M/S Kirloskar Brothers Limited Through Its Authorized Mr Jayanta Chakraborty vs. State Of Jharkhand Through The Secretary Commercial Taxes Department

Held

The Court held that Rule 19(2)(a) of the JVAT Rules, 2006, prescribing a 90-day limitation for filing a refund application, is ultra vires Section 52 of the JVAT Act, 2005. The Court reasoned that Section 52, which deals with refunds, does not contain language delegating the power to the State Government to impose a time limit through rules, unlike other provisions in the Act. Therefore, the rule imposing a limitation period is beyond the scope of the delegated power and affects the substantive right to a refund guaranteed by Section 52. The Court also held that the Act does not envisage denial of a refund application on the ground of existing dues. It noted that for the period 2017-18, VAT dues were paid, and CST dues were set aside, while for 2016-17, VAT dues were stayed and CST dues were set aside by the appellate court. The Court found the rejection of the refund claim unjust and arbitrary, especially given the unexplained delay in processing the application and the subsequent favorable appellate orders regarding the alleged dues. The impugned order rejecting the refund of Rs. 98,17,880/- was set aside.

Facts

M/s. Kirloskar Brothers Limited (the petitioner) filed a writ petition challenging an order dated 28.05.2022 passed by the Joint Commissioner of Commercial Taxes, Jamshedpur Division. This order rejected the petitioner's refund claim of Rs. 98,17,880/- for the assessment year 2010-11. The rejection was based on two grounds: delay in filing the refund application and alleged outstanding dues. The petitioner had initially received an excess demand notice on 31.03.2014, indicating Rs. 98,17,880/- as the excess amount paid. The refund application was filed on 15.12.2017, and later, on 20.02.2020, an online application was submitted. The respondents' counter-affidavit did not dispute the excess payment but failed to explain the delay in processing the application.

Key Issues

1. Whether Rule 19(2)(a) of the JVAT Rules, 2006, which prescribes a 90-day limitation period for filing a refund application from the receipt of an excess demand notice, is ultra vires Section 52 of the JVAT Act, 2005, which does not prescribe any period of limitation for seeking a refund. The petitioner argued that Section 52 of the JVAT Act, governing refunds, does not authorize the State Government to prescribe a time limit through rules, unlike other sections of the Act (Sections 35(3)(b), 36(1), and 73(1)) where such delegation is explicit. Therefore, Rule 19(2)(a) is de hors Section 52 and should be ignored. The respondents did not record any specific arguments on this point. 2. Whether the refund application could be rejected on the ground of outstanding dues, particularly when subsequent appellate orders had stayed or set aside these dues. The petitioner contended that the Act does not envisage denial of a refund application based on existing dues, and Rule 19(5) of the JVAT Rules only addresses situations where dues exist at the time of filing. The respondents did not record any specific arguments on this point.