There is no legal justification for withholding the amount which is otherwise refundable to the assessees in passing of any assessment orders for the relevant assessment years

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There is no legal justification for withholding the amount which is otherwise refundable to the assessees in passing of any assessment orders for the relevant assessment years

 

Dharti Quarry Works Vs State Of Gujarat
R/Special Civil Application No. 9431 Of 2020
Short Overview of the Case:
The assessees are engaged in the business of excavation and grinding of black trap stones and sale of the products like grit, rubbles etc.
They preferred the present petition challenging the decision of the Department in declining to grant the refund of the amount recovered during the search for the period between F.Y. 2012-13 and 2015-16 to the tune of Rs. 14,61,850/-, which according to counsel for assessee had not been appropriated by passing the audit assessment orders and the same now having become time barred.
The issue before HC was as to whether there is any legal justification for withholding the amount which is otherwise refundable to the assessees.
HC held as under : 
There is no legal justification for withholding the amount which is otherwise refundable to the assessees in passing of any assessment orders for the relevant assessment years.
It could be said that such withholding of the refund is contrary to the provisions of the Section 36 of the VAT Act, 2003.
In the said context, this Court in the case of Shilpa Industries Vs. State of Gujarat – 2020-TIOL-362-HC-AHM-VAT, observed that: “….The Department have withheld the refund contrary to the provisions of Section 36 of the VAT Act, 2003.
In the facts of the case, the assessee was compelled to deposit Rs. 83,106/-, pursuant to the inspection of the business premises of the assessee towards tax, penalty and interest for two assessment years i.e. 2011-2012 and 2012-2013, prior to the assessment of tax penalty or interest payable by the assessee for the respective years.
There is no provision in the VAT Act, 2003, whereby the assessee may be compelled to deposit any amount during the course of search or inspection. It appears that the assessee in his bona fide belief waited for the expiry of the period prescribed under the provisions of Section 34 of the VAT Act, 2003 for the assessment to be made under Subsection (2), (5), (6) or (7) up to 4 years and assessment under subSection (8) upto 8 years. Admittedly, the Department have not passed any order of assessment for the year 2011-2012, raising any demand against the assessee.
Therefore, the Department authorities cannot retain the balance amount of Rs. 63,843/-….” In the overall view of the matter, the authorities are directed to pay to the assessees an amount of Rs. 14,61,850/- together with the statutory interest @ 6 % within a period of six weeks from the date of communication of this order.

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