The provisions of DVAT Act with regard to grant of interest would be applicable to the case of the petitioner: Delhi High Court.
CASE TITTLE: RASHTRIYA TRANSPORT CORPORATION V COMMISSIONER OF DELHI GOODS AND SERVICE TAX & ANR.
CASE NO: W.P.(C) 11463/2023
ORDER ON: : 27 May 2024
QUORUM: . JUSTICE SANJEEV SACHDEVA, JUSTICE RAVINDER DUDEJA
FACTS OF THE CASE:
The facts leading to the present appeal in question is that the Petitioner was engaged in the business of transporting goods. A survey was conducted at the godowns of the Petitioner by the Officers of the Department, A notice was issued calling upon the relevant records stated therein. Default Assessments were framed on imposing tax of Rs. 4,91,096/- and penalty under section 86 (19) and under Section 86 (14) amounting to Rs. 4,91,096/- and Rs. 50,000/- respectively. The assessment was challenged before Objections Hearing Authority which was rejected After the said order, Petitioner deposited disputed amount of tax penalty vide challans. Being aggrieved, Petitioner preferred appeals before the Delhi Value Added Tax [“DVAT”] Appellate Tribunal but the same were partially allowed, whereby, only the penalty imposed under Section 86 (19) was set aside. Petitioner preferred VAT Appeal before this Court the matter was remanded to the Tribunal for deciding afresh. Accordingly, the appeals were reconsidered and decided in favour of the petitioner vide order dated 10.05.2023, whereby, assessments framed by Assessing Authority and the order passed by OHA were set aside. Petitioner preferred Writ Petition (C) No. 8667/2023 before this Court seeking refund of the amount deposited with interest and the same was disposed of, directing the Respondents to decide the claim of petitioner within four weeks the entire deposited amount was refunded along with interest calculated from the date of order of the Appellate Tribunal at the rate of 6% per annum. Challenging the order petitioner again approached this Court and this Court set aside the order dated and directed the Authority to reconsider the issue of interest and pass a speaking order thereto. After hearing the Petitioner, Respondents passed a speaking order rejecting the contentions of the petitioner of higher rate of interest than that mentioned in the Delhi Value Added Tax [“DVAT”] Act as also grant of interest from the date of deposit. The interest on the penalty imposed under Section 86 (19) of Rs. 4,91,096/- was calculated from 26.08.2021 i.e. the date of order by which the said penalty was set aside by the learned Tribunal, while the interest on the tax and penalty under Section 86 (14) was calculated from 10.05.2023.Hence this petition.
LEGAL ISSUES:
whether the provisions of DVAT Act with regard to grant of interest would be applicable to the case of the petitioner, who admittedly is not a dealer but a transporter, and was not engaged in trading of goods and what would be the rate of interest and the date from which such interest is payable?
LEGAL PROVISIONS:
Sections 38 of the DVAT Act, Deals with refunds
Section 42 of the DVAT Act, deals with Intrest.
