GST UPDATE ON REFUND CANNOT BE HOLD DUE TO PENDING CROSS VERIFICATION BY DEPTT AUTHORITY #034/2020-21

GST UPDATE ON REFUND CANNOT BE HOLD DUE TO PENDING CROSS VERIFICATION BY DEPTT AUTHORITY
High Court of Telangana in the case of ACC Ltd. v/s Assistant Commissioner CT LTU vide its Writ Petition No: 943 dated 27th April 2020 has held that cross verification is not a valid reason to withhold the refund of the assessee after the prescribed period.

The petitioner M/s ACC Limited is engaged in the manufacture of cement and cement products. The petitioner was assessed to Sales tax during the years 1979-80 and 1980-81 on the turnover relating to packing material i.e. gunnies under the APGST Act, 1957.

The original adjudicatory authority levied tax at basic rates of 3% and 8% on packing material and cement respectively and completed assessment for 1979-80. A similar order was passed on 20.3.1985 for the assessment years 1980-81. Subsequently, the said orders were revised by the Dy. Commissioner (CT), Begumpet Division on 11.3.1987 (1979-80) and 9.3.1987 (1980-81) on the ground that the Commercial Tax Officer had levied basic tax at 3% instead of 8% on packing material, and so an additional demand was raised by Form B-3 demand notice.

The said additional demand was challenged before the Supreme Court by applicant. Pursuant to an interim order passed by the said Court, petitioner paid Rs.13,03,679/- and Rs.15,06,753/-(i.e. total of Rs.28,10,432) through Demand drafts bearing No. 014826 and 014827 both dated 31.5.1988.
However, the Supreme Court on 25.9.1989 remanded the matter to Dy. Commissioner (CT), Begumpet Division, Hyderabad(respondent) and the department again confirmed the levy on packing material at the basic rate of 8% and levied additional tax 28, 10,432/- on 24.01.1990.

Aggrieved by the said order, petitioner appealed before the Sales Tax Appellate Tribunal. The Tribunal, by a common order dt. 3.2.1993 allowed the appeals filed by the petitioner. In spite of the said favourable orders, the said amount of Rs.28,10,432/- was not refunded to petitioner. Petitioner therefore seeks refund of Rs.28,10,432/- from the respondent.

The respondent directed to withhold Rs.28,10,432/- for want of getting cross verification on payment details from the Commercial Tax Officer concerned on 05.05.2009.

The petitioner seeks a Writ of Mandamus [A (writ of) mandamus is an order from a court to an inferior government official ordering the government official to properly fulfill their official duties or correct an abuse of discretion] declaring that the impugned order dt.5.5.2009 withholding the refund of Rs.28, 10,432/-is arbitrary, illegal and without jurisdiction; to set aside the same and to direct the Dy.Commissioner to refund the said amount with interest at 12% p.a. from 2.8.1993 to 22.1.2004 as per Sec.33-F of the Act and also at 12% p.a from 5.11.2009 till date as per Sec.33-F of the Act apart from costs.

Sub-section (2) of Section 33F deals with the refunds withheld under the provisions of Section 33C and enjoins the State Government to pay interest @ 12% p.a. on the amount of refund ultimately determined to be due as a result of the appeal or further proceedings for the period commencing after the expiry of six months from the date of the order referred to in Section 33C to the date the refund is granted.

High Court held in the instant case, the respondents had withheld the refund for 11 years on the ground of 'want of cross-verification details' which is not a ground mentioned in Sec.33-C for withholding the refund due to petitioner. Admittedly no proceeding such as an appeal or revision was pending against the petitioner. So Sec.33 F(2) of the APGST Act is also inapplicable.

Also, a refund withholding order must invariably specify (as per Sec.33C) the period of time during which it will be in force and a refund cannot be withheld indefinitely as has been done in the instant case. Sec.33-E and 33-F of the APGST Act give 6 months' time to the respondents to complete the verification and the authorities cannot withhold the refund beyond the said period.

Thus there has been an ex-facie abuse of power by the respondent in denying refund to the petitioners of the sum of Rs.28, 10,432/-. The court ordered to repay the refund amount along with interest at 12% p.a from 2.8.1993 to 22.1.2004 as per Sec.33-F of the Act and also at 12% p.a from 5.11.2009 till date as per Sec.33-F of the Act. Therefore, the writ petition is allowed with costs of Rs.25,000/- to be paid to the petitioner.

This is solely for educational purpose.

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GST UPDATE ON REFUND CANNOT BE HOLD DUE TO PENDING CROSS VERIFICATION BY DEPTT AUTHORITY #034/2020-21

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