M/S V M Industries vs. Commissioner Of Vat & Anr.

Held

The Court noted that it is an undisputed fact that the Petitioner's application for refund along with interest is pending consideration with the Respondents, despite a reminder application. The Court held that it is incumbent upon the Respondents to take a decision on the application for refund. Therefore, the Court directed the concerned Respondent(s) to decide the Petitioner's claim for refund for the relevant period in accordance with law. The Court also emphasized that the decision should keep in mind the principle of "unjust enrichment" as propounded by the Hon'ble Supreme Court in Mafatlal Industries Ltd. vs. Union of India etc., (1997) 5 SCC 536. The Court did not explicitly decide on the entitlement to interest or damages but directed a decision on the refund claim expeditiously. No specific issue was left undecided, but the final decision on refund and interest is to be taken by the Respondent.

Facts

The Petitioner, M/s V M Industries, filed a writ petition seeking a refund of Rs. 25,75,818/- along with interest, claiming entitlement under Section 42 of the Delhi Value Added Tax (DVAT) Act, 2004. The refund pertains to the first quarter of 2017-18 (01.04.2017 to 30.06.2017). The Petitioner had filed its VAT return on 27.12.2017, claiming a refund of Rs. 55,04,128/-. Following the DVAT Act's replacement by the Delhi Goods and Service Tax (DGST) Act, 2017, on 01.07.2017, the Petitioner carried forward Rs. 29,28,310/- as transitional Input Tax Credit (ITC). The Petitioner also received two notices from Respondent No. 2 for default assessment of tax and interest under the CST Act for 2016 and the period 01.04.2017 to 30.06.2017. Applications for the pending refund and interest were filed on 18.06.2021 and a reminder on 23.07.2021, but no refund was issued.

Key Issues

1. Whether the Petitioner is legally entitled to a refund of Rs. 25,75,818/- along with interest as per the provisions of law, specifically Section 42 of the DVAT Act, 2004? (Question of law) 2. Whether the Respondents acted in violation of statutory provisions by unjustly denying the refund and whether the Petitioner is entitled to interest at 6% on the claimed refund amount? (Question of mixed law and fact) 3. Whether the Petitioner is entitled to exemplary damages due to malafide and colourable exercise of power by the Respondents in withholding the refund? (Question of law) Petitioner's Arguments: The Petitioner argued that they are legally entitled to the refund and interest under Section 42 of the DVAT Act, 2004, as the refund was unjustly denied. They contended that the Respondents acted in violation of statutory provisions and malafide. They relied on Section 42 of the DVAT Act and the principle of unjust enrichment as propounded by the Supreme Court in Mafatlal Industries Ltd. vs. Union of India. Respondents' Arguments: The Respondents submitted that two notices of default assessment of tax and interest under the CST Act have already been issued to the Petitioner on 10.02.2021 and 11.02.2021.