In W.P.(C) 15684/2022-DEL HC- Not approaching Court immediately after refund of tax becomes due does not disentitle individual from claiming what is rightfully due: Delhi HC allows petitioner’s claim for interest as delay was not long
Justices Vibhu Bakhru & Amit Mahajan [31-01-2023]

Read Order: CONSORTIUM OF SUDHIR POWER PROJECTS LTD. AND SUDHIR GENSETS LTD v. COMMISSIONER OF DELHI GOODS AND SERVICES TAX 

Mansimran Kaur

Mumbai, February 20, 2023: While disposing the present petition preferred by  the petitioner praying for the direction to be issued to the respondent to refund an amount of Rs 59,56,772 which the petitioner claimed  was  due for the fourth quarter of the year 2013-14, the Delhi High Court observed that there was no material on record to indicate that the petitioner was responsible for any part of the delay in processing the refund. 

The Division bench of Justice Vibhu Bakhru and Justice Amit Mahajan disposed of the instant petition by observing that although the petitioner had  not approached this Court immediately after the refund of tax became due, the Court was unable to accept that the same disentitles the petitioner from claiming what is rightfully due.

The petitioner had filed a return claiming a refund of the sum of Rs.59,59,499 for the fourth quarter of the year 2013-14 .  Thereafter, it filed a revised return on reducing its claim of refund to Rs.59, 56,772/-. The petitioner's return was not processed immediately. However, on October 19, 2015 the concerned Value Added Tax Officer (VATO) issued a notice under Section 59(2) of the Delhi Value Added Tax Act, 2004 (DVAT Act).

Thereafter, default assessment was framed and a demand for the fourth quarter of the year 2013-14 was framed raising a demand of Rs.34,582/-. A notice was issued for the aforesaid amount. The petitioner claimed  that the liability for the said amount was assessed on account of some difference in the output tax liability and the input tax credit.

In the aforesaid context, the petitioner had filed the present petition.

After considering the submissions, the Court noted that there was no dispute  in the fact that the petitioner was entitled to the refund of the excess tax paid. The respondent has since refunded the excess tax and also paid interest for the period of three years. In the circumstances the only question that fell for consideration of this Court was whether the petitioner was  entitled to interest for the period prior to the said three years.

In view of the same, the Court noted that  the return filed by the assessee is required to be considered as an application for refund and the respondent is required to process the same.

In furtherance of the same, Court noted, “In the present case, there is no material on record to indicate that the petitioner was responsible for any part of the delay in processing the refund. There is no allegation to the aforesaid effect either”. 

On a closer examination of the facts of this case, the Bench was unable to accept that the petitioner could be denied interest on the amount of refund which had been unjustifiably withheld, mainly for two reasons. First, that there was no dispute that the petitioner is entitled to the refund and his return was required to be considered as an application for the same. 

The petitioner was not required to approach or pursue the authorities for its claim for refund of excess tax. Second, that the delay in processing claims for refund is endemic to the DVAT authorities and if the same is considered, the delay on the part of the petitioner approaching this court is not long, the Court further noted. 

 In the facts of the present case, the petitioner had received a notice under Section 59(2) and in view of the same, the Court stated that it was  aware that some proceedings were pending before the DVAT authorities. The default assessment was framed on March 31, 2018 . Obviously, the petitioner could not be expected to immediately approach this Court thereafter,the Court further remarked. 

Although the petitioner has not approached this Court immediately after the refund of tax became due, the Court was unable to accept that the same disentitles the petitioner from claiming what is rightfully due. In the given circumstances, this Court directed the respondents to process the petitioner's claim for interest in accordance with law.