Punjab-Haryana High Court
M/S Capital Builders vs State Of Haryana And Others on 3 February, 2012
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
CWP No. 11677 of 2011
Date of Decision: February 3, 2012
M/s Capital Builders
...Petitioner
Versus
State of Haryana and others
...Respondents
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE ALOK
ALOK SINGH
Present: Mr. Avneesh Jhingan, Advocate,
for the petitioner.
Mr. Vinod s. Bhardwaj, Addl. AG, Haryana,
for the respondents.
1. To be referred to the Reporters or not?
2. Whether the judgment should be
reported in the Digest?
M.M. KUMAR,
KUMAR, J.
1. This petition filed under Article 226 of the Constitution prays for a direction to the respondents to refund a sum of `1,06,42,788/- along with interest.
2. Brief facts of the case are that the petitioner is a proprietorship concern engaged in the business of works contract. It is duly registered as a dealer under the Haryana Value Added Tax Act, 2003 (for brevity, 'the VAT Act') as well as under the Central Sales tax Act, 1956 (for brevity, 'the CST Act'). On 6.12.2004, the petitioner was issued a letter of intent by the Central Government Employees Welfare Housing Organisation, New Delhi (CGEWHO) for execution of a Turnkey Housing Project at Gurgaon. During the year the land so purchased was transferred from land owner to CWP No. 11677 of 2011 2 CGEWHO against payments made by CGEWHO. However, the CGEWHO debited the entire amount paid to the land owners in the account of the petitioner and also deducted WCT @ 4% and deposited the same with the department.
3. The petitioner filed its return in respect of Assessment Year 2005-06 and submitted that the cost of land is outside the purview of definition of 'goods' and same is not liable to VAT. It was also stated that since no construction of the project had yet started, therefore, no VAT was payable on the payment made by the contractee. On 30.3.2009, the Assessing Authority passed an assessment order and accepted the plea raised by the petitioner and ordered refund of the tax deducted at source, amounting to `1,06,42,788/- (P-1). However, no refund voucher was issued in favour of the petitioner along with the assessment order.
4. On 7.7.2009, a notice was issued to the petitioner as the assessment order dated 30.3.2009 was taken in suo-moto revision proceedings. On 28.7.2009 (P-2), the Revisional Authority passed an order holding that since the TDS deducted and deposited pertains to land which is beyond the taxation purview of the VAT Act, hence this could not be refunded. It was further held that any act beyond the purview of the VAT Act does not fall in the jurisdiction of the Assessing Authority and only tax deducted as per law could be refunded. Accordingly, it was held that the land value amounting to `1,53,18,367.59p. on which TDS @ 4% i.e. `61,27,335/- was deducted and deposited, was not liable to be refunded and only balance of `45,15,453/- was ordered to be refunded. Thus, the Revisional Authority revised the assessment order as under:
CWP No. 11677 of 2011 3
"GTO 266069698.00
Less exempted amount including 266069698.00
cost of land
---
TDS deducted & deposited 10642788.00
Less TDS pertaining to immovable 6127335.00
property i.e. land excess
Excess 4515453.00"
5. Despite the specific order of the Revisional Authority, no refund voucher of `45,15,453/- was issued to the petitioner. Feeling aggrieved, the petitioner preferred an appeal before the Haryana Tax Tribunal (for brevity, 'the Tribunal), against the order passed by the Revisional Authority, dated 28.7.2009 (P-2). On 7.4.2010, the Tribunal disposed of the appeal filed by the petitioner in terms of its earlier decision rendered in the case of M/s Shiva Automat, Faridabad v. State of Haryana (STA No. 376 of 2008-09, decided on 21.4.2010). In the said case, the Tribunal without expressing any opinion on the merits of the case or deciding the question of law whether any tax would be attracted and whether any transfer of goods is involved in execution of work contract, remanded the matter to the Assessing Authority for taking appropriate decision in the matter in accordance with law (P-3).
6. On 26.5.2010, the petitioner again applied for the refund of `1,06,42,788/- (P-4). The petitioner also filed a review application before the Tribunal. On 2.2.2011, the Tribunal accepted the review application and ordered that the refund due to the petitioner be processed as per law (P-5). On 15.4.2011, the petitioner again applied for refund in the light of the order dated CWP No. 11677 of 2011 4 2.2.2011 passed by the Tribunal (P-6). However, no refund has been made to the petitioner.
7. On 4.11.2011, the learned State counsel stated before this Court that the amount has been refunded to the petitioner. However, learned counsel for the petitioner pointed out that interest on the refunded amount, which is payable in terms of Section 20(8) of the VAT Act, has not been paid to the petitioner.
