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2018 DIGILAW 342 (GUJ)

NEO STRUCTO CONSTRUCTION LTD. v. STATE OF GUJARAT

2018-02-01

A.S.SUPEHIA, HARSHA DEVANI

body2018
JUDGMENT : HARSHA DEVANI, J. 1. Rule. Mr. Chintan Dave, learned Assistant Government Pleader, waives service of notice of rule on behalf of the respondent. Having regard to the controversy involved in the present case, which lies in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter was taken up for final hearing today. 2. By this petition under article 226 of the Constitution of India, the petitioner seeks a direction to the respondent to refund an amount of Rs.10,00,000/- paid by the petitioner by way of pre-deposit in compliance with an order dated 19.10.2015 made by the Gujarat Value Added Tax Tribunal (hereinafter referred to as "the Tribunal"), while granting stay against the recovery of the demand arising out of the order which was subject matter of challenge before it in Revision Application No.67 of 2015 filed by the petitioner. 3. An assessment order dated 7.8.2010 came to be made against the petitioner. The said order came to be taken in revision by the Deputy Commissioner of Commercial Tax, Appeal-15, Surat under section 75 of the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as "the GVAT Act") read with section 9(2) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act") and an order dated 3.8.2015 came to be passed against the petitioner. The petitioner challenged the revision order before the Tribunal. At the time of admission of the revision application, the petitioner was directed by the Tribunal to deposit a sum of Rs.10,00,000/- as condition for granting stay against the recovery of demand arising out of the order impugned before it. Such amount came to be deposited by the petitioner on 30.10.2015, where after the revision application came to be admitted. By an order dated 22.1.2016, the revision application came to be allowed by setting aside the order passed by the Deputy Commissioner. 4. In view of the fact that the petitioner's revision application has been allowed, the petitioner requested the respondent to refund the amount of Rs.10,00,000/- deposited by it at the time of admission of the revision application, however, the respondent did not heed to such request. The petitioner, therefore, approached the Tribunal by filing a miscellaneous application bearing No.17 of 2016 seeking a direction to the respondent to refund the amount of predeposit to the petitioner. The petitioner, therefore, approached the Tribunal by filing a miscellaneous application bearing No.17 of 2016 seeking a direction to the respondent to refund the amount of predeposit to the petitioner. By an order dated 22.6.2016, the Tribunal ordered refund of the pre-deposit amount of Rs.10,00,000/- to the petitioner within a period of one month from the date of such order. Such order of the Tribunal came to be challenged by the respondent before this court in Special Civil Application No.21446 of 2016. By an order dated 27.12.2016, this court granted ad-interim relief staying the order dated 22.1.2016 passed in Revision Application No.67 of 2015 and the order dated 22.6.2016 passed in Miscellaneous Application No.17 of 2016. 5. Mr. A.J. Shaikh, learned advocate for the petitioner submitted that the action of the respondent in withholding the amount of pre-deposit and not refunding it to the petitioner is against the provisions of law and violative of the fundamental rights of the petitioner. It was urged that in view of the fact that the petitioner has succeeded before the Tribunal, the respondent has no authority to retain the amount deposited by the petitioner by way of pre-deposit pursuant to the order of the Tribunal, and hence, the respondent be directed to forthwith refund the amount of Rs.10,00,000/- to the petitioner with interest, in accordance with law. 6. Vehemently opposing the petition, Mr. Chintan Dave, learned Assistant Government Pleader, while reiterating the averments made in the affidavit-in-reply filed on behalf of the respondent, invited the attention of the court to the provisions of section 36 of the GVAT Act, to submit that the Commissioner while making a refund to a person of the amount of tax, penalty and interest, if any, paid by such person in excess of the amount due from him, is required to first apply such excess towards the recovery of any amount due under the GVAT Act or the earlier laws and then refund only the balance amount, if any. It was submitted that for assessment year 2012-13, an amount of Rs.78,812/- together with running interest at statutory rates is payable by the petitioner, and hence, unless and until the total outstanding amount that is due and payable by the petitioner is not arrived at, refund orders in favour of the petitioner cannot be issued. It was submitted that for assessment year 2012-13, an amount of Rs.78,812/- together with running interest at statutory rates is payable by the petitioner, and hence, unless and until the total outstanding amount that is due and payable by the petitioner is not arrived at, refund orders in favour of the petitioner cannot be issued. 6.1 The learned Assistant Government Pleader further submitted that the order passed by the Tribunal had been stayed by this court and hence, the respondent would not be liable to pay any interest on the amount of pre-deposit. 7. In rejoinder, Mr. Shaikh, learned advocate for the petitioner drew the attention of the court to the fact that the order passed by the Tribunal on the refund application was dated 22.1.2016, whereas the assessment order in relation to assessment year 2012-13 was made on 23.3.2017 and the order of the appellate authority was passed on 19.7.2017. It was submitted that therefore, such dues became payable much after the order passed by the Tribunal and therefore, the respondent cannot seek to recover such amount from the amount paid by the petitioner by way of pre-deposit. 