Kerala High Court
Harikrishnan Mohan vs State Of Kerala on 25 September, 2024
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
OT.REV NO. 95 OF 2022 1 2024:KER:71534
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
WEDNESDAY, THE 25TH DAY OF SEPTEMBER 2024 / 3RD ASWINA, 1946
OT.REV NO. 95 OF 2022
AGAINST THE ORDER DATED 15.07.2022 IN TA(VAT) NO.162 OF 2014
OF THE KERALA VALUE ADDED TAX /AGRICULTURAL INCOME TAX & SALES TAX
APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM
REVISION PETITIONER/LEGAL HEIR OF RESPONDENT:
HARIKRISHNAN MOHAN,
AGED 35 YEARS
LEGAL HEIR OF LATE SRI. M. N. MOHANAN,M/ S. MARIYIL
BROTHERS, THODUPUZHA, PIN - 685581
BY ADV P.N.DAMODARAN NAMBOODIRI
RESPONDENT/APPELLANT:
STATE OF KERALA,
REPRESENTED BY IT'S SECRETARY TO GOVERNMENT,GOVERNMENT
SECRETARIAT,THIRUVANANTHAPURAM, PIN - 695001
BY SENIOR GOVERNMENT PLEADER SRI.V.K SHAMSUDHEEN
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR FINAL
HEARING ON 25.09.2024, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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ORDER
The petitioner is a registered dealer under the provisions of the
Kerala Value Added Tax Act. During the assessment year 2011-2012, the
petitioner submitted an application in Form 21CC under Rule 47A of the
Kerala Value Added Tax Rules ((hereinafter referred to as "the KVAT
Rules") claiming refund of excess input tax credit in an amount of
Rs.1,38,414/- that was paid by him. The application was submitted within
the time granted under the statute for submission of the application, but
the petitioner had not enclosed the closing stock inventory in respect of
VAT suffered goods locally purchased during the year and held as closing
stock as on 31st March on that year in Form No.54 along with the refund
application. The assessing authority, finding the application of the
petitioner to be incomplete, acted in accordance with the provisions of Rule
47 (3)(iii), which was made applicable for refund application filed in terms
of Rule 47A as well, and issued a notice to the petitioner inviting his
comments in the matter of the incomplete application that was filed by him.
The petitioner thereupon submitted the closing stock inventory in Form
No.54 before the assessing authority at the time of the hearing. The
assessing authority, however, took a stand that inasmuch as there was no
specific provision, similar to what obtains in the proviso to Rule 47(i) of the
KVAT Rules, for condoning the delay in filing of statements or other
documents supporting a refund application, the delay occasioned by the
petitioner in submitting the closing stock inventory could not be condoned.
The refund application preferred by the petitioner was therefore rejected
by the assessing authority.
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2. In an appeal preferred before the First Appellate Authority, the
said authority set aside the order of the assessing authority and remanded
the matter to the assessing authority for an adjudication on the merits of
the refund application. The revenue, however, carried the matter in a
further appeal before the Appellate Tribunal, which by the order impugned
in this O.T Revision allowed the appeal preferred by the revenue and
restored the order of the assessing authority. Referring to the provisions of
Rule 47A of the KVAT Rules, the Tribunal found as follows in paragraph 7:
"7. A perusal of the above provision reveals that a dealer has
to file refund application in Form 21CC along with closing stock
inventory in respect of Value Added Tax suffered goods locally
purchased during the respective year and held as closing stock on
31st March, in Form No.54. The Rule does confer any power either
to the assessing authority or appellate authority to condone delay
in filing stock inventory beyond the prescribed time. Even though
sub rule (2) to (5) of rule 47 except clause ( ii) of sub rule (3) shall,
mutatis mutandis, apply for refund under Rule 47A, Rule 47 (1)
was not be made applicable. Though Proviso to Rule 47 (1) states
that assessment authority has power to condone delay in filing
documents in support of refund under Rule 47, no such provision
was incorporated in Rule 47A. Therefore it is clear that the rule
makers had no intention to condone delay in submitting
documents in respect of 21CC application. In the instant case no
closing sock inventory in form 54 was filed within the prescribed
period. Therefore the order of the first appellate authority
remanding the case is not in consonance with Rule 47A and
thereby liable to be set aside. "
3. The petitioner impugns the order of the Appellate Tribunal in this
Revision Petition in which the following questions of law have been
raised :
(i) Whether Sec. 47(3)(3) would apply in the instant case and
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the assessing authority and the appellate authority went wrong
in appreciating the same?
