The Delhi High Court directed the Assessing Officer (AO) to refund the amount Delhi Value Added Tax (DVAT) Act since it was not recoverable .
Ramky Infrastructure Limited, the petitioner is a limited company engaged in the business of development of the infrastructural sector and was awarded civil construction works for various projects in Delhi, namely, Mangolpuri DMSW Project, Narela Power Project, DSIIDC Residential Flats Project, Bawana Power Projects, and Najafgarh Drain Project, to name a few.
To comply with the Delhi Value Added Tax (DVAT) Act as well as the Central Sales Tax Act, 1956 (CST Act), the petitioner applied for and was registered with the Department of Trade and Taxes, Delhi (‘the Department’) on 05.03.2007.
The petitioner filed its return under the requisite form (Form DVAT 56) for the fourth quarter of the Financial Year 2013-14 claiming a refund of ₹2,59,88,302/-. Thereafter, the petitioner filed a revised return in Form DVAT 56 on 31.03.2015, enhancing its claim of refund to ₹2,64,77,458/-. The petitioner claims that on the date of filing of its return, there were no amounts due for any period either under the DVAT Act or the CST Act.
Notices for default assessments of tax and interest were issued under Sections 32 and 33 of the DVAT Act, for various tax periods falling during the Financial Year 2012-13. In 15.06.2015, notices for default assessments were framed for tax periods falling within the Financial Year 2013-14 by the Department. These default assessments were made alleging mismatch in the Input Tax Credit (ITC), due to mismatch between purchases made by the petitioner and sales shown by the registered selling dealer.
The petitioner’s claim for refund was considered and the Joint Commissioner of the Department of Trade and Taxes, passed an order on 01.02.2023 in Form DVAT 22 granting a refund of the amount of ₹44,14,979/- after adjustment of an amount of 10,43,918/-. The petitioner’s claim for interest was partly allowed to the extent of ₹7,983/- being the interest on the amount of ₹44,14,979/- computed from 15.01.2023 till the date of the order.
The petitioner had objected to the assessments framed under Sections 32 and 33 of the DVAT Act by filing objections under Section 74 of the DVAT Act, on 10.10.2015. In terms of Section 35(2) of the DVAT Act the recovery of the said demands, thereafter, were required to be suspended
The withholding of the amount due to the petitioner was in breach of Section 38 of the DVAT Act. Thus, interest would be payable to the petitioner on the said amount from 01.06.2015, as claimed.
It can be viewed that the Department has processed the petitioner’s claim for the refund of ₹44,14,979/-. The Department has withheld a sum of ₹10,43,918/- for the tax period covered under the Financial Year 201314. The demand for the same is not recoverable as the petitioner had filed its objections against the said demands on 02.11.2018.
“It is impermissible to withhold refund towards demands which are not recoverable.”, the Court viewed.
A division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan directed the concerned authority to refund the remaining withheld amount of amount ₹10,43,918/- along with interest with effect from 01.06.2015 and recompute the interest for the amount of ₹44,14,979/- as refunded in terms of the order dated 01.02.2023 and refund the interest due after adjusting the amount of ₹7,983/- already disbursed.
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