Northern India Motor Company vs Commissioner Vat, Department Of ...
2009 Latest Caselaw 3341 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                   S.T. Appeal No. 15/2008

                                                    25th August, 2009

NORTHERN INDIA MOTOR COMPANY                ...Appellant
                 Through: Mr. Bhagwat Prasad, Advocate

              VERSUS

COMMISSIONER VAT, DEPARTMENT OF
TRADE & TAXES, NEW DELHI                     ....Respondent

Through: Mr. Rajesh Mahna, Advocate CORAM:

HON'BLE MR. JUSTICE A.K.SIKRI HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

     2. To be referred to the Reporter or not?        Yes

     3. Whether the judgment should be reported in the Digest?               Yes

    %

VALMIKI J.MEHTA, J

1. The present appeal under Section 81 of the Delhi Value Added Tax Act,

2004 (hereinafter referred to as "the Act") has been filed by the appellant

against the order dated 28.02.2008 passed by the Appellate Tribunal, VAT

rejecting the claim of the appellant for tax credit on transitional stock.

2. The facts of the case are that the appellant was carrying on business of

resale of auto parts. It was registered with both under the Delhi Sales Tax Act,

1975 and Delhi Value Added Tax Act, 2004. The appellant claimed a tax credit

S.T. Appeal No. 15/2008 Page 1 of Rs. 49,424/- under Section 14 of the Delhi Value Added Tax Act, which

Section allows tax credit on notified first point goods including auto parts dealt

in by the appellant subject to the following conditions:-

"(a) Stock held on 31.03.05 was of trading goods, raw material and packing material.

(b) Stock related to goods purchased from a registered dealer during the period 01.04.04 to 31.03.05.

(c) The stock had borne tax under Section 5 of Delhi Sales Tax Act.

(d) The claim of the tax credit was made by submitting statement on DVAT-18, and DVAT-18A before 31.07.05."

3. Since the appellant held stock of Rs. 732554/- which were tax paid goods

it was entitled to a tax credit of Rs. 49424/-. On account of the fact that the

appellant has not claimed the input tax on the transitional stock in the return

Form DVAT-16 therefore he was not allowed input tax credit on the transitional

stock. To rectify his mistakes, the appellant filed objections under Section 74 of

the Act before the competent authority and claimed a refund or adjustment

against future tax liability of Rs. 49,424/-. The competent authority rejected his

objections vide order dated 21.02.2006 and the appeal against that order was

also dismissed by the impugned order of the VAT Appellate Tribunal.

4. The learned counsel for the appellant submitted that he had filed the

return for the period 01.04.2005 to 30.06.2005 on 26.07.2005 wherein he did

not mention the details of input tax credit on transitional stock in the return

Form DVAT-16 however being entitled to refund/adjustment of the same under

Section 28(2) of the Act he filed the objections before the competent authority

S.T. Appeal No. 15/2008 Page 2 but the same have been wrongly dismissed by the impugned order inasmuch as

the expression "tax paid" should include not only actual tax paid but credit

available for such tax already paid by the assessee. Section 28 of the Act is

reproduced below:

"Section 28 Correction of deficiencies

(1) If, within four years of the making of an assessment, any person

discovers a mistake or error in any return furnished by him under this

Act, and he has as a result of the mistake or error paid less tax than

was due under this Act, he shall, within one month after the discovery,

furnish a revised return and pay the tax owed and interest thereon.

(2) If, within four years of the making of an assessment, any person

discovers a mistake or error in any return furnished by him under this

Act, and he has as a result of the mistake or error paid more tax than

was due under this Act, he may lodge an objection against the

assessment in the manner and subject to the conditions stipulated in

Section 74 of this Act.

5. The sole contention raised by the counsel for the appellant before this

Court is that the expression "mistake or error paid more tax than was due under

the Act" should be read including to mean not „actual payment‟ of tax but even

a credit which is lying to the account of the assessee. The counsel for the

respondent when confronted with this position that a hyper technical

S.T. Appeal No. 15/2008 Page 3 interpretation which was adopted by the Tribunal in taking the tax paid as an

actual tax which had been paid but not a credit on tax which is available to the

assessee should not be accepted, did not vary strenuously oppose the stand of

the appellant. We also feel that a pragmatic interpretation of the provision, the

intention of which is to give benefit to the assessee in tax which was not due

and which he is entitled to refund of, then, the expression in Section 28(2)

should include tax available as a credit and the expression appearing in Section

28(2) should be interpreted to include a credit lying to the account of the

assessee.

6. In view of the interpretation given above we accept the appeal and hold

that the appellant is entitled to the benefit of the input tax credit of Rs. 49,424/-

and hold that the same was available to the appellant on the transitional stock.

7. The appeal is disposed off accordingly.

                                                               A.K. SIKRI, J




                                                         VALMIKI J.MEHTA, J


August 25, 2009
dkg




S.T. Appeal No. 15/2008                                                        Page 4