M/s. Jain Irrigation Systems Limited, rep. by its Senior Manager, Mr. Rajendra Bansilal Lodha V. Assistant Commissioner (CT), LTU, now known as Deputy Commissioner (ST) Saroornagar Division, Hyderabad and Deputy Commissioner (CT), Saroornagar Division, Hyderabad and Joint Commissioner (CT), Refunds, Office of the Commissioner of Commercial Taxes, Opp. Gandhi Bhavan, Nampally, Hyderabad and State of Telangana, rep. by Principal Secretary to Government, Revenue (CT-II) Department, Secretariat, Hyderabad

WP/10459/2021

AI Insights

The case revolves around a writ petition filed by M/s. Jain Irrigation Systems Limited under Article 226 of the Constitution of India, seeking a refund of VAT paid based on the orders of the Telangana Value Added Tax Appellate Tribunal. The petitioner contested the classification and subsequent tax rate applied to their product, mango pulp/puree, which was initially taxed at a lower rate but later reclassified to a higher tax bracket by the 2nd respondent, leading to the payment of excess tax. The Tribunal's decision favored the petitioner, but the refund was not processed by the respondents, leading to this writ petition.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 819458 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 07-07-2021
• Assessment Year: misc
• Other Referred Cases: Pulp 'N' Pack Private Limited vs. Commercial Tax Officer, BSNL vs. State of Andhra Pradesh, Reddy Laboratories Limited vs. Assistant Commissioner (CT) LTU, KMC Constructions Ltd vs. Assistant Commissioner (CT) Hyderabad
• Laws Referred To: Telangana Value Added Tax Act, 2005
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SAI KRISHNA
• Assessee Lawyers: KARTHIK PUTTAMREDDY
• Keywords: Interest on Delay; Tax refund; Value Added Tax; Writ of Mandamus; Telangana VAT Appellate Tribunal
• Section: 226; 40(2); 39(2); 33(2)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY ,THE SEVENTH DAY OF JULY TWO THOUSAND AND TWENTY ONE PRESENT THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO AND THE HONOURABLE SRI JUSTICE T.VINOD KUMAR Between: AND 1 ..PETITIONER Assistant commissioner (cT), LTU, (Now known as Deputy commissioner (ST) Saroornagar Division, Hyderabad. Deputy Commissioner (CT)' Saroornagar Division, Hyderabad' Joint Commissioner (CT), Refunds, Office of the Commissioner of Commercial i\"\"\"., Opp. Gandhi Bhdvan, Nampally, Hyderabad' State of Telanqana,, rep. by Principal Secretary to Government' Revenue (CT-ll) Department, S-ecretariat, Hyderabad. ...RESPONDENTS Counsel for the Petitioner:SRl. KARTHIK RAMANA PUTTAMREDDY Counsel forthe Respondents: SRI' SAI KRISHNA, AGP FOR ADVOCATE GENERAL The Court made the following: Petition under Article 226 of lhe constitution of lndia praying that in the circumstancesstatedintheaffidavitfiledtherewith,theHighCourtmaybepleasedto issue a writ of Mandamus or any other appropriate writ or order or direction, directing tn\" n\".ponO\"nts to refunJ the'amount oi Ri. t ,sS,Ss,31B/- for the tax period-April' )oos to Mur.n, 2012 (VAT) and Rs.50.94.947/- (vAT) for the tax period April, 2012 lo lrilarch, 2013 pursuant to the orders of the Teiangana Value Added Tax Appellate iiiUrnriut Hyderabad in T.A.Nos. 132 and'1 33 of 2018 daled 181112019' together withinterest@l2percentageperannUmlromlt5l2O-lgtillthedateofrefundasper section 39(2) o{ the Act a n\"d also Fourth proviso to section 3312) of the Telangana VATACt.2005andawardexemplaryCostsagainsttheRespondentsfordelaying'the refund. 2 3 4 - - WRIT PETITION NO: 10459 OF 2021 M/s. Jain lrrigation Systems Limited,, rep. by its Senior Manager, It/r' Rajendra Bansilal Lod\"ha, S.N6.s87 and 588, Kondbmadgu Village, Bibinaar Ivlandal, Nalgonda District, Telangana-508 126. THE HON'BLE SRI JUSTICE M.S.RAMACHANDRA RAO AND THE HON'BLE SRI JUSTICE T.VINOD KUMAR WRIT PETITION No.10459 of 2021 O R D E R:/per Honble Sri .lustice T.Vinod Kumar) This is yet another Writ petition, whereby the petitioner is driven to invoke the jurisdiction of this court under Article 226 of the constitution of India, for grant of refund of the tax paid, from the respondents, pursuant to the orders of the Telangana Value Added Tax Appellate Tribunal, Hyderabad (for short, 'the Tribunal). 