Block E-1 v. Kar Bhawan, Palace Compound, Agartala, West Tripura

Judgment

8. 2006-07

30.9.2007

30.9.2007 2007-08

30.9.2008

30.9.2008 2008-09

30.10.2009

30.10.2009 2009-10

30.10.2010

30.10.2010 2010-11

30.10.2011

30.10.2011 2011-12

31.10.2012

31.10.2012 2012-13

28.10.2013

29.10.2013 2013-14

28.10.2014

28.10.2014 Refunds of VAT are dealt with by Section 43 of the Act. It 15) states: “Section 43. Refund. (1) Subject to other provisions of this Act and the Rules made thereunder, the Commissioner shall, refund to a dealer the amount of tax, penalty and interest, if any, paid by such dealer in excess of the amount due from him. (2) Where any refund is due to any dealer according to return furnished by him for any period, such refund may provisionally be adjusted by him against the tax due or tax payable as per the returns filed under section 24 for any subsequent period in the year; Provided that, the amount of tax or penalty, interest or sum forfeited or all of them due from, and payable by the dealer

on the date of such adjustment shall first be deducted from such refund before adjustment.” 16) Thus the Commissioner is obligated to refund to a dealer like petitioner the amount of tax, penalty and interest, if any, paid by such dealer in excess of the amount due from him subject to the provisions of the Act. 17) Rules 35 deals with the manner of seeking refund. It states: “Rule 35: REFUNDS : (1) An application for refund shall be made Superintendent of Taxes and shall include, amongst other, the following particulars; (a) the name, address and registration No. of the dealer; (b) the period of assessment for which refund is claimed; (c) the amount of dues already paid together with challan number and the date of payment and; (d) the amount of refund claimed and the grounds thereof. (2) An application for refund shall be signed and verified by the person seeking 159 refund and shall be in Form XXXIII. (3) Every registered dealer who is entitled to claim refund under Section 43 shall, within twenty one days from the end of each return period, submit a statement showing details of refund claimed in respect of each export sale effected during such period. (4) No claim of any refund shall be allowed unless it is made within one year from the date of the original order of assessment or within one year of the final order passed on appeal or revision as the case may be, in respect of such assessment.” 18) As can be seen from the above provisions, limitation of 21 days is prescribed under sub–Rule (3) of Rule 35 for seeking a refund only from dealers doing ‘export sales’, but not from any dealer like petitioner doing works contracts. 19) The contention of respondents that this period of 21 days prescribed under sub–Rule (3) of Rule 35 also applies to petitioner though it is doing ‘works contracts’ and not ‘export sales’ cannot be accepted for the aforesaid reason. 20) Moreover, as held by the Supreme Court in Bharat Barrel and Drum Manufacturing Co. Ltd v. ESI Corporation1 where substantive rights of parties are likely to be affected and extinguished, only the legislature should prescribe the limitation, and such limitation cannot be prescribed by the Rules made under the Statute. It was held : “5. The question which directly confronts us is whether the to prescribe periods of limitation initiating proceedings before the Court is a part of, and is included, in the power to prescribe “the procedure to be followed in proceedings before such Courts … …. … … …

7. … …The law of limitation appertains to remedies because the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute in respect of 1 (1971) 2 SCC 860 that right. Apart from Legislative action prescribing the time, there is no period of limitation recognised under the general law and therefore any time fixed by the statute is necessarily to be arbitrary. … … …

