Bombay High Court
Hindustan Unilever Ltd vs The Union Teerritory Of Dadra And Nagar ... on 6 February, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
Digitally
2024:BHC-AS:7942-DB
signed by
KAWRE
KAWRE KIRAN
KIRAN KALYAN 2-WP-4551-2022.DOC
KALYAN Date:
2024.02.20
10:29:05
+0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 4551 OF 2022
Hindustan Unilever Ltd. ... Petitioner
Versus
The Union Territory of Dadra & Nagar Haveli & Ors. ...Respondents
Mr. Sriram Sridharan a/w Mr. Dhananjay Sethuraj i/b Mr. Sriram
Sridharan, for the Petitioner.
Mr. Hiten Venegaonkar a/w Mr. Aayush Kedia, for Respondents.
_______________________
CORAM: G. S. KULKARNI &
FIRDOSH P. POONIWALLA, JJ.
DATED: 6 February, 2024
_______________________
Oral Judgment :- (Per G. S. Kulkarni, J.)
1. Rule, made returnable forthwith. Respondents waive service. By consent
of the parties, heard finally.
2. This petition under Article 226 of the Constitution of India is filed
praying for the following reliefs:
"a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or any
other Writ, order or direction under Article 226 of the Constitution of India
to quash and set aside the impugned Notice of Default Assessment
Ref.No.ADM.DNH/DC(VAT)/718 dated 02.09.2020 (Exhibit A) issued by
the Respondent No. 3 after going into the validity and legality thereof;
Page 1 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
b) that this Hon'ble Court be pleased to issue a Writ of Certiorari or any
other Writ, order or direction under Article 226 of the Constitution of India
to quash and set aside, insofar as it is prejudicial to the Petitioner, the
impugned Letter F.No.26000001930/VAT-Refund/ 2015-16/718 dated
02.09.2020 (Exhibit B) issued by the Respondent No. 3 after going into the
validity and legality thereof;
c) that this Hon'ble Court be pleased to issue a Writ in the nature of
Mandamus or any other Writ, order or direction under Article 226 of the
Constitution of India directing the Respondent No. 3 to refund the amount
of Rs.1,06,95,341 sanctioned to the Petitioner vide the Letter
F.No.26000001930/VAT-Refund/2015-16/718 dated 02.09.2020 (Exhibit
"B");
d) that this Hon'ble Court be pleased to issue a writ of Mandamus or a writ
in the nature of Mandamus or any other appropriate writ or order or
direction under Article 226 of the Constitution of India ordering and
directing the Respondents themselves, their officers and subordinates to
refrain from taking any steps or proceedings in pursuance of and/or in
furtherance of and/or in implementation of the i) impugned Notice of
Default Assessment Ref.No.ADM.DNH/DC(VAT)/718 dated 02.09.2020
(Exhibit A) issued by the Respondent No. 3; and ii) Letter
F.No.26000001930/VAT-Refund/2015-16/718 dated 02.09.2020 (Exhibit
"B"), insofar as it is prejudicial to the Petitoiner, passed by Respondent No.3;
e) that pending the hearing and final disposal of this Petition, the
Respondents by themselves, their officers, subordinates, servants and agents
be restrained by an interim order and injunction of this Hon'ble Court from
taking any steps or proceedings in pursuance of and/or in furtherance of
and/or in implementation of the i) impugned Notice of Default Assessment
Ref.No.ADM.DNH/DC(VAT)/718 dated 02.09.2020 (Exhibit A) issued by
the Respondent No. 3; and ii) Letter F.No.26000001930/VAT-Refund/2015-
16/718 dated 02.09.2020 (Exhibit "B"), insofar as it is prejudicial to the
Petitioner, passed by Respondent No.3;
f) for ad-interim reliefs in terms of the prayers above;
g) for costs of this Petition;
h) for such further and other reliefs as the nature and circumstances of the
case may require."