2, The petitioner contends that the lstrespondent had completed the assessment for the period April,2009 to March,2012 by order dt. 19.01.2013; that the goods sold by the petitioner namety, Mango pulp/puree, was classified as falling under Entry 107(b) of the iV Schedule to the Telangana Value Added Tax Act, 2005 (for short, ,the Act') and subjected to tax at 4o/o I 5o/o. Similar classification was applied even in respect of sales made during the period April, 2012 to March, 2013 also. 3. However, the 2nd respondent, being the revisional authority, was of the view that said orders of assessment were prejudiciar to the interest of revenue and accordingly, revised the orders of assessment passed by the 1st respondent, holding that the Mango pulp/puree sotd by the petitioner would merit classiflcation as falling under Schedule V of the Act, being a residuary entry, liable to tax at 72.5o/o174, o/s. 4. Being aggrieved by the aforesaid revision proceedings, the petitioner fired appears before the Tribunar. As a pre-condition for firing appeE! the petitioner was required to make payment equal to 25olo of the 2 W.P.No.1O4.tg ol 202 j difference oF tax disputed, as per the order of the 2nd respondent. The petitioner remitted such payment to the 1st respondent and fired the proor of such payment, for the appears to be entertained by me Tribunal,. 5. It is the contention of the petitioner that the appeals filed by the petitioner before the Tribunal were allowed by order dt.18.01.2019, wherein it was held that the mango puree/pulp sold by the petitioner would be crassifiabre under Entry 107(b) of IV Schedure to the Act and is liable to tax at 4% l 5o/{ and that the said order passed by the Tribunal was received by it on 30.01.2019, and even the respondents would have received the said order at the same time. 6. The petitloner contends that, as a result of the Tribunal allowing the appeals filed by the petitioner in T.A. No. 132 and 133 of 2018 by order dt. 18.01.2019, the petitioner became entitled for refund of a sum of Rs.1,90,28,265/- (Rs.1,39,33,318/- and Rs.50,94,9471-) for the period April, 2009 to March, 2012 and for the tax period 2012-13, respectively, by virtue of proviso to Section 33(2) of the Act; that the respondents, in particular the 1st respondent, is required to refund the tax paid within a period of 90 days; that if refund of tax paid is not made within the period stipulated, the amount of refund shall carry interest at 1% per month for the period of delay as per proviso to Section 33(2) and Sectlon 39(2) of the AcU and that for the purpose of granting refund pursuant to the order of the Tribunal, no application is required to be made by the petiti0ner as a duty is cast on the respondents to grant refund. 7. It is the contention of the petitioner that the petitioner became entitled for refund, consequent upon the Tribunal allowing the appeals and the order of the 2nd respondent being setting aside; as no refund had been sanctioned, the petitioner filed a representation on 09'08'2019, ;1. j,.';Lr l.r.ii)r., (,i /r.: l .1 requesting the lst respondent to pass a consequential order for each of the tax periods on the basis of the order of the Tribunal' determine the excess amount due to the petitioner; and to refund the same immediately' B. It is also contended that upon the petitioner flling the above representation, the 1sI respondent issued Form - 351' notifying the refund and the petitioner submitted its confirmation thereto by furnishing the desired information. The petitioner again addressed another letter dt.13.08.2020 requesting for expedlting the process of refund and also furnishedindemnitybondon03.0g'2020asrequiredbythe15t respondent, undertaking to keep the respondents indemnifled against any loss,intheeventofsuccessbytherespondentsintheTaXRevisionCases preferred by them against the order of the Tribunal before the Hon'ble High Cout. 9. Petitioner contends that, despite considerable time having elapsed from the date of the Tribunal allowing the appeals, the lst respondent, having issued Form - 351 notifying the amount of refund, and the petitioner having filed confirmation in Form-352 and furnishing the information sought for, apaft from also executing the indemnity bond, the respondents have not sanctioned the refund. The petitioner claims that the respondents, in particular, the 2nd and 3'd respondents, being the appropriate authority under Rule 59(12) of the Telanqana Value Added Tax Rules, 2005 (for short,'the Rules'), to sanction refund in excess of Rs,10.00 lakhs, ought to have sanctioned the refund of the difference of tax paid pursuant to the order of the 2nd respondent within the time prescribed under the Act. 10. The petitioner contends that the respondents cannot deny the refund due to the petitioner on the ground of the pendency of the tax 1 revision cases before the Hon,ble High Court, as has been held by this Court in the cases of pulp ,N, pack private Limited V/s. Commerciat Tax OfficeF and BSNL V/s, State ofAndhra pradeshz. 