Delhi High Court
Ikea Trading (India) vs The Value Added Tax Officer And ... on 27 January, 2014
Author: S.Ravindra Bhat
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on: 27.01.2014
+ W.P.(C) 4220/2012, C.M. APPL. 2026/2013
IKEA TRADING (INDIA) ..... Petitioner
Through : Appearance not given.
versus
THE VALUE ADDED TAX OFFICER AND ANR.
..... Respondents
Through : Ms. Latika Chaudhry, Advocate.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.V. EASWAR
MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT)
%
1. The petitioner's grievance before this Court is that a sum
of `2,55,11,598/- has to be paid to it by the respondents
(hereafter referred to as "the VAT Department).
2. The brief facts are that the petitioner, a registered dealer,
was, at the relevant time, exporting home furnishing products,
including carpets, durries, fabrics, plastic articles, lamps, soft
toys etc. The petitioner had, during the course of VAT
proceedings filed objections to the Assessing Officer's (AO's)
determinations. These objections were not decided in eight
months' time as required by the relevant statutory provision.
Therefore, the petitioner, basing upon the previous order of the
W.P.(C) 4220/2012 Page 1
VAT Tribunal in Behl Construction successfully argued that if
the objections are not decided by the Objection Hearing
Authority (OHA) within eight months they are deemed to have
been allowed. The Tribunal accepted that argument and
directed refund of amounts claimed. The VAT Department's
appeal to this Court was rejected on the ground that it was
preferred after the period of limitation and that there was no
provision in the Delhi VAT Act, enabling the Court to condone
the delay.
3. It is argued that given these circumstances, the VAT
Department has to refund the sums claimed by the petitioner
since it had succeeded before the Tribunal.
4. The VAT Department points out that the VAT Tribunal's
ruling in Behl Construction was overturned by this Court in its
appeal where it was held that the provision requiring decision
within eight months is not mandatory but only directory.
Learned counsel also submitted that as far as the appeal was
concerned, a retrospective amendment has been made enabling
this Court to condone the delay. These aspects were not being
disputed by the petitioner.
5. On 14.01.2013, this Court made the following directions:
"The grievance of the petitioner is that despite the
order of the Delhi Value Added Tax Appellate
Tribunal, the amounts due to them are not being
refunded. Apart from this, the learned counsel for
the petitioner also submits that there are other
periods for which the refund claims have been
made but the refunds are not being granted despite
W.P.(C) 4220/2012 Page 2
the fact that there are no default assessment orders
within the stipulated period of one month from the
filing of the return nor is there any show cause
notice issued under section 59 of the DVAT Act,
2004 within the stipulated period of time. The total
amount of the refund claims comes to `
2,55,11,598/- . Out of this amount, a sum of
`80,22,477/- is on account of the orders passed by
the Tribunal whereas the balance amount is in
respect of the refund claims which ought to have
been decided within the period of one month as
prescribed under section 38 (3)(a)(i) of the said
Act.
The learned counsel for the petitioner has placed
reliance on a decision of a Division Bench of this
court in the case of Swarn Darshan Impex (P) Ltd.
v. Commissioner, Value Added Tax & Anr: in
W.P(C) No. 3817/2010 decided on 03.06.2010,
wherein it was held as under:-
"13. In any event, even if we assume that the
said notice was issued by the respondents
and that it had been received by the
petitioner, it would not change the position
in law. Sub-section (4) of Section 38 has to
be read with the provisions of sub-section
(3) of Section 38. By virtue of the latter
provision, the refund had to be paid to the
petitioner within two months from the date
of the return furnished by him. No such
notice under Section 59 requiring additional
information had been issued during that
period. Consequently, the subsequent
purported issuance of notice under Section
59 cannot be taken as a ground for not
paying the refund to the petitioner. In this
connection, the provisions of subsection (7)
W.P.(C) 4220/2012 Page 3
of Section 38 also needs to be examined.
The said provision stipulates that for
calculating the period prescribed in Section
38(3)(a), the time taken to, interalia, furnish
additional information sought under Section
59 shall be excluded. It is obvious that
exclusion can only be when the period of
limitation itself has not run out. The
consequence of this discussion is that the
notice under Section 59 in connection with
refund has to be issued within the period of
two months stipulated in Section
38(3)(a)(ii). As a result, the submission of
the learned counsel for the respondents that
because of issuance of notice under Section
59 of the said Act, albeit beyond the
prescribed time, the refund was not payable,
is not tenable."
The learned counsel for the petitioner
submits that in the present case also, no notice
under section 59 was issued during the stipulated
period of one month.
Furthermore, in the case which went up to
the Tribunal, what the respondent has done was
that instead of granting the refund they had raised
demands equivalent to the refunds claimed vide
four separate default assessment order Nos.
1539-1542, all dated 23.02.2007. According to
the petitioner these default assessment orders
were time barred. Anyhow, the fact of the
matter is that the Tribunal has set aside these
demands and has ordered accordingly. The
consequence of which would be that the refund
claims of the petitioner were to be allowed as
prayed for. Despite this the respondents have
not paid the refund amounts. Going through
W.P.(C) 4220/2012 Page 4
the provisions of the statute it becomes clear
that the refunds are to be paid promptly and
the decisions are to be taken as per the time
schedule prescribed in the Act.
Unfortunately, the Revenue has not
followed the said time schedule and has in
some way or the other managed to delay the
payment of refund to the petitioner.
Renotify on 28.02.2013.
In the meanwhile, the respondents shall
deposit a sum of `2,55,11,596/- within a period
of three weeks with the Registrar General of
this court who shall place the same in a Fixed
Deposit initially for a period of three months.
Dasti under the signature of the court
master."
6. It transpired subsequently that the VAT Department's
grievance in respect of this Court's order carried by it by way
of Special Leave Petition to the Supreme Court was accepted in
part and a remand order was made on 02.01.2014. This in turn
would mean that the VAT Department's appeal is at large and
has to be decided - both on the question of limitation as well as
the merits. Given these set of circumstances, this Court is of the
opinion that no useful purpose would be served in retaining the
amounts paid by the respondents in this Court. As on date, the
order of the VAT Tribunal has not been set aside. At the same
time, the setting-aside of the VAT Department's previous
W.P.(C) 4220/2012 Page 5
determination in Behl Constructions (supra) would mean that
the objection would have to be heard and adjudicated on the
merits. Consequently, it is hereby directed that the amounts
deposited in Court shall be refunded to the petitioner subject to
its complying with the following directions:
(a) furnishing bank guarantee to the extent of 35% of the
amount so deposited - further to the order of 14.01.2013;
(b) furnishing an indemnity bond and such other acceptable
security as may be deemed appropriate by the VAT
Department having regard to the entirety of the
circumstances;
(c) The petitioner shall comply with the above terms within
six weeks from today.
S. RAVINDRA BHAT
(JUDGE)
R.V. EASWAR
(JUDGE)
JANUARY 27, 2014
W.P.(C) 4220/2012 Page 6