3. The case of the petitioner is that for the financial year 2015-16, the
petitioner had filed its returns alongwith all relevant documents with the
Page 2 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
Department of Value Added Tax, Dadra and Nagar Haveli, Silvassa. The
Deputy Commissioner (Department of Value Added Tax, Dadra & Nagar
Haveli, Silvassa) considered the returns as filed by the petitioner and passed an
assessment order which is titled as Re-conciliation of Statutory Forms / Order
under Dadra & Nagar Haveli VAT Regulation - 2005 & Central Sales Tax Act
on non-submission of declaration forms 'C' / 'F' / 'H' / 'E-P' / 'E-II' against the
claim of inter-State sales made to registered dealers under Section 9 of the
Central Sales Tax Act, 1957 read with Chapter VI of the Dadra & Nagar
Haveli Value Added Tax Regulation, 2005. A copy of such order is annexed at
Exhibit - 'F' (page 54 of the paper book) which clearly records the scrutiny of
the returns and other documents as furnished by the petitioner (dealer) as per
under the Statutory provisions.
4. The manufacturing activity as undertaken by the petitioner in the
establishment at Dadra & Nagar Haveli, Silvassa is of "Skin Creams & Lotions,
Soaps and Detergents, Tea". Insofar as the furnishing of the 'C', 'F' & 'H' forms
are concerned, the assessment order clearly records that the petitioner had
produced the said forms and in fact a statement of all statutory forms were
submitted has been set out. The relevant extract of the said order reads thus:
"Re-conciliation of Statutory Forms/Order under Dadra & Nagar Haveli
VAT Regulation-2005 & Central Sales Tax Act on non-
Page 3 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
submission of declaration forms 'C' / 'F' / 'F' / 'E-I' / 'E-II' against the claim
of interstate sales made to registered dealers.
(Under Section 9 of the Central Sales Tax Act, 1957 read with Chapter-VI of
the Dadra & Nagar Haveli Value Added Tax Regulation, 2005.)
And
Scrutiny of Returns and other documents filed by the dealer under Dadra
and Nagar Haveli Value Added Tax Regulation, 2005, and CST Act, 1957.
Name and Address M/s Hindustan Unilever
of the Dealer Limited, Srv No.907,
Kilwani Road, Gandhi
Gram Bus Stop Village-
Amli, Dadra and Nagar
Haveli.
Tin No. 26000001930
Central Sales Tax DNH/CST/1860 w.c.f.
No. 17.6.1996
Period 01.04.2015 to 31.03.2016
Assessment Year 2018-19
Details of NA.
Exemption /
Entitlement
Certificate
Document 1. Copy of Registration Certificate
available 2. Copy of Returns
3. Sale & Purchase details
4. DVAT 43
Name of Mr. Biswanath Sahoo
Authorized person
The dealer is a Manufacturer of "SKIN CREAMS & LOTIONS,
SOAPS AND DETERGENTS, TEA" and has furnished Returns of year
2015-16 in Form DVAT 16, Form 1, Annexure-II etc. The dealer has filed
DVAT-43 & Returns for the year 2015-16 which is in time.
The dealer in its periodic returns for the tax-periods in the financial
year 2015-16 has claimed concessional rate of tax on the interstate sales made
to registered dealers on the strength of prescribed declaration forms under the
Act amounting to Rs. 2,82,98,393/-, Rs. 2779,25,02,276/- & RS.
8,19,24,076/- required under Section 8(4) and 8(5) of the Central Sales Tax
Act, 1956 and Rule 12(7) of Central Sales Tax Rules, 1957, the dealer is
Page 4 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
required to submit the Form 'C', 'F' & 'H' (prescribed declaration forms)
within the prescribed period of three months of completion of each quarter
against the above said claim. The dealer has produced Form 'C' 'F' & 'H' for
Rs. 2,82,64,098/-, Rs.2779,25,01,079/- & Rs. 8,19,24,076/-. The dealer has
failed to produce Form 'C' & 'F' of R.7,575/- & Rs.1,197/- which are
determined as taxable sales @ 10.5% & @12.5% for non submission of Form
'F' & 'H' and tax comes to Rs.795/- & Rs. 150/- on which interest per annum
of Rs.258/- & Rs.49/- is imposed. The total tax and interest comes to Rs.
