- (1) A claim for refund of tax, penalty or interest paid in excess of the amount due under the Act (except claimed in the return) shall be made in Form DVAT-21, stating fully and in detail the grounds upon which the claim is being made. (2) Only such claim shall be made in Form DVAT-21 that has not already been claimed in any previous return. A claim for refund made in Form DVAT-21 shall not be again included in the return for any tax period. (3) The Commissioner shall issue notice to any person claiming refund to furnish security under sub-section (5) of section 38, in Form DVAT -21A. (4) Where the refund is arising out of a judgment of a Court or an order of an authority under the Act, the person claiming the refund shall attach with Form DVAT-21 a certified copy of such judgment or order. (5) When the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited by an assessee solely for the purposes of pursuing its remedy of appeal. The consistent line as struck in this respect was duly recognized by the Court in its recent decision in Otis Elevators. We are thus of the firm opinion that the respondents were neither entitled in law to retain the pre-deposit amount of Rs. 1,00,00,000/- nor could it have been utilized for adjustment purposes. 39. The record would bear out that the objections which had been filed before the OHA for FY 2012-2013 and April 2013 to December 2013 had all been disposed of on 08 November 2016 itself. There thus appears to be no justification or valid ground for the said amount having been unjustifiably retained by the respondents. That then takes us to the principal question of whether the refund as claimed in the revised return of 31 March 2015 could have been adjusted against any other tax dues. 40. Undisputedly, the aforesaid claim for refund stood duly embodied in the revised return filed on 31 March 2015. In terms of the statutory time frame which stands constructed by Section 38(3)(a)(ii) of the DVAT Act, the said amount had become refundable post 31 May 2015. This since in terms of that provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This issues with prior approval of the Commissioner, Value Added Tax. (G.C. Lohani) VATO (Policy) No.F.6(87)/Policy/VAT/2011/440-445 Dated: 10.08.2011 Copy to:- 1. PS to the Commissioner, Value Added Tax, Department of Trade and Taxes. Vyapar Bhawan, I.P. Estate, New Delhi. 2. All Special/Addl./Joint Commissioners, Department of Trade and Taxes, Vyapar Bhawan, I.P. Estate, New Delhi. 3. Dy. Director (Policy) Department of Trade and Taxes. 4. Manager (EDP), Department of Trade and Taxes, with the request to upload the circular on the website of the department. 5. President, Sales Tax Bar Association (Regd.), Vyapar Bhawan, I.P. Estate, New Delhi. 6. Guard File. (G.C. Lohani) VATO (Policy)" 44. Before concluding, we note that the respondents clearly appear to have acted arbitrarily in making numerous adjustments post 31 May 2015 and thus illegally depriving the petitioner of the refund as claimed. The various adjustments clearly appear to have been made even though objections before the OHA had been duly lodged online by the petitioner. The respondents thus clearly appear to have acted contrary to the clear mandate of Section 38 of the DVAT Act. 45. As wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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