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TMI Blog2024 (5) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the default notices were issued after the period within which the refund should have been processed. Sub-section (2) only permits adjusting amounts towards recovery that are due under the Act . By the time when the refund should have been processed as per the provisions of the Act, the dues under the default notices had not crystallised and the respondent was not liable to pay the same at the time. The appellant-department is therefore not justified in retaining the refund amount beyond the stipulated period and then adjusting the refund amount against the amounts due under default notices that were issued subsequent to the refund period. The impugned judgment directing the refund of amounts along with interest as provided under Section 42 of the Act affirmed - appeal dismissed. - PAMIDIGHANTAM SRI NARASIMHA And PRASANNA BHALACHANDRA VARALE , JJ. For the Appellant : Mr. N Venkataraman, A.S.G.Mr. Mukesh Kumar Maroria, AOR Mr. V C Bharathi, Adv. Mr. Udai Khanna, Adv. Mr. Siddharth Sinha, Adv. Mr. Sanjay Kumar Dubey, Adv. For the Respondent : Mr. Avadh Bihari Kaushik, AOR JUDGMENT PAMIDIGHANTAM SRI NARASIMHA, J. 1. The issue for consideration before us is whether the timeline fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The department does not have any legal right or justification to retain the amount beyond the time limit prescribed under Section 38. Impugned judgment, para 10. In the facts of the present case, it was held that the mandate of the Act has not been followed and hence the adjustment order is not maintainable. ibid, para 11. 5. We have heard the learned ASG for the department and Mr. Rajesh Jain, learned counsel for the respondent-assessee. The learned ASG has submitted that the timelines specified in Section 38(3) are only to ensure that interest is paid if the refund is delayed beyond the statutorily prescribed period. However, he has argued, the timeline cannot be used to denude the power to adjust refund amounts against outstanding dues under Section 38(2). The refund can be adjusted as long as outstanding dues exist at the time when the refund is processed, even if it is beyond the stipulated timeline. The learned counsel for the assessee has supported the reasoning of the High Court and has placed reliance on several judgments of the Delhi High Court that affirm this position of law. Swarn Darsan Impex v. Commissioner, Value Added Tax, 2010 SCC OnLine Del 4697; Nucleus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. (6) The Commissioner shall grant refund within fifteen days from the date the dealer furnishes the security to his satisfaction under subsection (5). (7) For calculating the period prescribed in clause (a) of sub- section (3), the time taken to (a) furnish the security under sub-section (5) to the satisfaction of the Commissioner; or (b) furnish the additional information sought under section 59; or (c) furnish returns under section 26 and section 27; or (d) furnish the declaration or certificate forms as required under Central Sales Tax Act, 1956, shall be excluded (8) Notwithstanding anything contained in this section, where (a) a registered dealer has sold goods to an unregistered person; and (b) the price charged for the goods includes an amount of tax payable under this Act; (c) the dealer is seeking the refund of this amount or to apply this amount under clause (b) of sub-section (3) of this section; no amount shall be refunded to the dealer or may be applied by the dealer under clause (b) of sub-section (3) of this section unless the Commissioner is satisfied that the dealer has refunded the amount to the purchaser. (9) Where (a) a registered dealer has sold goods to anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line stipulated therein to fulfil the object of the provision, which is to ensure that refunds are processed and issued in a timely manner. 9. In the present case, Section 38(3)(a)(ii) is relevant as both the refunds in the present case pertain to quarter tax periods. Therefore, as per Section 38(3)(a)(ii), the refund should have been processed within two months from when the returns were filed (31.03.2017 and 29.03.2019), which comes up to 31.05.2017 and 29.05.2019. The default notices are dated 30.03.2020, 23.03.2021, 30.03.2021, and 26.03.2022. It is therefore evident that the default notices were issued after the period within which the refund should have been processed. Sub-section (2) only permits adjusting amounts towards recovery that are due under the Act . By the time when the refund should have been processed as per the provisions of the Act, the dues under the default notices had not crystallised and the respondent was not liable to pay the same at the time. The appellant-department is therefore not justified in retaining the refund amount beyond the stipulated period and then adjusting the refund amount against the amounts due under default notices that were issued sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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