Allowed

M/s. Jain Irrigation Systems Limited, v. Assistant Commissioner (Ct)

Telangana HC7 Jul 2021WP/10459/2021

Case brief

AI extract

What is this about?

Petitioner sought refund of VAT paid pursuant to Tribunal order. Court held State cannot withhold refund pending internal revision. Refund with statutory interest directed within 15 days.

What did the court decide?

Respondents directed to refund Rs. 1,90,28,265/- within 15 days with interest at 1% per month from date of Tribunal order and pay costs of Rs. 10,000/-.

M/s. Jain Irrigation Systems… — Constitutional and Fundamental Rights | Telangana HC (2021)

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)

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WEDNESDAY ,THE SEVENTH DAY OF JULY TWO THOUSAND AND TWENTY ONE

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PRESENT

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THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO

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AND

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THE HONOURABLE SRI JUSTICE T.VINOD KUMAR

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WRIT PETITION NO: 10459 OF²⁰²¹

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Between:

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M/s. Jain lrrigation Systems Limited,,^{rep. by its Senior Manager,It/r' Rajendra} Bansilal Lod"ha, S.N6.s87 and 588,^{KondbmadguVillage, BibinaarIvlandal,} Nalgonda District, Telangana-508^126.

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..PETITIONER

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AND

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1 Assistant commissioner^{(cT), LTU, (Now known as Deputy commissioner(ST)} Saroornagar Division,^Hyderabad.

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2 Deputy Commissioner^{(CT)' Saroornagar Division, Hyderabad'} 3 Joint Commissioner^{(CT), Refunds, Office of the Commissioner of Commercial} i"""., Opp. Gandhi^{Bhdvan, Nampally, Hyderabad'}

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4 State of Telanqana,,^{rep. by Principal Secretary to Government' Revenue (CT-ll)} Department, S-ecretariat,^Hyderabad.

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...RESPONDENTS

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Petition under Article^{226 of lhe constitution of lndia prayingthat in the} circumstancesstatedintheaffidavitfiledtherewith,theHighCourtmaybepleasedto issue a writ of Mandamus^{or any other appropriate writ or orderor direction, directing} tn" n".ponO"nts^{to refunJ the'amountoi Ri. t ,sS,Ss,31B/-for the tax period-April'} )oos to Mur.n,^{2012 (VAT)and Rs.50.94.947/- (vAT) for the tax periodApril, 2012lo} lrilarch, 2013^{pursuantto the orders of the TeianganaValueAddedTaxAppellate} iiiUrnriut Hyderabad^{in T.A.Nos. 132 and'1 33 of 2018 daled181112019'together} withinterest@l2percentageperannUmlromlt5l2O-lgtillthedateofrefundasper section 39(2)^{o{ the Acta n"d also Fourth proviso to section3312) of the Telangana} VATACt.2005andawardexemplaryCostsagainsttheRespondentsfordelaying'the refund.

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Counsel for the^{Petitioner:SRl. KARTHIK RAMANA PUTTAMREDDY}

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Counsel forthe^{Respondents: SRI'SAI KRISHNA, AGPFOR}

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ADVOCATE^GENERAL

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The Court made^{the following:}

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THE HON'BLE SRI JUSTICE M.S.RAMACHANDRA RAO

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AND

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THE HON'BLE SRI JUSTICE T.VINOD KUMAR

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WRIT PETITION No.10459 of 2021

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O R D E R:/per Honble Sri .lustice T.Vinod Kumar)

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This is yet another Writ petition, whereby the petitioner is driven to invoke the jurisdiction of this court under Article 226 of the constitution of India, for grant of refund of the tax paid, from the respondents, pursuant to the orders of the Telangana Value Added Tax Appellate Tribunal, Hyderabad (for short, 'the Tribunal).

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2, The petitioner contends that the lstrespondent had completed the assessment for the period April,2009 to March,2012 by order dt. 19.01.2013; that the goods sold by the petitioner namety, Mango pulp/puree, was classified as falling under Entry 107(b) of the iV Schedule to the Telangana Value Added Tax Act, 2005 (for short, ,the Act') and subjected to tax at 4o/o I 5o/o. Similar classification was applied even in respect of sales made during the period April, 2012 to March, 2013 also.

