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2016 DIGILAW 621 (JK)

Lark Non Ferrous Metals Ltd. v. State of J&K

2016-12-01

N.PAUL VASANTHAKUMAR, TASHI RABSTAN

body2016
JUDGMENT : N. Paul Vasantha Kumar, J. 1. This writ petition is filed seeking to quash order dated 28.05.2015 passed by the Commercial Taxes Officer, Circle-I, Jammu and for direction to the respondents to refund the security amount to the tune of Rs. 1,05,17,000.00 along with interest at the rate of 27% per annum. The case of the petitioner-company is that it is a manufacturing unit situated at Bari Brahmana, Jammu having TIN No. 01021112083 which is manufacturing enameled copper wire and enameled copper rods for which the raw material is being imported from outside the State of Jammu and Kashmir in the shape of copper cathode. The petitioner-company imported cathode from various dealers situated across the country by proper documents including invoices and goods receipts. The consignments were-seized by the Commercial Taxes Officer, Commercial Taxes Check Post, Lakhanpur at the time of entering the State of J & K under section 67(10) of J & K VAT Act, 2005. The seizure memos were issued to the petitioner-company on various dates. 2. For releasing the seized consignments, the petitioner-company was forced to furnish security under section 67(10) of J & K VAT Act, 2005 in the shape of FDRs to the tune of Rs. 1,05,17,000.00 in the year 2007. The details of security amount deposited are as follows: Seizure memo No. Security amount 2350-K dated 03.07.2007 Rs.5,04,633.00 2787-K dated 22.07.2007 Rs.14,65,000.00 2786-K dated 22.07.2017 Rs.4,96,309.00 1318-K dated 23.07.2007 Rs.27,88,293.00 2273-K dated 30.06.2007 Rs.15,01,115.00 2788-K dated 22.07.2007 Rs.2,90,223.00 2613-K dated 15.07.2007 Rs.10,59,973.00 2591-K dated 14.07.2007 Rs.8,87,053.25 2272-K dated 30.06.2007 Rs.15,04,159.00 3. Seizure memos were prepared on the premise that the petitioner-company had not registered for import of raw material for manufacture of super enameled copper wire under the provisions of J & K VAT Act, 2005. It is stated that the petitioner-company had imported copper cathode before the expiry of 90 days from amending of registration i.e. 17.09.2007 to import the raw materials. The petitioner-company filed nine appeals on 27.12.2009 before Deputy Commissioner, Commercial Taxes (Appeals), Jammu against the orders of seizure and the appeals were allowed by order dated 26.08.2010 and the matter was remanded to the Assessing Authority, Commercial Taxes Check Post, Lakhanpur as the goods stand incorporated in the registration certificate and the Assessing Authority was directed to keep the said fact in mind while passing fresh orders in accordance with law. The Appellate Authority came to the conclusion that in each of the orders passed by the Assessing Authority TIN No. 01761071033 has been mentioned, hence the Assessing Authority was not justified in imposing security as if the petitioner-company was not a registered dealer under VAT Act. It is also an admitted fact that the petitioner moved an application for amendment in registration certificate and by order dated 17.09.2007, the amendment was ordered. 4. After remand, the Assessing Authority, Commercial Taxes Check Post, Lakhanpur directed the petitioner-company to file necessary documents which were duly filed through its counsel, stating that Commercial Officer Circle (1) Jammu by order dated 17.09.2007 has granted permission to the petitioner-company to import raw material/packing material w.e.f. 24.07.2007 to 08.08.2007. It was also pointed out that in view of the amendment of registration certificate within 90 days as provided under proviso to sub-Section 10 of Section 67 of J & K VAT Act, 2005, the petitioner is entitled to get refund of the amount which has been paid as term deposits on different dates. The refund request was made on 03.02.2011 by the petitioner through counsel. The Commercial Taxes Officer, Commercial Taxes Post, Lakhanpur passed an order, stating that when the goods were passed through Toll Post, Lakhanpur, the same were not covered by the registration certificate, though the same were incorporated subsequently. He further ordered that the Check Post, Authority has the role of imposing security only and the adjustment of security and refund claim can be made before the concerned Circle where the petitioner-company is registered. The said order was passed on 07.03.2011. The assessment of the dealer for the year in 20.10.2011 was finalized by order dated 25.03.2011, stating NIL tax liability under the J & K VAT Act, 2005 without considering refund claim. Hence, the petitioner-company again approached the Assessing Authority, Commercial Taxes, Circle-I, Jammu with a request to grant refund on 20.02.2014. Thereafter, the petitioner-company also made a request to the Bank for issuance of certificate to the effect that the amounts had been encashed by the Commercial Taxes Officer, Lakhanpur and also applied for issuance of verification certificate of payment of security under section 67(10) to the Commercial Taxes, Officer, Lakhanpur followed by reminders dated 27.05.2014 & 05.07.2014. The Commissioner, Commercial Taxes, Check Post, Lakhanpur issued a certificate on 24.07.2014 confirming that an amount of Rs. The Commissioner, Commercial Taxes, Check Post, Lakhanpur issued a certificate on 24.07.2014 confirming that an amount of Rs. 1,07,31,731/- had been forfeited and the amount has been transferred in the Bank account of the Department. Thereafter, the