Delhi High Court
M/S. Kent Cables (P) Ltd. vs The Commissioner Of Trade And Tax And ... on 16 July, 2012
Author: S.Ravindra Bhat
Bench: S. Ravindra Bhat, R.V.Easwar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 16.07.2012
+ W.P.(C) 4045/2012
M/S. KENT CABLES (P). LTD. ..... Petitioner
Through : Sh. Randhir Chawla, Advocates.
versus
THE COMMISSIONER OF TRADE AND TAX AND ORS.
..... Respondents
Through : Sh. A.K. Babbar, Govt. Counsel, for Respondent Nos. 2 and 3.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.V.EASWAR MR. JUSTICE S.RAVINDRA BHAT (OPEN COURT) %
1. The writ petitioner questions an order of the VAT Tribunal in Appeal No.602/ATVAT/08-09; by that, the majority decision upheld the authorities' order refusing to consider the petitioner's application for refund of excess tax amount, saying that it was time barred. Mr. A.K. Babbar is present on behalf of the respondents; he accepts notice. With consent for counsel for parties, the petition was heard finally.
2. The petitioner is a registered dealer. It submitted VAT return for the first quarter of 2006-07 but omitted to include the input tax credit (in short the "ITC") of `66925/- on the basis of three purchase invoices amounting to W.P.(C) 4045/12 Page 1 `644200/-. It later filed an objection under Section 74 (1) read with Section 28 (2) of the Delhi Value Added Tax Act, 2004 ("the Act") by application dated 22.2.2008 claiming ITC of `66925/-. This was accompanied by an application for condonation of delay of 143 days. The objections were taken up for hearing by Joint Commissioner-IV, the Objection Hearing Authority (OHA). The latter, by his order dated 07.10.2008 rejected the objection by observing that the application for refund was not maintainable as it was time barred. Aggrieved, the petitioner filed an appeal to the Tribunal. It was contended that the order of OHA was untenable, in view of Section 28 (2) which permits a dealer to lodge an objection if there is detection of an error or mistake in any return furnished by a person within four years of making of an assessment if as a result of the mistake or error tax was paid more than was due. Thus, an order has been passed without application of mind in view of the fact that there has been no delay in filing objection. Form DVAT-39 along with affidavit was filed by way of abundant precaution only. It was alternatively argued that the order of OHA refusing to condone the delay was unsustainable.
3. Counsel for the Petitioner argued that Section 28 (2) is a special provision according to which if someone has paid excess amount of tax, he can file an objection within four years, though the procedure shall be in the manner prescribed under Section 74. He submitted that the Petitioner filed the objection within the prescribed period of 4 years and in the manner as provided. It was also argued that the revenue had not issued any default assessment notice or any other notice and consequently the limitation of two months in Section 74 was inapplicable. Counsel urged that the fact that the W.P.(C) 4045/12 Page 2 Petitioner had initially filed a revised return cannot preclude the objection, as the revised return was not acted upon. Counsel argued that the State cannot lay claim over an amount which it was not entitled to in the first place, and as long as the citizen approached it within the period of limitation for refund, that claim could not be rejected. Counsel argued that seeking an incorrect legal remedy in ignorance of law by the earlier counsel could not be a valid basis to reject a legitimate claim as there is no presumption that everyone knows the law.
4. Counsel for the revenue argued that the Petitioner did not file the objection under Section 28 (2) of the Act in accordance with Section-74 of the Act. He submitted that Section-74 (4) (a) prescribes limitation of two months and consequently the OHA rightly rejected the objections on the ground that these were barred by limitation and he rightly did not condone the delay which was said to have occurred due to negligence of the advocate.
5. At the outset, this Court notices that the impugned order is a majority order; the Chairman has differed from the other members. This appears to be the norm, since we have seen at least five such orders displaying an identical pattern where the members of the Tribunal differed from the Chairman! The proceedings held also prima facie reveal lack of collegiality and harmony, since the difference of opinion in most cases is not fundamental, or based on principle, but not unoften based on slight variation in the way facts are seen. This Court is constrained to make these observations, because such differences of opinion tend to lower the authority of the body, and undermine the confidence of those who are before it. Such institutional behavior also has a telling effect on the judicial system, because litigants W.P.(C) 4045/12 Page 3 would tend to be dissatisfied, and would be forced to approach the Courts seeking writs, for relief.
6. Section 74 (4) (a) reads as under: -
"in case of an objection made under Sub-Section (1) of this Section, within two months of the date of service of the assessment, or order or decision, as the case may be."
