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Refund under Section 38(3) of the Delhi Value Added Tax Act,2004 is mandatory: Supreme court while upholding the decision of high court

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CASE TITTLE: COMMISSIONER OF TRADE AND TAXES. V.  FEMC PRATIBHA JOINT VENTURE

CASE NO: Civil Appeal no. 3940 of 2024

ORDER ON: May 01, 2024

QUORUM: J.PAMIDIGHANTAM SRI NARASIM, J.PRASANNA BHALACHANDRA VARALE

FACTS OF THE CASE:

The facts which lead to the present appeal is that the Respondent is a joint venture engaged in the execution of works Contracts for the Delhi Metro Rail Corporation and makes Purchases for this purpose. It claimed refund of excess tax credit  for the 4th quarter of 2015-16 Through revised return filed on 31.03.2017 and For the 1st quarter of 2017-18 through return filed on 29.03.2019, Along with applicable interest under Section 42 of the Act. The Appellant did not pay the refund even until 2022, pursuant to Which the respondent sent a letter dated 09.11.2022 for the Consideration of their refund. The Value Added Tax Officer passed An adjustment order dated 18.11.2022 to adjust the respondent’s Claims for refund against dues under default notices dated 30.03.2020, 23.03.2021, 30.03.2021, and 26.03.2022. The Respondent then filed a writ petition before the Delhi High Court For quashing the adjustment order and the default notices.By judgment dated 21.09.2023, impugned herein, the High Court quashed the adjustment order and directed refund for the 4th quarter of 2015-16 and for the 1st quarter of 2017-18, along with Interest as per Section 42 till the date of realisation. The present appeal is restricted to the issue of quashing the Adjustment order.

 LEGAL ISSUES:

Whether the timeline for refund under Section 38(3) of the Delhi Value Added Tax Act,2004 must be mandatorily followed?

LEGAL PROVISIONS:

Section 38(a)(ii)of the Delhi Value Added Tax Act, 2004- refunds

Any amount Remaining after the application referred to in sub-section (2) of this section shall be at either –

 (a) refunded to the person, –

(ii) within two months after the date on which the return was furnished or Claim for the refund was made, if the tax period for the person claiming refund is a Quarter

CONTENTIONS OF THE APPELANT:

The appellent through their Learned counsel submits that the timelines specified in Section 38(3) are only to ensure that interest is paid if the refund is delayed,Beyond the statutorily prescribed period. However, The timeline cannot be used to denude the power to adjust refund Amounts against outstanding dues under Section 38(2). The Refund can be adjusted as long as outstanding dues exist at the Time when the refund is processed, even if it is beyond the Stipulated timeline.

CONTENSIONS OF THE RESPONDENT:

The respondent through their learned counsel Supported the reasoning of the High Court and has placed reliance On several judgments of the Delhi High Court that affirm this Position of law.therefore, the counsel submits that there is no reason to interfere with the impugned judgment, Which follows the view that has been consistently adopted by the High Court.The finding of the High Court is based on the plain Language of Section 38 of the Act

COURT ANALYSIS AND JUDGEMENT:

The court on hearing both sides, observed that  Sub-section (3) of sec 38, provides The assesse with the option of getting the refund or carrying it Forward to the next tax period as a tax credit. In case of refund, Section 38(3)(a) provides the timeline for refund from the date on which the claim for refund is made. Sub-section (4) Provides that if notice has been issued under Section 58 or Additional information has been sought under Section 59, then the Amount shall be carried forward to the next tax period as tax Credit. Sub-section (7) Provides certain exclusions while calculating the period under Sub-section (3), The language of Section 38(3) is mandatory and the Department must adhere to the timeline stipulated therein to fulfil the object of the provision, which is to ensure that refunds are Processed and issued in a timely manner. In the present case, Section 38(3)(a)(ii) is relevant as both the Refunds in the present case pertain to quarter tax periods. Therefore, as per Section 38(3)(a)(ii), the refund should have been Processed within two months from when the returns were filed, which comes up to 31.05.2017 and 29.05.2019. The default notices are dated 30.03.2020, 23.03.2021, 30.03.2021, and 26.03.2022. It is therefore evident That the default notices were issued after the period within which The refund should have been processed. Sub-section (2) only Permits adjusting amounts towards recovery that are “due under The Act”. By the time when the refund should have been processed As per the provisions of the Act, the dues under the default notices Had not crystallised and the respondent was not liable to pay the Same at the time. Therefore, the appellant-department is not Justified in retaining the refund amount beyond the stipulated Period and then adjusting the refund amount against the amounts Due under default notices that were issued subsequent to the Refund period. Further, the appellent contention that the purpose of the Timeline provided under sub-section (3) is only for calculation of Interest under Section 428 would go against the object And purpose of the provision. Therefore this contention is hence rejected. In view of the above,the court further dismissed the present appeal and affirm The impugned judgment directing the refund of amounts along With interest as provided under Section 42 of the Act