11. Per contra, sri sai Krishna, learned Assistant Government pleader attached to the oFfice of the Advocate General appearing for the respondents, would submit that the order of the Tribunal has not been accepted by the respondents and revision thereagainst have been preferred to this Court and the same are pending consideration. He would futher contended that, if the refund is sanctioned, the revision flled before this Court would become infructuous; and that the 3rd respondent, being the prescribed authority under Rule 59(12) of the Rules conferred with powers under Sectlon 40(2) of the Act, is of the view that grant of refund to the petitioner would adversely affect the revenue, had withheld the refund. t2. We have given our anxious consideration to the submissions made on either side. 13. The case of the petitioner is not an isolated instance where the respondents have not sanctioned refund by implementing the orders of the Tribunal. Rather, this court has witnessed that wherever as a result of the order of the Tribunal, a refund arises, the dealer/assessee is required to approach this court by invoking the jurlsdiction under Article 226 of the constitution of India, notwithstanding the provisions of the Act stipulating that the difference of tax/ penalty/ interest paid as a pre-condition for fillngappealshouldberefundedwithinaperiodofg0days,TheActalso provides that, in the event the amount due the dealer/assessee' is not refunded within the time prescribed, the same shall carry interest at the r 12009) 23 VST 573 , (2009) 25 VST 511 (AP) .--_- v,I.P No.10459 ol 2A21 J rate of 1olo per month, beyond the period of 90 days tiil the date of refund. 14. we have not come across a case where the respondents have granted refund, be it of substantial amount or otherwise' along with interest under section 39(2) of the Act, on their own, even when the refund is sanctioned. Wherever, a dealer/assessee seeks refund or makes a clatm for interest for the delayed refund, it invariably is required to invoke the jurisdiction of the Court under Article 226 of the Constitution of India. The attitude of the respondents appears to be that the grant cf refund rs a favour to the dealer/assessee and refund is a gratuitous payment, forgetting the fact that the statute provides for payment of interest, if the refund is not made within the stipulated period. As a result of such approach and attitude of the respondents in not effecting the refund in time, resulting in payment of interest thereon, the respondents are actually causing a loss to the State Exchequer. 15. The approach of the respondents in not granting refund along with interest beyond the period permitted, without the assessee/ dealer asking for the same, in contrad istinction can be compared with the proceedings under Income Tax Act, 1961. In the assessment orders / intimations issued by the Income Tax Authoritles, where refund is due, the proceeding issued itself provides for the calculation of Interest under Section 244-A of the Income-tax Act, 1961, and the same is paid out along with the refund of tax. 16. A reading of the provisions of Section 33(2) and 39 of the Act, makes it clear that the statute mandates refund of the tax paid for maintaining appeal, within a period of ninety days. The Non payment / Non g[ant of refund within the tlme prescribed would require payment of I I o WI'.No. t a)459 al 2O2 j interest as contemplated in the proviso to Section 33(2) as well as further reinforced jn Section 39(2) of the Act. 17. The Supreme Cout in Dipak Babaria & Anr, V. State of Gujarat and otherf, it was held that _ 'As stated ear/ier if the /aw requires a particular thing shou/d be done in a particu/ar manner it must be done in that way and none other. fhe State cannot ignore the po/icy intent and the procedure contemplated by the Statute.,, 18' Applying the principre deduced from the above, to the scheme of the Act, the usage of the word \"shall,, mandates the respondents to refund the difference of tax paid by an appelrant like petitioner for firing and maintalning an appeal wjthin ninety days. If such refund is not granted, the amount would become refundable along with interest once the period of ninety days expires. The only exception for withholding the refund due as per Section 33 is exercise of powers under Section 40 of the Act and no other, including the ground of pendency of revision before the Higher court. 