petitioner received a communication from the Commercial Taxes Officer, Cir-cle-I, Jammu (where the petitioner is registered) stating that the application filed by the petitioner cannot be entertained with a direction to the petitioner to approach the Commercial Taxes Officer, Commercial Taxes Check Post, Lakhanpur where the petitioner has paid the security amount under Section 67(10) of VAT Act. The said order was passed on 27.08.2014. The petitioner thereafter moved an application before Commercial, Taxes Check Post, Lakhanpur for refund on 27.08.2014 followed by reminder dated 22.02.2015. The said request was transmitted internally to the 3rd respondent who rejected refund on 28.05.2015 on the ground that in the return form submitted for the assessment year 2007-08, the petitioner had not shown the security amount paid, therefore, the refund claim cannot be granted under section 50 of J&K VAT Act, 2005. The said order was passed by the Commercial Taxes Officer Circle (1), Jammu. 5. The said order is challenged in this writ petition by contending that in the order of Deputy Commissioner, Commercial Taxes (Appeals), Jammu dated 26.08.2010 it is specifically held that the security has been levied by respondent No. 3 without noticing the documents to prove that the petitioner is registered under J & K VAT Act, 2005 and as the petitioner is a TIN holder, the ingredients of section 67(10) of J & K VACT Act, 2005 are not attracted to seize the imported goods and the said order having become final and refund claim having been rejected only on the ground that the petitioner has not mentioned about the security furnished in the returns filed during the year 2007-08, it is to be ascertained as to whether the order of 2nd respondent dated 28.05.2015 is valid and petitioner is entitled to get refund. 6. Mr. Pranav Kohli, learned counsel appearing for the petitioner argued that in the printed return form prescribed in the year 2007-08, there is no specific column to mention about the security amount furnished and the said column was made available only in the assessment forms prescribed now. 6. Mr. Pranav Kohli, learned counsel appearing for the petitioner argued that in the printed return form prescribed in the year 2007-08, there is no specific column to mention about the security amount furnished and the said column was made available only in the assessment forms prescribed now. Therefore the petitioner was not expected to mention about the security deposits made in the year 2007 in the return form submitted for the assessment year 2007-08. 7. When this issue was raised by learned counsel for the petitioned, learned Advocate General was asked specifically as to whether any such column was provided in the printed return format to disclose the security deposited. The learned Advocate General fairly submitted that the return format of the year 2007-08 do not contain any such column to mention about the security furnished. Learned Advocate General, however, argued that the security having been furnished pursuant to the demands raised vide various orders from 30.06.2007 to 27.07.2007, the refund claim has not been made within 3 years' period. In answer to the said submission, learned counsel appearing for the petitioner submitted that the petitioner is all along agitating and seeking refund before the Assessing Authority which is reflected in various orders passed by the department and the said submission made by learned Advocate General is not valid on the facts of the case. 8. We have considered the rival submissions. It is not in dispute that the petitioner challenged the orders of seizure before the Deputy Commissioner Commercial Taxes Appeals (Appellate Authority), Jammu by filing nine appeals and the said appeals were allowed on 26.08.2010 by setting aside the order and remanding the matters to the Assessing Authority to pass fresh orders. The petitioner thereafter approached Assessing Authority on 03.02.2011 and the Assessing Authority, Commercial Taxes, Check Post Lakhanpur passed an order on 07.03.2011, stating that the adjustment of security/refund of excess amount is to be seen by the concerned Circle where the dealer is registered. Thereafter, the Assessing Authority, Commercial Taxes Circle I, Jammu, when approached on 20.02.2014, passed an order on 27.08.2014, stating that the petitioner has to approach the Assessing Authority, Check Post Lakhanpur for grant of refund in whose jurisdiction, the security has been paid. Thereafter, the Assessing Authority, Commercial Taxes Circle I, Jammu, when approached on 20.02.2014, passed an order on 27.08.2014, stating that the petitioner has to approach the Assessing Authority, Check Post Lakhanpur for grant of refund in whose jurisdiction, the security has been paid. Thereafter, the petitioner approached the Commissioner, Commercial Taxes, Check Post Lakhanpur on 27.08.2014 which application was forwarded to 2nd respondent seeking refund, who passed an order on 28.05.2015, stating the only reason that the petitioner's claim of refund was not reflected as the amount paid as security at Check Post Lakhanpur in the returns form submitted for the year 2007-08. Thus, the claim of learned Advocate General that the amount was not claimed within 3 years is not factually correct and not the reason stated in the impugned order as the only reason stated was that in the returns filed for the assessment year 2007-08, the security furnished was not mentioned which was due to non-availability of separate column which fact is admitted by the respondents through learned Advocate General. In such view of the matter, the petitioner-company is entitled to get the refund of the amount deposited for release of goods. As narrated above the petitioner company is all along questioning the demand of security deposit right from 27.12.2009 till 28.05.2015 and this writ petition was filed on 12.06.2015. Thus, there is no delay on the part of the petitioner in claiming refund. 