In a major relief to the e-commerce giant Flipkart India, a two-judge bench of the Delhi High Court has quashed an order adjusting a sum of Rs. 10 crore of VAT refund and directed the VAT department to release a refund of Rs. 6.62 crores to the Company as the order was observed as illegal and arbitrary.
The assessee, Flipkart India has submitted a return for the year 2014. The self-assessment return claimed a refund of Rs.11,40,96,384/- on account of excess Input Tax Credit. However, the VAT department issued notices for default assessment of tax referable to Section 32 of the DVAT Act for the period commencing from April 2012 to March 2013 raised a demand of Rs.3,10,97,964/- inclusive of interest and penalty against the assessee. The assessee approached the High Court for a relief contending that the demand is arbitrary.
Justice Yashwant Varma and Justice Dharmesh Sharma observed that as per Rule 34, a claim for refund of tax is liable to be made in Form DVAT-21 only if such a refund is not claimed in the return itself.
“This clearly emerges from Rule 34(1) which uses the expression “except claimed in the return”. The aforesaid position is again reiterated in sub-rule (2) and which stipulates that only such claim for refunds may be made in Form DVAT-21 which have not been claimed in any previous return. It is thus manifest that once a claim for refund stands embodied in the return itself, there is no additional obligation placed upon the assessee to file Form DVAT-21. This position, in any case, stands concluded against the respondents in light of the judgments rendered by the Court in Corsan Corviam and Consortium of Sudhir Power Projects,” the bench observed.
Concluding the order, the High Court observed that “the respondents clearly appear to have acted arbitrarily in making numerous adjustments post 31 May 2015 and thus illegally depriving the petitioner of the refund as claimed. The various adjustments clearly appear to have been made even though objections before the OHA had been duly lodged online by the petitioner. The respondents thus clearly appear to have acted contrary to the clear mandate of Section 38 of the DVAT Act.”
Observing that the Vat Department “clearly acted in flagrant violation of the mandate of Section 38 of the DVAT Act,” the Court directed to refund the amount of Rs. 6,62,74,405/- to the Company, along with interest from the date it fell due.
“The refund be effected within a period of three weeks from the date of this decision,” the Court added.
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