1,053/ & Rs. 199/- for which a demand notice is created in Form DVAT 24.
The dealer furnished all the statutory forms are as per the table below:-
TABLE
Tax Declaration forms Declaration Declaration Tax Interest Net tax &
period required to be forms already forms not payable levied per Penalty to
submitted in Rs. submitted in Rs. submitted, by the annum on be paid by
to be taxed dealer net tax to the dealer
@ 10.5% & in Rs. be paid by
12.5% the dealer
1 2 3 4 5 6 7
2015-16 2,82,98,393/- 2,82,64,098/- 7,575/- 795/- 258/- 1,053/-
(C)
2015-16 2779,25,02,276/- 2779,25,01,079/- 1,197/- 150/- 49/- 199/-
(F)
2015-16 8,19,24,076/- 8,19,24,076/- -- -- -- --
(H)
Total 945/- 307/- 1,252/-
The dealer has been liable to pay a tax & interest of Rs.1,252/-/-
for non submission 'C' & 'F' forms. For which demand notice is
created in form DVAT-24."
5. Thus, the order clearly records that the petitioner was liable to pay a tax
and interest of Rs.1252/- for non submission of C & F forms for which demand
notice was issued in form DVAT-24 which was complied by the petitioner. The
case of the petitioner is that on such assessment order being passed by the
Deputy Commissioner (VAT), the petitioner submitted a refund application
dated 29 July 2019 submitting all the documents entitling the refund for the
Page 5 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
period in question (for financial year 2015-16). The petitioner had also
enclosed certificate collected from the local supplier in form DVAT-31 that out
of total purchase tax imported of Rs.4,42,27,524/- the original DVAT-31 and
certificate worth the said amount 4,34,76,174/- which was 98% was being
submitted. Also, Re-conciliation of C, F & H form for 2015-16 to June 2017
was also submitted. In the process of consideration of the refund application,
correspondence ensued between the department and the petitioner in regard to
verification of CST declarations on different forms, copies of which annexed to
the petition (page 62 to page 89).
6. The case of the petitioner is that during the course of taking a decision
on the refund application, the petitioner was issued two communications both
dated 2 September 2020. By the first communication (page 28 F.
No.26000001930/VAT-Refund/2015-16/118) the petitioner was informed that
the department had scrutinized the VAT refund claim of the petitioner,
whereby the eligible refund to the petitioner was quantified at Rs.
1,06,94,341/-. However, despite there being an assessment order dated 1
September 2018, the petitioner was informed that for the financial year 2015-
16 there is a demand for tax at Rs.139,51,35,715/- and the net demand to be
paid shall be Rs.138,44,40,374/- after adjustment of the eligible refund. The
said communication is required to be noted which reads thus:
Page 6 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
"Form DVAT-24
(See Rule 36 of the Dadra and Nagar Haveli Value Added Tax Rules, 2005)
Ref.No.ADM/DNH/DC(VATY 718 Dated: 2/9/2020.
To,
M/s. Hindustan Unilever Ltd.
Sry. No. 907, Kilwani Road,
Gandhi Gram Bus Stop,
Village: Amli.
Tin No. 26000001930
Notice of default assessment of tax and interest under section 32
Whereas I am satisfied that the dealer has not furnished returns/furnished
incomplete returns or incorrect returns/furnished a return that does not comply with
the requirements of Dadra and Nagar Haveli Value Added Tax Regulation, 2005 /
any other reason.
The dealer is hereby directed to pay tax of an amount of Rs. 138,44,40,374/- (Rs
One Hundred Thirty Eight Crore Forty Four Lakh Forty Thousand Three Hundred
Seventy Four Only) and furnish proof of such payment to the undersigned on or
within 15 days for the following tax period.
Year 2015-16
Tax Period F.Υ. 2015-16 Amount (Rs.)
