Flipkart India Private Limited Vs Value Added Tax Officer (Delhi High Court)
Delhi High Court held that as per Rule 34 of the Delhi Value Added Tax Rules, 2005, a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself.
Facts- On 09 May 2014, the petitioner submitted a return for the quarter ending 31 March 2014. The self assessment return claimed a refund of Rs.11,40,96,384/- on account of excess Input Tax Credit. On 15 May 2014 and 07 June 2014, the respondents proceeded to issue notices for default assessment of tax referable to Section 32 of the DVAT Act for the period commencing from April 2012 to March 2013. The default assessment notices raised a demand of Rs.3,10,97,964/- inclusive of interest and penalty. The petitioner is stated to have filed objections in respect of the aforesaid notices before the OHA in terms of Section 74 of the DVAT Act.
On 15 June 2015, the respondents proceeded to issue default assessment notices for the period between April 2013 to December 2013. In terms of those notices, a tax demand in the sum of Rs. 62,61,80,251/- inclusive of interest and penalty came to be raised against the petitioner. These default assessment demands were also assailed by the petitioner by filing objections before the OHA on 15 July 2014. On 16 November 2015, the petitioner made a pre-deposit of Rs.1,00,00,000/- in terms of the statutory mandate of Section 73(1) of the DVAT Act. The aforesaid pre-deposit was made in respect of the objections which had been preferred before the OHA pertaining to the default assessment notices for the F.Y. 2012-2013 and April 2013 to December 2013. On 08 November 2016, the OHA proceeded to dispose of the aforesaid objections and remanded the matter to the file of the first respondent.
Conclusion- This clearly emerges from Rule 34(1) which uses the expression “except claimed in the return”. The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21.
Held that the respondents clearly appear to have acted arbitrarily in making numerous adjustments post 31 May 2015 and thus illegally depriving the petitioner of the refund as claimed. The various adjustments clearly appear to have been made even though objections before the OHA had been duly lodged online by the petitioner. The respondents thus clearly appear to have acted contrary to the clear mandate of Section 38 of the DVAT Act.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present writ petition had been originally preferred seeking the issuance of a direction commanding the respondents to process a refund application dated 24 August 2020 and give effect to a claim for refund of Rs.6,62,74,405/- in terms of Section 38 along with interest in terms of Section 42 of the Delhi Value Added Tax Act, 20041.
2. From the record, it would appear that when the matter was taken up on 22 April 2022, the petitioner had agreed to the opening of a bank account in Delhi to facilitate the refund being duly processed and affected. It was in the aforesaid light that the Court framed a direction calling upon the respondents to process the refund claim within a period of two weeks. However, and by the time the matter was taken up next, the respondents had proceeded to pass an order dated 31 May 2022 negating the claim for refund as raised by the petitioner. On the passing of the aforesaid order, the petitioner amended its writ petition questioning the validity of the aforenoted order in addition to the reliefs originally sought.
3. The claim for refund is principally based on the assertion of the petitioner that its application of 31 March 2015 was liable to be decided within the statutory timeframe as prescribed in Section 38(3)(a)(ii) of the DVAT Act. It had asserted that in the absence of any valid claim in respect of an amount due existing at the time when the said application was made, the respondents were bound to acknowledge the same and ensure that the refund was granted within two months. The petitioner also questions the validity of the impugned order dated 31 May 2022 and submits that any claim for refund which had fructified in accordance with the timelines prescribed by Section 38(3)(a)(ii) of the DVAT Act could not have been nullified by any demand of tax that may have either sprung into existence post the period of two months from the filing of the return nor could such an adjustment have been effected during the pendency of objections made by the petitioner with reference to Section 35 of the DVAT Act. The petitioner contends that Section 35(2) of the DVAT Act restrains the respondents from enforcing the payment of any amount of tax which formed subject matter of contestation before the Objection Hearing Authority2 and thus such an amount cannot be viewed as an amount due and payable under the DVAT Act as envisaged in terms of Section 38(2).
