Allowed

M/s Kirby Building Systems and Structures India Private Limited v. The Assistant Commissioner

Telangana HC7 Jun 2022WP/4191/2022

Case brief

AI extract

What is this about?

The High Court directed the respondent authority to refund Rs. 40 lakhs held as a pre-deposit by the petitioner alongside 6% annual interest. The Court ruled that since the limitation for a fresh revisional order had expired, the amount could not be treated as tax, triggering a refund obligation under Article 265.

What did the court decide?

Respondent No.2 directed to refund Rs. 40,00,000/- with interest @ 6% per annum from 21.06.2012 within three months.

M/s Kirby Building Systems and Structures… — Civil Procedure and Limitation | Telangana HC (2022)

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

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TUESDAY, THE SEVENTH DAY^{OF JUNE} TWO THOUSAND AND TWENTY TWO

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PRESENT

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THE HONOURABLE THE^{SRI JUSTICEUJJAL BHUYAN} AND THE HONOURABLE^{MRS JUSTICE SUREPALLI NANDA}

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WRIT PETITION^{NO:4191 0F 2022}

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Between:

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M/s Kirby Building systems^{and Structures lndia Private Limited, (Formerly known as} M/s Kirby Building^{SVstemJ'iiOla pii"ut" t-i.it"d) Reoresentedbv its authorized} sionatory.^p. Veera^{neOov,'irniililproi'Nbl.Obto rS.rOA,Phase-lll,-Pashamvlaram'} S5ngardooy District,^{502507, Telangana, lndia} ...pETl,oNER

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...pETl,oNER

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AND

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l.TheAssistantCommissioner'(StateTax)CharminarDlvisionl'tFloor, Gagan Vihar Complex,^{Nampally, Nyderabad.}

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Joint Commissioner:GSf i5tat'e^{rdx) Charminar Division'1't Floor' Gagan} Vihar Complex.^{ruamfriiy,'Avoliigoio'} ll"viouslv^{Deputv Commissioner}

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ii;;;;;;Iiiaxictiirriinai^{Division' -Hvderabad'}

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ii;;;;;;Iiiaxictiirriinai^{Division' -Hvderabad'}

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1. The Commissioner;isi;i;1;^{C i' bomptex' opp Gandhi Bhavan'} Hvderabad Siate^{- 500001500001}

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Hvderabad Siate of^{Telangana,'Through - 500001500001Principal-P99'911ry to Government Revenue}

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;;;;;r;;ilc-ommerciitfax)' Hvderabad'Telansana ...RESP.NDENTS

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PetitionunderArticle226ollheConstitutionoflndiaprayingthatinthe circumstances^{Stated in the affidavitfiled therewith,the High Court may be} pleased to^{issue a Writ' Orderor direction particularly one in the nature of WRIT} OF IVIANDAMUS^{or any other appropriatewrit (i) Declaringthat the Revision} Notice^{of Assessmentdated'1 '1 07 '2011 is barred by limitation on account of} lapse^{of a period of 3 years as stipulated under Section 37 of the Telangana} Value^{Added Tax n't'ZOOS(ii) directing the Respondentstorefund} Rs.40,OO,0O0/-^{paid by the Petitioner under protestvide Cheques bearing} Nos.392817^{daled 23 12'2011and 392836dated31 'O1 '2012 drawn on SBI} Commercial^{BranchHyderabadduring the pendency of revisionproceedings} beforeRespondentNo2'astherevisionproceedingsisbarredbylimitation'under^{Section 37 of TVAT Act' whichis pursuant to the order dated30 08'2011} passed^{by this Hon'bteHigh Court and (iii) to direct the Respondents to grant} compensation/interest@1%pm'{orarbitrary'ifi';nordinatedelayingranting

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ri,|l,

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refund to the Petitioner from 30.08.2014 to till date of refund towards the grave financial loss suffered due to undue, arbitrary and inordinate delay of more than 7 years in granting refund as the same is against the interest of justice and equity and violative of Articre 14, Articre 19(i xg), and Articre 265 of the Constitution of lnd ia.

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Counsel for the Petitioner: SRI. KARAN TALWAR

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Counsel for the Respondents: SRI K. RAJI REDDY, SENIOR SC FOR COMMERCIAL TAX

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The Court made the following: ORDER

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,it

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3 UB,J & SN,T W.P.No.4J9t of 20i,

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THE HONOURABLE SRI JUSTICE UJJAL BHUYAN

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AND

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THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITIONNo.419lof 2022

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ORDER: per Hon'ble Sri Justice ujjal Bhugan)

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Heard Mr. Karan Talwar, iearned counsel for the petitioner and Mr. K.Rqi Reddy, learned Senior Standing Counsel for Commercial Tax for the respondents.

