Published on: May 07, 2024 12:47 IST
Top Court ruled that the tax department must strictly follow to the time limits prescribed for processing and issuing refunds under Section 38 of the Delhi Value Added Tax Act, 2004. The bench comprising Justices PS Narasimha and PB Varale emphasized that the language of Section 38(3) is mandatory, and the department must comply with the timeline to ensure timely issuance of refunds.
Rejecting the department’s contention represented by Additional Solicitor General Mr. N Venkataraman that the timeline is only for calculating interest under Section 42, the court emphasized that such an interpretation would enable the department to retain refundable amounts for extended periods, contrary to the provision’s objective.
The case involved an assessee who claimed excess duty from the department under Section 38 but did not receive the refund. The High Court, relying on a previous judgment, directed the department to refund the excess duty amount. The Supreme Court upheld the High Court’s decision, stating that the department was not justified in withholding the refund beyond the stipulated period and then adjusting it against amounts due under default notices issued later.
The court dismissed the department’s appeal and directed it to refund the amounts along with interest as provided under Section 42 of the Act.
Case Title: Commissioner of Trade and Taxes v. FEMC Pratibha Joint Venture, CIVIL APPEAL NO. 3940 OF 2024