4. In order to appreciate the question which stands raised, it would be pertinent to note the following salient facts. On 09 May 2014, the petitioner submitted a return for the quarter ending 31 March 2014. The self assessment return claimed a refund of Rs.11,40,96,384/- on account of excess Input Tax Credit. On 15 May 2014 and 07 June 2014, the respondents proceeded to issue notices for default assessment of tax referable to Section 32 of the DVAT Act for the period commencing from April 2012 to March 2013. The default assessment notices raised a demand of Rs.3,10,97,964/- inclusive of interest and penalty. The petitioner is stated to have filed objections in respect of the aforesaid notices before the OHA in terms of Section 74 of the DVAT Act.
5. On 31 March 2015, the petitioner submitted a revised return for the quarter ending 31 March 2014. In terms of the revised return, it sought a refund of Rs.11,40,97,349/-. It is the case of the petitioner that bearing in mind the provisions of Section 38(3)(a)(ii) of the DVAT Act, the refund application was liable to be granted within two months from the submission of the revised return and thus latest by 31 May 2015. It was further averred that in the absence of any enforceable demand in respect of an ―amount due‖ existing between 31 March 2015 and 31 May 2015, the respondents were not entitled to adjust the amount claimed as refundable against any other tax demand that came to be raised subsequently.
6. On 15 June 2015, the respondents proceeded to issue default assessment notices for the period between April 2013 to December 2013. In terms of those notices, a tax demand in the sum of Rs. 62,61,80,251/- inclusive of interest and penalty came to be raised against the petitioner. These default assessment demands were also assailed by the petitioner by filing objections before the OHA on 15 July 2014. On 16 November 2015, the petitioner made a pre-deposit of Rs.1,00,00,000/- in terms of the statutory mandate of Section 73(1) of the DVAT Act. The aforesaid pre-deposit was made in respect of the objections which had been preferred before the OHA pertaining to the default assessment notices for the Financial Year3 2012-2013 and April 2013 to December 2013. On 08 November 2016, the OHA proceeded to dispose of the aforesaid objections and remanded the matter to the file of the first respondent.
7. Between 23 August 2017 and 15 November 2017, reassessment proceedings for FY 2012-2013 are stated to have been undertaken resulting in a fresh and revised demand of Rs. 4,92,09,468/- inclusive of interest and penalty coming to be raised against the petitioner. These assessments were again challenged before the OHA with objections being filed on 16 October 2017 and additionally on 14 December 2017 and 15 December 2017.
8. Pursuant to the order of the OHA dated 08 November 2016, reassessment proceedings were also undertaken with respect to the period starting from April 2013 to March 2014. The aforesaid proceedings were concluded between 23 November 2017 to 28 November 2017. The revised assessment orders framed in respect thereof were again questioned before the OHA by way of objections which were filed on 15 January 2018. The aforesaid narration thus concludes the events relating to the returns filed with respect to FY 2012-2013 and April 2013 to December 2013.
9. The writ petitioner has also adverted to the additional demands which came to be created thereafter pertaining to FY 2014-2015, January 2013 as well as for the period between April 2013 to June 2013. However, insofar as the original refund application relating to FYs‘ 2012-13, 2013-14 and 2014-15 is concerned, the same came to be disposed of by an order dated 03 December 2018. The respondents while acknowledging and accepting the claim for refund, which was pegged by the petitioner at Rs.11,40,97,349/- adjusted a sum of Rs.10,74,67,218/- and sanctioned an amount of Rs.66,30,131/- only. The said amount was duly credited to the petitioner‘s bank account. The petitioner being aggrieved by the aforesaid action filed objections manually on 29 January 2019. It is its case that the said manual filing was done on account of technical problems which beset the portal of the respondents.
10. On 31 October 2019, the OHA passed a detailed order dealing with the twenty-four objections which had been submitted by the petitioner for FY 2012-2013 as well as for the period from April 2013 to December 2013. The said order purports to record a concession made by the petitioner conceding to the tax demand of Rs.1,78,58,003/- but continuing to question the claim of interest and penalty. On due consideration of the objections so raised, the OHA accepted the challenge as raised by the petitioner and quantified the interest payable under Section 42(2) of the DVAT Act at Rs.15,00,000/- as against the original demand of Rs.1,34,63,462/-. The penalty of Rs.1,78,58,003/-, however, was set aside. The OHA, as a consequence to the above framed directions for refund of the pre-deposit.