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By filing this petition under Artic le 226 of the Constitution of India, petitioner has prayed for the following

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reliefs:-

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1 To set aside revision notice of assessment dated 1 l.O7.2OlI; 2 To direct the respondents to refund a sum of Rs.4O,OO,OOO.OO to the petitioner; and

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3 To direct the respondents to pay interest @^{7o/o per month} for the deiay in granting the refund.

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UB,J^{& S]V,J} 4 W.P.No.4191^{of 2022}

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Petitioner^{was aregistered dealer under the} Telangana^{Value AddedTax Act' 2005 (briefly referred to} hereinafter^{as the 1/AT Act')' Petitioner is engaged in the} businessofmanufacturingpre-engineeredsteelbuildings.

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4 . For the^{assessment period2OO8-09'assessment} order^{was passedby the l"t respondent on 08'06'2009under} the VAT^{Act lerying tax of Rs'1'14'858'00'}

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On the^{ground that the aforesaidorder was} prejudicial to^{the interestof the revenue' revised notice of} assessment dated^L!.O7 '2011^{was issued by the2nd} respondent.^{Thereafter, respondent No'2 passedrevisional} order dated^{29.O7 .2011 enhalcingthe 1erry of tax to} Rs.1,51,63,868'00.

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The aforesaid revisional^{order lvas challengedby} the petitioner before this^{Court by filingW.P No'22880of 2011'} This court bv order dated 30.09.201r held that no persOnai hearing was granted to the petitioner before passing the I revisionai order. There was thus violation of the principies of

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UB,J & SN,J W.P.No.4191 of 2O22

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natural justice. Accordingly, the revisional order^dated 29.07.2011 was set aside with a further direction^{to the 2nd} respondent to pass fresh order^{inaccordancewith law.} Accordingly, the revision^{was allowed.}

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Following the order^{passed by this Court,2'd} respondent issued revision^{notice dated 10'11.2011 providing} for personal hearing on^{28.11'2011'It is stated that the} authorized representative^{of the petitionerhad attended the} personal hearing so fixed. Additionally^{writtensubmissions} were made on 01.12.2011.^{On 26.12.2011,petitioner} deposited an amount of^{Rs.20,00,000/-for the aforesaid} assessment^period under^{protest.Likewise,a further arnount} of Rs.2O,OO,OOO/- was^{depositedby the petitioner under} protest on 31.01 .2072. Both the^{amounts were depositedby} the petitioner by way of cheques,^{which were encashed by} respondent No.2^.

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Though respondent^{No'2 issued final notice of} ' hearing on 24.03.201.2, no order of revision was passed by respondent No.2 thereafter.^{In the meanwhile,petitioner}

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6 UB,J & SN,J Vr.P.No.4191 of 2022

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submitted application dated 2r.06.2orz before the 2nd respondent stating that foliowing the order passed by this Court, the initial order of revision d,ated.29.02.2011 was set aside wherea-fter no fresh order of revision was passed. Since the limitation period of three years provided under Section 37 of the VAT Act had expired, petitioner sought for refund of the amount of Rs.40,00,000/_ as paid by it. This was reiterated by subsequent applications dated. 2 t.OZ .2O 17 and, OB. I 1.2O2 l.

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As there was no response, present writ petition has been filed seeking the reliefs as indicated above. Notice in this case was issued on 22.0I.2022.

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When the Court put a query to Mr. Raji Reddy, learned counsel for the respondents as to whether respondents would like to file counter affidavit, he submits that in view of the admitted facts, filing of counter affidavit may not be necessary. In this regard, he submits that he has written instructions of the respondents.

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1 1. Learned counsel for the petitioner submits that following the order passed by this Court dated 30.08.2011, the

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7 UB,J & SN'J W.P.No.4191^{of 2022}

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revisionai^{order dated 29 'O7 '2011 no longer exist as the same} has been^{set aside' Though this Court had remandedthe} matter back^{to the revisionalauthorityfor passing of fresh} order, no^{such orderof revision has been passed till date' This} would mean^{that the initial order of assessment dated} 08.06.2009^{would'hold the field' Adverting to Section 37 of} the VAT^{Act, he submits that the limitation for passing fresh} orderuponremandisthreeyears,whichperiodhadlong expired.^{Therefore, question of passingany revisional order} now does^{not arlse'}

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Learned^{counselhas also placed reliance on a} division^{bench decision of the Gujarat High Court in Torrent} PowerLtd.vs.StateofGujarat,decidedonl5.04.2019,to contend^{that resPondentsare under an obligation to refund} the amount^{deposited by the petitioner with adequateinterest'} as hoiding^{on to such depositmadeby the petitioner would be} of India. 1n contravention^{of Article265 of the Constitutton} the Petitioner^{cannot be} Rs.4O,OO,OOO/-^{<lePosit made bY} tax. It was^amere construed^{to bePaYmentof} of tax,^{which did} in anticipation^{of quantificatton} pre-dePosit

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8 UB,J & SN,J W.P. No.4191 of 2022

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not materia-lize. Therefore, he submits that respondents may be directed to refund the amount deposited by the petitioner with adequate interest.

