In a significant legal case, the Delhi High Court has provided a judgement on the refund and interest dispute concerning the DVAT Act. The court’s decision has implications for parties involved in the issue, including the authorities and claimants. This judgement sheds light on the interpretation of relevant provisions and sets a precedent for future similar cases.
Facts
- The petition was allowed with directions to the competent authority of the respondents
- The competent authority was instructed to dispose of the prayer for refund within four weeks
- A specific direction in the nature thereof was given, directing the dated 27.03.2023
- The matter was remanded to the Tribunal for deciding afresh.
- The Tribunal concluded that the petitioner was not liable to be recognized or treated as a ‘dealer’ under the Delhi Value Added Tax Act, 2004.
- The Commissioner did not file an appeal, therefore the decision reached by the Tribunal has now become final.
Arguments
- The term ‘person’ in Sections 38 and 42 of the DVAT Act includes all persons, not limited to just dealers.
- The refund of pre-deposited amount as a condition of appeal starts from the date the appeal is allowed.
- Restricting the term ‘person’ would go against the intention of the legislature.
- Refund of any amount received as deposit or pre-deposit, even if unintentional, must be refunded with interest.
- Interest rate for refund as per Sections 38 and 42 is 6% p.a. as notified by the Government.
- Penalty set aside by the Tribunal should also result in setting aside/quashing of interest as per DVAT Act.
- Mr. Aggarwal, learned counsel for the respondents, assures that the prayer for refund will be addressed and disposed of within four weeks, subject to verification of facts.
- Mr. Mahana, counsel for the petitioner, argues that as the petitioner was not considered a “dealer” under the Act, the interest payable on refund should not be restricted by Act provisions.
- The Court acknowledges Mr. Mahana’s contention and leaves it open for the competent authority of the respondents to address.
Analysis
- The High Court orders dated 03.07.2023 and 18.07.2023 set aside and quashed the restriction on interest rate under the DVAT Act.
- The court clarified that the decisions in the cases of Roadmaster and Tata Chemicals are not applicable as they were under the Income Tax Act which has specific provisions for interest payment.
- The use of ‘person’ instead of ‘dealer’ in the DVAT Act indicates the legislature’s intention to include entities other than dealers for refund and interest benefits.
- The Court directed the competent authority to handle the claim for interest within two weeks.
- The Court emphasized that the DVAT Act provisions regarding interest and refund apply even if the petitioner is a transporter and not a dealer.
- Specific provisions under Section 42 of the DVAT Act pertain to the grant of interest on refunds.
- The petitioner, having availed remedies under the Act, cannot now challenge the Act’s applicability.
- The Court directed the authority to decide on interest for delayed refund disbursement, taking into account the petitioner’s contentions.
- Sections 38 and 42 of the DVAT Act address refund and interest grant.
- The competent authority was instructed to address the refund request within four weeks and consider the petitioner’s claim for interest at claimed rates.
- A person entitled to a refund under the DVAT Act shall receive simple interest at the annual rate notified by the Government.
- Interest is calculated on a daily basis from the later of the due date of the refund or the date the overpaid amount was paid.
- Interest is calculated on the refund amount after deducting any tax, interest, penalty or other dues.
- If the amount of refund is enhanced or reduced, the interest amount is adjusted accordingly.
- Section 38(1) and Section 42(1)(a) and (b) of the DVAT Act outline the rules for refunds.
- Interest on refund is computed from the date when the refund was due until the actual date of refund.
- The judgement in the case of Redihot Electricals does not apply to the present case.
- The refund became payable following the orders of the DVAT Appellate Tribunal.
Decision
- The Tribunal, in its decision on 10 May 2023, dismissed the writ petition (W.P. No 11463/2023) seeking a refund of Rs. 10,32,138/- with interest and compensation.
- Interest on the refund amount of Rs. 10,32,138/- is to be paid from 10.05.2023 at the rate of 6%.
- A penalty amount of Rs. 4,91,096/- under Section 86(19) was set aside by the Tribunal, with interest on this amount to be calculated from 26.08.2021 at the rate of 6% p.a.
- The Tribunal also set aside the payment of tax of Rs. 4,91,096/- and a penalty of Rs. 50,000/- imposed under Section 86(14).
Case Title: RASHTRIYA TRANSPORT CORPORATION Vs. COMMISSIONER OF DELHI GOODS AND SERVICE TAX & ANR. (2024:DHC:4318-DB)
Case Number: W.P.(C)-11463/2023
