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

Held

The Court held that Rule 19(2)(a) of the JVAT Rules, 2006, is ultra vires Section 52 of the JVAT Act, 2005, and therefore, the petitioner's refund application could not have been rejected on the ground of limitation. The reasoning was that Section 52 of the Act, which deals with refunds, does not grant the State Government the power to prescribe a time limit for filing refund applications through rules, especially when other sections of the Act expressly delegate such powers. The Court found that the rule imposed a disability not contemplated by the Act itself, thereby affecting the substantive right to refund. Regarding outstanding dues, the Court held that the Act does not envisage denial of a refund application on this ground. It was noted that for the period 2017-18, VAT dues were paid and CST dues were set aside, and for 2016-17, VAT dues were stayed and CST dues were set aside by the Appellate Court. The Court also highlighted the unexplained delay in processing the refund applications, noting that Section 55 of the JVAT Act implies that refund applications should be decided within 90 days. The impugned orders rejecting the refund claims were quashed and set aside. The respondents were directed to calculate and pay the refund amount, including interest, within 12 weeks.

Facts

The petitioner, M/s Kirloskar Brothers Limited, filed two writ petitions challenging orders dated 28.05.2022 passed by the Joint Commissioner of Commercial Taxes, Jamshedpur Division. In W.P.(T) No. 3944 of 2022, the petitioner sought refund of Rs. 56,86,616/- for the assessment year 2009-10, and in W.P.(T) No. 3911 of 2022, sought refund of Rs. 19,09,596/- for the assessment year 2012-13. The refund applications were rejected on grounds of delay and alleged outstanding dues. The petitioner had filed the refund application for 2009-10 on 07.03.2015, after an excess demand notice was issued on 02.09.2014. The respondents did not provide an explanation for the significant delay in processing the refund application, which was filed nearly seven years prior to the rejection order. The respondents also failed to dispute that the petitioner had paid an excess amount.

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 specify any such limitation period? The petitioner argued that Section 52 of the JVAT Act, 2005, does not authorize the State Government to prescribe a time limit for filing refund applications through rules, unlike other sections of the Act (Sections 35(3)(b), 36(1), and 73(1)) where such delegation is expressly provided. Therefore, Rule 19(2)(a) is beyond the scope of the delegated power and cannot extinguish a substantive right to refund. The respondents did not present any arguments on this issue. 2. Whether the Act envisages denial of a refund application on the ground of existing dues? The petitioner contended that the Act does not envisage denial of refund on this ground, and Rule 19(5) of the JVAT Rules only deals with situations where outstanding dues exist at the time of filing. The respondents did not present any arguments on this issue, but the judgment noted that for the period 2017-18, VAT dues were paid and CST dues were set aside, and for 2016-17, VAT dues were stayed and CST dues were set aside by the Appellate Court.