IKEA Trading (India) v. The Value Added Tax Officer and Anr.

1. The petitioner’s grievance before this Court is that a sum of `2,55,11,598/- has to be paid to it by the respondents (hereafter referred to as “the VAT Department).

2. The brief facts are that the petitioner, a registered dealer, was, at the relevant time, exporting home furnishing products, including carpets, durries, fabrics, plastic articles, lamps, soft toys etc. The petitioner had, during the course of VAT proceedings filed objections to the Assessing Officer’s (AO’s) determinations. These objections were not decided in eight months’ time as required by the relevant statutory provision. Therefore, the petitioner, basing upon the previous order of the 2014:DHC:485-DB W.P.(C) 4220/2012 Page 2 VAT Tribunal in Behl Construction successfully argued that if the objections are not decided by the Objection Hearing Authority (OHA) within eight months they are deemed to have been allowed. The Tribunal accepted that argument and directed refund of amounts claimed. The VAT Department’s appeal to this Court was rejected on the ground that it was preferred after the period of limitation and that there was no provision in the Delhi VAT Act, enabling the Court to condone the delay.

3. It is argued that given these circumstances, the VAT Department has to refund the sums claimed by the petitioner since it had succeeded before the Tribunal.

4. The VAT Department points out that the VAT Tribunal’s ruling in Behl Construction was overturned by this Court in its appeal where it was held that the provision requiring decision within eight months is not mandatory but only directory. Learned counsel also submitted that as far as the appeal was concerned, a retrospective amendment has been made enabling this Court to condone the delay. These aspects were not being disputed by the petitioner.

5. On 14.01.2013, this Court made the following directions: “The grievance of the petitioner is that despite the order of the Delhi Value Added Tax Appellate Tribunal, the amounts due to them are not being refunded. Apart from this, the learned counsel for the petitioner also submits that there are other periods for which the refund claims have been made but the refunds are not being granted despite W.P.(C) 4220/2012 Page 3 the fact that there are no default assessment orders within the stipulated period of one month from the filing of the return nor is there any show cause notice issued under section 59 of the DVAT Act, 2004 within the stipulated period of time. The total amount of the refund claims comes to ` 2,55,11,598/-. Out of this amount, a sum of `80,22,477/- is on account of the orders passed by the Tribunal whereas the balance amount is in respect of the refund claims which ought to have been decided within the period of one month as prescribed under section 38 (3)(a)(i) of the said Act. The learned counsel for the petitioner has placed reliance on a decision of a Division Bench of this court in the case of Swarn Darshan Impex (P) Ltd. v. Commissioner, Value Added Tax & Anr: in W.P(C) No. 3817/2010 decided on 03.06.2010, wherein it was held as under:-

6. It transpired subsequently that the VAT Department’s grievance in respect of this Court’s order carried by it by way of Special Leave Petition to the Supreme Court was accepted in part and a remand order was made on 02.01.2014. This in turn would mean that the VAT Department’s appeal is at large and has to be decided – both on the question of limitation as well as the merits. Given these set of circumstances, this Court is of the opinion that no useful purpose would be served in retaining the amounts paid by the respondents in this Court. As on date, the order of the VAT Tribunal has not been set aside. At the same time, the setting-aside of the VAT Department’s previous W.P.(C) 4220/2012 Page 6 determination in Behl Constructions (supra) would mean that the objection would have to be heard and adjudicated on the merits. Consequently, it is hereby directed that the amounts deposited in Court shall be refunded to the petitioner subject to its complying with the following directions: (a) furnishing bank guarantee to the extent of 35% of the amount so deposited – further to the order of 14.01.2013; (b) furnishing an indemnity bond and such other acceptable security as may be deemed appropriate by the VAT Department having regard to the entirety of the circumstances;

(c) The petitioner shall comply with the above terms within six weeks from today.

S. RAVINDRA BHAT

(JUDGE)

R.V. EASWAR (JUDGE) JANUARY 27, 2014