CONTENTIONS OF APPELLEANT:
The appellant through their counsel has submitted that Delhi Value Added Tax Act Appellate Tribunal has concluded that petitioner is not a “dealer” in terms of provisions of DVAT Act, 2004 and accordingly the provisions of DVAT Act are not applicable in the present case. That being so, the sum of Rs. 10,32,138/- deposited by the petitioners with the respondents was neither a tax nor a penalty for violation of any provision of DVAT Act.the counsel further submitted that Such amount was illegally retained by the respondents for over a period of 17 years without authority of law, and therefore, respondents are bound to compensate petitioner by way of interest at the market rate.It is submitted that impugned order insofar as it restricts rate of interest as prescribed under the DVAT Act is liable to be set aside/quashed. The counsel has also placed reliance on judicial decisions, in support of his contentions
CONTENTIONS OF THE RESPONDENT:
The respondent through their Counsel has argued that the term, employed in Sections 38 and 42 of the DVAT Act is “person” and not “dealer”, which would certainly include within its fold any person including the transporter and, therefore, to give a restricted meaning to the word, “person”, occurring in Sections 38 and 42 of the DVAT Act, The counsel further submitted that it would be contrary to the intention of the legislature, which has explicitly and consciously employed the term, “person” and not “dealer” and if the contention of the petitioner is accepted, it would be tantamount to doing damage to the literal meaning of the said provisions as well as intention of legislature in enacting the said provisions.the counsel further argued that Sections 38 and 42 have a larger scope to include persons other than just the dealers and, therefore, as per the said provisions, the rate of interest liable for the refund is annual rate notified by the Government at 6% p.a. counsel further submitted that amount of tax and penalty was deposited by the petitioner only after the objections filed by him were rejected by the OHA and, therefore, the same are akin to the pre-deposit before filing the appeal. Learned Standing Counsel has also placed reliance on decision of Allahabad High Court in Ebiz.com Pvt. Ltd. Vs. Commissioner of Central Excise, Customs & Service Tax & Ors. MANU/UP/3167/2016, wherein, it was held that any amount received by revenue as deposit or pre-deposit i.e. unauthorisedly or under mistaken notion, cannot be retained by revenue since it has no authority in law to retain such amount and it must be refunded with interest, however, the interest was ordered to be refundable from the date after three months of passing of order by Commissioner till the amount is actually paid. The Counsel has thus submitted that writ petition is devoid of any merits and is liable to be dismissed.
COURTS ANALYSIS AND JUDGEMENT:
The court on hearing both the counsel, observed that the use of word “person” instead of “dealer” reflects that the intention of the legislature is to include the persons other than the dealers for the benefit of grant of refund and interest under Section 38 & 42 of the DVAT Act. Therefore, the court opined that the provisions of Section 38 & 42 of the DVAT Act would be applicable to the petitioner/transporter.Also the court With regard to the contention of learned counsel for petitioner regards the payment of interest from the date of deposit, the decisions in the case of Roadmaster (supra) and Tata Chemicals (supra) are not applicable in the present case inasmuch as the decisions in both the cases were rendered in the context of Income Tax Act where there is a specific provision under Section 244(1)(A) for the payment of interest from the date of payment of excess tax by the assessee, while there is no corresponding provision in DVAT Act. Similarly, in the case of Redihot Electricals (supra), the Excise Authority had collected the amount as tax without authority of law and therefore the Court had granted interest at the rate of 12% per annum from the date of collection of the amount till the date of actual payment. In the Central Excise & Salt Act, 1944, there was no provision for the grant of interest on the refunded amount. However, in the DVAT Act, there is a specific provision under Section 42 for the grant of interest on the refund. Hence, the judgment in the case of Redihot Electricals (supra) is also not applicable in the present case.the court further opined that Section 42 of the DVAT Act provides that the interest shall be computed from the date when refund was due to be paid to the person until the date of refund. Admittedly, the refund became payable consequent to the orders passed by the DVAT Appellate Tribunal. The interest therefore shall be computed from the date(s) of the orders passed by the DVAT Appellate Tribunal Admittedly, statutory rate of interest is 6% by virtue of notification The Tribunal had set aside the notice of penalty amounting to Rs. 4,91,096/- under Section 86(19) and, therefore, interest on such amount shall be computed and payable from 26.08.2021 at the rate of 6% p.a. till the date of refund. Vide subsequent orde, the Tribunal had set aside the payment of tax of Rs. 4,91,096/- and penalty of Rs. 50,000/- imposed under Section 86(14). Therefore, interest on such amount shall be payable from 10.05.2023 at the rate of 6% till the date of refund. Hence from the aforesaid, The court opined that the GSTO has rightly computed the interest vide its order dated 31.07.2023, and therefore, the writ petition is devoid of any merits.the court further ordered that the Revenue will pay the interest within four weeks of receipt of copy of this judgment. Therefore the court dismissed the present pettition.
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judgement reviewed by: Sowmya.R