11. The petitioner also refers to further demands which had been raised for FY 2015-2016 and the objections that were filed in respect thereof. Insofar as the claim for refund for FY 2012-2013 and FY 2013-2014 are concerned, the petitioner on 08 July 2020 is stated to have submitted Form DVAT-21 on the portal of the respondents. There is a dispute between parties with respect to non-consideration of the aforesaid refund claim with allegations being leveled by both sides of a failure to comply with the formalities prescribed. Insofar as the petitioner is concerned, it asserts that there were various technical glitches besetting the portal of the respondents and on account of which Form DVAT-21 could not be lodged online. The petitioner also refers to certain documents forming part of the record in support of its allegation of technical glitches and shortcomings which the portal of the respondents faced. Since the claim for refund was not attended to, the instant writ petition came to be filed sometime in April 2022.
12. Mr. Gulati, learned senior counsel appearing for the petitioner, submitted that the return for the quarter ending 31 March 2014 which had been duly filed on 31 March 2015 had itself claimed a refund of Rs. 11,40,97,349/-. It was pointed out that between the filing of the return for the said quarter initially on 09 May 2014 and the revised return on 31 March 2015, only two notices for default assessment pertaining to the period April 2012 to March 2013 had come to be issued. It was his submission, however, that since those had been questioned by filing objections before the OHA, the mere issuance of those notices could not have constituted a valid ground to deny refund as claimed by the petitioner and as it stood embedded in its return. Mr. Gulati pointed out that the period of two months as prescribed in Section 38(3)(a)(ii) of the DVAT Act had clearly expired on 31 May 2015 and undisputedly at least till that date no enforceable demand existed and which may have justified the respondents in withholding the amount as claimed to be refundable.
13. It was further pointed out that the objections which had been preferred before the OHA for FY 2012-2013 as well as for the period from April 2013 to December 2013 were ultimately accepted by the OHA itself in terms of the order dated 08 November 2016. It was the submission of Mr. Gulati that the respondents deliberately withheld the amount liable to be refunded and continually sought to avoid the statutory obligation as placed while seeking to effect adjustments in respect of demands raised for subsequent periods. This, according to Mr. Gulati clearly goes against the very ethos of Section 38 of the DVAT Act.
14. It was submitted that as would be evident from the impugned order dated 31 May 2022, the amount as claimed by the petitioner has ultimately come to be adjusted in respect of alleged demands which did not relate to the period in question at all.
15. According to Mr. Gulati, the aforesaid submission is addressed without prejudice to the contention of the petitioner that even those subsequent demands cannot be characterized as “….any other amount due…”, a phrase which finds place in Section 38(2) of the DVAT Act, and which alone empowers the respondents to effect an adjustment. Mr. Gulati submitted that this would be the undisputed position which would emerge when one bears in mind the objections which had been preferred by the petitioner in terms of the right conferred by Section 74 of the DVAT Act and the statutory restraint which would consequentially come into effect in terms of Section 35(2) thereof.
16. It was the submission of Mr. Gulati further that the insistence of the respondents of requiring the petitioner to submit Form DVAT-21 was also wholly misconceived since the refund stood claimed in the return itself. Mr. Gulati submitted that the statute itself draws a distinction between a refund which may come into existence pursuant to an order made by the OHA or the appellate authority and one which is claimed in the return that is submitted by the assessee itself. In case of the latter, it was the submission of Mr. Gulati that the statute places no obligation upon the assessee to submit Form DVAT-21.
17. Taking the Court through the counter affidavits which had been filed in the present proceedings, Mr. Gulati also drew our attention to a chart showing the dates on which objections were filed for different default assessment notices on the online portal and additionally submitted physically before the respondents. The details as set out in that chart are extracted hereinbelow: –