9. The non-liability of the petitioner to pay the demand is evident from the amendment of registration granted by the 2nd respondent dated 17.09.2007. The amendment was made before the expiry of 90 days of actual transport/import. Section 67(10) of the J & K VAT Act 2005 can be extracted herein to appreciate the same which reads thus; "67(10) Where the taxable goods are transported on behalf of an unregistered dealer, or a registered dealer in whose registration certificate the goods transported are not covered, the officer Incharge of the Special Investigation Unit (SIU) or notified area or check post or barrier or any officer authorized under sub-section(4) shall detain conveyance or any other person Incharge of the goods furnishes security in the prescribed form for an amount equal to double the amount tax leviable on such goods or twenty five percent of the value of goods whichever is higher. The security thus furnished shall be adjusted against the tax, penalty, interest, fee or any other sum that may be payable by such dealer under the provisions of the Act. The excess amount of security, if any, shall be refundable in the manner laid down in the Act. The provisions relating to detention and search of goods contained in this section shall, in so far as may be applicable, apply for the purposes of this sub-section. Provided that if the said dealer fails to obtain a certificate of registration under the Act within a period of 90 days from the date of deposit of security and the Assessing Authority has no information in his possession that the dealer is carrying on regular business of selling taxable goods, the amount of security deposited shall be deemed to be the tax payable by the dealer and no claim for refund of such amount or any part thereof shall be entertained." As stated supra, as per the proviso to sub-section 10 of Section 67, if a dealer fails to obtain a certificate of registration under the Act within a period of 90 days from the date of deposit of security and the Assessing Authority has no information about the registration, then only the security deposit shall be deemed to be the tax payable by the dealer and no claim for refund of such amount may be entertained. The petitioner company having amended the registration, as stated supra on 17.09.2007 and imported the raw materials from 30.06.2007 to 22.07.2007, the said transportation/import is within 90 days of amending the registration certificate. Thus the petitioner is entitled to get refund as per proviso to sub-section 10 of Section 67 of J & K VAT Act. 10. Considering the facts and circumstances of this case, we are of the view that the order passed by 2nd respondent, rejecting the claim for refund is invalid and the petitioner is entitled to get refund of the security furnished at the time of seeking release of the imported copper cathode/packing materials. In so far as the claim of interest, the amount paid as security was in the year 2007. The Appellate Authority allowed the appeal on 26.08.2010 and the said order was delayed to be implemented. In so far as the claim of interest, the amount paid as security was in the year 2007. The Appellate Authority allowed the appeal on 26.08.2010 and the said order was delayed to be implemented. The amount deposited and then forfeited on 01.01.2008 is certified by the Deputy Commissioner Commercial Taxes, Check Post, Lakhanpur as per his communication dated 24.07.2014. The said communication reads thus:- "Office of the Deputy Commissioner Commercial Taxes Check Post Lakhanpur, J & K Lark Non Ferrous Metals Ltd. No. CTL/790 Bari Brahmana Jammu Dated:-24.7.2014 Subject-Verification of payment paid by M/s. Lark Non Ferrous Metals Ltd. Sir, With reference to the subject matter, this is to confirm on the basis of office record that the payment as detailed below has been received at this Checkpost as Security under Section 67(10) of J & K VAT Act, 2005. The dealer has filled the FDR's against the Seizure Memo Nos. as mention below. S. No. Seizure No. Dated Amount of FDR 1. 2272-K 30.06.2007 15,05,000/- 2. 2273-K 30.06.2007 15,10,000/- 3. 2350-K 03.07.2007 5,05,000/- 4. 2591-K 14.07.2007 8,90,000/- 5. 2613-K 15.07.2007 10,65,000/- 6. 2786-K 22.07.2007 4,97,000/- 7. 2786-K 22.07.2007 14,65,000/- 8. 2288-K 22.07.2007 2,91,000/- 9. 1318/CTL 23.07.2007 10,33,000/- 14,65,000/- 2,91,000/- Total 1,05,17,000/- Above referred FDRs were forfeited by this office vide letter No. 2555-56 dated 12.12.2007. The state bank of India Bari Brahmana Jammu has transferred the forfeited FDRs with amounting to Rs. 1,07,31,131/-. Same amount was credited in our bank account No. CD-16 on 01.01.2008. Yours faithfully (P.K. Bhat) KAS Dy. Commissioner Commercial Taxes Checkpost Lakhanpur" Thus the petitioner is entitled to get 6% interest per annum from 01.01.2008 i.e. the date of crediting the amount. The writ petition is partly allowed. Respondent Nos. 1 to 3 are directed to release the amount deposited by the petitioner as security with 6% interest with effect from 01.01.2008 within a period of six weeks from the date of receipt of copy of this order. No costs.