The Delhi High Court directed to issue a refund with interest under Section 42 of the Delhi Value Added Tax (DVAT) Act for delayed refunds, allowing the writ petition filed by Mangalam Traders.
The petitioner, Mangalam Traders, a registered dealer under the DVAT Act, 2004, and the CST Act, 1956, filed quarterly returns on 01.06.2017 and 29.07.2017, claiming a concessional rate of interest on interstate sales based on ‘C’ Forms. Despite furnishing physical ‘C’ Forms as required, the refunds were either delayed or not credited to the petitioner’s account, prompting the filing of writ petitions.
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The petitioner sought the setting aside of impugned orders and demanded the issuance of interest amounting to Rs. 23,27,644 on refunds due for the 4th quarter of the assessment year 2016-17 and the 1st quarter of the assessment year 2017-18.
The court emphasised the mandatory nature of the provisions of the DVAT Act regarding refunds, stating, “As per the plain reading of the aforesaid provision, the Commissioner is obliged to refund the tax, penalty, and interest, if any, paid by an assessee which is more than the amount due from it.”
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Citing multiple judgements, including Prime Papers & Packers v. Commissioner of VAT & Anr., the court reinforced the strict guidelines for the grant of refunds and the accrual of interest on delayed refunds.
The bench of Justices Yashwant Varma and Ravinder Dudeja ordered that the petitioner’s entitlement to statutory interest under Section 42 of the DVAT Act was clear and noted that the law provides strict guidelines for the grant of refund which are mandatory and not discretionary.
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The court concluded that the petitioner is entitled to interest on the refund. The court held that such a claim cannot be defeated on the mere grounds of an ongoing investigation and the involvement of legal issues, which were ultimately decided in favor of the petitioner by orders passed by the High Court.
Consequently, the impugned orders passed by the respondents were set aside. The court ruled that the petitioner shall be entitled to simple interest at the rate of 6% per annum from the date the refund fell due, taking into account the observations made in the judgment.
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