Kerala High Court
M/S. Leo Distributors vs Commercial Tax Inspector on 17 October, 2012
Author: A.M. Shaffique
Bench: A.M.Shaffique
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
FRIDAY, THE 9TH DAY OF DECEMBER 2016/18TH AGRAHAYANA, 1938
WP(C).No. 9120 of 2014 (L)
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PETITIONER :
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M/S. LEO DISTRIBUTORS,
NO.6, OLD NADAKAVU ROAD,
THRISSUR - 680 001.
BY ADV. SRI.TOMSON T.EMMANUEL
RESPONDENT(S):
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1. COMMERCIAL TAX INSPECTOR,
COMMERCIAL TAXES CHECK POST,
WALAYAR - 678 625.
2. INSPECTING ASSISTANT COMMISSIONER,
COMMERCIAL TAXES CHECK POST,
WALAYAR - 678 625.
3. ASSISTANT COMMISSIONER,
COMMERCIAL TAXES, SPECIAL CIRCLE,
THRISSUR - 680 003.
4. COMMISSIONER OF COMMERCIAL TAXES,
TAX TOWER, KARAMANA, THIRUVANANTHAPURAM - 695 002.
5. STATE OF KERALA,
REPRESENTED BY SECRETARY TO GOVERNMENT, (TAXES),
SECRETARIATE, THIRUVANANTHAPURAM- 695 001.
BY GOVERNMENT PLEADER SMT. M.M.JASMIN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 09-12-2016, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
sts
WP(C).No. 9120 of 2014 (L)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXT.P1: COPY OF REGISTRATION CERTIFICATE DATED 17/10/2012 ISSUED BY
THE 3RD RESPONDENT UNDER THE VALUE ADDED TAX AND CENTRAL
SALES TAX ACTS, BY THE 3RD RESPONDENT.
EXT.P2: COPY OF THE NOTICE OR NO.4043/9/ 13-14 DATED 21/01/2014, ISSUED
BY THE 1ST RESPONDENT UNDER THE SUPERVISION OF
INTELLIGENCE INSPECTOR, SQUAD NO.IV, COMMERCIAL TAXES,
MALAPPURAM AT PERINTHALMANNA, U/S.47(2) DEMANDING
SECURITY DEPOSIT RS. 13,21,648/-
EXT.P3: COPY OF E-CHALLAN NO.CK3948513 DATED 30/01/2014 FOR
RS.6,60,824/- TOWARDS ADVANCE TAX, BEING 50 % OF THE AMOUNT
DEMANDED IN EXT.P2
EXT.P4: COPY OF RELEASE ORDER NO.4043/9 13-14 DATED 30/01/2014 AFTER
REFERRING EXT.P3 AND UTILIZATION OF THE ADVANCE TAX ISSUED
BY THE 1ST RESPONDENT TO THE PETITIONER.
EXT.P5: COPY OF E-RETURN FOR THE DATED 14/02/2014 FOR THE MONTH OF
JANUARY,GENERATED BY THE PETITIONER, WHEREIN EXT.P3
ADVANCVE TAX PAYMENT NOT SEEN CREDITED.
EXT.P6: COPY OF E-MAIL COMMUNICATION DATED 17/03/2014 MADE BY THE
PETITIONER TO THE 2ND RESPONDENT, FOR FACILITATING CREDIT
OF EXT.P3 DURING FEBRUARY 2014 RETURN PERIOD, SINCE IT WAS
NOT CREDITED IN JANUARY, 2014.
EXT.P7: COPY OF E-MAIL COMMUNICATION DATED 18/03/2014 SENT BY THE
PETITIONER TO THE 3RD RESPONDENT, FOR FACILITATING CREDIT
OF EXT.P3 DURING FEBRUARY 2014 RETURN PERIOD, SINCE IT WAS
NOT CREDITED IN JANUARY 2014.
