M/S.Alukkas Photo Press vs. The Commercial Tax Officer, Kottayam

Facts

The petitioner, M/s. Alukkas Photo Press, an assessee under the Kerala Value Added Tax (KVAT) Act, filed a writ petition seeking a refund of excess input tax credit for the tax periods 2014-2015 and 2015-2016. The petitioner claimed that due to an inability to adjust the entire input tax credit against output tax liability, a refund was due under Section 11(6) of the KVAT Act. The 1st respondent, the Commercial Tax Officer, filed a counter affidavit stating that proceedings under Section 25(1) of the KVAT Act for 2014-2015 were not finalized. For 2015-2016, proceedings under Section 24(1) were initiated following an audit visit which identified suppressed turnover and proposed disallowance of alleged bogus input tax credit amounting to Rs. 3,54,855, with an excess claim of Rs. 13,137. The respondent argued that the refund application could only be considered after these proceedings concluded.

Held

The Court acknowledged the petitioner's prayer for a direction to the 1st respondent to consider and pass orders on the refund applications (Exts. P3 and P3(a)) expeditiously. Taking into account the averments in the counter affidavit filed by the respondents regarding the pending proceedings under Section 25(1) for 2014-2015 and Section 24(1) for 2015-2016, the Court deemed it appropriate to dispose of the writ petition with a specific direction. The 1st respondent was directed to consider and pass orders on the refund applications filed by the petitioner only after the culmination of the aforementioned proceedings. Furthermore, the respondents were directed to endeavor to finalize these proceedings within a period of three months from the date of receipt of a copy of the judgment. The Court did not decide on the substantive claim for refund itself, but rather on the procedural aspect of when it should be considered.

Key Issues

1. Whether the petitioner is entitled to a refund of excess input tax credit for the tax periods 2014-2015 and 2015-2016, considering the pending proceedings initiated by the respondent. Petitioner's Argument: The petitioner contended that they are entitled to a refund of excess input tax credit for the years 2014-2015 and 2015-2016, as per Section 11(6) of the KVAT Act, and that the 1st respondent has failed to act on their refund applications (Exts. P3 and P3(a)). Respondent's Argument: The respondent argued that the refund application for excess input tax credit can only be considered after the finalization of ongoing proceedings. For 2014-2015, proceedings under Section 25(1) are pending. For 2015-2016, proceedings under Section 24(1) have been initiated following an audit, which identified suppressed turnover and proposed disallowance of input tax credit.