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Judgement Reviewed by:SOWMYA.R

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Power to modify the Orders of the original authority conferred to the appellant tribunal cannot be in dispute: Madras High court

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CASE TITTLE: Regional PF Commissioner, EPF organization vs President officer EPF Appellate tribunal and ors.

CASE NO:W.A(MD).No.298 of 2024

ORDER ON:15.04.2024

QUORUM: J. D.KRISHNA KUMAR And J. R.VIJAYAKUMAR

FACTS OF THE CASE :

The facts leading to the present appeal in question is that the second respondent in the writ appeal had suffered an order under Section 14-B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 on 26.12.2003. Aggrieved over the same, the Management had filed an appeal before the Appellate Tribunal in A.T.A.No.37/(13) of 2004. The Appellate Tribunal under the impugned order dated 03.03.2009 had restricted the damages up to 15% per annum. This order has Been confirmed by the writ Court. Challenging the same, the present appeal has been filed by the Regional Provident Fund Commissioner, Madurai.

LEGAL PROVISIONS:

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

 Sec 14B- pertains to the power to recover damages from the employer on default payment of contribution of provident fund. The section provides that authorized officials may recover damages by way of penalty from the employer.

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

Sec 7-I – Appeals to the tribunal, Sec 7-L- orders of the tribunal

CONTENSIONS OF THE APPELENT:

The learned counsel appearing on behalf of the appellant submitted that,The Appellate Tribunal has no power to Revise the damages imposed by the Original Authority under Section 14-B Read with Sections 32A and 32B of Employees’ Provident Fund Scheme 1952.Further, gross reduction in the levy of damages will Have an adverse impact on the entire scheme itself.As per Paragraph No.32A of EPF Scheme, damages have to be levied at the rates furnished therein, And there is no discretion to the official to do so as per the said provision.the financial difficulties of the Management cannot be a reason for reducing the quantum of damages. When The management had deliberately and intentionally delayed the payment of Contribution, there is no ground or discretion whatsoever to the authorities to Reduce the quantum of damages as prescribed under the statute.

COURT ANALYSIS AND JUDGEMENT:

