Delhi Value Added Tax Act, 2004 – Section 38(3), 42 – Value Added Tax – Refund – Refund Adjustment – Timeline – Mandatorily – Recovery – Dues – The Supreme Court examined the issue of whether the timeline for refund under Section 38(3) of the Delhi Value Added Tax Act, 2004 must be mandatorily adhered to while recovering dues by adjusting them against the refund amount.
The respondent, engaged in works contracts for the Delhi Metro Rail Corporation, claimed refunds amounting to Rs. 17,10,15,285/- and Rs. 5,44,39,148/- for specific quarters, which were not paid by the appellant tax authority until 2022. The tax authority, instead of refunding, adjusted the refund claims against dues under default notices issued subsequently.
The Delhi High Court, in its judgment, quashed the adjustment order and directed refund along with interest, holding that the department must adhere strictly to the time limit for processing refunds under Section 38.
The Supreme Court affirmed the High Court’s decision, emphasizing the mandatory nature of the timeline prescribed in Section 38(3) for processing refunds. It rejected the contention that the timeline was merely for calculating interest, stating that such an interpretation would defeat the provision’s purpose. Consequently, the Court dismissed the appeal and upheld the direction for refund with interest as per Section 42 of the Act.(Para 2, 4, 7, 9, and 10)
SUPREME COURT OF INDIA
2024 STPL(Web) 314 SC
[2024 INSC 364]
Commissioner Of Trade And Taxes Vs. Femc Pratibha Joint Venture
Civil Appeal No. 3940 OF 2024-Decided on 01-05-2024
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