EXT.P8: COPY OF REVISED E-RETURN FOR JANUARY DATED 19/3/2014, MADE
BY THE PETITIONER AS PER THE DIRECTIVES OF RESPONDENTS
1 TO 3, FOR CARRY FORWARD OF EXCESS TAX PAYMENT, SINCE
OUTPUT TAX DUE PAID BY THE PETITIONER, DUE TO THE REASON OF
NOT CREDITING THE SAME AT THE TIME OF FILING EXT.P5.
EXT.P9: COPY OF E-RETURN DATED 19/03/2014 FOR THE MONTH OF
FEBRUARY MADE BY THE PETITIONER WHEREIN NO EXCESS CREDIT
CARRY FORWARDED AND THE PETITIONER HAD TO PAY INTEREST
RS.6,248/-
RESPONDENT(S)' EXHIBITS: NIL
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/TRUE COPY/
sts P.S.TO JUDGE
A.M. SHAFFIQUE, J.
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W.P. (C) No. 9120 of 2014
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Dated this, the 9th day of December, 2016
J U D G M E N T
Petitioner has approached this Court seeking for a direction to respondents 1 to 3 to refund an amount of `6,60,824/- with interest and for other consequential reliefs.
2. The short facts involved in the writ petition would show that the petitioner being a registered dealer had to remit advance tax of `6,60,824/- when certain goods were detained and the petitioner was called upon to remit an amount of `13,21,648/-. It is submitted that though notice was issued under Section 47(2) of the KVAT Act calling upon the petitioner to furnish security deposit of `13,21,648/-, being convinced with the reply filed, petitioner was permitted to release the goods on payment of advance tax of `6,60,824/- as per Ext.P3. Petitioner remitted the said amount on 30/1/2014. Ext.P4 is the order of release. According to the petitioner, advance tax paid by the petitioner ought to have been credited in the petitioner's account in KVATIS immediately. When the e-return dated 14/2/2014 for the month of January was generated, no W.P(C) No.9120/14 -:2:- mention was seen made regarding the credit for the aforesaid amount. Petitioner therefore sent a communication dated 17/3/2014 requesting the 2nd respondent to provide the necessary credit in the petitioner's account. Since no action was taken in the matter, a further communication was sent on 18/3/2014 by e- mail. Since no action was taken in the matter, petitioner was forced to file the writ petition seeking the aforesaid relief. It is submitted that on account of the delay on the part of the officer to have made necessary adjustments regarding the advance tax paid in the KVATIS of the petitioner, petitioner was forced to pay interest on the deficit amount at the time of filing e-return of February, 2014. Ext.P9 is the said certificate.
3. The main contention urged by the petitioner is that once advance tax had been paid relating to a transaction of January, 2014, the same should have been credited in the petitioner's account then and there. Since such a credit was not made, the said amount had to be paid by the petitioner with interest for payment of tax for the next relevant return period. It is contended that the inaction on the part of the respondents in W.P(C) No.9120/14 -:3:- not refunding the amount is clearly mala fide and therefore petitioner had approached this Court. An interim order was passed by this Court on 11/4/2014 by which this Court observed as under:-
"Admit. Urgent notice. There will be an interim order as prayed for."
4. The interim relief sought for in the writ petition is as under:-
"For the reasons stated in the accompanying affidavit and in the Writ Petition it is humbly prayed that this Hon'ble Court may be pleased to direct the respondents 1 to 3, for crediting the amount realised from the petitioner as advance tax in Ext.P3 during the month of March 2014 or to refund a sum of `6,60,824/- together with interest provisionally, pending disposal of the writ petition, in the interest of justice."
Learned counsel for the petitioner submits that despite the interim order by which petitioner had sought for interest also, the amount was refunded only by August, 2014 and no interest was paid.
5. As matters stand now, this Court is only concerned W.P(C) No.9120/14 -:4:- with the question as to whether any interest can be fastened on the respondents for not crediting the advance tax paid by the petitioner in the KVATIS system in time.
6. Though no counter affidavit has been filed, learned Government Pleader submits that in so far as refund has already been effected, substantial grievance of the petitioner has been taken note of. Further, there is no provision under the KVAT Act to enable the petitioner to claim interest. Advance tax has been paid only for the purpose of releasing the goods. Once goods have been released, even if there is some delay on the part of the department in adjusting the said amount to the petitioner's account, no claim for interest is maintainable.
