Gujarat High Court
N J Devani Builders Private Limited & vs Deputy Commissioner Of Commercial Tax ... on 1 July, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, A.J. Shastri
C/SCA/3368/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 3368 of 2016
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N J DEVANI BUILDERS PRIVATE LIMITED & 1....Petitioner(s)
Versus
DEPUTY COMMISSIONER OF COMMERCIAL TAX (APPEAL - 1) &
1....Respondent(s)
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Appearance:
M/S WADIAGHANDY & CO, ADVOCATE for the Petitioner(s) No. 1 - 2
MS JIRGA JHAVERI, AGP for the Respondent(s) No. 2
NOTICE SERVED BY DS for the Respondent(s) No. 1 - 2
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 01/07/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Petitioner No. 1 is a private limited company and is engaged in the business of civil construction work. For the assessment year 2006-07, the petitioner-company had filed its return under the Gujarat Value Added Tax Act ['the Act' for short] claiming refund of Rs. 7.63 lacs (rounded off). According to the petitioner, such refund was not released on the premise that the same would be carried forward in the next year and would be adjusted towards the petitioner's tax liability. However, for the assessment year 2007-08 also the petitioner had claimed refund of Rs. 35.15 lacs (rounded off) which was also not granted by Page 1 of 8 HC-NIC Page 1 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER the department. Assessments for both the assessment years 2006-07 and 2007-08 became time barred. The right of the petitioner to seek refund therefore crystallized. Despite this, since no refund was released, the petitioner filed Special Civil Application No. 11616 of 2012 which came to be disposed of by the High Court by an order dated 15.02.2015 recording the statement of the Government counsel that refund as payable to the petitioner shall be released latest by 10.03.2013.
2. In terms of such statement, the Assessing Officer granted refund to the petitioner as part of the order of assessment for the assessment year 2008-09. Case of the petitioner is that, in such computer generated assessment order in pre-set format, there was no column for refund for the earlier years. The Assessing Officer, therefore, in his order dated 06.03.2013 showed the refund of Rs. 35,13,883/- against the clause pertaining to net tax credit. He also calculated a sum of Rs. 8,11,642/- as interest payable on such refund. The net refund payable thus became to Rs. 42,65,438/-. However, the petitioner was not entirely satisfied. According to the petitioner a sum of Rs. 73,236/- remained unpaid and the interest was calculated from the date of the order of the High Court instead of from the date when the respective refunds became payable. The petitioner, therefore, preferred appeal against such order of the Assessing authority and claimed before the appellate authority that the remaining amount of the refund be released and full interest be paid. Instead of examining these grievances of the petitioner, the Page 2 of 8 HC-NIC Page 2 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER Commissioner issued impugned notice dated 10.02.2016 seeking to take the assessment order of the year 2008-09 in suo motu revision denying refund of Rs. 42,65,438/- to the petitioner on the ground that in the order of assessment dated 06.03.2016, the petitioner has been granted tax credit of Rs. 35,13,383/- for the assessment year 2007-08 which was not payable to the petitioner since the petitioner was covered by the composition tax regime and, therefore, was not entitled to any input tax credit. This notice the petitioner has challenged in the present petition.
3. Counsel for the petitioner submitted that the authorities have committed a serious error in treating the petitioner's refund of Rs. 35,13,883/- with interest of Rs. 8,11,642/- as its input tax credit. Such sum was never in the nature of tax credit. It was not so claimed by the petitioner nor granted by the Assessing Officer. It was only on account of the fact that the computer generated assessment proforma would not accept any entry of refund for the past assessment years, the Assessing Officer, therefore, for convenience had shown such refund against the entry of input tax credit. Counsel relied on the additional affidavit filed on behalf of the petitioner on 28.06.2016 in which these aspects have been further clarified.
4. On the other hand, learned AGP relied on further affidavit in reply dated 01.07.2016 filed by the Deputy Commissioner of Page 3 of 8 HC-NIC Page 3 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER Commercial Tax, in which, he has raised the issues of refund as well as of the assessment for the assessment year 2008-09.
5. Having heard learned counsel for the parties and having perused the documents on record, few facts immediately become clear. First and foremost, the petitioner had been pressing hard for release of the refunds which arose in assessment years 2006-07 and 2007-08. Before the High Court in Special Civil Application No. 6616 of 2012, the department made a statement that the refunds, as payable, would be released. These refunds were released by the Assessing Officer while passing order of assessment for the assessment year 2008-09. Simply because such assessment orders are computer generated and would have specific boxes containing specific details and which did not have any entry for refund for past assessment years, he was compelled to show the sum of Rs. 35,13,883/- against the entry of net tax credit. This method adopted by the Assessing Officer would not change the true character of the said sum payable to the petitioner. It was and remained a refund due and payable. The sum of Rs. 8,11,642/- shown by way of interest of such refund also, therefore, had a direct co-relation to the petitioner's claim of refund of the past excess taxes paid to the department. These facts clearly emerge from the record as well as in the additional affidavit dated 28.06.2015 filed by the petitioner in which, following averments have been made:
"1. I am filing this Additional Affidavit to bring certain Page 4 of 8 HC-NIC Page 4 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER factual aspects on record and to assist the Hon'ble Court in the aforesaid petition. I state and submit that for the year 2006-07 there was an amount of refund due to the extent of Rs. 7,63,106/- on account of tax paid being more than tax payable. However, since the Return Form which is to be filed online did not contain any such column for the refund of tax and therefore, left with no other alternative, this amount was indicated in the column of the tax credit carried forward to the next period. For the year 2007-08, the amount of refund on account of tax being paid more than tax payable came to Rs.27.50.277/-. Thus, the principle amount of refund of Rs. 35,13,883/- alongwith the interest of Rs. 8,11,642/- making the total amount of Rs. 43,25,525/- came to be payable to the Petitioner No. 1.
