M/S Mukesh Agencies vs. Commissioner, Trade & Taxes & Ors.

Facts

The Petitioner, M/s Mukesh Agencies, filed objections on March 3, 2011, against default assessment orders for tax, interest, and penalty for the second quarter of 2009-10, issued by the Value Added Tax Officer (VATO) under the CST Act. The Petitioner claims the Objection Hearing Authority (OHA) failed to dispose of these objections. After no response, the Petitioner sent a letter on September 25, 2018, and later a notice in Form DVAT-41 on October 15, 2018, to the OHA, requesting a decision. The Petitioner contends that as no decision was communicated within 15 days of receiving the DVAT-41 notice, their objections should be deemed allowed under Section 74(9) of the DVAT Act. The Respondents, however, claim they sent a reply dated October 18, 2018, which was returned undelivered.

Held

The Court held that the Petitioner's objections are deemed to have been allowed. The Court emphasized the mandatory nature of Section 74(8) and 74(9) of the DVAT Act, as interpreted in Commissioner of Sales Tax vs. M/s Behl Construction. The Court found that the Petitioner had duly served the notice in Form DVAT-41 on the OHA. The Respondents' contention that they sent a reply which was returned undelivered did not negate the Petitioner's right to have their objections decided within the stipulated period. The failure of the OHA to pass an order within 15 days of receiving the DVAT-41 notice, irrespective of the returned communication, triggered the deeming fiction under Section 74(9). Consequently, the demand created by the VATO for the second quarter of 2009-10 was quashed. The Court directed the Respondents to process the Petitioner's refund claims for the said period and other related periods within four weeks, with the refund and interest to be credited by September 15, 2019, failing which compensation would be payable. The Court also reiterated the legal position on interest on refunds as per IJM Corporation Berhad v. CT&T.

Key Issues

1. Whether the Petitioner's objections filed on March 3, 2011, are deemed to have been allowed under Section 74(9) of the DVAT Act due to the Objection Hearing Authority's (OHA) failure to decide within 15 days of receiving the notice in Form DVAT-41, as stipulated by Section 74(8) of the DVAT Act? Petitioner's arguments: The Petitioner argued that they complied with the procedure by filing objections and subsequently serving a notice in Form DVAT-41 on the OHA. They contended that since the OHA failed to communicate a decision within the mandatory 15-day period after receipt of the DVAT-41 notice, Section 74(9) of the DVAT Act is attracted, deeming the objections allowed. They relied on the judgment in Commissioner of Sales Tax vs. M/s Behl Construction. Respondents' arguments: The Respondents argued that the deeming provision of Section 74(9) would not apply because they were not inactive. They claimed to have sent a reply to the Petitioner's DVAT-41 notice, but it was returned undelivered, indicating the Petitioner's lack of follow-up. They contended that the Petitioner could not benefit from the deeming provision if they did not receive the communication.