(ii) Whether the Appellate Tribunal went wrong in interpreting
Sec.47A?
(iii) Whether the Appellate Tribunal as well as the assessing
authority is justified in interpreting that act doesn't empower
them to condone the delay in producing the documents?
(vi) Has not the Appellate Tribunal committed an error in not
adverting to the facts of the case and contentions raised by the
petitioner and following the factually incorrect statement of facts
relied on the assessment order?
(v) Is not the findings of fact arrived at by the authorities and
Tribunal perverse?
4. We have heard the learned counsel for the petitioner and the
learned Senior Government Pleader for the respondent.
5. On a consideration of the rival submissions, we are of the view that
for the reasons that are to follow this Revision Petition must necessarily
succeed. The provisions of Rule 47 and Rule 47A of the KVAT Rules read as
follows:
"Rule 47. Refund of input tax in case of sale or purchase of
goods in the course of export. - (1) Every dealer who claims a
refund under section 13 shall submit an application in Form No.
21 C to the assessing authority concerned not later than one year
from the date on which the goods have been exported. Along with
the application the dealer shall also submit the following-
(i) a copy of the Exporter's copy or Export Promotion copy of
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the shipping Bill, Air way Bill or similar document evidencing
export Of the goods, duly certified by the Customs authorities,
(ii) a certificate from the Bank to prove receipt of payment from
the foreign buyer.
(iii) Declarations in form No.2l J from the dealer who collected
the tax in respect of which refund is claimed except where such
refund in respect of input tax in relation to goods held as opening
stock on the date of commencement of the Act and goods
purchased from unregistered dealers in the State. A single
declaration shall be sufficient for all purchases made from a
dealer during a month.
(iv) Declarations in Form H prescribed under the Central Sales
Tax (Registration and turnover) Rules, 1957 where the sale by the
dealer claiming refund falls under sub-section (3) of section 5 of
the Central Sales Tan Act,1956 (Central Act 74 Of 1956).
Provided that the assessing authority may condone, for
reasons to be recorded in writing, any delay in the filing of the
statement or other documents aforesaid.
(2) The burden of proving that a dealer is entitled to the refund
under this rule shall be on the dealer who claims the refund.
(3) (i) On receipt of the application in Form No. 21C the
assessing authority shall, if it is satisfied after such enquiry as it
considers necessary, that input tax credit has not been availed of
in respect of such goods and that the claim of refund is otherwise
admissible, pass an order refunding the tax within three months
from the date on which the dealer submitted all the relevant
records rectifying the defects, if any, pointed out.
(ii) Where the dealer claiming refund under sub-rule (I) had
claimed input tax credit in respect of any purchase in relation to
which refund is claimed, which could not be set off till date,
refund shall be allowed under clause (i) and the input tax credit
carried over shall be reduced by the amount of the refund
allowed.
(iii) If the application submitted by the dealer appears to the
assessing authority to be incorrect or incomplete or otherwise not
in order, it shall, after making such enquiry as it considers
necessary and recording the reasons in writing, pass such orders
as it thinks fit. The Assessing Authority shall, before passing any
such order, give the dealer an opportunity of being heard.
(4) Notwithstanding anything contained in the foregoing sub-
rules, the assessing authority may issue refund of the input tax
OT.REV NO. 95 OF 2022 6 2024:KER:71534
claimed in Form No. 21 C without pre-verification where the
dealer claiming such refund furnishes security, in the manner
specified in clause (a), (b), (c) or (f) of sub-rule (2) of Rule 19,
covering the amount for which refund is claimed.
Provided that where the security is furnished in the form
prescribed under clause (b) of sub-rule (2) of rule 19, the dealer
claiming refund shall obtain and produce a permission from the
authority concerned to adjust, at any time, the amount which, on
subsequent scrutiny, is found to be in admissible for refund.
(5) Where a dealer eligible for refund under this rule is liable
to pay any tax or other amount under the Act or where he is found
to be in arrears of tax or other amount under the KGST Act 1963,
Central Sales Tax Act,1956, or the Kerala Tax on Entry of Goods
into Local Areas Act, 1994, the assessing authority shall adjust
the amount to be refunded towards tax or other amount due from
the dealer under any of the said enactments and the balance
remaining after making such adjustment shall be refunded to the
dealer.