Section 28 (2) of the Act reads as follows: -
"If within four years of making an assessment, any person discovers a mistake or error in any return furnished by him under this Act, and he has as a result of the mistake or error paid more tax than was due under this Act, he may lodge an objection against the assessment in the manner and subject to the conditions stipulated in section 74 of this Act."
7. Section 74 (4) (a) says that the period of limitation of two months for filing objection is for those under Section 74 (1) of the Act. Section 74 (4)
(a) in contrast to Section 74 (1), is in respect of objections as are filed against the assessments made under Sections 32 and 33 of the Act and not for the objections filed under Section 28 (2). The latter is on the basis of the discovery of mistake from deemed self assessment of return under Section 31 of the Act. The expression used in Section 74 (4) (a) of the Act is "within two months of the date of service of the assessment, or order or decision". The reasoning of the dissenting view - which we endorse - is that in this case the longer period (four years) of limitation was applicable, because self assessment is, by reason of Section 31 of the Act a deemed service of notice on the day return is filed and that such point in time cannot be considered as "the date" - under Section 74 (4). That expression is clarified by the words W.P.(C) 4045/12 Page 4 "within two months of the date of service of the assessment or order or decision". Therefore, an objection- which in reality was what the petitioner had preferred, despite its nomenclature of an application, under Section 28 attracts the longer period of four years, - from the date of original filing of the return, within which period the petitioner filed objections in the present case.
8. The reasoning adopted by the two members of the Tribunal, who formed its majority, in the present case, can be found in the following extract of their order:
"6. The word "decision" or decision, as the case may be; in clause (a) has to be read in consonance with the provisions as contained in Section 28 of the DVAT Act. The word or order or decision as the case may be; as used in the section is in context with the decision of the assessee under Section 28 (2) with regard to discovery of mistake or error in the return about the payment of more tax than due. As is clear from the provisions of clause (1) of Section 28, the period of four years of making the assessment within which the assessee may discover a mistake or error, is a period for that purpose only and not for filing the objection under Section 28 (2) of the DVAT Act. For filing the objection the assessee has to resort to the provision as contained in Section 74 of the DVAT Act, 2004 which prescribed limitation period within which the assessee may file objection against the assessment bringing to the notice of the OHA that he paid more tax than due. For the purpose of reckoning the limitation the assessee has to count the limitation period from the date of discovery of the mistake or error he committed while paying more tax than due.
7. In the light of the above discussion and meticulous reading of Section 74 (4) (a) of the Act reproduced as above shows that the period of limitation of 2 months provided for filing the objection is for such objection as are u/s 74 (1) of the Act. Consideration of the provisions as contained in Section 74 (4) (a) in consonance with Section 74 (1) of the Act shows that W.P.(C) 4045/12 Page 5 the period of limitation of two months is for such objections as are filed against the assessment made under Section 31 as well as 32 and 33 of the Act read with Section 28 (2) of the Act, as also the expression used in 74 (4) (a) of the Act is "within two months of the date of service of the assessment, or order or decision, as the case may be".
9. This court is of opinion that the majority order of the Tribunal is in clear error of law. Where self assessment is made, and upon later reconsideration, the assesse feels that he has deposited excess amount as tax, the only mechanism provided is an objection under Section 28. That can be filed within four years of his filing the return. However, where assessment is completed in other manner, or after notice issued by the concerned authorities, the route prescribed is under Section 74. It is in such cases that there is a shortened limitation period. Furthermore, the nomenclature adopted or the provision of law mentioned in the application would not detract from the remedies available to an applicant in law, or limit him to what he says in the claim. Invariably, applicants are guided by their advice; if that is defective, they cannot be deprived of the remedy.
10. In view of the above reasons, the Objection Hearing Authority has to decide the merits of the objections filed by the Petitioner dealer. If it is found that the objections are duly supported by materials, maintained in due course of the business and the claim that the dealer has paid excess VAT is established from such documents, orders relating to the revised return for claiming the refund of the same have to be made in accordance with law. The case is therefore, remanded to the OHA. The petitioner shall appear before him on 10.08.2012. The OHA shall endeavour to dispose of the W.P.(C) 4045/12 Page 6 objections within three months from the date of first hearing. The petition is allowed in these terms; order Dasti.
S. RAVINDRA BHAT (JUDGE) R.V.EASWAR (JUDGE) JULY 16, 2012 W.P.(C) 4045/12 Page 7