The court after hearing the submissions made by the appellant counsel perceived the material records and observed that A perusal of Section 7-I and 14-B makes it clear that all orders Including the order passed by the Central Board under Section 14-B are also Appealable to the Appellate Tribunal. When the order of the Central Board is Appealable to the Appellate Tribunal, the contentions of the learned counsel Appearing for the appellant that the Appellate Tribunal would not have any power to reduce or waive damages Is not legally acceptable. A close reading of Section 7-L would reveal that the Tribunal has Got power either to confirm, modify or to annul the orders of the original Authority or it can remit it back to the original authority for fresh Adjudication. Therefore, the power of the Appellate Tribunal to modify the Orders of the original authority cannot be in dispute. The original authority Cannot contend that his orders cannot be modified or set aside by the Appellate Authority. It is very strange that the original authority had Questioned the power of his Appellate Authority by way of filing this writ Petition. A comparative reading of 7-Q which relates to the imposition of Interests for the belated payment of their contribution amount and damages Under Section 14-B of the Act clearly reveals that the imposition of interest is Automatic and it is not necessary to provide any opportunity of being heard to The employer. But before imposing damages, a hearing is mandatory. Therefore, it is clear that some kind of discretion is vested with the Authorities to consider the mitigating circumstances before imposing the Damages. If there is no discretion whatsoever, the legislature would not have Mandated granting of opportunity to the employer before imposing damages, Thereafter court also referred to the below precedents, Regional Provident Fund Commissioner, Nagpur Vs. Manohar Bhai Ambalal Gondia,  Spinning Mills Ltd., Tirupur District Vs. Regional Provident Fund Commissioner, Coimbatore and others)In view of the above said deliberations, the court Opines, that the Appellate Tribunal, is Empowered to reduce or waive damages as per the scheme. In the present case, in the exercise of the said powers, the Appellate Tribunal has reduced the Damages to 15%. Therefore, the court doesn’t find any illegality or infirmity in the Order passed by the Appellate Tribunal or by the writ Court in confirming the Order passed by the Appellate Tribunal. Therefore, concluded that there are no merits in the writ appeal. Hence, The Writ Appeal is dismissed

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Judgement Reviewed by:Sowmya R

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Courts cannot entertain a petition once electoral process has begun as it obstructs the process: MP High Court

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Case Title : Moti Singh vs Election Commission Of India Through Chief Election Commissioner & Ors.

 Case no : Writ Petition No. 1039 of 2024

 Order no : 3rd May, 2024Moti Singh v. Election Commission of India Through Chief Election Commissioner & Ors.

 Quorum : Hon’ble Justice Sushrut Arvind Dharmadhikari and Hon’ble Justice Gajendra Singh

 FACTS OF THE CASE

The Election commission of India on 16/03/2024 announced the General Elections for the House of People. Both the Petitioner and the Respondent filed their nominations before the said date in the prescribed format as required under Conduct of Election Rules, 1961. Indian National Congress declared Respondent No.4 as ‘approved candidate’ and the Appellate as a ‘substitute candidate’

On 29/04/2024 the approved candidate (respondent no.4) withdrew his nomination, following the Appellant submitted a request to declare him as the ‘approved candidate’ of INC. Subsequently the same was declined by the Returning Officer and he was deprived of his Legal right. As stating that it was necessary according to Sec 33(1) of the Representation of Peoples Act the candidate is supposed to submit the nomination with 10 proposers signatures.

LEGAL PROVISIONS

  1. Article 226 of the Indian Constitution : Clearly states that every High Court has the powers throughout the territories in relation to which it exercises jurisdiction to issue writ or any order to any person or authority.
  2. Sub-Section (1) of Section 33 of The Representation of People Act , 1951 : A candidate not set up by a recognised political Party shall not be deemed to be duly nominated for election from the constituency unless the nomination paper is subscribed by 10 proposers being elector of the constituency. 
  3. Sub-Section(5) of Section 36 of the Representation of People Act, 1951 : The returning officer shall hold the scrutiny on the date appointed in this behalf under clause (b) of section 30 and shall not allow any adjournment of the proceedings except when such proceedings are interrupted or obstructed by riot or open violence or by causes beyond his control:

Provided that in case an objection is raised by the returning officer or is made by any other person the candidate concerned may be allowed time to rebut it not later than the next day but one following the date fixed for scrutiny, and the returning officer shall record his decision on the date to which the proceedings have been adjourned.

CONTENTION OF THE APPELLANT

The counsel for the appellant argued that the Learned Judge had overlooked the Provisions of the Representation of the Peoples Act which mentioned that only one single signature was required. The appellant also submitted that according to Section 36(5) of the Act the candidate must be given one day’s time to collect the signatures yet the Returning Officer rejected the appellants claim.

As a result the Appellant claimed that he was entitled to contest in the parliamentary elections.

 CONTENTION OF THE RESPONDENT

The Respondent’s counsel requested the court to dismiss the Petition as the High Court cannot entertain a petition under article 226 of the constitution once the electoral process has begun as it would be obstructing the electoral process.