8. On 15.11.2011, a short reply on behalf of the respondents has been filed pointing out that on 5.8.2011, the Excise and Taxation Officer-cum-Assessing Authority, Gurgaon, has passed an order determining the refundable amount as `1,06,42,788/- (R-1). On 3.10.2011, the Excise and Taxation Commissioner, Haryana also granted approval for refund of the said amount. On 5.10.2011, the refund voucher was prepared and the same was handed over to the petitioner on 17.10.2011. It has been contended that the refund voucher was prepared on 5.10.2011 i.e. within 60 days of the receipt of the order passed by the Tribunal, however, it is the petitioner who has received the same after 60 days. Therefore, the petitioner is not entitled to claim the interest.
9. We have heard learned counsel for the parties at length and perused the paper book with their able assistance. The only issue which survives for adjudication is "Whether the petitioner is entitled to any interest to be paid on the amount of refund i.e. `1,06,42,788/-.
10. It would be apposite to first read Section 20 of the VAT Act and Rule 41(5) and 42 of the Haryana Value Added Tax Rules, 2003 (for brevity, 'the VAT Rules'), which are as under: CWP No. 11677 of 2011 5
Section 20 REFUND "(1) to (3) xxx xxx xxx (4) Where the assessing authority finds on assessment of a dealer that he has paid any amount in excess of tax, interest or penalty assessed or imposed on him under this Act, it shall allow refund of the excess amount or allow the same to be carried forward for adjustment with future tax liability, as the case may be.
(5) Any amount refundable to any person as a result of an order passed by any court, appellate authority or revising authority, shall be refunded to him on an application containing the prescribed particulars accompanied with the prescribed documents made in the prescribed manner to the prescribed authority. (6) The amount refundable under the foregoing provisions of this section to any person shall be subject to the approval in the prescribed manner of the prescribed authority who may, by order in writing passed after providing opportunity of being heard to the affected person, change the amount of refund or order that no refund is due.
(7) Before any refund is given to any person under this Act it shall be first adjusted with any amount due from him under this Act or the Central Act for any period and the balance, if any, only shall be refunded to him. (8) Any amount ultimately found due to any person, which he paid as a result of an order passed under this Act, shall be refunded to him with simple interest at the CWP No. 11677 of 2011 6 rate of one per cent per month for the period from the date of payment to the date when refund is given to him. (9) Any amount, not falling within sub-section (8), refunded after a period of sixty days from the date of making an application under sub-section (5) shall carry with it simple interest at the rate of one per cent per month for the period from the date of making the application to the date when the refund is made. (10) Any amount due to a dealer under sub-section (4) but not refunded to him within sixty days from the date of order of approval of the refund by prescribed authority shall carry with it simple interest at the rate of one per cent per month for the period from the date of order of approval of the refund by the prescribed authority to the date when the refund is made. [sub-section (10) substituted vide Act No. 10 of 2009 w.e.f. 20.3.2009.
Before substitution it reads - "any amount due to a dealer under sub-section (4) but not refunded to him within sixty days from the date of passing the order allowing the refund, shall carry with it simple interest at the rate of one per cent per month for the period from the date of passing the order allowing the refund to the date when the refund is made"]
11. Where any question arises as to any period to be excluded for the purposes of calculation of interest payable under sub-section (9) or sub-section (10) because the delay for the period in question has been due to the fault of the assessee entitled to the refund, CWP No. 11677 of 2011 7 such question shall, after giving the assessee a reasonable opportunity of being heard, be determined by the Commissioner by an order in writing."
Rule 41. REFUND "(1) to (4) xxx xxx xxx (5) Where a refund of any amount paid by any dealer or other person becomes payable as a result of the order of any appellate or revising authority or any court and the same is not the subject-matter of any further proceedings, such dealer or such other person shall make an application to the officer incharge of the district concerned in case he is the owner of the goods in respect of which penalty imposed under sub-section (8) of section 31 has been quashed or reduced and in other cases to the assessing authority concerned, along with the original copy of the order which constitutes the basis for refund and the authority to whom the application is made shall order the refund of the excess amount in the manner specified in sub-rule (4) and where the said authority fails to do so within sixty days of the receipt of such application, there shall be paid interest to the claimant at the rate of one per cent per month from the date of making the application to the date when the refund payment order or refund adjustment order, as the case may be, is issued to him."
CWP No. 11677 of 2011 8Rule 42. APPROVAL OF REFUND " The following authorities shall be competent to allow refund, arising from a single order, of the amount mentioned against each:
1. Commissioner Any amount
2. Officer incharge of the range Ten lakh rupees
3. Officer incharge of the Five lakh rupees district
4. Excise and Taxation Officer Fifty thousand or Assistant Excise and rupees Taxation Officer The lower authority/authorities shall submit the record of the case along with his/their recommendation(s) to the competent authority at the appropriate level at least thirty days before the time prescribed for issuing refund without interest lapses and the competent authority shall intimate its decision to the lower authority/authorities well in time. It may, by order in writing, increase or decrease the amount of refund or may order that no refund is due but no adverse order shall be passed without giving the affected person a reasonable opportunity of being heard."
