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2018 DIGILAW 812 (JK)

Karamhans Food Private Limited v. State of J&K

2018-10-17

DHIRAJ SINGH THAKUR, SINDHU SHARMA

body2018
JUDGMENT : Thakur, J. 1. In the present petition, the petitioner questions the order dated 22.08.2017, issued by the Commissioner, Commercial Taxes Department to the extent it does not grant the relief with regard to payment of interest @ 24% per annum in its entirety. 2. Briefly stated, the material facts are as under:- 3. The petitioner is a Private Limited Company involved in the business of walnuts. According to Section 55 of the Jammu & Kashmir Value Added Tax Act, 2005 (in short “Act”), it is inter alia envisaged that any goods, which are exported outside the territory of India are to be treated as Zero-rated in the context of taxation under the Value Added Tax Act, 2005. However, at the same time, it does not absolve the assessee to pay the input tax credit at the time of making such a sale. 4. Section 55(2) envisages that the dealer would be entitled to the refund of tax paid in the State. Section 55(3) envisages that the Assessing Authority shall refund to the dealer the amount of input tax paid by the dealer, within a period of 120 days from the date of such sales. 5. Section 55(4) envisages that in case where a registered dealer entitled to refund under sub-section (3) is not granted refund within the prescribed period, he shall upon making an application in the prescribed manner to the prescribed authority be entitled to receive in addition to the refund, simple interest @ 18% per annum on the said amount from the day immediately following the expiry of the prescribed period. It further envisages that in case the delay exceeds three months, the rate of interest would be 24% per annum. 6. It appears that the sales in question were made for the period 2006-07 and an amount of Rs. 57,34,346.21 came to be refunded under the provisions of Section 55 on 22.03.2016. The claim of the petitioner is that the refund ought to have been made within 120 days from the date of such loss. The case of the petitioner appears to have considered by the Commissioner, Commercial Taxes Department vide order impugned dated 22.08.2017, which order was passed pursuant to a direction issued by this Court dated 09.05.2016 in petition bearing OWP No. 680/2016 and had directed thus:- “9. The case of the petitioner appears to have considered by the Commissioner, Commercial Taxes Department vide order impugned dated 22.08.2017, which order was passed pursuant to a direction issued by this Court dated 09.05.2016 in petition bearing OWP No. 680/2016 and had directed thus:- “9. On bare perusal of the order passed by the Division bench of this court as also the order of Commissioner, Commercial Taxes, we feel that the obligation on the Assessing Officer was to comply with the provisions of Section 55[4] in its entirety and not piece-meal. Since interest appears not to have been paid in terms of the aforementioned provisions, the same needs to be considered by the authorities. 10. With consensus of the Learned counsel for the parties, this petition is disposed of with a direction to the respondents to consider the case of the petitioner with regard to refund of interest @ 24% per annum and pass appropriate orders in terms of Section 55 [4] of the Jammu and Kashmir Value Added Tax Act, 2005 within six weeks from today." 7. The Commissioner, Commercial Taxes Department appears to have held the petitioner entitled to interest only from the date of the order of approval for grant of refund issued on 30.10.2014. The following break-up of interest awarded, which the petitioner has been entitled to refund is thus:- Rs. 14,85,010.76 - for the accounting year 2005-06 Rs. 3,91,554.52 - for the accounting year 2006-07 8. The brief submission of learned counsel for the petitioner is that the entire basis for calculation of interest from the date of grant of approval for refund, i.e., dated 30.10.2014, is misconceived and erroneous in law. 9. Learned counsel for the respondents, on the other hand, stated that the issue of payment of interest has relevance to the determination of the entitlement of the petitioner to receive such an interest. It is stated that earlier the Assessing Authority had rejected the case of the petitioner for grant of refund, which order was subsequently challenged by the assessee in appeal proceedings before the Appellate Authority, i.e., DC, Commercial Taxes Appeal. It is stated that earlier the Assessing Authority had rejected the case of the petitioner for grant of refund, which order was subsequently challenged by the assessee in appeal proceedings before the Appellate Authority, i.e., DC, Commercial Taxes Appeal. It was only upon the decision in appeal proceedings on 12.05.2014 that the petitioner was held entitled to refund and it was only thereafter that approval was granted on 30.10.2014 and, therefore interest, if any, would be payable with effect from the date of approval and not from any earlier date. 10. Heard learned counsel for the parties. 11. Admittedly, the petitioner was claiming refund on the basis of the fact that he had made a Zero-rated sale in terms of Section 55 of the Act, being an exporter of walnuts. It is also admitted that an amount of Rs. 57,34,346.21 was refunded on that basis to the petitioner in terms of Section 55(2). While dealing with the issue of interest Section 55(3) is relevant, which prescribes that the refund has to be made within a period of 120 days from the date of such sales. 12. Admittedly, the date of sale and the payment of vat tax, are the factors which would be in the knowledge of the department. The refund, therefore, should have certainly been made within a period of 120 days from the date of sales, inasmuch as, element of sale necessarily is accompanied with an element of deposit of tax. Equally clear is the provision with regard to the rate of interest. If the payment is delayed by three months beyond 120 days prescribed, it has to be @ 24% per annum simple interest. 13. Admittedly, the rate of interest in the present case, which would apply is @ 24 %. The order impugned also does not in so many words clearly reflect the rate, which has been applied for purposes of calculating the amount, which the petitioner is held entitled to receive. Mr. Amit Gupta, learned counsel for the respondents stated that the rate applied was @ 18%. 14. The order impugned also does not in so many words clearly reflect the rate, which has been applied for purposes of calculating the amount, which the petitioner is held entitled to receive. Mr. Amit Gupta, learned counsel for the respondents stated that the rate applied was @ 18%. 14. Considering the aforementioned facts, we have no hesitation to hold that the order impugned dated 22.08.2017, in so may ways is not totally in accord with the obligation cast upon the respondents in terms of Section 55 of the Act in regard to the determination of the amount, as also the rate of interest applicable for payment of interest. Equally erroneous is the principle adopted that the rate of interest has to be with effect from the date of approval for grant of refund and not from the date as prescribed in sub-section 3 & 4 of Section 55. 15. For the reasons mentioned above, we set aside the order impugned, passed by the Commissioner, Commercial Taxes, J&K. Apart from the amount, which the petitioner has been held entitled to receive, the Commissioner shall re-work the amount, which is payable to the petitioner strictly in terms of sub-section 3 & 4 of Section 55 of the Jammu & Kashmir Value Added Tax Act, 2005 by considering the date of sales as the relevant date for purposes of calculation of interest. 16. Let the needful be done within a period of six weeks’ from today. 17. Disposed of accordingly.