Challan Can Be Rectified To Correct Bonafide Errors: Delhi High Court Directs VAT Dept. To Allow Changes in Tax Period

The petitioner submitted that in respect of the second quarter of 2015-2016, i.e., from 1.07.2015 to 30.09.2015, the petitioner filed its returns on 31.03.2017. The VAT liability for the period was Rs. 7,87,038/-whereas the liability under the CST Act was Rs. 37,381/-. The petitioner deposited Rs. 10,44,118 towards DVAT and Rs. 37,381 towards CST through challans, and, therefore, a sum of Rs. 2,58,912 was deposited in excess for the second quarter of 2015-2016.

While depositing the challan dated 29.09.2016 for the amount, the petitioner inadvertently mentioned in the challan that the amount was being deposited for the second quarter of 2015-2016 instead of the second quarter of 2016-2017, consequently depositing an excess amount. While preparing the returns for the second quarter of 2016-2017, the error came to light and the petitioner wrote to the respondent/department on March 27, 2018 for correction of the tax period in the challan. Despite reminders, there has been no response from the respondent.

Counsel appearing for the petitioner submitted that the error in the challan was merely an inadvertent error and, therefore, directions be issued to the respondent to amend the tax period in the challan and accept the returns for the second quarter of 2016-2017.

Counsel further submitted that the respondent accepted and acknowledged the fact that there was a genuine and bonafide error on the part of the petitioner. However, a counter affidavit filed by the respondent suggested that the respondent was not willing to permit the correction on account of a technical issue pointed out by the System Branch.

It was stated in the counter affidavit that the petitioner can claim the refund amount by filing Form DVAT-21 for the excess payment and, insofar as the filing of returns for the second quarter of 2016-2017 is concerned, the same shall be allowed as per Section 86(9) of the DVAT Act, 2005, on payment of the due penalty for failing to furnish returns by the due date.

It was submitted that the petitioner cannot accept the remedy suggested by the respondent for the reason that if the amount is refunded and a fresh challan is issued for the period from 01.08.2016 to 31.08.2016, then it would attract penalty, interest, etc. and cast a stigma on the petitioner, who is a regular tax payee without a default.

On the other hand, counsel appearing for the respondent submitted that, so far as the correction of the challan is concerned, the respondent has requested the System Branch to look into the issue. As per the response received, system correction of the challan transfer is not possible as at the time of challan transfer, the dealer needs to upload the documents related to the challan transfer, which is not possible from the system end. If the request is updated, it may leave the data in an inconsistent state.

The court allowed the petition and directed the respondent to treat and read the period '01.08.2015 to 31.08.2015'mentioned in the challan dated 29.09.2016, issued by the HDFC Bank Ltd., as '01.08.2016 to 31.08.2016', which will obviate the lengthy and complicated procedure of applying for a refund and deposit on the part of the petitioner and will also save him from any penalty under the Tax Statute.

Case Title: : La Mode Fashions Private Limited Vs Commissioner, Value Added Tax

Citation: 2022 LiveLaw (Del) 195

Dated: 3.12.2021

Counsel For Appellant: Advocate Aseem Mehrotra

Counsel For Respondent: Advocates Dhandanjaya Mishra, A. Reyna Shruti

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