11. From a bare perusal of the above it is evident that the language of the relevant provisions of Section 20(5) and 20(9) of the VAT Act as well as Rule 41(5) and Rule 42 of the VAT Rules is clear and there is no ambiguity. Sub-section (5) of Section 20 of the VAT Act mandates that an application containing the prescribed CWP No. 11677 of 2011 9 particulars accompanied with the prescribed documents has to be filed by any person claiming any amount to be refunded by the prescribed authority as a result of an order passed by any court, appellate authority or revising authority. Sub-section (6) provides that the amount refundable to any person would be subject to the approval of the prescribed authority who may after affording an opportunity of hearing to the affected person, change the amount of refund or order that no refund is due. Sub-section (9) stipulates that any amount which is refunded after a period of sixty days from the date of making an application under sub-section (5) would carry with it simple interest at the rate of one per cent per month for the period from the date of making the application to the date when the refund is made.
12. Similarly, sub-rule (5) of Rule 41 of the VAT Rules talks of making an application by the dealer to the officer incharge of the district concerned along with the original copy of the order which constitutes the basis for refund and where the said authority fails to do so within sixty days of the receipt of such application, the claimant is required to be paid interest at the rate of one per cent per month from the date of making the application to the date when the refund payment order or refund adjustment order, as the case may be, is issued to him. Rule 42 of the VAT Rules prescribes the authorities who are competent to grant approval in respect of refund. It also casts an obligation upon the lower authorities to submit the record of the case along with their recommendation(s) to the competent authority at least thirty days before the time prescribed for issuing refund and the competent authority is required to intimate its decision to the lower authority well in time. CWP No. 11677 of 2011 10
13. In the present case it is conceded position that the assessment order was passed on 30.3.2009 and the Assessing Authority ordered for refund of `1,06,42,788/-. On 28.7.2009, the Revisional Authority reduced the amount of refund to `45,15,453/-
by holding that the wrongly deducted TDS cannot be refunded. On 21.4.2010, the Tribunal remanded the case to the Assessing Authority. On 26.5.2010, the assessee-petitioner applied for refund. The petitioner then filed a review application before the Tribunal. On 2.2.2011, the Tribunal allowed the review application filed by the petitioner and directed that refund be made to it. On 15.4.2011, the assessee-petitioner again applied for refund in view of the order dated 2.2.2011 passed by the Tribunal. On 5.8.2011, the Excise and Taxation Officer-cum-Assessing Authority, Gurgaon, passed an order for refund of `1,06,42,788/- and the case was sent for approval of the competent authority as required under section 20(6) of the VAT Act read with Rule 42 of the VAT Rules (R-1). On 3.10.2011, the competent authority i.e. Excise and Taxation Commissioner, Haryana approved the refund amounting to `1,06,42,788/-. On 5.10.2011, the refund voucher was prepared and the petitioner was informed telephonically to receive the refund voucher and the same was delivered on 17.10.2011.
14. It is, thus, evident that the assessee-petitioner in compliance with the provisions of sub-section (5) of Section 20 of the VAT Act read with Rule 41(5) of the VAT Rules made the prescribed application firstly on 26.5.2010 claiming the refund as a result of the order dated 21.4.2010 passed by the Tribunal. It again filed another application on 15.4.2011 in pursuance to the order dated 2.2.2011 passed by the Tribunal in the review application. CWP No. 11677 of 2011 11 Even if the date of filing the application seeking refund is taken as 15.4.2011, the prescribed period of sixty days expired on 14.6.2011. It has already come on record that the prescribed authority has passed the order of refund of `1,06,42,788/- on 5.8.2011 (R-1) and approval by the Commissioner was granted on 3.10.2011 and refund was given to the petitioner on 17.10.2011. Thus, by no stretch of imagination it would be inferred that the refund has been made within a period of sixty days from the date of making of the prescribed application.
15. As a sequel to the above discussion, the instant petition is allowed. The petitioner is held entitled to simple interest at the rate of one per cent per month for the period from 26.5.2010 to 15.4.2011 in respect the sum of refund amounting to `45,15,453/-. The firm would also be entitled to interest at the same rate with effect from 15.4.2011 till the date of payment on the whole amount of `1,06,42,788/-. Accordingly, the respondents are directed to calculate the amount of interest and pay it to the assessee- petitioner. The needful shall be done within a period of one month from the date of receipt of a copy of this order.
(M.M. KUMAR) JUDGE (ALOK SINGH) SINGH) February 3, 2012 2012 JUDGE PKapoor