19. Whether the State can deny refund during the pendency of the revision before this Court is no longer res integra. This Court in Pulp 'N' Pack Private Limited and BSNL cases (supra) had considered, this issue in detail, and held that mere pendency of tax revision case before this Couft cannot be the basis for withholding refund due to the dea ler/assessee. 20. This Court in Reddy Laboratories Limited v. Assistant Commissioner (CT) LTU, held that - r (20 r .1) 3 SCC 502 , (201 r ) 37 VST 76 (AP) {DB) 7 I W.P.Na.l0159 of 2021 I \"Is it possible to argue that any refund would adversely affect the Revenue during the pendency of appeal or futther proceeding? If the intention ofthe Legistature was to bar refund under Sections 3B and3gofVATAct,thediscretionvestedintheprescribedauthoriU towithholdrefundwouldnothavefoundplaceinthestatute,The right to seek refund and the right to claim interest' in the event refundisnotmadewithintheprescribedperlodofg0days'would lndicate that mere pendency of an appeal or further proceedlng is no ground to withhold refund \" 27. Fufther, in a recent judgment rendered by this Bench on 07.06.2021 in KMC Constructions Ltd, v. Assistant Commissioner (CT) Hyderabad and Otherf , held that - \"Merety because the decision rendered by the Tribunal is not acceptabte to the respondents and they having preferred a Revision to this Court the respondents cannot grant to themselves stay of operation of the order of the Tribunal by such non refund.\" 22. Though it is contended by the 3'd respondent that he exercised powers conferred under Section 40(2) of the Act, to withhold the refund due to the petitioner, no order/proceeding to that effect is shown to this Court. The said statement made on behalf of the respondents is also disputed by the learned counsel for the petitioner, as no such communication withholding the refund has been received by the petitioner either before filing of the Writ Petition or during the pendency of the present proceeding. Thus, this Couft cannot accept the statement made on behalf of the respondents that the 3'd respondent, having exercised powers conferred under Section 40(2) of the Act, has decided to withhold the refund due to the petitioner. 23. In view of the above, the petitioner is entitled to succeed in this Writ Petition. i I t t\" s WP No. 20554 of 2O2O B W P.Na. ) 04s9 of 2AZ1 24, hereby directed to (Rs,1,39,33,31g 1_ and respondent, in VAT refund the amount of respondents are Rs.1,90,28,26s/- Accordingly, the Writ petition is allowed and the Rs.50,94,947/-), 351, pursuant to as determrned by the 1st the order of the Tribunal dt.18.01.2019 by crediting the above said amount to the petitioner,s bank account, within fifteen (15) days from the date of receipt of a copy of this order, along with interest due thereon at the rate of 1% per month, as provided under section 39 of the Act, from the date of receipt of the order of the Tribunal, till the date of credit of the said amount; and the respondents shall pay costs of Rs.10,000/- (Rupees Ten Thousand only) to the petitioner. 25. Pending miscellaneous petitions, if any, shall stand closed in the light of this flnal order. MEMORANDUM OF COSTS w.P.NO. 10459 0F 2021 Costs Quantified by Hon'ble Court (That the Respondents herein are directed to pay costs of Rs,'10,0001 (Rupees Ten Thousand Only) to Petitioner to the petitioner. Rs. Ps To, 10,000-00 TOTAL 10,000-00 SD/.B,SATYAVATHI ASSISTANT REGIST R //TRUE COPY// SECTION OFFICER 1. The Assistant Commissioner (CT), LTU, (Now known as Deputy Commissioner (ST) Saroornagar Division, Hyderabad. 2. The Deputy Commissioner (CT), Saroornagar Division, Hyderabad. 3. The Joint Commissioner (CT), Refunds, Office of the Commissioner of Commercial Taxes, Opp. Gandhi Bhavan, Nampally, Hyderabad. 4. The Principal Secretary to Government, Revenue (CT-ll) Department, State of Telangana, Secretariat, Hyderabad. 5. One CC to Sri. Karthik Ramana Puttamreddy, Advocate IOPUC] 6. Two CCs to GP for Commercial Taxes, High Court for the State of Telangana. tourl 7. Two CCs to the Advocate General, High Court for the State of Telangana. (OUT) B. Two CD Copies 9. One Spare Copy. I h PN4 HIGH COURT DATEO:l710712021 ORDER WP.No.10459 of 2021 Allowing the WP Without costs. {.1 X t-l d 2 7 ,rrll202l D € 1Y E STAT 2 a .L f u*\"* / ,+ .,.,, &-2q "