 COURT’S ANALYSIS AND JUDGMENT

The court after considering the facts and circumstances of the case dismissed the Appeal as to finding force in the contentions put forth by the Learned counsel of the Respondent.

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 JUDGMENT REVIEWED BY – Nagashree N M

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Income Tax Department Should Allow Personal Hearings Through the National Faceless Assessment Centre on the Assessee’s Request: Delhi High Court

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Income Tax Department Should Allow Personal Hearings Through the National Faceless Assessment Centre on the Assessee’s Request: Delhi High Court

‘Case title: Global Vectra Helicorp Limited vs Assessment Unit, National Faceless Assessment
Case no.: W.P.(C) NO. 5912 OF 2024
Dated on: 26th April 2024
Quorum: Justice Hon’ble Mr. Justice Vibhu Bakhru and Justice Hon’ble Ms. Justice Tara Vitasta Ganju.

FACTS OF THE CASE
The petitioner has flied the present petition impugning the assessment order dated 27.03.2024 (hereinafter the impugned assessment order) passed under section 143(3) read with section 144B of the Income Tax Act, 1961(hereinafter the Act). Additionally, the petitioner also impugns the demand raised under section 156 of the Act pursuant to the impugned assessment order in respect of assessment year 2022-23 (hereinafter the impugned Assessment year). Mr. Kapoor, learned counsel appearing for the petitioner has confined the challenges in the present petition solely on the ground that the petitioner had not been provided sufficient opportunity to be heard.
The petitioner was issued a show cause notice dated 05.03.2024 (hereinafter the SCN), inter alia, proposing certain additions to the income returned and calling upon the petitioner to respond to the same. The SCN spans over 10 pages and raises various grounds. The fact that such an attempt has been made on 11.03.2024 indicates that the petitioner was aware of the procedure and despite the same, no request was made by the petitioner through the online mode.

CONTENTIONS OF THE APPELLANT
Mr. Kapoor submits that despite the wide nature of allegations and issued raised in the SCN, the petitioner was called upon to submit a response by 17:24 hours on 09.03.2024. He states that the time provided was extremely short considering that there were two holidays after 05.03.2024. He also referred to the standard operating procedure (hereinafter SOP) dated 03.08.2022 framed by the national faceless assessment centre, Delhi which requires that at least 7DAYS Time be provided to the assessee for responding to the show cause notice. He submits that notwithstanding the limited time available for filing the response, the petitioner did submit a response within stipulated time. The petitioner protested against the limited time provided to respond to the SCN and submitted that if the assessing officer require any further information, the petitioner be provided additional time to furnish the same. Further submits that an attempt to upload such a request online was made on 11.03.2024 but the online portal did not accept the same. He submits once a request for personal hearing is made, it is obligatory on the part of Assessing officer to provide the same.

CONTENTIONS OF THE RESPONDENTS
Mr. Sinha, learned counsel submits that the controverts the contentions advanced by Mr. Kapoor on behalf of the petitioner. He submits that since the request for a personal hearing was required to be made online. He further submits that if the said request is not made in the manner as provided, the assessing officer cannot be faulted with for not acceding to such request. However, he is unable to substantiate the said contention with reference to any provision of the act and the rules and regulations made therein.

LEGAL PROVISIONS
Section 144B(6)(viii) of the Income tax act 1961: where a request for personal hearing received, the income tax authority of the relevant unit shall allow hearing through the National Faceless Assessment Centre.
Section 143(3) of Income Tax act 1961: the scrutiny assessment thoroughly reviews your Income tax return.

COURT’S ANALYSIS AND JUDGEMENT
The decision further delved into the provisions of Section 144B(6)(vii) and 144B(6)(viii) of the Income Tax Act, 1961, which outline the procedure for granting a personal hearing in tax assessments. The court elucidated that upon receipt of a request for a personal hearing, the relevant authority must allow for such a hearing through the National Faceless Assessment Centre, to be conducted exclusively via video conferencing or video telephony .In light of the petitioner’s submission and the statutory provisions cited, the Delhi High Court set aside the impugned assessment order and remanded the matter to the Assessing Officer for reconsideration, with a directive to provide the petitioner with a reasonable opportunity to be heard through video conferencing, as mandated by law. In the present case, the act expressly provided for the concerned unit to afford the assessee an opportunity of hearing. The petitioner contention that the impugned assessment order falls foul of the principles of natural justice and the statutory requirement of affording the assessee an opportunity of being heard. The petition is disposed of in the aforesaid terms. All pending applications are also disposed of.

