Case Law Details
Consortium of Sudhir Power Projects Ltd Vs Commissioner of Delhi Goods And Services Tax (Delhi High Court)
Delhi High Court noted that delays on the part of the respondent-department in processing the pending claims for refund result in unnecessary burden of interest on the ex-chequer. Accordingly, court directed the Commissioner, Department of Trade and Taxes to ensure that all pending refund claims are processed as expeditiously as possible.
Facts-
The petitioner had filed a return claiming a refund of the sum of ₹59,59,499/-. Thereafter, it filed a revised return on 15.01.2015 reducing its claim of refund to ₹59,56,772/-. The petitioner’s return was not processed immediately.
However, on 19.10.2015, the concerned Value Added Tax Officer (VATO) issued a notice u/s. 59(2) of the Delhi Value Added Tax Act, 2004 (DVAT Act). Thereafter, default assessment was framed on 31.03.2018 and a demand for the fourth quarter of the year 2013-14 was framed raising a demand of ₹34,582/-. A notice was issued for the aforesaid amount.
The petitioner claims that the liability for the said amount was assessed on account of some difference in the output tax liability and the input tax credit. The petitioner claims that it continued to pursue the concerned authority for seeking the refund, which according to the petitioner, was due within a period of two months from filing of the return / revised return.
The petitioner also contends that even if the additional liability of ₹34,582/- is accepted, the petitioner’s claim for refund would at best be reduced by the aforesaid amount. And, there is no possible reason for the respondent to have withheld the said amount.
In the aforesaid context, the petitioner had filed the present petition.
Conclusion-
In the facts of the present case, the petitioner had received a notice under Section 59(2) and in view of the same, was aware that some proceedings were pending before the DVAT authorities. The default assessment was framed. Obviously, the petitioner could not be expected to immediately approach this Court thereafter.
This Court is also constrained to note that delays on the part of the respondent in processing the pending claims for refund result in unnecessary burden of interest on the ex-chequer not to mention, unnecessary imposition on judicial time. The Commissioner, Department of Trade and Taxes is directed to take expeditious steps to ensure that all pending refund claims are processed as expeditiously as possible.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, praying for the direction to be issued to the respondent to refund an amount of ₹59,56,772/-, which the petitioner claims is due for the fourth quarter of the year 2013-14. The petitioner further claims that he is entitled to interest on the said amount which has been outstanding since several years.
2. The petitioner had filed a return claiming a refund of the sum of ₹59,59,499/- for the fourth quarter of the year 2013-14 on 09.05.2014. Thereafter, it filed a revised return on 15.01.2015 reducing its claim of refund to ₹59,56,772/-. The petitioner’s return was not processed immediately.
3. However, on 19.10.2015, the concerned Value Added Tax Officer (VATO) issued a notice under Section 59(2) of the Delhi Value Added Tax Act, 2004 (DVAT Act).
4. Thereafter, default assessment was framed on 31.03.2018 and a demand for the fourth quarter of the year 2013-14 was framed raising a demand of ₹34,582/-. A notice was issued for the aforesaid amount.
5. The petitioner claims that the liability for the said amount was assessed on account of some difference in the output tax liability and the input tax credit.
6. The petitioner claims that it continued to pursue the concerned authority for seeking the refund, which according to the petitioner, was due within a period of two months from filing of the return / revised return.
7. The petitioner also contends that even if the additional liability of ₹34,582/- is accepted, the petitioner’s claim for refund would at best be reduced by the aforesaid amount. And, there is no possible reason for the respondent to have withheld the said amount.
8. In the aforesaid context, the petitioner had filed the present petition.
9. The present petition was listed on 15.11.2022 and this Court had expressed a prima facie view that the petitioner would be entitled for a refund along with interest for at least previous three years.
10. There is no dispute that the petitioner was entitled to the refund of the excess tax paid. The respondent has since refunded the excess tax and also paid interest for the period of three years. In the circumstances the only question that falls for consideration of this Court is whether the petitioner is entitled to interest for the period prior to the said three years.
11. Concededly, the return filed by the assessee is required to be considered as an application for refund and the respondent is required to process the same.