Explanation:- For the removal of doubt it is hereby clarified
that input tax which is eligible for refund under this rule or rule
46 shall include input tan paid on the purchase of Duty
Entitlement pass book or any other similar document for the
import of any goods in relation to which refund of input tax is
claimed."
"47A. Refund of input tax remaining unadjusted at the end
of the year:- (1) Every dealer claiming refund of input tax in
accordance with the proviso to sub-section (6) of section 11 shall,
within three months after the expiry of the year to which the input
tax relates, submit an application in Form No. 21 CC to the
assessing authority along with the closing stock inventory in
respect of Value Added Tax suffered goods locally purchased
during the respective year and held as closing stock as on 31 st
March, in Form No 54.
(2) Sub-rules (2) to (5) of rule 47, except clause (ii) of sub-rule (3)
shall, mutatis mutandis, apply to the refund under this rule.
Provided that the date of submission of application under
sub-rule (1) for the year 2005-06, shall be 28 th February, 2007. "
6. A joint reading of both the Rules clearly brings out the scheme of
consideration of refund applications in relation to input tax credit under the
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Rules, and it requires the adjudicating authority to consider the refund
application on merits in the light of the supporting documents that are
mandated under the Rules. It is also clear from the Scheme that in the
event of there being an incomplete application submitted by an assessee,
inter alia, on account of the application not being accompanied by a
stipulated document or statement, the assessing authority is required to
conduct an enquiry as regards the reason for the incomplete application
and hear the dealer before passing an order on the refund application. In
our view, the Scheme of the KVAT Rules clearly indicates that the efforts of
the assessing authority have to be to try and decide the refund application
on merits as far as possible, and a rejection of the refund application for not
furnishing the required documents that are to support the application can
be done only if all attempts at obtaining the documents necessary to
consider the refund application, fail.
7. In the instant case, we find that although the refund application
submitted by the petitioner did not originally contain the closing stock
inventory, the said document was made available before the assessing
authority in response to the notice issued by the assessing authority under
Rule 47(3)(iii). When, pursuant to the notice issued by the assessing
authority as above, the petitioner produced the document to support his
refund application, we see it as nothing less than an abdication of the duty
of the assessing authority in not considering the refund application on
merits by looking into the closing stock inventory that was produced before
him at the time of the hearing. We are of the view that notwithstanding the
absence of an express provision, that deals with the power to condone the
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delay in producing the closing stock inventory in Rule 47A of the Rules, in
the absence of any clause prohibiting such a consideration, a power has to
be read into the Rules and in the assessing authority, who is entrusted with
the statutory function of adjudication of refund claim preferred by the
assessee, to look into supporting documents that are produced at the time
of hearing. We, therefore, set aside the impugned order of the Appellate
Tribunal and answer the questions of law raised in the revision petition in
favour of the assessee and against the revenue. The assessing authority is
consequently directed to consider the refund application preferred by the
petitioner, on merits, by taking note of the closing stock inventory that was
produced before him by the assessee at the time of hearing. The assessing
authority shall pass orders as directed, after hearing the petitioner, within
a period of three months from the date of receipt of a copy of this
judgment.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
SYAM KUMAR V.M.
JUDGE
mns
OT.REV NO. 95 OF 2022 9 2024:KER:71534
PETITIONER ANNEXURES
Annexure A 1 TRUE COPY OF THE ORDER NO. 32061380084/ 2011-
12 DATED 10/9/2012 ISSUED BY THE COMMERCIAL
TAX OFFICER, 1 ST CIRCLE, THODUPUZHA TO THE
PETITIONER WITH TYPED COPY
Annexure A 11 TRUE COPY OF THE IST APPELLATE ORDER NO.
KVATA-3209/2012 ISSUED BY THE DEEPUTY
COMMOSSIONER,( APPEALS) KOTTAYAM TO THE
PETITIONER WITH TYPED COPY
Annexure A III ORIGINAL ORDER NO.T.A.(V A T ) NO.162/2014
DATED 15/7/2022 ISSUED BY THE KERALA VALUE
ADDED TAX APPELLATE TRIBUNAL, ADDL BENCH
KOTTAYAM
Annexure A 1V TRUE COPY OF THE DEATH CERTIFICATE DATED
4/1/2022 OF SRI. LATE. M.N. MOHANAN WITH
TYPED COPY
Annexure A V TRUE COPY OF THE LEGAL HEIR CERTIFICATE DATED
4/5/2022 WITH TYPED COPY