7. Learned counsel for the petitioner places reliance on Section 89 of the KVAT Act, 2003, which reads as under:-
"89. Refunds (1) When an assessing authority finds, on completion of annual assessment, that a dealer has paid tax in excess of what is due from him, it shall refund the excess to the dealer. (2) When the assessing authority receives an order from any appellate or revisional authority to make a refund of tax or penalty paid by a dealer it shall effect the refund.
W.P(C) No.9120/14 -:5:- (3) Notwithstanding anything contained in sub-
section. (1) and (2), the assessing authority shall have power to adjust the amount due to be refunded under sub-section (1) or sub-section (2), towards the recovery of any amount due, on the date of adjustment, from the dealer.
(4) In case refund under sub-section (1) or sub- section (2) or adjustment under sub-section (3) is not made within ninety days of the date of completion of assessment or, as the case may be, within ninety days of the date of receipt of the order in appeal or revision or the date of expiry of the time for preferring appeal or revision, the dealer shall be entitled to claim interest at the rate of ten per cent per annum on the amount due to him from the date of expiry of the said period up to the date of payment or adjustment."
8. It is contended that eventhough it is an instance where Section 89 does not squarely apply, still, the principles laid down in Section 89 can be applied on account of the fact that the amount was available with the department as early as on 30/1/2014, which ought to have been credited in the petitioner's account then and there. Petitioner lost the utility of the said amount till August, 2014 by which the petitioner had suffered loss as well. It is also pointed out by the learned counsel for the W.P(C) No.9120/14 -:6:- petitioner that there is deliberate inaction on the part of the officers in adjusting the amount paid by the petitioner. In an instance where the advance tax is paid online, it is the duty of the officer concerned to ensure that the said amount is credited in the KVATIS of the petitioner. When the very purpose of paying advance tax is to ensure that the tax has to be adjusted towards the particular consignment, in the return also, petitioner expects that the said amount is adjusted. However, when the return of January was taken, no such adjustment was seen as a result of which petitioner had to expend further amount for filing return and also to pay interest on the deficit amount. If the adjustment was made then and there, petitioner would not have become liable to pay the interest, i.e., `6,248/-, which is collected by the department from the petitioner as per Ext.P9.
9. From the facts arising in the case, there is no doubt about the fact that there has been delay on the part of the department in giving credit to the amount payable to the petitioner. On account of such delay, definitely the petitioner had lost the utility of the said amount and in fact the petitioner had to W.P(C) No.9120/14 -:7:- pay certain amount as interest to make up the amount to be paid towards tax. That situation could have been avoided if the credit had been given as early as on 30/1/2014. Even after Ext.P9, there had been substantial delay to effect payment. It is also evident that there was delay in payment of the amount even after an interim order was passed by this Court as early as on 11/4/2014. This inaction on the part of the Officer concerned is definitely deliberate and is not expected to be done by responsible officers of the State dealing with fiscal matters. Money belonging to a person is his wealth which cannot be retained without authority of law. Retention of such amounts are clearly illegal and therefore the petitioner is liable to be compensated by the respondent authority, viz., the 1st respondent.
10. Having regard to the factual circumstances involved in the matter, I am of the view that interest of justice will be served in refunding to the petitioner, the loss he had to suffer on account of the negligent attitude of the 1st respondent. Accordingly, there will be a direction to refund to the petitioner, `6,248/- which the W.P(C) No.9120/14 -:8:- petitioner was forced to remit on account of the delay in crediting the amount in KVATIS system of the petitioner.
In the result, this writ petition is disposed of as under:-
The 1st respondent pay the petitioner an amount of `6,248/- (Rupees Six thousand two hundred and forty eight only) as compensation for delay in refund of `6,60,824/-, within a period of one month from the date of receipt of a copy of this judgment.
Sd/-
A.M. SHAFFIQUE, JUDGE Rp13/12/2016 //True Copy// P.S to Judge