Bombay High Court
Whirlpool Of India Ltd vs The State Of Maharashtra on 9 February, 2012
Author: D.Y.Chandrachud
Bench: D.Y.Chandrachud, M.S. Sanklecha
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.11168 OF 2011
Whirlpool of India Ltd. ..Petitioner.
versus
The State of Maharashtra,
Through Secretary, Department of
Revenue and others ..Respondents.
.....
Mr. Vikram Nankani with Mr. Monish Panda i/b Mr. Madhur R. Baya
for the Petitioner.
Mr. Vinay A. Sonpal, A Panel counsel for the Respondents.
......
CORAM : DR.D.Y.CHANDRACHUD &
M.S. SANKLECHA, JJ.
9 February 2012.
ORAL JUDGMENT (Per. DR.D.Y.CHANDRACHUD, J.) :
1. Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal.
2. The Petitioner manufactures and sells consumer durables and is registered with the authorities under the Maharashtra Value Added Tax Act 2002. The Petitioner has stated that it is entitled to the benefit of the Package Scheme of Incentives, 1993 framed by the State Government, in respect of its unit at Ranjangaon in the Taluka of Shirur. On 21 July 1998 an eligibility certificate was issued to the Petitioner under which it is entitled to claim a refund of the amount ::: Downloaded on - 09/06/2013 18:09:13 ::: PNP 2 WP11168-9.2.sxw of VAT / tax paid on the inputs / purchases for the period 1 March 1998 to 31 March 2012 under the MVAT Act 2002 subject to a cap of Rs.317 Crores.
3. Section 51(1) lays down the principles for the grant of refund to registered dealers. On 23 August 2007 the Second Respondent issued a trade circular to effectuate the provisions of Section 51. The circular was modified thereafter in certain respects on 18 January 2010. Thereafter a fresh trade circular has been issued on 22 October 2010 for providing guidelines for disbursement of refunds.
4. On 27 October 2010 the Petitioner furnished bank guarantees drawn on the Punjab National Bank for securing the refund due for the period between October 2008 to September 2009 which were forwarded to the jurisdictional Joint Commissioner of Sales Tax.
Since the refunds were not granted, the Petitioner filed an earlier petition before this Court, Writ Petition 10339 of 2010, in which rule has been granted. Refunds were sanctioned and granted by the Revenue, forming the subject matter of the earlier petition.
5. On 28 April 2011, the Petitioner filed its returns for the period between January to March 2011 and a refund application for an amount of Rs.2.56 Crores was filed on 10 August 2011. The Petitioner submitted bank guarantees dated 16 September 2011 for facilitating the grant of a refund. Despite several letters addressed in September, November and December 2011, refund has not been sanctioned for the period between January to March 2011. Consequent thereto the present proceedings have been instituted.
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6. Section 51 of the MVAT Act 2002 deals with the grant of refunds. Under sub section (1) where a registered dealer has in any return, fresh return or revised return shown any amount to be refundable, and has not undertaken to adjust such amount against the amount due as per any return in accordance with Section 50, the Commissioner shall, on an application made by the dealer and subject to rules and the other provisions of the Act, grant refund of such amount to the dealer. The proviso to sub-section (1) empowers the Commissioner subject to conditions and restrictions as may be prescribed to reduce the refund and grant only a part of the refund claimed in the application. Modalities are prescribed for the grant of refund in sub-sections (2) and (3). Sub-section (2) deals with the first category of registered dealers who are required to apply for a refund after the end of the year to which the return, fresh return or revised return relates. The Commissioner is empowered to call for additional information within one month from the receipt of the return. An order for the grant of refund is required to be passed within a period of six months. The second category is that which is provided in sub-section (3) of Section 51. Sub-section (3) of Section 51 begins with a non-obstante clause and deals with (i) exporters within the meaning of sub-sections (1) or (3) of Section 5 of the Central Sales Tax Act, 1956; (ii) a unit specified in the explanation to Section 8(3); (iii) a holder of a certificate of entitlement under any Package Scheme of Incentives except the New Package Scheme of Incentives for Tourism Projects. 1999; (iv) a dealer selling goods in interstate trade or commerce; and (v) the Canteen Stores Department or the Indian Naval Canteen Services. In case of those dealers who ::: Downloaded on - 09/06/2013 18:09:13 ::: PNP 4 WP11168-9.2.sxw fall in any of the categories specified in sub-section (3) the Commissioner may within a period of one month of the receipt of the application require the dealer to furnish bank guarantees and may call for additional information. Under sub-section (4), the Commissioner is required to grant a refund within three months of the receipt of the application under the section or receipt of additional information whichever is later. However, if the additional information is not furnished, refund has to be granted within six months of the receipt of the application.
7. The aforesaid provisions would thus show that while a general provision has been made in sub-section (2) prescribing the modalities of refund for registered dealers, a special provision has been made in sub-section (3) governing a class of registered dealers who fall within the ambit of that provision. While in the case of a registered dealer under sub-section (2), the application for refund has to be filed after the end of the year, such a restriction has not been imposed under sub-section (3) in respect of those categories of dealers who fall within the ambit of that provision. Sub-section (5) of Section 51 is of relevance to this case and provides as follows :
"(5) Notwithstanding anything contained in this section, if the dealer has furnished a bank guarantee for such amount, from such bank, for such period and to such authority as may be prescribed, the Commissioner shall grant the refund due under sub-section (2) or (3), within one month of the furnishing of the bank guarantee, irrespective of whether the additional information has been furnished or not."
