M/S Kirby Building Systems And Structures INDIA Private Limited vs. The Assistant Commissioner

Facts

The petitioner, M/s Kirby Building Systems and Structures India Private Limited, was assessed under the Telangana Value Added Tax Act, 2005 (VAT Act) for the period 2008-09, with an initial tax demand of Rs. 1,14,858.00. The revenue challenged this order, leading to a revised assessment notice dated 11.07.2011 and a revisional order dated 29.07.2011 by the Joint Commissioner, enhancing the tax to Rs. 1,51,63,868.00. The petitioner challenged this revisional order before the High Court, which set it aside on 30.09.2011 due to a violation of natural justice, directing a fresh order. Subsequently, the petitioner deposited Rs. 40,00,000/- under protest. Despite a further hearing notice on 24.03.2012, no fresh revisional order was passed. The petitioner filed multiple applications seeking a refund of the deposited amount, citing the expiry of the three-year limitation period under Section 37 of the VAT Act for passing a fresh order. As no response was received, the present writ petition was filed.

Held

The Court held that the revision notice of assessment dated 11.07.2011 was indeed barred by limitation. Following the High Court's order dated 30.09.2011, which set aside the revisional order and directed a fresh one, the revisional authority issued a notice on 10.11.2011. However, no fresh order was passed thereafter. The Court noted that Section 37 of the VAT Act prescribes a limitation period of three years for passing a fresh order upon remand, which had long expired. Therefore, the initial assessment order dated 08.06.2009 would hold the field. The Court agreed with the petitioner that the Rs. 40,00,000/- deposited was in the nature of a pre-deposit and not a finalized tax payment, especially since no revised assessment order materialized. The Court relied on the Gujarat High Court's decision in Torrent Power Ltd. vs. State of Gujarat, which held that amounts paid under protest, where no assessment, reassessment, or revision order is passed within the time limit, cannot be retained by the authorities without authority of law, violating Article 265 of the Constitution. Consequently, the Court directed the Joint Commissioner to refund Rs. 40,00,000/- to the petitioner with interest at 6% per annum from 21.06.2012 (the date of the first refund demand) within three months. The claim for interest at 1% per month was not granted, but 6% per annum was awarded.

Key Issues

1. Whether the revision notice of assessment dated 11.07.2011 is barred by limitation under Section 37 of the Telangana Value Added Tax Act, 2005, given that no fresh order was passed after the High Court's remand on 30.09.2011? 2. Whether the petitioner is entitled to a refund of Rs. 40,00,000/- paid under protest, considering the delay and the expiry of the limitation period for passing a fresh revisional order? 3. Whether the petitioner is entitled to compensation/interest at 1% per month for the delay in granting the refund? Petitioner's Arguments: - The revision proceedings are barred by limitation under Section 37 of the VAT Act as no fresh order was passed within the stipulated three-year period after the High Court's remand. - The amount of Rs. 40,00,000/- deposited under protest should be refunded as the revision proceedings have lapsed. - The respondents are liable to pay interest for the undue delay in refunding the amount, citing Article 14, 19(1)(g), and 265 of the Constitution of India. - Relied on Torrent Power Ltd. vs. State of Gujarat. Respondents' Arguments: - The delay in passing the fresh order was due to the uncertain situation and dislocation of files following the bifurcation of Andhra Pradesh. - Submitted that reasonable time may be granted for making the refund.