SUMIT AGARWAL
B.Com(H), FCA,MBA,CFA
Section 74 of the Delhi VAT Act, 2003 deals with filing of objections before the Commissioner by any person who is dissatisfied with the order of an Assessment under the Act or any other order or decision made under this Act. However, such appeals can only be filed only against the appealable order and not orders defined u/s 79 of the Act. Further, it is also mentioned in the second Proviso of Section 74 (1) of the Vat Act that the Commissioner will entertain such objections only when the amount of tax, interest or penalty assessed that is not in dispute has been paid.
A new Third proviso has been introduced in Section 74 (1) w.e.f. 01.10.2011 which states that
“Provided also that the Commissioner may, after giving to the dealer an opportunity of being heard, may direct the dealer to deposit an amount deemed reasonable, out of the amount under dispute, before such objection is entertained”
Now on introduction of the above third proviso, the department contention is that the date of filing of objections should be the material date for the applicability of the third proviso.
Since the substantial right to raise objections by the dealer have been made subject to fulfillment of the conditions imposed by the third proviso of Section 74 (1) of the Delhi VAT Act ‘2003, the important questions which comes to one mind are
a) Whether the Third Proviso is applicable for all the pending objections which have been filed before the Commissioner before introduction of the Third proviso i.e 01.10.2011 but final decisions are pending?
b) Whether the Third Proviso will be applicable for assessments passed for the period upto 30.09.2011 after 01.10.2011 for which monthly returns are filed according to the provisions of the Act much before the introduction of the third proviso to Section 74(1) of the Act ?
c) Whether the relevant date for considering the applicability of the third proviso to section 74(1) of the said Act would be date of filing of the objections?
The above questions have been answered by the Hon’ble Delhi Court in the matter of Bajaj Overseas Impex vs Special Commissioner -1 and another reported in (2013) 62 VST 397 (Del). In this case, the Returns were filed much earlier than the introduction of the third proviso to Section 74(1), but assessment and filing of objections was done after the introduction the third proviso. The Special Commissioner raised a demand of Rs 25 lakhs as pre-condition for hearing of the objections in line with the third proviso to Section 74(1). The above demand notice was challenged before the Delhi High Court by way of Writ petition. The court held that the right of the dealer to file objections is substantive rights and it gets crystallized on the date on which the returns are filed.
The right of appeals are substantive right and that substantive right cannot be taken away retrospectively unless it is by way of specific, express or implied legislative provision .The court held that the third proviso to section 74 (1) has not been expressly been made retrospective and it is also not retrospective by implication and therefore the law applicable would be the one that existed on the date when the return was filed.
The court referring to the Apex court judgments namely Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh [1953] 4 STC 114 (SC) and Vitthalbhai Naranbhai Patel v. Commissioner of Sales Tax, Madhya Pradesh [1961] 12 STC 219 (SC) held that the law applicable will be the law that existed at the time when the right to appeal accrue and commences. The right to appeal accrues and commences from the time the return is filed since the state gets the power to oppose such return immediately. The court further held that it is immaterial that the points of dispute are raised at the time of assessment as possibility exist for such dispute to arise as soon as proceedings started with the filing of the return or when the authority called for evidence and started the hearing and therefore the right of appeal must be taken to have been in existence even from the date on which the dealer files its return.
Hence the Court held that since the returns having been filed much prior to the introduction of the third proviso to Section 74(1) , the proviso would have no applicability and right of appeal accrues from the date of filing of return and law existing at that point of time will be applicable.
Therefore, the above judgment is very important in challenging the notices and demands raised as pre condition to entertaining of appeal by the VAT authorities. Further the existing provisions in relation to deposits before entertaining the appeals in the State VAT Acts may be analysed to find out the effective date of applicability of such provisions and amendments made in such provisions.