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Mr. K.Raji Reddy, learned Senior Standing Counsel for the respondents submits that following the order passed by this Court dated 30.08.2017, respondent No.2 had issued notice of hearing immediately on 10.11.2011. Subsequently a1so, notice was issued to the petitioner on 24.O3.2012. However, because of the uncertain situation prevailing in the State at that point of time leading to bilurcation of the erstwhile composite State of Andhra pradesh, there was dislocation of files as well as re-location of officials. As a consequence, no hearing could take place and resuitantly, no order could be passed. Faced with the present situation, Mr. Raji Reddy, however, submits that reasonable time may be granted to the respondents for making the refund.

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Submissions made by iearned counsel for the parties have received the due consideration of the Court.

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() UB,J & SN,J W,P,No.4191 of 2022

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As narrated above, there is no dispute as to the facts. Petitioner was initially assessed on 08.06.2O09' On the ground that the assessment order was^prejudicial to^the interest of the revenue, revisional order^{was passed under} Section 32 of the VAT Act on^{29.07.2O1 1 enhancingthe levy of} tax. The revisional order came to^{be challenged by the} petitioner before this Court^{in W.P.No.2288Oof 2011' This} Court by order dated^{30.08.20 11 altowed the writ petition and} set aside the^{revisionalorder dated 29'07'2oll' The matter} was remanded^{back to the revisional authority to pass fresh} orders in^{accordance with law' Though respondent No'2 had} issued^{notices dated 10'11'2011 and 24'O3'2012for hearing'} which was^{attended to by the petitioner, no order of revision} came^{to be} Passed'

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16.^{When the revisionalorder was set aside by this} Court,^{the consequence was that the originalassessmentorder} ,stood^{restored and continuestill date sinceno fresh order of} revision^{has been passed on remand'}

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UB,J & SN,J W.P.No.4191 of 2022

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Section 37 of the VAT Act deals with^limitationin respect of assessments and re-assessments, etc.,^upon remand. Section 37 of the VAT Act is extracted hereunder:-

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"37. Notwithstanding anything containecl in sections 21 and 32 where arr assessment, re-assessment, rectification in or revision of an assessment is made in respect of a dealer or any person in pursuance or in consequence of or to give effect to any finding or direction contained in an order under Sections 31, 32, 33, 34 and 35 or in an order of any court in a proceeding otherwise than by way of appeal or revision, such assessment, re-assessment, rectification in or revision of an assessment shall be made within three years from the date of receipt of such order by the prescribed or revising authority as the case may be:

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Provided that if such appeal, order or order of any court has been subjected to further appeal, either partiaJly or entirely, and if there are orders of stay prohibiting tlie authority concerned to pass consr period or three years """;r;:111":j:;.; ,,lj period during which such stay orders r,,a." in force;

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Provided further that if tl subsequent ,pp"al results in -",fi";;.;:de uch aPreal, order or order of any ";;.ffi;',, ; subjected to further

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UB,J & SN.J W.P.No.4 t 9t of 2022

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appeal, either partially or wholly, the period of three years shall be computed from the date of receipt of subsequent order of appea_l but not from the date of receipt of the original appea-l, order or order of any court which was subjected to further appeal.,,

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From the above, it is evident that when an order of assessment, re-assessment, rectification or revision of an assessment is made following an order of any Court, the same is required to be made within three years from the date of receipt of such order by the prescribed or revising authority.

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i 9. In the instant case, the remand order of the High Court is dated 30.08.2011. Though date of receipt of the order of the High Court is not on record, it can safely be presumed that when 2"d respondent had issued consequential notice dated 10.\l.2OIl for hearing, it would mean that before that date, it had received copy of the High Court,s order. There is also no dispute to the fact that in anticipation of a reviAional order levying higher taxes, petitioner had deposited ,. ,r_ of Rs.40,00,000/- in two tranches though under protest. Insofar

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UE,J^{& SJV.J} W.P.No.4191^{of 2O22}

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the^{assessmentorder daled 08'06'2009is} the^{lerry of tax under} has^{aiready been paid by the petitioner'} concerned,^{the same}

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As to^{the status of the quantumof amount of} this^{asPect was gone} Rs.40,00,000/-^{paid by the petitioner'} High^{Court in Torrent} into^{by a division bench of the Gujarat} Power^{Ltd' (suPra)'It has been held as follows:-}

