Right to seek refund under the MVAT accrues when order on application for refund in Form 501 is duly served on applicant

Bombay High Court: The right to seek refund under the Maharashtra Value Added Tax Act, 2002 accrues when order on application for refund in Form 501 is duly served on the applicant. Any change in ownership of the assessee firm shall be informed within prescribed time under section 18 of the Act

E-Land Apparels Ltd. vs State of Mahrashtra & Ors; W.P. No. 1819 of 2019; Bombay High Court; 05.10.2021

The Writ Petition was filed by the Petitioner seeking directions against the respondents for grant and refund of interest and declaration that the rejection order of refund for the first quarter of the period 2009-2010 is non est and void as it is not served on the petitioner till date.

Facts and Petitioner’s Contention:

• For the relevant period, no notice for assessment or the order rejecting refund is served. The respondents in the affidavitin-reply stated that respondent No.3 has rejected refund claim on September 20, 2012 for the first quarter by issuing online refund rejection order under Rule 60 read with Section 51 of the said Act which is served on the petitioner by way of pasting as the petitioner was not found at the place of business.
• It is pertinent to mention that the petitioner’s predecessors were carrying on the business in the name and style as ‘Mudra Lifestyle Ltd.’ prior to 2011. The original company was taken over by E-Land group of South Korea and the name of the erstwhile company was changed to ‘E Land Apparel Ltd’. The new management is therefore pursuing the matter based on the records available.

Observations and findings:

• Respondent placed reliance on section 18 of the Act, which provides that any registered dealer liable to pay tax under this Act, who transfers by way of sale or otherwise disposes of his business or any part thereof, or effects or knows of any other change in the ownership of the business, and changes the name of his business, shall, within the prescribed time, inform the prescribed authority accordingly. There is nothing on record to indicate and even learned counsel for the petitioner was not in a position to demonstrate that there is due compliance with the provisions of Section 18 of the said Act.
• Therefore, the bench did not find any substance in the contention of the petitioner that as the copy of the refund rejection order is not served the cause of action survives. There is a failure to take steps as per the requirement of Section 18 of the said Act. Therefore the stand of the respondents that the order has been served by way of pasting as the assessee named in the application was not found at the place of business cannot be ignored.
• The roznama was perused and it revealed that on August 29, 2012 fresh notice in Form 301 is issued for the assessment of the first quarter of 2009. The report was received that the dealer was not available at the place of business. The roznama records that as the dealer is not available at the place of business and not responding for the last 2 years, the case is closed for rejection. Dealer was not available at the place of business despite being given many opportunities.
• The roznama dated March 25, 2014 records that the application made by the dealer for the year 2009-2010 is rejected on September 20, 2012 and served on September 26, 2012 by pasting. Hence, assessment/audit is not done in the case.
• On perusal of communication dated 14.10.2015 by Petitioner to the respondent, it was observed that a reference was made to the refund application viz. Form 501 dated September 30, 2011 claiming refund for the Financial Year 2009-2010. The petitioner has mentioned that the company had received one refund rejection order from the office of Deputy Commissioner of Sales Tax for the period of April 1, 2009 to June 30, 2009 amounting to Rs.41,42,109/- vide refund rejection order dated September 20, 2012. It was stated that that the company is unable to trace the documents and hence it is not clear as to how the refund application for the particular quarter was processed and rejected. Even this application for considering the claim of refund for the full year i.e. Financial Year 2009-2010 was made on October 14, 2015.
• RTI application was filed by the Petitioner to resurrect the cause of action. The right to seek the refund in the instant case crystallized on September 30, 2011 itself, viz. the date of transaction stated in form 501. The response to the RTI application of the respondents on October 9, 2018 that the refund application for the amount of Rs.1,26,98,745/- was rejected by the department can hardly be a ground for the petitioner to resurrect the cause of action. The respondents merely supplied information as regards the decision already made.
• Reference was made to the decision of the Hon’ble Supreme Court in the case of Union of India and others vs. M.K. Sarkar; (2010) 2 SCC 59 to hold that the reply dated October 9, 2018 cannot be considered as furnishing a fresh cause of action for reviving a dead issue or a stale claim.
• As far as the Petitioner’s contention that the business was taken over from predecessor entity in 2011 and as the company was in a shifting process, the notices and orders issued by respondents might be misplaced was ejected by the bench stating that the petitioner woke up from its slumber on October 14, 2015. It was held that this was not a case of unjust enrichment enuring to the benefit of the respondents. Though the right to claim refund is crystallized way back on September 30, 2011, the petitioner chose not to enforce their rights with diligence and promptitude.
• The bench went ahead to hold that the law was well settled that making of repeated representations does not have the effect of keeping the claim alive. The petitioner has referred to the application dated October 14, 2015 and the application made under Right to Information Act from 2018 onwards to explain the delay in filing the writ petition. However, the explanation, in our opinion, was unsatisfactory.
• It was reiterated that the right to seek the refund having been crystallized on September 30, 2011 and in any case as the order rejecting refund was passed on September 20, 2012, it was expected that the petitioner approached this Court as early as possible and without undue delay. The petitioner slept over its rights.
• Further, the petition being in the nature of a money claim, it does not appear that the petitioner has exercised due diligence and invoked the writ jurisdiction with utmost promptitude. The delay in moving the writ petition was found unreasonable and accordingly the same was dismissed.

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