14. … … It appears to us that where the Legislature clearly intends to provide specifically the period of limitation in respect of claims arising thereunder it cannot be considered to have left such matters in respect of claims under some similar provisions to be provided for by the rules to be made by the Government under its delegated powers to prescribe the procedure to be followed in proceedings before such Court. What is sought to be conferred is the power to make rules for regulating the procedure before the Insurance Court after an application has been filed and when it is seised of the matter. That apart the nature of the rule bars the claim itself and extinguishes the right which is not within the pale of procedure. Rule 17 is of such a nature and is similar in terms of Section 80. There is no gain- saying the fact that if an employee does not file an application before the Insurance Court within 12 months after the claim has become due or he is unable to satisfy the Insurance Court that there was a reasonable excuse for him in not doing so, his right to receive payment of any benefit conferred by the Act is lost. Such a provision affects substantive rights and must therefore be dealt with by the Legislature itself and is not to be inferred from the rule-making power conferred by regulating the procedure unless that is specifically provided for. It was pointed out that in the Constitution also where the Supreme Court was authorised with the approval of the President to make rules for regulating generally the practice and procedure of the Court, a specific power was given to it by Article 145(1)(b) to prescribe limitation for entertaining appeals before it. It is therefore apparent that the Legislature does not part with the power to prescribe limitation which it jealously retains to itself unless it intends to do so in clear and unambiguous terms or by necessary intendment. The view taken by the Madhya Pradesh, Madras, Punjab and Andhra Pradesh High Courts in the case already referred to are in consonance with the view we have taken.” (emphasis supplied) 21) This was also followed by a Bench of the Jharkhand High Court in M/s Kirloskar Brothers Ltd v. State of Jharkhand and others2. 22) In the absence of prescription of limitation for claiming refunds in the substantive law/statute i.e., Section 43 of the Act by the State Legislature, Section 87 of the Act which empowers the State to make Rules ‘for carrying out the purposes of the Act’ and in clause (f) to prescribe ‘the manner in which refunds shall be made’ (in exercise of which Rule 35 is made), cannot prescribe a period of limitation for filing a refund application if the substantive provisions of the statute do not prescribe such limitation. 23) So even assuming for the sake of argument without conceding that the sub-Rule (4) of Rule 35 is valid, for the aforesaid reason, it will not also be applicable to petitioner as it is ultra vires the Act. 24) The applications for refund for each financial year have been filed by petitioner within 7-8 months from end of the financial year on 31st of March, and within one year from the end of the financial year in question, and therefore they cannot be said to have been filed after an unreasonable period of time or time barred. So they needed to be considered by the respondents. 2 Judgment dt.26.4.2023 in W.P.No.3944 of 2022 25) The record reveals that after the Writ Petition was filed, a counter affidavit was filed by respondent nos.4 and 5 initially stating in para 8 thereof that no claim for refund would lie without assessment of ‘final amount’ of tax, that no refund can be allowed to any dealer without conducting ‘assessment’, but admitting that petitioner had filed it’s self declaration/return, and contending that the TDS deductions are provisional in nature. 26) In para 12 of the counter affidavit this is reiterated by respondents as under: “.. without making any assessment of the dealer/petitioner, the actual amount of tax cannot be ascertained and the claim raised by the petitioner cannot be proved conclusively”. It is further stated that: “a dealer is selected for assessment on random basis and after completion of assessment, the actual tax liability of the dealer can be determined and the excess amount of tax may be refunded to the dealer”. 27) If the respondents do assessments on random basis, and they did not select the petitioner’s case for assessment under Section 30 or for an Audit assessment under Section 31 or Section 34 of the Act on such random basis, they cannot deny refund saying that there was no ‘assessment’ of the petitioner. The petitioner cannot be blamed for the inaction of the respondents in not making an ‘assessment’ and it cannot deny a refund on that basis. 28) The respondents cannot be allowed to plead mistake, if any, in not disputing petitioner’s quarterly returns and take advantage of their own wrong, particularly, when the window for making ‘assessments’ is fixed as 5 years under Section 33 of the Act and the said period of 5 years had expired long back. 29) Moreover admittedly, in the instant case, the quarterly returns filed by petitioner have been accepted by the respondents after finding them to be in order (as they did not raise any query or dispute), and as per Section 29(3), the said return has to be accepted as ‘self assessment’. Thus ‘self assessment’ under Section 29(3) is also a form of ‘assessment’ under the Act and so this plea about lack of ‘assessment’ cannot be raised by respondents. 30) 31) This can also be looked at in another way. Under Section 53 of the Act, every dealer whose turnover exceeds Rs. 40 lakhs or such other amount as many be notified, has to get it’s accounts audited by an accountant within 6 months from the end of the year and obtain report of an audit, and then furnish it to the Commissioner by the end of the month after expiry of period of 6 months during which the audit would have to be completed, and in para 24, it is stated that this was done by petitioner. 32) 33) This is not disputed by the respondents. Under Section 52 of the Act, the Commissioner may, for any purpose related to the administration or enforcement of the provisions of the Act, by notice require any person to provide to the Commissioner within such reasonable time as may be stipulated in the notice, with any information or additional information. 34) Thus after getting such information, the Commissioner can take appropriate action against the dealer which may include assessment under Section 31 or Section 32 of the Act. 35) When the statute prescribes for an audit by an accountant of dealers like the petitioner who have more than the prescribed turnover, and petitioner obtained such an audit report and submitted it to the respondents as directed under Section 53, and they never disagreed with those reports when they were submitted, these audit reports will also fall in the category of ‘additional information’ under Section 52 of the Act available to the Commissioner to initiate appropriate action under the Act. 36) Had the audit reports indicated that petitioner had paid less tax that what it is liable for, proceedings would have been undoubtedly initiated against the petitioner for assessment under Section 30 within the period of 5 years prescribed under Section 33 of the Act, on basis of the audit report to collect shortfall in tax and penalty by the respondents. 37) Conversely, when those audit reports filed by the petitioner within the time prescribed by the Act indicate that petitioner should get a refund, the respondents cannot deny the same raising untenable objections. 38) The respondents have also contended that petitioner did not submit the claim for Refund in Form XXXIII and it had given the request for refund on plain paper and so petitioner cannot seek the refund. 39) This plea was raised for the first time in a Letter dt.9.7.2015 to the petitioner by the Joint Commissioner of Taxes. It is highly belated as the disputes pertain to period 2006-07 onwards. 40) The petitioner then made an application in the said Form XXXIII on 31.5.2016 (Annexure XV to the rejoinder). 41) When the bar of limitation is not prescribed in the Act (as discussed supra) in respect of ‘self assessment’ returns under Section 29 of the Act, and when the petitioner submitted the refund claims for each of the financial years in question on 31.5.2016 (in addition to the previous refund applications within 7-8 months of end of financial years in question), the respondents ought to have processed it and could not have rejected it. 42) Not only is the objection raised by the respondents highly belated because prior to 9.7.2015, it was never made, but it cannot also be countenanced since the substantive right conferred by Section 43 of the Act to get a refund of tax cannot be denied for non compliance with a procedural provision i.e. non submission of Refund claim in Form XXXIII. 43) In Ramnath Exports (P) Ltd. v. Vinita Mehta3 , the Supreme Court declared: “15. It is trite law that the procedural defect may fall within the purview of irregularity and capable of being cured, but it should not be allowed to defeat the substantive right accrued to the litigant without affording reasonable opportunity.” 44) In Lakshmi Rattan Engg. Works Ltd. v. CST4 , the Supreme Court had declared as under: “11. It is to be remembered that all rules of procedure are intended to advance justice and not to defeat it.” 45) The respondents 4 and 5 went to the extent of contending in para 11 of the Counter affidavit that no copy of the refund application in Form XXXIII could be located in the concerned charge office and that the Chief Commissioner of State Taxes wrote a letter dt.7.1.2022 that no copies of