Refund of VAT - State can raise no technical objections
Tripura High Court Directs State to Refund VAT to Larsen, Criticizes Procedural Delays. Court Condemns State's Technical Objections, Upholds Company’s Right to Tax Refund with Interest
In a landmark judgment delivered by the Tripura High Court, a division bench comprising Chief Justice M.S. Ramachandra Rao and Justice S. Datta Purkayastha ruled in favor of Larsen, a public limited company engaged in various engineering and construction activities, in its writ petition against the State of Tripura. The company had sought a refund of Value Added Tax (VAT) paid in excess during the financial years 2006-07 to 2013-14. The court criticized the state for raising frivolous and technical objections to the company's legitimate refund claims.
The judgment emphasized that the entitlement to VAT refunds under the Tripura Value Added Tax Act, 2004 cannot be negated by procedural irregularities or arbitrary rejection without valid assessment. The court noted that Larsen had complied with all statutory requirements, including filing quarterly returns and submitting VAT audit reports as required under the Act.
The court observed that the respondents had accepted Larsen's quarterly returns without raising any queries, which amounted to a deemed self-assessment under Section 29(3) of the Act. Furthermore, the court highlighted that the statutory audit reports submitted by Larsen were not contested by the respondents, reinforcing the validity of the company's claims.
Addressing the procedural objections raised by the state, the court stated that the rules made under the Act cannot impose a limitation period for filing refund claims when the substantive statute does not prescribe such limitations. It criticized the state's reliance on technicalities, such as the format of refund applications and submission of TDS certificates, to deny the company's legitimate claims.
The judgment also addressed the state's contention regarding the necessity of assessments for refund claims. The court clarified that the state's failure to conduct assessments cannot be used to deny refunds, especially when the statutory period for assessments had already elapsed.
In its decision, the court directed the state to process Larsen's refund claims expeditiously and pay interest on delayed refunds as prescribed under Section 45 of the Act. The court also imposed costs of Rs. 2 lakhs on the state for its conduct throughout the litigation process, emphasizing the need for the state to act as a model litigant and adhere to principles of fairness and justice.
This ruling sets a precedent for upholding the statutory rights of businesses in Tripura and underscores the importance of creating an enabling environment for ease of doing business in the state.
Bottom Line:
Refund of VAT - Entitlement cannot be defeated on procedural grounds or by arbitrary rejection without valid assessment. The statutory right to refund cannot be negated by vexatious or technical objections raised by the State.
Statutory provision(s): Tripura Value Added Tax Act, 2004 Sections 29(3), 43, 45, 52, 53, 87
Larsen v. State of Tripura, (Tripura)(DB) : Law Finder Doc id # 2776874