Tax Interest Total
Demand raised for non 945 307 1252
submission forms for
the year 2015-16
Demand raised for non 139513446 0 1395134
Verification forms for 3 463
the year 2015-16
Total Demand 139,51,35,715/-
Less:-Eligible VAT 1,06,95,341/-
Refund
Net Demand to be paid 138,44,40,374/-
Page 7 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
7. The second communication demanding tax as issued to the petitioner
was a notice for default assessment of tax and interest under Section 32 read
with Rule 36 of the 2005 Rules of the Union Territory by which an amount of
Rs.1,38,44,40,374/- was the net amount as demanded for the petitioner. The
said communication reads thus:
"UT-Administration of
Dadra & nagar Haveli and Daman and Diu,
1st floor Udhyog Bhavan, 66 KV Road
(Department of Value Added Tax)
Silvassa.
F. No.26000001930/VAT-Refund/2015-16/718 2
September 2020.
To,
M/s.Hindustan Unilever Ltd.
Sry. No. 907, Kilwani Road,
Gandhi Gram Bus Stop,
Village : Amli.
Subject :- Application for VAT refund for the FY 2015-
16.
Ref. DVAT-21 Ack No.14240066 dated 29.07.2019
of Rs.1,06,95,341/-
With reference to above mentioned subject, it is to inform that
the department has scrutinized your VAT Refund claim and
calculated as below;
Gross Refund (as per DVAT-21) Rs.1,06,95,341/-
Eligible Refund Rs.1,06,95,341/-
Demand for FY 2015-16 Rs.139,51,35,715/-
Net Demand to be paid (copy Rs.138,44,40,374/-
enclosed)
Therefore, the VAT Refund has been deducted towards
the recovery of outstanding dues and to pay remaining tax of
an amounting to Rs.138,44,40,374/- (Rs One Hundred
Thirty Eight Crore Forty Four Lakh Forty Thousand Three
Hundred Seventy Four Only) and furnished proof of such
payment to the undersigned within 15 Days.
Page 8 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
Encl:-DVAT-24 for the FY 2015-16
Deputy Commissioner (DVAT),
Dadra and Nagar Haveli
Silvassa"
8. The petitioner being aggrieved by the aforesaid communications dated 2
September 2020 has filed the present petition.
9. Mr. Sridharan, learned counsel for the petitioner would submit that the
impugned communications / demands are patently illegal and arbitrary, as also
without application of mind, inasmuch as, the authority did not have
jurisdiction to make a demand in the teeth of the assessment order dated 1
September 2018, by which the assessment for the financial year was already
made, quantifying the demand of Tax at Rs.1252/-. It is submitted that there
was no locking procedure under regulation 58(4) of the 2005 Regulations as
adopted to make a re-assessment, and without a show cause notice or an
opportunity of a hearing being granted to the petitioner, the impugned
demand could not have been raised. It is therefore his submission, that not
only considering the express provisions of the regulations, but also, considering
the well settled principles of law which was required to be followed, it was not
permissible for the concerned officer to reopen the concluded assessment to
issue the impugned communication. It is therefore his submission that the
petition needs to be allowed on the basic premise, on the patent illegality on
the part of the Deputy Commissioner in passing the impugned order.
Page 9 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
10. On the other hand, learned counsel for the respondents has justified the
impugned order referring to the reply affidavit as filed on behalf of the
department, which does not dispute the basic contentions as urged on behalf of
the petitioner in regard to the petitioner not being heard and the procedure
which otherwise could have been followed before any demand could be raised,
in the teeth of a concluded assessment. The reply for the first time sets out in
para 2 and 3 that in the soft copies and the hard copies of the documents there
was a deficiency found in the documents, namely, that the petitioner had not
submitted details of the statutory forms in soft copies. It is contended that the
refund claim application was not as per the prescribed compliance of the office
circular dated 29 December 2014, and that the department had issued a letter
dated 3 June 2020, to the petitioner informing the petitioner to comply with
the deficiencies and submit soft copies of the forms, with the details in the
statutory form. It is submitted that under Regulation 38 of the 2007 amended
Regulation, the refund application was required to be processed and sanctioned
within 90 days from the date the refund claim was raised, and accordingly such
refund claim was processed and the impugned demand was raised.
