Section 39 of Punjab VAT Act 2005 deals with refund of tax. Some welcome changes have been made in said section by adding a new sub section 1-A to the said section which provides for provisional allowing of 75% of amount of refund claimed under PVAT Act subject to furnishing of indemnity bond in prescribed format and subject to such terms and conditions as may be prescribed.
The said new sub section 1-A of section 39 runs as under:
“(1-A) Notwithstanding anything contained in sub-section (1), where an application for claim of refund is submitted by a person on the basis of his monthly or quarterly return ,as the case may be, the designated officer may, after adjusting any recovery, if due against such person, provisionally allow seventy-five per cent of the amount of refund claimed, but not exceeding one crore rupees, on furnishing of an Indemnity Bond in the prescribed form, subject to such terms and conditions, as may be prescribed;
Provided that if such terms and conditions are not complied with by the taxable person, he shall be liable to pay due tax along with penalty at the rate of two per cent per month and interest in accordance with the provisions of section 32 on the tax so due from the date of filing of the return.”
The said sub section starts with the words “Notwithstanding anything contained in sub-section 1” which means that refund under the new sub section 1-A to section 39 shall be provided irrespective of provisions as contained in section 39(1).
It is here to be noted that refund under section 39(1) is provided subject to the provisions of PVAT Act and the PVAT Rules since it starts with words “Subject to the provisions of this Act and rules made thereunder”. Rule 52 of PVAT Rules prescribes certain conditions and furnishing of certain documents which must be compiled with before any refund is issued u/s 39(1) for example bill of lading, airway bills forms under CST Act 1956(C, D, E-I, E-II, F, H, I Forms) etc.
Now 75% of the amount of refund u/s 39(1-A) may be granted subject to furnishing of indemnity bond in prescribed format and subject to fulfillment of certain terms ands conditions as may be prescribed (Format of indemnity bond and terms and conditions are yet to be prescribed) irrespective of the provisions of section 39(1).
This is a welcome amendment in view of the difficulties faced by dealers claiming refunds under PVAT Act, in obtaining and furnishing of statutory forms under CST Act due to which their refunds are not issued.
However the proviso to section 39(1-A) provides that if such terms and conditions are not compiled with by taxable person then he shall be liable to pay a penalty @ 2% per month and interest as applicable u/s 32 along with tax due from the date of filing of the return.
Definition of Designated officer under PVAT Act 2005 has also been amended so as to include Excise and Taxation inspector in such definition to carry out any of the purpose of PVAT Act. Earlier only officer not below the rank of Excise and Taxation officer was designated officer in the definition of designated officer u/s 2(i).
The relevant ordinance promulgated making changes in section 39 can be downloaded by clicking at the following link which will take you to my files wherefrom it can be downloaded: