The Gujarat High Court directed the Commercial Tax Authorities to disburse the refund amount along with 6% interest within 6 weeks.
The writ applicant, Saurashtra Ferrous Pvt. Ltd. is in the business of manufacturing Pig Iron. In the production of Pig iron, the applicant-Company is using Iron Ore, Lime Stonex, Dolomite, and Lam Coal as the basic raw material. The applicant-Company is registered under the Provisions of the GVAT Act and under the Central Sales Tax Act, 1956. The applicant-Company has claimed input tax credit during the assessment year for the year 2008-2009, 2009-2010, and 2010-2011 on the purchase of goods as per the applicable relaxation, and accordingly the respondents have passed assessment order along with sanctioning refund orders for the respective years.
The dispute arose between the writ applicant and the respondent authority, when the Joint Commissioner of Commercial Tax (Legal), Gujarat State passed a determination order under Section 80 of the GVAT Act stating that “the coke” is used as fuel in the manufacture of Pig Iron. As a result, admissible ITC on purchase of coke is liable to be reduced by 4% of the turnover of purchase of coke.
The applicant-Company had challenged the impugned order before the Gujarat Value Added Tax Tribunal, Ahmedabad wherein the Tribunal allowed the Appeal and observed that the coke is used by the appellant as raw material in the manufacture of Pig Iron; and therefore, admissible ITC cannot be reduced by applying Section 11 (3)(b) (iii) of the VAT Act in connection with the purchases of coke affected by the appellant.
The applicant-Company had made several requests to the respondent to grant outstanding refund for the respective assessment years. However, there was no response from the department.
The respondents have expressed their view that due to the stay order passed by the Supreme Court, they have not processed the matter. It is further stated by the respondent that the matter is pending before the Supreme Court and the order of the High Court has stayed and therefore, they are unable to disburse the amount.
Mr. Hardik Vora, counsel appearing for the applicant-Company would submits that the stay order passed by the Supreme Court would not affect to the case of the writ applicant-Company in claiming the refund for the relevant period as the assessment order reached its finality and the time limit to initiate any proceedings under the GVAT Act is now lapsed. Therefore, there would not be any impact of the order on the refund claim.
Referring Section 35 of the GVAT Act Mr. Vora submitted that considering the order of assessment, the authority now legally cannot exercise their powers of reassessment as stipulated period as prescribed has already been over. In these circumstances, Mr. Vora for the applicant Company would further submit that when the time limit has already expired, there is no reason to withhold the refund by the respondent-authority.
The division bench of Justice J.B.Pardiwala and Justice Ilesh J.Vora held that writ applicants are entitled to get the refund amount and the authorities have no legal justification to withholding the same, which is otherwise refundable to the writ applicants Company, as the action of the respondent’s authorities is contrary to the provisions of GVAT Act.