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'Ifl^{the present case'the petitionershave} mua"^{u. tppti"ationfor refund for the first time} wherein^{it was statedthat the} :;;;r;;t assessment^{{or theyeat 2O06-2007 under} 34^{of the GVATAct wascomPletedin} "; 2O11^{accepting the facts and figures} ""itrro as^{per annual returnand VAT audit t"O]"^} 1l August^{2013, flyingsquad issued notice rn} a.r-^{OO'seekingdetaiis of arnountcollected} towards^{maintenanceof flyash collection} systern.^{The petitionersvoluntarilydeposited} " arnol"tt^{towards tax arld intereston} administrative^{charges collectedfor} maintaining^{fly ash collection system under} ,.o,"=.^{for FY 2006-2007 to 2OLO-2O11for five} ,"".^{n was conveyedto the petitioners by the} \ nyi.rg "qlr"d^{that ttre jurisdictional ward offlce} would^{pass the necessaryorders in this regard'} The petitioners^{received notices for revisionol} assessment^{orders for the financial years 2007-}

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UB,J & SN,J W.P.No.4191 of 2022

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2008 and 2008-2009. Reassessment proceedings for financial^{year 2009-2010 were} completed covering the^{fly ashrelated} transactions,^{whereasthe transactionsfor the} Iinancial^year 2010-2011^{were covered under} regular assessment^{orderpassed undersection} 34 of the GVAT Act.^{The petitioners therefore,} submitted that^{no action was initiatedso far by} the department^{toadjudicatethematter} pursuant to the amount^{collected for the year} 2006-2007.^{The petitionersalso submitted} that the time limit^{for passingthe order for} revision / reassessment^{as per the provisions} under the GVAT^{Act has already expired'Thus} in facts of the case,^{respondentauthoritiesare} withholding the^{amount paidunder protest by} the petitioners^{for the year 2006-2007without} there being^{any assessment, reassessmentor} revision^{order being passed by the authorities} under the^{provisionsof Act Since the action of} the respondent^{authorities inretainingthe} amount^{depositedby the petitionersunder} protest, is^{not backed by any authority of law'} in view^{of provisionsof Article 265 of the} Constitution^{of India'the respondentshave no} authodty^{to retain the same As the petitroners} have made^{an application for refund withinthe} period of^{limitationand as ttre respondent} authorities^{have not decidedthe same ti11 date'} the two^{basic requirementsate to be satished;} one the^{amount of duty in relation to which}

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UB,J & SN,J W.P.No.4191 of 2022

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refund is claimed is^{paid by the petitionersand} two, the incidence of^{such tax has not been} passed by the petitioners to any other^person. So far as both the requirements^{ale concerned,} sarne are satis{ied^{inasmuchas the petitioners} have paid the amount under^{protestis not in} dispute. It is also not in^{dispute that no} assessment, reassessment^{or revision orderis} passed and the time limit for^{passing such} order has already been expired. It is^{also not in} dispute that the petitioners^{havenot passed} over tJ e incidence of such tax to any other person."

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2L. We are in respectful agreement with the views expressed by the Gujarat High Court. The aforesaid amount cannot be construed to be an amount paid as tax or ievy. It is in the nature of a pre-deposit. Therefore, provision of Section 38 of the VAT Act which deals with refund of tax would not be applicable in the present case.

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Following the above, we direct respondent No.2 to refund Rs.4O,00,OO0/- to the petitioner with interest @ 6%o per arinum to be computed from 21.06.2072 when the petidoner first raised the demand for refund. Let the refund along with interest be paid by respondent No.2 to the petitioner within a

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.r.".r1?l#i{;l

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period of three (03) months from the date ol receipt of a copy of ti.ris order.

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This disposes of the Writ petition. However, there shall be no order as to costs.

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As a sequel, miscellaneous applications pending, if

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any, 1n this Writ Petition, s !"llll11d^closed. SD/-T.SR|N|VAS z //TRUE coPY, DEPUry ffnGlsrRAR^/ SECTIOIV--OFFICER

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ONE fAiT COPY 19 THE HON'BLE SRI JUSTICE UJJAL BHUYAN (For His Lordship,s Kin; p;;;;i"^'

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AND

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One fair copy to THE HON'BLE MRS JUSTTCE SUREPALLI NANDA (For Her Lordship,s Kind perusal)

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To,

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The Assistant Commissioner, (State Tax) Charminar Division 1St Floor,

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Gagan Vihar Complex. Nampally, Hyderabad

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The Joint Co.rmissioner -GST, astaie Tax) Charminar Division.^.1st Ftoor. Gagan Vihar Complex. Nampally, Hyderabad^previously Deputy Commissioner (Commercial Tax) Charminar Division Hyderabad

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