VAT Refund Claim of Registered dealers under C Form not be denied as being 'Unverified': Delhi HC [Read Order]

The Delhi High Court bench comprising of Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav, in a Writ Petition, directed the Value Added Tax Officers (VATO) to process the refund claim under C Form of Value Added Tax (VAT) to the registered dealer and cannot be denied as being unverified. Also set aside the impugned order of the Assistant Value Added Tax Officer AVATO.

The petition was filed by M/s Mangalam Traders against the impugned orders passed by the AVATO under Section 32 of the Delhi Value Added Tax Act, 2004 (DVAT) for the fourth quarter of the A.Y. 2016-2017 and the first quarter of the A.Y. 2017-2018, as being violative of Article 14, 19 and 265 of the Constitution of India.

The petitioner is a registered dealer under the DVAT Act and the Central Sales Tax Act, 1956 (CST), who undertakes the business of inter-State trading of cosmetics, toiletries, disinfectant, deodorants, drugs, medicines, fruit jams, insect repellents, mosquito coils, ready mix food items and washing soaps under the name and style of Mangalam Traders.

The petitioner filed quarterly returns for the fourth quarter of A.Y.  2016-2017 and first quarter of the A.Y. 2017-2018 claiming concessional rate of tax in respect of inter-State sales on the strength of C Form. The petitioner claimed a refund of ₹53,93,100 and ₹ 24,47,850, respectively, against C forms.

The claim was not processed and the petitioner filed a writ petition before the HC. The petitioner furnished the physical forms, and the respondents passed a refund order for the first quarter of the Assessment Year 2017-2018, wherein the refund amount of ₹20,86,966 was allowed after adjusting ₹3,60,884/- against the claim of refund of ₹24,47,850 however, the same was not credited.

In the impugned order, VATO held that C Forms, furnished by the petitioner, related to another product and some of the C Forms could not be verified.

The C Forms that the petitioner submitted were issued by the registered dealer having valid registration certificates for the products sold by the petitioner, and Anuj Aggarwal, the counsel for the respondent (VAT officers), did not contest this. Furthermore, there is no claim that any of the C Forms supplied by the petitioner are fakes or fabricated.

The division bench made the observation that it is not envisaged that the registered dealer will look into how the purchasing dealer acquired the C Form. The selling dealer can accept the transaction without further inquiry if the acquiring dealer is a registered dealer for the goods being dealt with and the C Forms submitted are legitimate.

Furthermore, it was highlighted that there is no concern about the purchasing dealers' proper validation as registered dealers with the appropriate authority. There is no doubt that the petitioner submitted invoices and other documentation to prove that they had provided the purchasing dealers with the relevant goods. In the instant case, the petitioner has all documents in proper.

Additionally it was highlighted, under the scheme of taxation, the point of further taxation shifts to the purchasing dealer and the tax on the goods in question have to be recovered from those dealers.

To Read the full text of the Order CLICK HERE

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