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However, the 2nd respondent, being the revisional authority, was of the view that said orders of assessment were prejudiciar to the interest of revenue and accordingly, revised the orders of assessment passed by the 1st respondent, holding that the Mango pulp/puree sotd by the petitioner would merit classiflcation as falling under Schedule V of the Act, being a residuary entry, liable to tax at 72.5o/o174,\o/s.

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Being aggrieved by the aforesaid revision proceedings, the petitioner fired appears before the Tribunar. As a pre-condition for firing appeE! the petitioner was required to make payment equal to 25olo of the

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2 W.P.No.1O4.tg ol 202 j

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difference oF tax disputed, as per the order of the 2nd respondent. The petitioner remitted such payment to the 1st respondent and fired the proor of such payment, for the appears to be entertained by me Tribunal,.

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It is the contention of the petitioner that the appeals filed by the petitioner before the Tribunal were allowed by order dt.18.01.2019, wherein it was held that the mango puree/pulp sold by the petitioner would be crassifiabre under Entry 107(b) of IV Schedure to the Act and is liable to tax at 4% l 5o/{ and that the said order passed by the Tribunal was received by it on 30.01.2019, and even the respondents would have received the said order at the same time.

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The petitloner contends that, as a result of the Tribunal allowing the appeals filed by the petitioner in T.A. No. 132 and 133 of 2018 by order dt. 18.01.2019, the petitioner became entitled for refund of a sum of Rs.1,90,28,265/- (Rs.1,39,33,318/- and Rs.50,94,9471-) for the period April, 2009 to March, 2012 and for the tax period 2012-13, respectively, by virtue of proviso to Section 33(2) of the Act; that the respondents,ⁱⁿ particular the 1st respondent, is required to refund the tax paid within a period of 90 days; that if refund of tax paid is not made within the^period stipulated, the amount of^{refund shall carry interest at 1% per month for} the^period of delay as^{per proviso to Section33(2) and Sectlon39(2)of} the AcU and that for the^{purposeof granting refund pursuantto the order} of the Tribunal, no application^{is required to be made by the petiti0ner as} a duty is cast on the respondents^{to grant refund.}

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It is the contention^{of the petitionerthat the petitioner became} entitled for refund, consequent^{upon the Tribunal allowingthe appeals} and the order of the^{2nd respondent being setting aside; as no refund had} been sanctioned, the^{petitioner filed a representationon 09'08'2019,}

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;1.^{j,.';Lr l.r.ii)r., (,i /r.:l}

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requesting^{the lst respondentto pass a consequentialorderfor each of} the tax^{periodson the basis of the orderof the Tribunal' determinethe} excess^{amountdueto the petitioner; andto refundthe sameimmediately'}

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B. It^{is also contendedthat upon the petitionerflling the above} representation,^{the 1sI respondentissued Form - 351' notifying the refund} and the^{petitioner submittedits confirmationthereto by furnishing the} desired information.^{The petitioner againaddressedanotherletter} dt.13.08.2020^{requesting for expedltingthe processof refund and also} furnishedindemnitybondon03.0g'2020asrequiredbythe15t respondent, undertaking^{to keep the respondents indemnifled againstany} loss,intheeventofsuccessbytherespondentsintheTaXRevisionCases preferred by them against the order of^{the Tribunal beforethe Hon'ble} High Cout.

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Petitioner contends that, despite considerable^{timehaving elapsed} from the date of the Tribunal allowing^{the appeals,the lst respondent,} having issued Form - 351 notifying the amount of^{refund,and the} petitioner having filed confirmation in Form-352 and furnishing the information sought for, apaft from also executing the^{indemnity bond, the} respondents have not sanctioned the refund.^{The petitionerclaimsthat} the respondents, in^particular, the 2nd and 3'd^{respondents,being the} appropriate authority under Rule 59(12) of the^{Telanqana Value Added} Tax Rules, 2005 (for short,'the Rules'), to sanction^{refundin excessof} Rs,10.00 lakhs, ought to have sanctioned the refund of^{the difference of} tax^{paid pursuant} to the order of the 2nd respondent^{within the time} prescribed under the Act.