11. The next contention as urged in the reply is that as per Regulation 74(1)
of the 2005 Regulations the petitioner would have an opportunity of a
statutory appeal assailing the decision of the department demanding the tax by
Page 10 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
the impugned communications, to be filed before the Joint Commissioner
(VAT) and even for such reason this petition ought not to be entertained.
12. On behalf of the petitioner a rejoinder affidavit is filed disputing the
contentions as urged on behalf of the respondents in the reply affidavit. It is
contended that all the documents namely the soft copies as also the hard copies
were submitted. There was no communication from the respondents in regard
to re-consideration of the said documents, and without following the lawful
procedure, the impugned demand was issued. The case of the department as
pleaded in the reply affidavit has been denied by the petitioner in totality. It is
on such backdrop, we have heard learned counsel for the parties.
13. We have heard learned counsel for the parties, we have also perused the
record.
14. At the outset, we may observe that there is much substance in the
contentions as urged on behalf of the petitioner, namely that at the hands of
the Deputy Commissioner (VAT) / respondents, an assessment order was
passed on 1 September 2018 whereby taking into consideration the declaration
of forms namely C, F & H forms and the amounts as involved, the Tax liability
was calculated at Rs.1252/- for non submission of C & F forms. The said
amount was admittedly paid. Once such assessment stood finalised in terms of
the order dated 1 September 2018, the only course of action available to the
Page 11 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
department was to reopen such assessment as the law would mandate. Also the
department could have taken recourse to the provisions of Regulation 58(4) of
the 2005 Regulation which pertains to "reassessment" which reads thus:
"CHAPTER X
58(1).....
(4) The Commissioner shall, after considering the return, the
evidence furnished along with the returned, if any, the evidence
acquired in the course of the audit, if any, or any information
otherwise available to him, either__
(a) confirm the assessment; or
(b) serve a notice of the assessment or re-assessment of the amount
of tax, interest and penalty, if any, pursuant to section 32 and 33."
15. It is quite clear that such procedure as the law would recognize was not
followed by the Deputy Commissioner in issuing the impugned
communication. Thus, an incongruous position is reflected by the record of the
department namely, on one hand an assessment order which is not set aside or
invalidated in any manner known to law has remained to operate and on the
other hand, in the course of processing of the refund application the impugned
demand has been raised without any re-assessment of the assessment order
and / or invalidating the returns filed by the petitioner as per the procedure the
law would mandate the department to follow. This apart, the basic requirement
in law of the department following the principles of natural justice, has also
been overlooked in issuing the impugned communication.
Page 12 of 14
6 February, 2024
Kiran Kawre
::: Uploaded on - 20/02/2024 ::: Downloaded on - 24/02/2024 18:44:34 :::
2-WP-4551-2022.DOC
16. Admittedly, the impugned order is an ex-parte order. There is nothing
on record to justify that the petitioner was issued any show cause notice or the
petitioner was heard, before the deputy commissioner could come to a
conclusion that the demands as set out in the impugned order are required to
be made against the petitioner.
17. For all these reasons, we are quite certain that the impugned order /
communication when tested on law look from any angle cannot be sustained
and would be required to be quashed and set aside. We accordingly allow the
petition by the following order.
ORDER
i. The impugned orders / communications dated 2 September 2020
Exhibit-A & Exhibit-B are quashed and set aside.
ii. The respondents is at liberty to follow the due procedure in law, in
the event, the department is not accepting the assessment order dated 1
September 2018 passed by the Deputy Commissioner and / or to raise a
demand against the petitioner for the financial year 1 April 2015 to 31
March 2016, on any ground as the law may permit. All contentions of
the parties in respect of any proposed proceedings are expressly kept
open.
6 February, 2024
Kiran Kawre
2-WP-4551-2022.DOC
iii. The refund application of the petitioners shall now be decided by
the respondents in accordance with law.
iv. In regard to the admitted amount of Rs.1,06,95,341/- being
original refund as accepted by the department, the same shall be
refunded to the petitioner within a period of four weeks from today with
permissible interest.
iv. Rule is made absolute in the above terms.
18. No costs.
(FIRDOSH P. POONIWALLA, J.) (G. S. KULKARNI , J.)
6 February, 2024
Kiran Kawre