8. Sub-section (5) of Section 51 has a non-obstante provision. Insofar as is material the provision mandates that the Commissioner ::: Downloaded on - 09/06/2013 18:09:13 ::: PNP 5 WP11168-9.2.sxw shall grant a refund due under sub-section (2) or sub-section (3) within one month of the furnishing of a bank guarantee irrespective of whether additional information has or has not been furnished. Under clause (b) of sub-section (6) a provision has been made to the effect that if it is found as a result of any order passed under the Act that the refund granted under the Section is in excess of the refund, if any, as determined by the order, then the excess amount shall be recovered as if it is an amount of tax due from the dealer and the dealer shall be liable to pay simple interest at the prescribed rate per month or part thereof from the date of the grant of refund.
9. Counsel appearing on behalf of the Petitioner submits that since the Petitioner falls within sub-clause (3) of clause (a) of sub-section (3) of Section 51, there is an absolute obligation cast upon the authorities to process the refund in accordance with law. The Petitioner has furnished a bank guarantee in the month of September 2011, despite which the refund has not been granted. The guarantee, it has been submitted, is in the prescribed form and no objection has been raised by the Revenue either in regard to the terms of the guarantee or otherwise. Hence, it was urged that the Revenue should be directed to forthwith process the applications for refund and to grant and pay to the Petitioner refund together with interest under Section 53 of the Act. On the other hand, counsel appearing for the Revenue submitted that under Rule 60 it has been stipulated that when the Commissioner is satisfied that the refund is due, he shall pass an order showing an amount as refund due and shall communicate the same to the dealer. Learned counsel submitted that sub-section (1) of Section 51 is subject to the rules which are framed and therefore, the ::: Downloaded on - 09/06/2013 18:09:13 ::: PNP 6 WP11168-9.2.sxw Commissioner is duty bound to verify as to whether and to what extent a refund is due. Reliance has been placed on the proviso to sub-section (1) of Section 51.
10. Now it has not been disputed before the Court that the Petitioner falls in one of the categories referred to in sub-section (3) of Section 51. The category in which the Petitioner falls relates to holders of a certificate of entitlement under any Package Scheme of Incentives. In such a case, the Commissioner within one month of the receipt of the application may require the dealer to furnish a bank guarantee and call for additional information as he may think necessary. Sub-section (4) prescribes the period of three months from the receipt of the application or additional information, whichever is later for the grant of a refund. If additional information is not furnished, even then a refund has to be granted within six months of the receipt of the application. However, under sub-section (5), a non-
obstante provision has been made which operates notwithstanding anything contained in the Section. Under sub-section (5) therefore, the Commissioner is obligated to grant a refund due within one month of the furnishing of the bank guarantee. Under sub-section (6)
(b) however, it has been stipulated that if it is found as a result of any order passed under the Act that the refund which has been granted is in excess of the refund due, then the excess is liable to be recovered as if it is an amount of tax due from the dealer and upon which the dealer has to pay interest at the prescribed rate.
11. We do not subscribe to the extreme proposition that the Commissioner is precluded from carrying out a due verification.
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Refunds relate to the public revenues. The Commissioner as the
custodian of the public revenue is duty bound to ensure that the provisions of Section 51 are not being misused and that a refund is due. Such an exercise is not prohibited by the statute. However, refund applications cannot be kept pending indefinitely. The basic purpose of Section 51 is to streamline the grant of refunds to registered dealers and particularly in the case of those falling in the special category carved out in sub-section (3). Having regard to these provisions, we are of the view that there would be no justification for the sales tax department to keep the application of the Petitioner pending for the grant of a refund inordinately without explanation. A decision must be taken expeditiously to effectuate the purpose and object of the statutory provisions. Counsel appearing on behalf of the Revenue states that since the filing of the Petition, a reference has been made to the Joint Commissioner of Sales Tax (Refund) Pune Circle, who in turn has required a verification of the tax credit, if any, in respect of the Petitioner. This exercise should be completed expeditiously. The refund, if any, that is found due and payable to the Petitioner in accordance with law shall, subject to the due satisfaction of the competent authority in regard to the entitlement of the Petitioner and the validity of the bank guarantee furnished, be granted expeditiously and preferably within a period of one month from today. We clarify that the grant of the refund shall be provisional in accordance with the statutory provisions and shall have to necessarily abide by such final orders as may be passed in accordance with law, determining the liability of the Petitioner. Insofar as the prayer for the grant of interest is concerned, we leave it open to the Petitioner to pursue an application before the ::: Downloaded on - 09/06/2013 18:09:13 ::: PNP 8 WP11168-9.2.sxw Commissioner in accordance with law.
The Petition is accordingly disposed of. No order as to costs.
(Dr. D.Y. Chandrachud, J.) (M.S. Sanklecha, J.) ::: Downloaded on - 09/06/2013 18:09:13 :::