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The petitioner contends that the respondents cannot deny the refund due to the^petitioner on the^ground of the^pendency of the tax

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revision cases before the Hon,ble High Court, as has been held by this Court in the cases of pulp ,N, pack private Limited V/s. Commerciat Tax OfficeF and BSNL V/s, State ofAndhra pradeshz.

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Per contra, sri sai Krishna, learned Assistant Government pleader attached to the oFfice of the Advocate General appearing for the respondents, would submit that the order of the Tribunal has not been accepted by the respondents and revision thereagainst have been preferred to this Court and the same are pending consideration. He would futher contended that, if the refund is sanctioned, the revision flled before this Court would become infructuous; and that the 3rd respondent, being the prescribed authority under Rule 59(12) of the Rules conferred with^powers under Sectlon 40(2) of the Act, is of the view that^grant of refund to the petitioner would adversely affect the revenue, had withheld the refund.

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t2. We have^given our anxious^{consideration to the submissions made} on either side.

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The case of the^{petitioneris not an isolated instance where the} respondents have^{not sanctionedrefundby implementing the orders of} the Tribunal. Rather,^{this court has witnessed that whereveras a result of} the order of the^{Tribunal,a refund arises, the dealer/assessee is required} to approach this^{courtby invoking the jurlsdiction under Article 226of the} constitution of India,^{notwithstandingthe provisions of the Act stipulating} that the difference^{of tax/ penalty/ interest paidas a pre-condition for} fillngappealshouldberefundedwithinaperiodofg0days,TheActalso provides that, in the event^{the amountdue the dealer/assessee'is not} refunded within the^{time prescribed,the same shall carry interest at the} r 12009) 23 VST 573 , (2009) 25 VST 511 (AP)

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.--_-

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v,I.P No.10459^{ol 2A21}

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rate of^{1oloper month,beyond the periodof 90 daystiil the date of} refund.

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we^{havenot come across a case where the respondentshave} granted refund,^{be it of substantialamount or otherwise' alongwith} interest under^{section 39(2)of the Act, on their own, even whenthe} refund is sanctioned.^{Wherever, a dealer/assessee seeksrefund or makes} a clatm^{for interest for the delayedrefund, it invariablyis required to} invoke the^{jurisdiction of the Court under Article 226 of the Constitutionof} India. The attitude^{of the respondents appearsto be that the grant cf} refund rs a^{favour to the dealer/assesseeand refund is a gratuitous} payment, forgetting the fact^{that the statuteprovides for payment of} interest, if the refund^{is not made withinthe stipulated period.As a result} of such approach and^{attitudeof the respondents in not effecting the} refund in time, resulting^{in paymentof interest thereon, the respondents} are actually causing a^loss to^{the State Exchequer.}

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The approach of the respondents^{in not granting refund alongwith} interest beyond the^{periodpermitted, without the assessee/ dealerasking} for the same, in contrad istinction can be^{comparedwith the proceedings} under Income Tax Act, 1961. In^{the assessmentorders} /^intimations issued by the Income Tax Authoritles,^{where refundis due,the} proceeding issued itself provides for the calculation of Interest^under Section 244-A of the Income-tax Act,^{1961,and the same is paid out} along with the refund of tax.

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A reading of the^provisions of Section 33(2)^{and 39 of the Act,} makes it clear that the statute mandates refund of^the tax^{paid for} maintaining appeal, within a^period of ninety days.^{The Non payment} / Non^g[ant of refund within the tlme^prescribed would require^paymentof

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o WI'.No. t a)459 al 2O2 j

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interest as contemplated in the proviso to Section 33(2) as well as further reinforced jn Section 39(2) of the Act.

