Delhi High Court: The writ petition was filed by the petitioner seeking to direct the respondents to process a refund application of August 2020 and give effect to a claim for refund of Rs.6,62,74,405/- in terms of Section 38 along with interest in terms of Section 42 of Delhi Value Added Tax Act 2004. A division bench of Yashwant Varma, and Dharmesh Sharma, JJ.,* held that the respondents acted arbitrarily in making numerous adjustments post 31-05-2015 and thus illegally depriving the petitioner of the refund as claimed and thus, directed the respondents to refund the amount of Rs. 6,62,74,405/- along with interest from the date it fell due.
The Petitioner is Flipkart India Private Limited, seeking issuance of a direction commanding the respondents to process a refund application and give effect to a claim for a refund of Rs.6,62,74,405/- in terms of the DVAT Act 2004.
When the matter was taken up on April 2022 in the first instance, the petitioner had incorporated a bank account in Delhi to facilitate the refund being duly processed and affected. The Court framed a direction for the respondents to process the refund claim within a period of two weeks. However, and by the time the matter was taken up next, the respondents had proceeded to pass an order dated May 2022 negating the claim for refund as raised by the petitioner. The said claim was principally based on the assertion of the petitioner that its application of March 2015 was liable to be decided within the statutory timeframe, wherein it was asserted that in the absence of any valid claim in respect of an amount due existing at the time when the said application was made, the respondents were bound to acknowledge the same and ensure that the refund was granted within two months.
To comprehend this matter comprehensively, some pertinent issues and facts need to be investigated, dating back to 2014 wherein the petitioner submitted a return for the quarter ending March 2014 through self-assessment and claimed a refund on account of excess Input Tax Credit. The respondents proceeded to issue notices for default assessment of tax for the period commencing from April 2012 to March 2013, inclusive of interest and penalty. The petitioner is stated to have filed objections in respect of the aforesaid notices before the Objection Hearing Authority (‘OHA').
Further, the petitioner also adverted to the additional demands that came to be created thereafter pertaining to FY 2014-2015, as well as for the period between April 2013 to June 2013. As for the original refund application relating to FYs ‘2012-13, 2013-14, and 2014-15, were disposed of by an order of December 2018. The respondents while acknowledging and accepting the claim for refund, sanctioned an amount duly credited to the petitioner‘s bank account. Due to the discrepancies in the amount, the petitioner being aggrieved by the aforesaid action filed objections manually on January 2019. On October 2019, the OHA passed a detailed order dealing with the twenty-four objections which had been submitted by the petitioner for FY 2012-2013. The OHA, as a consequence to the above framed directions for refund of the pre-deposit, which the petitioner originally deposited in November 2015.
The Petitioner argued that the mere issuance of notices could not have constituted a valid ground to deny refund as claimed by the petitioner and as it stood embedded in its return. Also, that the respondents deliberately withheld the amount liable to be refunded and continually sought to avoid the statutory obligation as placed while seeking to effect adjustments in respect of demands raised for subsequent periods. The Court has consistently taken the view that the time limits as prescribed therein are mandatory and not discretionary, as laid in Prime Papers & Packers v. Commissioner of VAT (2016 SCC OnLine Del 4211). It was then submitted that since the claim for refund stood raised and included in the return which was filed.
The respondents contended that the petitioner itself was responsible for the delay caused in effecting the refund on account of incorrect and incomplete information which had been provided to the Department and thus disabling them from processing the application for refund. It was further submitted certain other demands had come to be raised against the petitioner and consequently the respondents were clearly justified in adjusting the refunds claimed against those demands.
Analysis, Law, and Decision
The Court noted that the original reports which had been filed by the respondents along with their counter affidavit only spoke of the objections either not being traceable or having not been received from the predecessor OHA. Once the objections had been duly lodged online, the mere fact that the respondents were unable to trace out the objections filed physically would not detract from the right of the petitioners to claim refund.
The Court further noted that the failure of the respondents to refund the amount of pre-deposit and even adjusting the sum deposited is also clearly arbitrary and untenable. Placing reliance on Otis Elevators Company (India) Ltd. v. Commissioner of Value Added Tax , 2023 SCC OnLine Del 4936, the Court observed that a pre-deposit does not partake the character of a tax or duty. Those are sums which are deposited by an assessed solely for the purposes of pursuing the remedy of appeal.
The court concluded that the respondents clearly appeared to have acted arbitrarily in making numerous adjustments post May 2015 and thus illegally depriving the petitioner of the refund as claimed. The various adjustments clearly appear to have been made even though objections before the OHA had been duly lodged online by the petitioner. The respondents thus clearly appeared to have acted contrary to the clear mandate of the DVAT Act.
Thus, the Court held that the writ petitioners are entitled to the grants of the writs as prayed for and quashed the impugned order. The Court further directed the respondents to refund the amount of Rs. 6,62,74,405/- along with interest from the date it fell due within a period of three weeks.
[Flipkart India Private Limited v. Value Added Tax Officer, Ward 300, 2023 SCC OnLine Del 5201, decided on 21-08-2023]
Advocates who appeared in this case :
For the Petitioner: Mr. Tarun Gulati, Sr. Advocate with Mr. Kishore Kunal & Mr. Parth, Advocates
For the Respondents: Mr. Satyakam, ASC with Mr. Sunny J., Mr. Anil Kumar, Jr. Asst., for GSTO
*Judgment authored by: Justice Yashwant Varma, and Justice Dharmesh Sharma