It is an admitted fact that the respondents-authorities have not invoked the Section 39 of the GVAT Act, which provides the powers to withhold the refund in certain cases.
After considering the facts and circumstances of the case, we are of the view that the time limit to initiate proceedings under GVAT Act is lapsed. It is required to be noted that Section 35 gives power to the authority to determine the amount of tax in respect of input tax credit etc after following the mandatory procedure as provided under the GVAT Act. However, the powers conferred under Section 35 cannot exercise after the expiry of 5 years from the end of the year in respect of which tax is assessable. Therefore, in view of the Section 35, the time limit is over and the authority now cannot initiate any proceedings in respect of refund.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. This batch of writ applications filed under Article 226 of the Constitution of India, raises common questions of fact and law, hence, were heard together and are being disposed of by this common order.
2. The captioned writ applications have been filed by the writ applicant-Company seeking appropriate directions to the respondents to disburse the refund amount for the following assessment years along with interest under Section 38 of the Gujarat Value Added Tax Act,2003. ((hereinafter referred to as the “GVAT Act”).
|Sr. No.||Refund Amount||Assessment Year|
|2||Rs. 2,54,23,937/-||Year 2009-2010|
3. The brief facts giving rise to the present litigation are as under:-
3.1 The writ applicant-Company is in the business of manufacturing of Pig Iron. In the production of Pig iron, the applicant-Company is using Iron Ore, Lime Stonex, Dolomite and Lam Coal as the basic raw material. The applicant-Company is registered under the Provisions of the GVAT Act and under the Central Sales Tax Act, 1956. The applicant-Company has claimed input tax credit during the assessment year for the year 2008-2009, 2009-2010 and 2010-2011 on the purchase of goods as per the applicable relaxation, and accordingly the respondents have passed assessment order along with sanctioning refund orders for the respective years.
3.2 The dispute arose between the writ applicant and the respondent, when the Joint Commissioner of Commercial Tax (Legal), Gujarat State passed a determination order under Section 80 of the GVAT Act dated 31.01.2011 stating that “the coke” is used as fuel in the manufacture of Pig Iron. As a result, admissible ITC on purchase of coke, is liable to be reduced by 4% of turnover of purchase of coke.
3.3 Being aggrieved by the determination order passed, applicant-Company had challenged the impugned order before the Gujarat Value Added Tax Tribunal, Ahmedabad by filing First Appeal. The Tribunal was pleased to allow the Appeal and observed as under:-
“ It is hereby held that the coke is used by the appellant as raw material in the manufacture of Pig Iron; and therefore, admissible ITC cannot be reduced by applying Section 11 (3)(b) (iii) of the VAT Act in connection with the purchases of coke affected by the appellant.”
3.4 After the decision of the Tribunal, revenue has issued assessment order in Form 305 and Form VII-B of GVAT and the authority was pleased to allow refund to the applicant-Company.
3.5 Being aggrieved by the order of the Tribunal, the matter carried to the High Court by way of filing of Tax Appeal. While dismissing the appeal, the order of the Tribunal upheld by the Hon’ble High Court. The Hon’ble High Court has dismissed the appeal. The respondent-State has filed the SLP before the Hon’ble Supreme Court, wherein, the Hon’ble Supreme Court has passed the following order;-
“In the meantime, the operation of the High Court is stayed.”
4. The applicant-Company had made several request to the respondent to grant outstanding refund for the respective assessment years. However, there was no response from the department. The applicant-Company had approached to the Hon’ble High Court by filing writ petition being Special Civil Application No. 9831 of 2020 wherein this Court was pleased to allow the petition vide order dated 29.06.2020, which reads as under:-
“At this juncture, in opinion of this Court, interest of justice would be served if the authorities are directed to consider all pending applications filed by the petitioner and examine whether the petitioner is entitled to refund of the claim. Such decision shall be taken in accordance with the law as expeditiously as possible within a period of four weeks from the date of receipt of the present order.”
5. After the order passed by the Hon’ble High Court as referred to above, the respondents have responded the representation of the applicant by way of written communication inter alia stating that the matter is under consideration by the higher authority for necessary action as the refund amount is above Rs.50,00,000/- . The respondent have express their view that due to stay order passed by the Hon’ble Supreme Court, they have not processed the matter. It is further stated by the respondent that the matter is pending before the Hon’ble Supreme Court and the order of the Hon’ble High Court has been stayed and therefore, they are unable to disburse the amount.
