Order passed by Honl. Delhi High Court on the subject of refund of VAT

Order passed by Honl. Delhi High Court on the subject of refund of VAT
Saturday, July 30, 2016
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Dear all,

One of prominent Chartered Accountant of our territory Shri K.C. Singhal has forwarded copies of the orders passed by Hon'ble Delhi High Court on 12th July 2016 in the W.P. (C) 5250/2016 and order passed by Hon'ble Delhi High Court on 23rd May 2016 in W.P.(C) 610/2016, W.P.(C) 1117/2016 & CM No. 4884/2016. The soft copies of both the orders are attached herewith for your ready reference.

Hon'ble Delhi High Court in W.P. (C) 5250/2016, New Age Generators Versus The Commissioner, Value Added Tax passed an order on 12th July 2016 that:

"Failure of the Department to make refunds in terms of Section 38 of the DVAT Act - Held that:- Not only is the dealer getting the refund far beyond the time period specified under Section 38 of the DVAT Act but the Department is ending up paying far more interest on the refund amount than what is permissible or contemplated in terms of Section 38 of the DVAT Act. There has to be some accountability fixed within the Department for the lapses on part of those processing refund application resulting in such unnecessary payment of interest beyond what is permissible. This is an additional reason why the Court refuses to countenance the so-called 'fail-safe' system devised by the Department for staggering the release of refund of payment once a refund application has been processed, verified and found to be in order.

As far as the present petition is concerned, Mr. Narayan, on instructions states that the refund amount due together with interest will be released to the Petitioner through ECS on or before 26th July 2016. On the basis of the said assurance, the petition is disposed of with liberty to the Petitioner to revive it if the refund is not received within the time assured."

Hon'ble Delhi High Court in W.P.(C) 610/2016, W.P.(C) 1117/2016 & CM No. 4884/2016, Roshan Lal Lalit Mohan & Another Vrs. Government of National Capital Territory of Delhi & Another, has passed an order on 23rd May 2016 that:

"Seeking refund of outstanding amount of tax credit - Refund application was already rejected by the respondents many a times even after the directions provided by the Court for refund of tax credit Held that:- considering that there has been an abject failure by the Respondents to comply with the statutory mandate of Section 38 of the DVAT Act, the Court sees no purpose being served in the Petitioners at this stage producing records of over ten years from 1st April 2005 till 21st January 2016. Since the Respondents in any event do not have the records, it will not be possible for them to verify the correctness of the records to be produced by the Petitioners. Also, the stage for the Department to now question the correctness of the self assessment return filed by the Petitioner No.1 way back on 30th October, 2007 for the year 2006-07 has long been crossed. There is no possibility of the said assessment being reopened. The carry forward of the refund amount in the succeeding returns up to 2012 was also never questioned by the Respondents.

In the circumstances, the production of records at this stage by the Petitioner No. 1 will only delay the refund further. Considering the number of times the Petitioners have had to approach this Court, the request of counsel for the Respondents for yet another opportunity to consider afresh the issue of refund due to Petitioner No. 1 is not justified. The whole object of stipulating a time schedule under Section 38 of the DVAT Act for processing refunds will be defeated if any further indulgence is shown to the Respondents. Therefore, the Respondents are directed to issue in favour of Petitioner No. 1 the refund order in the sum of ₹ 34,62,662 together with 6% interest per annum from 20th February, 2015 till the date of its payment, which shall not be not later than 31st May, 2016 - Decided in favour of petitioner."

As this both are relevant to the refund of VAT, it will be matter of interest for the accesses whose refund claim are pending and laying with the Value Added Tax Department.

So, fellow industries are requested to go through the detail in the matter and accordingly plead their refund cases.

This is for your kind information.

Thanking you,
With regards,

For Silvassa Industries & Manufacturers Association

Narendra Trivedi, 

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