Dept Can't Justify Retention Of Refund Claim On Account Of Having Been Deposited Voluntarily By Taxpayer: Delhi HC
Pankaj Bajpai
18 Oct 2024 1:00 PM IST
The Delhi High Court held that when the payment of refund was delayed, the assessee automatically becomes entitled to interest u/s 42 of the DVAT Act. After the assessee succeeds in vindicating its stand that its claim for refund was correct, it would follow that that the assessee would be refunded the amount claimed and interest would be payable, added the High Court. The High...
The Delhi High Court held that when the payment of refund was delayed, the assessee automatically becomes entitled to interest u/s 42 of the DVAT Act.
After the assessee succeeds in vindicating its stand that its claim for refund was correct, it would follow that that the assessee would be refunded the amount claimed and interest would be payable, added the High Court.
The High Court held so while referring to the statutory time frame constructed by Section 38(3)(a)(ii) of the DVAT Act, as per which the amount becomes refundable within the time frame stipulated u/s 38(3) of the DVAT Act.
The Division Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that “Once the tax payer succeeds in upsetting the assessments framed u/s 32 & 33 of the DVAT Act, which results in vindicating its claim for refund either in part or as a whole as claimed by either furnishing a return or Form DVAT-21, interest u/s 42(1)(a) of the DVAT Act would be payable from such date as the refund was due to be paid to the tax payer”. (Para 23)
Facts of the case:
The petitioner/ assessee, a manufacturer of motor vehicles, its business premises were visited by the Respondent/ department, and petitioner was asked to give a payment of Rs.3.5 crore to meet the target of Revenue, which was deposited. Later, the petitioner intimated the respondent about the deposits and stated that such amount be retained as payment against demand, if any, raised on account of inspection conducted at their premises.
Thereafter, assessment was framed creating demand on account of non-furnishing of declaration forms. In the meanwhile, petitioner deposited an amount of Rs. 52 lacs on different dates and filed objections before the Special Objection Hearing Authority (SOHA) for grant of benefit of declaration forms. The SOHA allowed the benefit of declaration forms and reduced the demands to Rs.35 lacs, thereby granting refund of Rs.16 lacs being the excess amount.
Since the amount of Rs.3.5 crores initially deposited and the excess amount of Rs.16 lacs were not adjusted in any of the returns furnished under DVAT Act, the petitioner filed applications in Form DVAT-21, claiming refund. Still aggrieved, the petitioner approached the High Court challenging the non-issuance of refund.
Observations of the High Court:
The Bench observed that claim for refund is liable to be made in Form DVAT-21, if such refund is not claimed in the return itself.
The claim of refund can be made in either of the two modes i.e. through the return or by filing Form DVAT-21, added the Bench.
Referring to Section 28 of the DVAT Act, the Bench observed that Respondent cannot possibly seek to justify the retention of refund claim on account of its having been deposited voluntarily or being barred by limitation.
“It is a clear case of unjust retention of the money of petitioner”, added the Bench while pointing that the Respondent had acted arbitrarily in illegally depriving the petition of the refund as claimed, in flagrant violation of the mandate of Section 38 of the DVAT Act.
The Bench also observed that the State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under the circumstances.
The obligation to refund money received and retained without right implies and carries with it the right to interest, added the Bench.
The High Court therefore, allowed the Assessee's petition and directed the Respondent to refund the amount of Rs.3.5 crores along with statutory interest.
Counsel for Petitioner/ Assessee: Advocates Ravi Chauhan and Vasdev Lalwani
Counsel for Respondent/ Revenue: Advocates Rajeev Aggarwal, Prateek Badhwar, Shaguftha H. Badhwar, and Samridhi Vats
Case Title: Ashok Leyland vs. Commissioner VAT
Case Number: W.P.(C) No.11708/2023
