The Delhi High Court slammed Department for Unnecessary Burden If Interest on Ex-Chequer and unnecessary imposition on judicial time on the ground of delay in VAT Refund.
The petitioner, Consortium of Sudhir Power Projects Ltd and Sudhir Gensets Ltd, had filed a return claiming a refund of the sum of Rs 59,59,499 for the fourth quarter of the year 2013-14. Thereafter, it filed a revised return reducing its claim of refund to Rs 59,56,772. The petitioner’s return was not processed immediately.
However, the concerned Value Added Tax Officer (VATO) issued a notice under Section 59(2) of the Delhi Value Added Tax Act, 2004 (DVAT Act). Thereafter, default assessment was framed and a demand for the fourth quarter of the year 2013-14 was framed raising a demand of Rs 34,582. A notice was issued for the aforesaid amount.
The petitioner claimed that the liability for the said amount was assessed on account of some difference in the output tax liability and the input tax credit. The petitioner claims that it continued to pursue the concerned authority for seeking the refund, which according to the petitioner, was due within a period of two months from filing of the return/revised return.
The petitioner also contended that even if the additional liability of Rs 34,582 is accepted, the petitioner’s claim for refund would at best be reduced by the aforesaid amount. And, there is no possible reason for the respondent to have withheld the said amount
On a closer examination of the facts of the case, the petitioner can be denied interest on the amount of refund which has been unjustifiably withheld, mainly for two reasons. First, that there is no dispute that the petitioner is entitled to the refund and his return was required to be considered as an application for the same.
The petitioner was not required to approach or pursue the authorities for its claim for refund of excess tax. Second, that the delay in processing claims for refund is endemic to the DVAT authorities and if the same is considered, the delay on the part of the petitioner approaching this court is not long.
The Bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan observed that “In the facts of the present case, the petitioner had received a notice under Section 59(2) and in view of the same, was aware that some proceedings were pending before the DVAT authorities. The default assessment was framed. Obviously, the petitioner could not be expected to immediately approach this Court thereafter.”
“This Court is also constrained to note that delays on the part of the respondent in processing the pending claims for refund result in unnecessary burden of interest on the ex-chequer not to mention, unnecessary imposition on judicial time. The Commissioner, Department of Trade and Taxes is directed to take expeditious steps to ensure that all pending refund claims are processed as expeditiously as possible” the Court opined.
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