Delhi High Court Directs VAT Dept. To Refund Rs. 6.62 Crores To Flipkart

The Delhi High Court has directed the Value Added Tax (VAT) department to refund Rs. 6.62 crore to Flipkart along with interest.

The bench of Justice Yashwant Varma and Justice Dharmesh Sharma has observed that the VAT department has acted arbitrarily in making numerous adjustments post-May 31, 2015, thus illegally depriving the petitioner, Flipkart, of the refund as claimed. The various adjustments clearly appear to have been made even though objections before the Objection Hearing Authority (OHA) had been duly lodged online by the petitioner. The department thus clearly appeared to have acted contrary to the clear mandate of Section 38 of the DVAT Act.

In accordance with the DVAT Act of 2004, the petitioner, Flipkart India, has requested a directive ordering the department to process a refund application and give effect to a claim for a refund of Rs. 6,62,74,405.

The claim for refund is principally based on the assertion of the petitioner that its application of March 31, 2015, was liable to be decided within the statutory timeframe as prescribed in Section 38(3)(a)(ii) of the DVAT Act. In the absence of any valid claim in respect of an amount due existing at the time when the said application was made, the respondents were bound to acknowledge it and ensure that the refund was granted within two months.

The petitioner submitted that any claim for refund that had fructified in accordance with the timelines prescribed by Section 38(3)(a)(ii) of the DVAT Act could not have been nullified by any demand for tax.

The petitioner contended that the return for the quarter ending March 31, 2014, which had been duly filed on March 31, 2015, had itself claimed a refund of Rs. 11,40,97,349/-. Between the initial filing of the return for the said quarter on May 9, 2014, and the revised return on March 31, 2015, only two notices for default assessment pertaining to the period April 2012 to March 2013 had come to be issued. However, since those had been questioned by filing objections before the OHA, the mere issuance of those notices could not have constituted a valid ground to deny refund as claimed by the petitioner and as it stood embedded in its return. The period of two months as prescribed in Section 38(3)(a)(ii) of the DVAT Act had clearly expired on May 31, 2015. At least till that date, no enforceable demand existed, which may have justified the respondents in withholding the amount claimed to be refundable.

The department contended that the petitioner itself was responsible for the delay caused in effecting the refund on account of incorrect and incomplete information that had been provided to the department, thus disabling them from processing the application for refund. Certain other demands had come to be raised against the petitioner, and consequently, the respondents were clearly justified in adjusting the refunds claimed against those demands.

The Court found that the original reports that had been filed by the respondents along with their counter affidavit only spoke of the objections either not being traceable or having not been received from the predecessor OHA. Once the objections had been duly lodged online, the mere fact that the respondents were unable to trace out the objections filed physically would not detract from the petitioner's right to claim a refund.

Thus, the Court held that Flipkart India is entitled to the grants of the writs as prayed for and quashed the order.

The Court directed the respondent department to refund the amount of Rs. 6,62,74,405 along with interest from the date it fell due within a period of three weeks.

Case Title: Flipkart India Private Limited Versus Value Added Tax Officer

Citation: 2023 LiveLaw (Del) 847

Case No.: W.P.(C) 6430/2022

Date: 21/08/2023

Counsel For Appellant: Tarun Gulati

Counsel For Respondent: Satyakam

Click Here To Read The Order