7.1 On the question of interest on the amount of which refund is sought, the learned advocate for the petitioner referred to the provisions of section 38 of the GVAT Act, which provides for "interest on refund". Reference was made to subsection (2) thereof, to submit that in view of the said provision, the petitioner is entitled to receive, in addition to the refund, simple interest at the rate of six percent per annum on the amount of such refund from the date immediately following the date of closure of the accounting year to which the said amount of refund relates, till the date of payment of the amount of such a refund. It was submitted that the date of closure of the accounting year would be 31st March, 2016 and hence, the petitioner would be entitled to interest on the amount of such refund with effect from 1st April, 2016. It was submitted that the date of closure of the accounting year would be 31st March, 2016 and hence, the petitioner would be entitled to interest on the amount of such refund with effect from 1st April, 2016. 7.2 As regards the contention that the order of the Tribunal had been stayed by this court and hence the respondent was not liable to pay interest during the period when such stay was in operation, the learned counsel for the petitioner invited the attention of the court to sub-section (3) of section 38 of the GVAT Act, which lays down that where the realization of any amount remains stayed by the order of any court or authority and such order is subsequently vacated, interest shall be payable also for any period during which such order remained in operation. It was submitted that therefore, the petitioner is entitled to interest on the said amount from 1st April, 2016, till the date the same is paid to the petitioner. 8. From the facts and contentions noted hereinabove, it is an undisputed fact that the petitioner had deposited an amount of Rs.10,00,000/- by way of pre-deposit pursuant to an order dated 19.10.2015 made by the Tribunal while granting stay against recovery of the demand arising out of the order which was subject matter of challenge in Revision Application No.67 of 2015. Revision Application No.67 of 2015 came to be decided on 22.1.2016, and hence, the petitioner became entitled to refund of the amount of pre-deposit paid by it pursuant to the order of the Tribunal. The respondent, however, did not refund such amount and till date, such amount had not been paid. In the interregnum in view of the interim order passed by this court, from 22.12.2016 till Special Civil Application No.21466 of 2016 came to be decided by this court by an order dated 25.1.2018, the respondents were protected from making payment to the petitioner during that period. Now, that Special Civil Application No.21466 of 2016 has been dismissed, the respondents are liable to refund the amount of pre-deposit made by the petitioner pursuant to the above referred order of the Tribunal. Now, that Special Civil Application No.21466 of 2016 has been dismissed, the respondents are liable to refund the amount of pre-deposit made by the petitioner pursuant to the above referred order of the Tribunal. According to the respondent, in view of the provisions of sub-section (1) of section 36 of the GVAT Act, the respondent is entitled to first apply the amount which is to be refunded towards recovery of any amount due under the said Act and refund only the balance amount and therefore, since in view of the orders passed by the appellate authority for the year 2012-13, an amount of Rs.78,812/- with running interest, is required to be first deducted and, the balance amount is then required to be paid to the petitioner. In the opinion of this court, considering the fact that the petitioner became entitled to refund of the amount of Rs.10,00,000/- paid by it by way of pre-deposit pursuant to the order dated 19.10.2015, the right to such refund accrued on the day when it’s revision application came to be allowed by the Tribunal, viz. on 22.1.2006. Therefore, for the purpose of considering whether any amount is required to be adjusted towards the refund, it is that date which could be relevant. In the facts of the present case, though the order was passed on 22.1.2016 and the interest thereon started accruing with effect from 1st April, 2016, the respondent did not take any steps to refund such amount. The order passed by the Tribunal came to be challenged belatedly before this court and about eleven months after the passing of the said order, such order came to be stayed by virtue of the order dated 27.12.2016 passed in Special Civil Application No.21466 of 2016. The said petition has thereafter been dismissed by this court. 9. In the opinion of this court, considering the fact that the respondent, despite being duty bound to refund the amount of Rs.10,00,000/- to the petitioner forthwith upon the order dated 22.1.2016 having been passed by the Tribunal, has not paid such amount, now cannot take advantage of its own wrong and seek to adjust the dues that have arisen subsequently, while making the refund of the amount which became due and payable from 22.1.2016. Under the circumstances, the contention that in view of the provisions of sub-section (1) of section 36 of the GVAT Act, the respondent is first required to adjust the outstanding amount payable by the petitioner towards any outstanding dues does not merit acceptance in the peculiar facts and circumstances of the present case. 10. As regards the interest payable on the amount so refundable, in the light of the provisions of sub-section (2) of section 38of the GVAT Act, the petitioner is entitled to receive in addition to the refund, simple interest at the rate of 6% per annum on the amount of such refund from the date immediately following the date of closure of the accounting year to which such amount of refund relates. Since the date of closure of the accounting year is 1.4.2016, the petitioner would be entitled to refund at the statutory rate with effect from the said date till the date of payment. 11. In the light of the above discussion, the petition succeeds and is, accordingly, allowed. The respondents are directed to forthwith refund the amount of Rs.10,00,000/- (Rupees ten lakh only) paid by the petitioner towards pre-deposit pursuant to the order dated 19.10.2015 made by the Tribunal in Revision application No.67 of 2015 together with interest in accordance with the provisions of section 38 of the Gujarat Value Added Tax Act, 2003 as discussed hereinabove. Rule is made absolute accordingly with no order as to costs.