2019 (3) TMI 443 – KERALA HIGH COURT – TMI – Recovery of tax – the petitioner, an assessee under the KVAT Act, was found entitled to refund for AY 2007-08; it was also found liable under Section 25(1) of the Act for AY 2016-17. As the amount due from it was more than the amount due to it, the assessing authority adjusted the amount to be refunded and, then, demanded the balance amount – Held that:- Section 89 of the act plainly reveals that if a dealer has paid tax more than what is due from him, he must have that excess amount refunded to him. Once an assessing authority receives an order from any appellate or revisional authority or any officer under subsection (5) of section 47, to refund tax or penalty to a dealer, he must comply with that – But the assessing authority has the power to adjust the amount due to be refunded towards the recovery of any amount due, on the date of adjustment, from the dealer. If the assessing authority delays refund without justification, the dealer ma
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MENT PLEADER DR. THUSHARA JAMES JUDGMENT Facts: The petitioner, a dealer under the Kerala Value Added Tax Act 2003, deals in IT products. It faces assessment proceedings for one year, but claims a refund for another. Thus, this writ petition concerns two assessment years: 2007-08 and 2016-17. 2. In 2012, dissatisfied with the petitioner's self-assessment for the AY 2007-08, the assessing officer re-opened the assessment and passed an order imposing a tax liability. The petitioner then challenged it in a statutory appeal. Finally, through the Ext.P1 order, dated 07.05.2013, the appellate authority remanded the matter for fresh adjudication. After remand, on 02.12.2013 the assessing officer issued a notice to the petitioner and received reply dated 23.12.2013. But later, nothing much happened. So the petitioner claims to have sent the Ext.P2 series of reminders. On 14.06.2018, the assessing officer, in terms of the Ext.P4 hearing notice, heard the petitioner. 3. For the AY 2016-17, t
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petitioner. Yet he adjusts that amount towards the petitioner's alleged liability under the Ext.P10. 6. Thus, the tax consolidation runs as follows: For the AY 2016-17 the tax assessed under Section 25(1) of the Act is ₹ 3,31,21,344/-; and the refund quantified for the AY 2007-08 is ₹ 2,77,34,985/-. Eventually, the assessing officer issued the Ext.P13 demand notice for the balance amount of ₹ 62,48,176/-. Assailing the Exts.P10, P11 and P13 orders, the petitioner has filed this writ petition. Submissions: Petitioner s: 7. Ms. Surya Binoy, the petitioner's counsel, strenuously contends that the whole procedure the assessing officer has adopted is vitiated. According to her, once the revision application was pending, the assessing officer ought not to have pursued the proceedings under Section 25(1) of the Act. This assumes importance, she stresses, in the face of the Ext.P6 judgment, the petitioner invited from this Court for the previous assessment year. 8. Be
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ssing officer adjusted the amount instantaneously, with no notice under Section 31(2), she adds. 10. Ms. Binoy has also contended that had the petitioner gone in appeal, it would have warded off any departmental steps for recovery by paying 20% of the assessed tax. But now the petitioner has been compelled to pay over 80% in the name of adjustment, which is unconscionable. The Respondents : 11. On the other hand, Dr. Thushara James, the Government Pleader, to begin with, has raised a technical issue: the petitioner has an efficacious alternative remedy to assail both the Exts.P10 and P11. 12. Then, dwelling on Section 31(2) of the Act, Dr. James asserts this provision would come into play in the usual course but not with adjustment, which, according to her, is like a set-off. So she contends that any adjustment made departmentally will, of course, be subject to the appellate proceedings the assessee may take. In this particular case, she adds, the petitioner has not at all gone in appe
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hara James, the Government Pleader. Discussion: 17. Simple and straight, the petitioner, an assessee under the KVAT Act, was found entitled to refund for AY 2007-08; it was also found liable under Section 25(1) of the Act for AY 2016-17. As the amount due from it was more than the amount due to it, the assessing authority adjusted the amount to be refunded and, then, demanded the balance amount. Aggrieved, the petitioner has filed this writ petition. 18. As much turns on-the petitioner s counsel asserts so- Sections Section 31(2) and 89 (3) of the Act, we will examine both the provisions. To begin with Section 31 (2), to the extent relevant, reads: 31. Payment and recovery of tax : – (1) Every dealer liable to pay tax under this Act for any return period shall pay tax within such period, as may be prescribed. (2) In the case of a dealer from whom any tax or other amount is demanded shall pay tax in such manner and in such installments, if any, and within such time, as may be specified
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what is due from him, it shall refund the excess to the dealer. (2) When an assessing authority receives an order from any appellate or revisional authority or any officer authorised under sub- section (5) of section 47, to make a refund of tax or penalty or cash security paid by a dealer or any other person, it shall effect the refund to such dealer or such other person, as the case may be. (3) Notwithstanding anything contained in sub-section (1) and (2), the assessing authority shall have power to adjust the amount due to be refunded under sub-section (1) or subsection (2), or under the provisions of the Kerala General Sales Tax Act, 1963 (15 of 1963); towards the recovery of any amount due, on the date of adjustment, from the dealer. (4) In case refund under sub-section (1) or sub-section (2) or adjustment under sub-section (3) is not made within ninety days of the date of completion of assessment or, as the case may be, within ninety days of the date of receipt of the order in app
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adjustment ? 24. The petitioner, indeed, asserts that its liability under Section 39(3) of the Act-that is, its obligation to pay tax- materialises only 15 days after its receiving a notice from the Department. The assessing authority s adjusting the amount, the petitioner further contends, before that eventuality is illegal. 25. Attractive as the petitioner s submission is, I am afraid it fails to pass the judicial muster. Section 31(1) declares that every dealer liable to pay tax for any return period shall pay the tax within such period as may be prescribed. Then, subsection (3) holds that the adjustment must be of any amount due [from the dealer] on the date of adjustment. The amount becoming due, I reckon, differs from the dealer s liability to pay. The amount becomes due the moment it is ascertained by the assessing authority, say, through an order of assessment. But the dealer may have breathing time to pay that amount. So, meritless is the petitioner s contention that the amoun
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