Vat
uma shankar
(Querist) 21 June 2013
This query is : Resolved
We have received the VAT assessment order for refund of a certain amount for the year 2011-2012. However, there was a demand in respect of an earlier year, ie. 2004-2005 by the CTO, against which an injunction was obtained by us. This matter is still subjudice. In view of this earlier demand, in respect of which an injunction has been obtained by us, we have now been asked to provide a Bank Guaratee to the extent of the refund due to us, stating that only on production of the Bank Guarantee, the refund will be released. We do not understand why a Bank Guarantee should be demnded of us. Can members advice ? Case laws would be much appreciated.Thanks.
KUMAR JAGADEESAN
(Expert) 22 June 2013
Dear Mr.Umashankar
I do not know which State VAT you are referring to. Kindly refer to the refund rules of the State. If there is no rule that requires a BG for refund, you may first request them to issue refund citing the relevant rules. If it does not work ( or even in the first instance) you may file Writ for necessary direction
J.KUMAR
Advocate
Hyderabad
uma shankar
(Querist) 22 June 2013
Dear Advocate Kumar,
Thank you for your reply. I am referring to the state of Andhra Pradesh. As far as I know, there is no rule stating that BG is required for VAT refund.
KUMAR JAGADEESAN
(Expert) 22 June 2013
Dear Mr.Umashankar
I agree. There is no provision requiring giving BG. Remedy lies infiling a Writ for necessary direction as the department is acting beyond their authority
J.KUMAR
Advocate
Anirudh
(Expert) 22 June 2013
We have to understand the broader frame work of the tax laws.
Every refund has to be adjusted against the pending demand. In your case the earlier demand has been stayed (not quashed). Therefore what is stayed is only the recovery not the assessment itself. In case the injunction gets vacated, the department will be legally entitled to adjust the refund to the extent of the demand. Therefore pending such an adjustment, the department wants you to give a B.G. I don't think that by filing writ petition, you will be succeeding in the matter.
KUMAR JAGADEESAN
(Expert) 23 June 2013
Dear Shri.Anirudh
While agree with the first part about the stay etc; as per the rules the department has only right to adjust any tax demand already due and payable.
In the present case the refund for the subsequent year is due and admitted by the department but we only question their right to demand BG ( in order to safeguard the revenue interest) which is not authorised by law.
Moreover the department has all powers to recover the tax dues in manners that are provided and hence need not have any apprehension about loss of revenue as and when their assessment is finally upheld.
Moreover I feel both the cases are not similar in nature .One is regarding assessment and another is on refund. Even if your point is conceded the BG can only be limited to the previous demand on assessment and not on the whole of the refund ( assuming the refund is more than the impugned tax assessed).
Hence there is a strong case to be made before the Hon'ble HC for necessary relief
J.KUMAR