6. In this backdrop, the captioned writ applications have been filed for relief as indicated above.
7. We have heard the learned advocate Mr. Hardik Vora appearing for the writ applicants and learned Assistant Government Pleader Mr. Chintan Dave
8. Mr. Hardik Vora, learned counsel appearing for the applicant-Company would submits that the stay order passed by the Hon’ble Supreme Court would not affect to the case of the writ applicant-Company in claiming the refund for the relevant period as the assessment order reached its finality and the time limit to initiate any proceedings under the GVAT Act is now lapsed. Therefore, there would not any impact of the order on refund claimed. Referring Section 35 of the GVAT Act Mr. Vora would submits that considering the order of assessment, the authority now legally cannot exercise their powers of reassessment as stipulated period as prescribed has already been over. In these circumstances, Mr. Vora for the applicant-Company would further submits that when time limit has already been expired, now, there is no reason to withhold the refund by the respondent-authority.
9. In the aforesaid circumstances, it is prayed by the learned counsels appearing for applicant-Company that the petition may be allowed as prayed for.
10. On the other hand, learned Assistant Government Pleader Mr. Dave, mainly relying on the letter dated 01.09.2020 addressed to the applicant-Company, would submit that the department has reason to withhold the refund amount and accordingly, there is no merit in the case and writ applicantions may not be entertained.
11. Having heard the learned advocates for the respective parties and considering the records, we find that it is not in dispute that the writ applicant-Company was given an incentive on tax for the relevant period as mentioned in the petition by the authority, as sanctioned for the respective years.
12. We take notice of the fact that in view of the determination order passed under Section 80 of the GVAT Act, the full amount of refund has not been disbursed by the respondents. It is an admitted fact that the respondents-authorities have not invoked the Section 39 of the GVAT Act, which provides the powers to withhold the refund in certain cases.
13. After considering the facts and circumstances of the case, we are of the view that the time limit to initiate proceedings under GVAT Act is lapsed. It is required to be noted that Section 35 gives power to the authority to determine the amount of tax in respect of input tax credit etc after following the mandatory procedure as provided under the GVAT Act. However, the powers conferred under Section 35 cannot exercise after the expiry of 5 years from the end of the year in respect of which tax is assessable. Therefore, in view of the Section 35, the time limit is over and the authority now cannot initiate any proceedings in respect of refund.
14. Vora, the learned advocate appearing for the writ applicant has pointed out the power of authority to examine the matter by way of revision. We have examined the revisional powers of the authority as provided under Section 75 of the GVAT Act, which says that the authority concerned either by his own motion within 3 years may call for and reexamine the matter or pass necessary order, which he thinks just and proper.
15. We are of the view that the time limit, as prescribed under Section 35 and Section 75 of the GVAT Act has already been lapsed. Therefore, assuming for the sake of argument, if the writ applicant succeeds before the Hon’ble Supreme Court then also, it is not permissible for the respondents to reassess or revise the assessment order passed in the instance case for the respective years as the assessment reached its finality.
16. It is also required to be noted that the State Government had added Section 84AA with effect from 01.04.2006, interalia providing for the exclusion of the period spent between the date of the decision of the appellate tribunal and that of the High Court as well as the Supreme Court in computing period of limitation referred to in Section 75 of the GVAT Act. The very amendment was challenged before this Court in the case of Reliance Industries Vs. State of Gujarat rendered in Special Civil Application No.14206 of 2018 with allied matters, and this Court vide order dated 16.04.2020 declared that Section 84 AA of the GVAT Act is ultra-vires and beyond the legislative competence of the State under Entry No.54 of list-II of the 7th Schedule to the Constitution of India on the ground of being manifestly, arbitrary and unreasonable.
17. In view of the aforesaid circumstances, we hold that writ applicants are entitled to get the refund amount and the authorities have no legal justification to withholding the same, which is otherwise refundable to the writ applicants – Company, as the action of the respondents – authorities is contrary to the provisions of GVAT Act.
18. In view of the foregoing reasons, the writ applications deserve to be allowed and accordingly are allowed. The respondents are directed to disburse the refund amount along with 6% interest within a period of 6 weeks from the date of receipt of this order.