2. I state and submit that since this amount was not released and the assessment had become time barred, the Petitioners were compelled to approach this Hon'ble Court seeking refund. Pursuant to the orders passed by this Hon'ble Court since the time limit for the completion of the Assessment Year 2007-08 had already expired, the Respondent granted such refund in the Assessment year of 2008-09 as per the Annexure D. It is relevant to note that the said Assessment Order also clearly denotes that there is no such column in the Return Form to be filed online or even the Assessment Order providing for the mentioning of refund of previous year. Accordingly, even the Assessing Officer mentioned this amount in column of net tax credit (Sr. No. 17.5 on Page 19 of the petition) mentioning an amount of Rs. 35,13,883/-. Further the interest calculated thereon is separately mentioned in Sr. No. 26.3 being an amount of Rs. 8,11,642/- and total refund payable was Rs. 42,65,438/-. A separate Chart indicating the amount of refund is attached herewith as Annexure R1."
6. The Deputy Commissioner of Commercial Tax, therefore, committed a serious error in treating such refund as input tax Page 5 of 8 HC-NIC Page 5 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER credit claimed by the petitioner. It is true that the petitioner has opted for composition of tax and, in such situation, would not be entitled to claim any input tax credit. However, when the petitioner had not in fact claimed any such credit and the sum of Rs. 35,13,883/- shown in the order of assessment for the assessment year 2008-09 was in fact the refund of the earlier years, the very basis for the Deputy Commissioner to issue impugned notice dated 10.02.2016 would disappear. Such notice is, therefore, required to be quashed.
7. In the further affidavit in reply filed today, respondent No. 1, however, has raised few further issues. The first issue that he seeks to raise is that in the input tax credit derived from the returns filed by the petitioner for the assessment years 2006-07 and 2007-08 according to him is ambiguity and requires scrutiny. Second issue he seeks to raise in following manner:
"2. It is humbly submitted that Audit query was raised and on that basis revision notice was issued. It is humbly submitted that on scrutiny it was found that dealer obtained for lumpsum tax scheme for 2008-09. during the scrutiny of VAT report revealed that goods worth of Rs. 5,77,10,250/- was held in stock as work in progress/stock eligible for ITC at the beginning of the year and dealer has availed LTC on the said goods in the previous year 2007-08. It was observed that dealer derived the tax liability on the value of goods used in execution of works contract in 2007-08. After deducting labour and like charges from total receipts. Thus in view of above mentioned GVAT Rules, ITC availed on value of goods held in opening stock shall be reversed. However, the Assessing Officer has not Page 6 of 8 HC-NIC Page 6 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER mentioned anything for not reversing ITC. This resulted into short levy of tax of Rs. 43,52,659/- including interest of Rs. 18,22,043/- tentatively calculated as below. ... ... ..."
8. Both these contentions would not persuade us from quashing the impugned notice. In the first issue, the authority refers to the assessment of years 2006-07 and 2007-08 which are not the subject matter of scrutiny either before us or before the said authority. It appears that those assessments have become time barred long back. In any case, such assessments, with or without scrutiny, have not been taken into revision by the competent authority so far. The Deputy Commissioner, therefore, cannot disturb the refund payable to the petitioner on mere suspicion. Regarding the second issue also, likewise, the order of assessment passed by the Assessing authority for the assessment year 2008-09 has not been taken in revision. If the Revisional authority is of opinion that such assessment is required to be taken in revision, it is always open for him to do so by issuing notice within the time prescribed and following the procedure provided in law. However, on a mere possibility of the assessment for the assessment year 2008-09 being taken in revision, refund already released in favour of the petitioner for earlier assessment years cannot be disturbed. For such reasons, impugned notice dated 10.02.2016 is set aside. The authority shall hear the petitioner's appeal against short refund and short interest and dispose of the same in accordance with law.
Page 7 of 8HC-NIC Page 7 of 8 Created On Wed Jul 06 01:32:17 IST 2016 C/SCA/3368/2016 ORDER The petition is disposed of accordingly.
(AKIL KURESHI, J.) (A.J. SHASTRI, J.) Jyoti Page 8 of 8 HC-NIC Page 8 of 8 Created On Wed Jul 06 01:32:17 IST 2016