Femc Pratibha Joint Venture vs. Commissioner Of Trade And Taxes

Held

The Court held that the impugned adjustment order dated 18 November 2022 could not be sustained in law as the mandate of Section 38 read with Sections 39 and 59 of the DVAT Act was not followed. The Court reasoned that the department did not adhere to the time limits for processing refunds and obtaining necessary information from the dealer after filing returns. The Court found that the adjustment of the petitioner's refund claim against pending demands was not legally permissible as the department failed to follow the prescribed procedures. Therefore, the petitioner was entitled to the refund claimed. Regarding the impugned default notices, the Court held that in light of the respondent's case that the petitioner did not comply with notices under Section 59(2) of the DVAT Act, the appropriate recourse for the petitioner was to file a statutory appeal under Section 74 of the DVAT Act. The petitioner was granted liberty to raise all objections regarding the untenability of these notices, including those related to the limitation prescribed for assessment or re-assessment under Section 34 of the DVAT Act. The Court directed the respondent to refund the claimed amounts of Rs. 17,10,15,285/- and Rs. 5,44,39,148/- along with interest as per Section 42 of the DVAT Act within three weeks.

Facts

The petitioner, FEMC Pratibha Joint Venture, a joint venture engaged in work contracts for Delhi Metro Rail Corporation, filed a writ petition challenging an adjustment order dated 18 November 2022 and default notices for tax and interest issued under the Delhi Value Added Tax (DVAT) Act, 2004. The petitioner claimed refunds of excess tax credit, specifically Rs. 17,10,15,285/- for the 4th quarter of 2015-16 and Rs. 5,44,39,148/- for the 1st quarter of 2017-18. The respondent, Commissioner of Trade and Taxes, issued default notices for various periods, including 2nd, 3rd, and 4th quarters of 2015-16, and 1st and 4th quarters of 2016-17. The petitioner contended that the adjustment order was passed in violation of Section 38(2) of the DVAT Act and that the default notices were not properly served. The respondent argued that the petitioner failed to respond to notices issued under Section 59(2) of the DVAT Act, leading to the default assessments and subsequent adjustment of refunds against pending demands.

Key Issues

1. Whether the impugned adjustment order dated 18 November 2022, which adjusted the petitioner's claimed refunds against pending demands, is liable to be quashed for being without jurisdiction and in violation of Section 38(2) of the DVAT Act? The petitioner argued that the adjustment order was illegal as the department failed to adhere to the time limits prescribed under Section 38 of the DVAT Act for processing refunds and that the adjustment was made without a legally enforceable demand. The petitioner also contended that the department did not follow the mandate of Section 59 of the DVAT Act. The respondent argued that the petitioner failed to respond to notices issued under Section 59(2) of the DVAT Act, justifying the default assessment and subsequent adjustment of refunds against pending demands. The respondent also raised the issue of maintainability of the writ petition due to the availability of an efficacious alternate statutory remedy under Section 74 of the DVAT Act. 2. Whether the unsigned default notices of assessments dated 30 March 2020, 23 March 2021, 30 March 2021, and 26 March 2022 are liable to be quashed? The petitioner argued that these notices were not properly served and were issued in violation of statutory provisions. The respondent contended that the notices were issued after the petitioner failed to comply with notices under Section 59(2) of the DVAT Act and were uploaded on the DVAT portal.