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The Supreme Cout in Dipak Babaria & Anr, V. State of Gujarat and otherf, it was held that _

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'As stated ear/ier if the /aw requires a particular thing shou/d be done in a particu/ar manner it must be done in that way and none other. fhe State cannot ignore the po/icy intent and the procedure contemplated by the Statute.,,

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18' Applying the principre deduced from the above, to the scheme of the Act, the usage of the word "shall,, mandates the respondents to refund the difference of tax paid by an appelrant like petitioner for firing and maintalning an appeal wjthin ninety days. If such refund is not granted, the amount would become refundable along with interest once the period of ninety days expires. The only exception for withholding the refund due as per Section 33 is exercise of powers under Section 40 of the Act and no other, including the ground of pendency of revision before the Higher court.

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Whether the State can deny refund during the pendency of the revision before this Court is no longer res integra. This Court in Pulp 'N' Pack Private Limited and BSNL cases (supra) had considered, this issue in detail, and held that mere pendency of tax revision case before this Couft cannot be the basis for withholding refund due to the dea ler/assessee.

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This Court in Reddy Laboratories Limited v.^Assistant Commissioner^(CT) LTU,^heldthat -

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r (20 r .1) 3 SCC 502

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, (201 r ) 37 VST 76 (AP) {DB)

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W.P.Na.l0159^{of 2021}

"Is it^{possibleto argue that any refund would adverselyaffect the} Revenue^{during the pendency of appeal or futtherproceeding?If} the intention^{ofthe Legistature was to bar refundunder Sections 3B} and3gofVATAct,thediscretionvestedintheprescribedauthoriU towithholdrefundwouldnothavefoundplaceinthestatute,The right to seek^{refundand the right to claiminterest'in the event} refundisnotmadewithintheprescribedperlodofg0days'would lndicate that^{merependency of an appealor further proceedlng is} no ground to^{withholdrefund"}

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Fufther, in a^{recent judgmentrendered by this Bench on}

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07.06.2021 in KMC^{Constructions Ltd, v. Assistant Commissioner}

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(CT) Hyderabad and Otherf , held that^-

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\ i t

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"Merety because the decision rendered by the^{Tribunal is not} acceptabte to the respondents and^{they havingpreferred a Revision} to this Court the respondents cannot^grant to themselves^stay of operation of the order of the Tribunal by such non refund."

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Though it is contended by the 3'd respondent that he exercised powers conferred under Section 40(2) of the Act, to withhold the refund due to the petitioner, no order/proceeding to that effect is shown to this Court. The said statement made on behalf of the respondents is also disputed by the learned counsel for the petitioner, as no such communication withholding the refund has been received by the petitioner either before filing of the Writ Petition or during the pendency of the present proceeding. Thus, this Couft cannot accept the statement made on behalf of the respondents that the 3'd respondent, having exercised powers conferred under Section 40(2) of the Act, has decided to withhold the refund due to the petitioner.

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In view of the above, the petitioner is entitled to succeed in this Writ Petition.

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s WP No. 20554 of 2O2O

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B W P.Na. ) 04s9 of 2AZ1

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\ \

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24, Accordingly, the Writ petition is allowed and the respondents are hereby directed to refund the amount of Rs.1,90,28,26s/(Rs,1,39,33,31g 1_ and Rs.50,94,947/-), as determrned by the 1st respondent, in VAT 351, pursuant to the order of the Tribunal dt.18.01.2019 by crediting the above said amount to the petitioner,s bank account, within fifteen (15) days from the date of receipt of a copy of this order, along with interest due thereon at the rate of 1% per month, as provided under section 39 of the Act, from the date of receipt of the order of the Tribunal, till the date of credit of the said amount; and the respondents shall pay costs of Rs.10,000/- (Rupees Ten Thousand only) to the petitioner.

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Pending miscellaneous petitions, if any, shall stand closed in the

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light of this flnal order.

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MEMORANDUM OF COSTS

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w.P.NO. 10459 0F 2021 Rs. Ps

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Costs Quantified by Hon'ble Court (That the Respondents herein are directed to pay costs of Rs,'10,0001 (Rupees Ten Thousand Only) to Petitioner to the petitioner.

10,000-00

TOTAL

10,000-00

SD/.B,SATYAVATHI ASSISTANT REGIST R

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//TRUE COPY//

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