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Judgement Reviewed by – HARIRAGHAVA JP

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Secured Creditors have priority over Tax Authorities under CERSAI : High Court of Bombay

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Case Title : Purushottam Prabhakar Chavan v Deputy Commissioner of Sales Tax(GST)

 Case no : Writ Petition No. 3477 of 2024Purushottam Prabhakar Chavan Versus Deputy Commissioner of Sales Tax (GST)

 Order no : 3rd May, 2024

 Quorum : Hon’ble Justice B.P. Colabawalla & Somashekar Sundareshan JJ

 FACTS OF THE CASE

The Lender bank between the dates of 31st May 2010 and 31st January 2010 provided credit facilities to several properties including Walkeshwar Flats and Nashik Properties. Walkeshwar Flats was owned by Mrs Praffullata Shah and the said property served as security for loan, and after her demise the loans on that property became a non-performing asset. Despite that the lender banks claimed possession over the property by invoking SARFAESI Act.

The DCST claimed the property under MVAT Act due to the taxes owned by one of the borrowers. Recovery proceedings were initiated and the DCST secured the assets. The lender bank registered a mortgage on the property using CERSAI.

Later on the said property was Auctioned and won by the Petitioner but due to conflicting claims the petitioner faced problems getting the ownership of the property. 

ISSUES

Whether as a matter of law, the Petitioner, the auction purchaser of the Walkeshwar Flat under the SARFAESI Act, is a valid recipient of free and marketable title to it ?

 LEGAL PROVISIONS

  1.  Article 226 of the Indian Constitution : Clearly states that every High Court has the powers throughout the territories in relation to which it exercises jurisdiction to issue writ or any order to any person or authority.
  2. Section 37 of Maharashtra Value Added Tax Act, 2002 : would override any provision of contract that creates a charge, it would be subservient to any provision in a Central Act that gives first charge to some other entity
  3.  Section 26-E of the SARFAESI Act : after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.

 CONTENTION OF THE PARTIES

The contentions of the Directorate of Commercial Taxes are establishing their right to enforce tax dues against the Walkeshwar Flat, particularly in relation to Bharat Shah’s liability as a partner of SMI in the mortgage of the property. The DSCT argue that Bharat, as a legal heir of Mrs. Praffullata, inherits the property, thereby providing a basis for the DCST to assert their claim against it. However, the petitioner argues against this stance by emphasizing the priority of enforcement established by the Lender Bank through SARFAESI Act, including registration of the mortgage under CERSAI and obtaining physical possession of the said property.

The petitioner contends that the DCST’s attachment orders were after the Lender Bank’s actions and are therefore priority can be established by the Lender Bank’s registered security interest. They rely on the case of Jalgaon Janta, to support their argument that security interests registered with CERSAI take precedence over attachment orders by tax authorities.

Overall, the petitioner asserts that the legal framework supports their claim to priority in enforcement against the Walkeshwar Flat, and any further action by the DCST would be after the rights established by the Lender Bank’s actions under the SARFAESI Act. 

COURT’S ANALYSIS AND JUDGMENT

The court looked into the contentions of both the parties and admitted the Petition with no costs imposed. The court ruled that attachment orders predating January 24, 2020, do not grant priority to the DCST over the Walkeshwar Flat. As the DCST did not register with CERSAI nor issue a proclamation of sale, the Lender Bank’s priority remains intact, passing to Encore ARC. Consequently, the petitioner gains a clear title, unaffected by the DCST’s claim. Any attachment related to tax dues by SMI on the property is nullified, allowing the petitioner to register it unopposed.

 

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 JUDGMENT REVIEWED BY – Nagashree N M

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