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2015 DIGILAW 326 (BOM)

OM Agencies v. Assistant Sales Tax (VAT ADM)

2015-02-04

A.S.CHANDURKAR, B.P.DHARMADHIKARI

body2015
JUDGMENT (B.P. Dharmadhikari, J.) 1. Heard Shri Bhattad, learned counsel for the petitioners and Mrs. Dangre, learned Government Pleader for the respondents. 2. Three different establishments are before this Court, complaining about non assessment of its Value Added Tax for the period from 01.04.2007 to 31.03.2008. 3. The petitioners claim benefit of provisions governing set off contained in Section 48(6) of the Maharashtra Value Added Tax Act, 2002 (hereinafter referred to as 2002 Act). In nutshell the submission is, in returns filed for said period, the petitioners have asked for refund which is approximately same as that of quantum of tax assessed for the next year i.e. for the period from 01.04.2008 to 31.03.2009. The grievance is, as assessment for the period from 01.04.2007 till 31.03.2008 is not being finalized, the exact amount to be returned to the petitioners has still not been crystallized and, therefore, cannot be technically used to claim set off against later demand. 4. Shri Bhattad, learned counsel submits that if this exercise is completed and exact amount of set off is worked out, Section 48(6) enables the petitioners to claim set off for that amount for the tax found payable in immediately next year. If this set off is allowed, the tax liability may be extinguished fully or partially and demand of interest upon the tax amount not paid or then levy of penalty, fall to ground. The petitioners state that questioning the levy of interest and penalty as also tax assessment for the year 2008-09, they have separately filed statutory appeals before the appellate authority and that authority has stayed recovery of penalty. 5. Our attention has been drawn to the judgment of the Hon'ble Apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa, reported at 1972 (83) ITR 26, to show that in this situation, the petitioners cannot be treated as defaulters and hence interest or penalty cannot be demanded from them. Unreported judgment delivered at Nagpur in Writ Petition No. 430 of 2014 on 04.12.2014 (M/s. Bhatia Industries and Infrastructure Ltd. vs. State of Maharashtra thr. its Principal Secretary, Finance Department & Ors.), which interprets the provisions of Sections 30 and 50 of the Maharashtra Value Added Tax Act, 2002, is also pressed into service. Unreported judgment delivered at Nagpur in Writ Petition No. 430 of 2014 on 04.12.2014 (M/s. Bhatia Industries and Infrastructure Ltd. vs. State of Maharashtra thr. its Principal Secretary, Finance Department & Ors.), which interprets the provisions of Sections 30 and 50 of the Maharashtra Value Added Tax Act, 2002, is also pressed into service. The judgment delivered at Bombay in Writ Petition No. 33 of 2012 on 11.05.2012 (M/s. Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur vs. The State of Maharashtra & Ors.), is pressed into service to show that in similar situation, there the learned Advocate General and State Government agreed to allow refund even in the absence of express prayer therefor. The contention is, deliberately assessment for the year 2007-08 is not being finalized. 6. The learned Government Pleader submitted that the respondents should be given time to finalize assessment for the year 2007-08. She also attempted to rely upon a Trade circular to urge that after assessment, if any amount is found refundable, the petitioners must apply for refund and after such application only, the amount can either be refunded or allowed to be set off by adjusting it against the subsequent demand. She also pointed out that Trade circular restricted this facility to particular years and as such the petitioners cannot now in present matter seek such refund or set off. 7. The judgments shown to this Court are not in dispute. The statement made by the State Government and accepted by the Division Bench, as recorded in its judgment dated 11.05.2012, is also not in dispute. The provisions of Section 48 deals with set off, refund etc. Section 49 is on refund of tax on declared goods sold in the course of inter-state trade or commerce and, therefore, not relevant here. Section 50 deals with refund of excess payment. Sub-section (2) thereof enables dealer to adjust such refund against the amount due as per any return for any period contained in the said year. However, it is not necessary for us to consider the question of refund of excess payment in present facts. Sub-section (6) of Section 48 states that where any dealer becomes entitled to refund after the appointed date, whether under any earlier law or under this Act, i.e. under 2002 Act mentioned supra, then such refund must be first applied against the amount payable under any earlier law or 2002 Act. Sub-section (6) of Section 48 states that where any dealer becomes entitled to refund after the appointed date, whether under any earlier law or under this Act, i.e. under 2002 Act mentioned supra, then such refund must be first applied against the amount payable under any earlier law or 2002 Act. If any balance amount is left, that amount can only be refunded to dealer. Thus, Section 48(6) of the 2002 Act, casts obligation upon the respondents to appropriate the excess amount paid by the dealer in any previous year towards its demand in subsequent year. This obligation imposed by Section 48(6) is being violated in present matters. It is apparent from the facts noted by us that though assessment for the year 2008-09 has been finalized and demand has been made, assessment for the earlier year i.e. 2007-08 is still pending. There is no obvious reason for keeping it pending. This conduct defeats legislative intent behind incorporating Section 48(6) in statute and denies advantage of a beneficial provision meant for assessee to it. 8. In this situation, interests of justice can be met by directing the respondents to complete the assessment proceedings for the year 2007-08 within a period of six weeks from today. The amount found refundable to the petitioners shall then be appropriately dealt with in accordance with law under Section 48(6) noted supra. The consequences of such appropriation can be examined in appeals which are preferred by the petitioners challenging subsequent levy of tax, interest and penalty for the year 2008-09. 9. Thus, leaving said question open and with above directions, we allow the petitions and dispose of the same. However, in the facts and circumstances of the case, there shall be no order as to costs.