12. The said issue was considered by a coordinate bench of this Court in IJM Corporation Berhad v. Commissioner of Trade and Taxes : 2017 SCC OnLine Del 11864. This Court had held that in terms of Section 42 of the DVAT Act, interest would be payable if the refund is not paid within a period of two months of filing of the return. Paragraph 16 and 17 of the said judgment are relevant and read as under:
“16. Section 42 relates to interest and sub-section (1) thereof stipulates that an assessee who is entitled to refund shall be entitled to receive, in addition to the refund, simple interest at the annual rate notified by the government from time to time computed on a daily basis. It fixes the time from which the interest is payable i.e. the date on which refund was due to be paid to the assessee; or the date when the overpaid amount was paid by that person, whichever was later. Interest is payable up to the date on which the refund is given. Subsection (1), therefore, fixes the starting point and the end point. With reference to the starting point, the date on which the refund was due to be paid to the assessee or the date when the overpaid amount was paid by the assessee, whichever is later is applicable. There is also stipulation in the first proviso with regard to adjustment, deduction etc. with which we are not concerned in the present case. The second proviso stipulates that if the amount of such refund is enhanced or reduced, as the case may be, the interest would be enhanced or reduced accordingly. Explanation to the subsection (1) states that if the delay in grating the refund is attributable to the assessee, whether wholly or in part, the period of delay attributable to him shall be excluded from the period for which interest is payable.
17. When we harmoniously read Sections 38 and 42 of the Act, which relate to processing of claim for refund and payment of interest, it is crystal clear that the interest is to be paid from the date when the refund was due to be paid to the assessee or date when the overpaid amount was paid, whichever is later. The date when the refund was due would be with reference to the date mentioned in Section 38 i.e. clause (a) to sub-section (3). This would mean that interest would be payable after the period specified in clause (a) to sub-section (3) to Section 38 of the Act i.e. the date on which the refund becomes payable. Two sections, namely, Sections 38(3) and 42(1) do not refer to the date of filing of return. This obviously as per the Act is not starting point for payment of interest.”
13. Rajesh Jain, learned counsel appearing for the petitioner has also pointed out that in terms of the explanation to Section 42 of the DVAT Act, if the delay in granting refund is attributable to the assessee, whether wholly or in part, the said period would be excluded from the period for which interest is payable under Section 42 of the DVAT Act.
14. In the present case, there is no material on record to indicate that the petitioner was responsible for any part of the delay in processing the refund. There is no allegation to the aforesaid effect either.
15. Satyakam, learned counsel appearing for the respondent has submitted that there has been some delay on the part of the petitioner in approaching this Court by filing a writ petition and therefore, the period of delay ought to be excluded for the purpose of computing the period for which interest is payable to the petitioner. He referred to the decision of the Hon’ble Supreme Court in Union of India v. Tarsem Singh : (2008) 8 SCC 648 and on the strength of the said decision, contended that the belated claim would be rejected on the ground of delay and latches or limitation where the remedy is sought by filing a writ petition.
16. We are unable to accept that the said decision is applicable in the given facts of this case. In that case the respondent (Tarsem Singh) was invalidated from the services of the Indian Army in the year 1983 and he had applied for disability pension in the year 1999. In that context, the court had held that consequential relief in service could in certain circumstances be limited to a period of three years. This decision has no application in the facts of this case.
17. On a closer examination of the facts of this case, we are unable to accept that the petitioner can be denied interest on the amount of refund which has been unjustifiably withheld, mainly for two reasons. First, that there is no dispute that the petitioner is entitled to the refund and his return was required to be considered as an application for the same. The petitioner was not required to approach or pursue the authorities for its claim for refund of excess tax. Second, that the delay in processing claims for refund is endemic to the DVAT authorities and if the same is considered, the delay on the part of the petitioner approaching this court is not long.
18. The respondent filed an affidavit in compliance with the directions issued by this Court which indicates that the respondent department has collated the data from the year 2005 till date and 14,024 refund claims are pending in respect of 9,990 assesses as on 21.02.2023.
18.19. This Court is also conscious of the fact that any person would reflect before taking a legal recourse and would approach the courts only as a matter of last resort.
20. In the facts of the present case, the petitioner had received a notice under Section 59(2) on 19.10.2015 and in view of the same, was aware that some proceedings were pending before the DVAT authorities. The default assessment was framed on 31.03.2018. Obviously, the petitioner could not be expected to immediately approach this Court thereafter.
21. Further the period of two years till 28.02.2022 is required to be excluded while calculating any period of limitation pursuant to the orders passed by the Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 In Re: Cognizance for Extension of Limitation.
22. Although the petitioner has not approached this Court immediately after the refund of tax became due, we are unable to accept that the same disentitles the petitioner from claiming what is rightfully due.
23. In the given circumstances, this Court directs the respondents to process the petitioner’s claim for interest in accordance with law.
24. After some arguments, there is a consensus that the petitioner would be entitled to interest commencing from the period of two months after 15.01.2015 till the date of refund.
25. This Court is also constrained to note that delays on the part of the respondent in processing the pending claims for refund result in unnecessary burden of interest on the ex-chequer not to mention, unnecessary imposition on judicial time. The Commissioner, Department of Trade and Taxes is directed to take expeditious steps to ensure that all pending refund claims are processed as expeditiously as possible.
26. The petition is disposed of in the aforesaid terms.
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