Vaibhav Steel Corporation vs Additional Commissioner of Sales Tax (Vat) and Others

Rule, returnable forthwith. At the request of the counsel, petition taken up for final disposal. By this petition under article 226 of the Constitution of India, the petitioner has prayed for a writ of mandamus to direct the respondents to accept the petitioner''s application in form 501 which the petitioner had sought to file within the limitation period of three years.

The relevant year is the financial year 2009-10. The petitioner filed its return for this year on April 22, 2010 entitling the petitioner to refund of Rs. 33,38,715. No assessment order has yet been passed. However, on or around August 20, 2012, the petitioner in terms of section 51 of the Maharashtra Value Added Tax Act, 2002 (the MVAT Act, 2002) filed an application for refund of Rs. 33,38,715 electronically but the system would not accept it. Thereafter by letters dated August 21, 2012, the petitioner addressed communication to the Joint Commissioner of Sales Tax and the Additional Commissioner of Sales Tax seeking acceptance of its refund application in form 501 for the financial year 2009-10. However, by communication dated September 20, 2012, the Additional Commissioner of Sales Tax informed the petitioner that the refund application in form 501 was to be filed by electronic system only within the prescribed time for the period 2009-10, i.e., before December 31, 2011, which was extended up to January 7, 2012 and since the petitioner had not filed the same within the prescribed time, the petitioner''s application could not be accepted or considered. By similar communication dated September 3, 2012, the Joint Commissioner of Sales Tax, refund also informed the petitioner that as the prescribed time-limit to file the refund application for the period 2009-10 was already over, the petitioner''s request for the same could not be considered. The petitioner''s refund application was thus not accepted.

The learned counsel for the petitioner submits that for the relevant year 2009-10, the period of limitation for filing refund application u/s 51(7) of the MVAT Act, 2002 was three years and accordingly the said three years period was to expire on March 31, 2013. However, well before expiry of the said limitation period, the petitioner sought to submit the application for refund in form 501 on August 20, 2012, but the said application was not accepted on the ground of limitation.

It appears that by Maharashtra Act No. XV of 2011 published in the Government Gazette on April 21, 2011, amendments were made to certain provisions of the MVAT Act, 2002. One of the amendment is to section 51 of the MVAT Act, 2002. The said amendment made by Maharashtra Act No. XV of 2011 reads as under:

Amendment of section 51 of Mah. Act IX of 2005: In section 51 of the Value Added Tax Act,--

(1) to (3) ...

(4) in sub-section (7), for the words ''three years'' the words ''eighteen months'' shall be substituted.

The learned counsel for the petitioner submits that the amendment is prospective and not retrospective. Hence the limitation period of three years, which was available to the petitioner for making a refund application for the year 2009-10 up to March 31, 2013, has not been curtailed by the Legislature. The period of limitation would be 18 months for the relevant years after April 21, 2011. This on the ground that a right to refund of excess tax is a substantive right and not a matter of procedure, which is subject to change in period of limitation for refund. In support reliance is placed upon the decision of the Supreme Court in Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh and Others, and on a decision of the Division Bench of this court in Universal Drinks Private Ltd., Nagpur Vs. Union of India and another, .

On the other hand, the learned counsel for the respondents has opposed the petition and submitted that in view of the amendment to section 51(7) of the MVAT Act, 2002, the Commissioner of Sales Tax, Maharashtra State, had issued Trade Circular No. 15T of 2011 dated November 2, 2011. The said circular reads as under:

The due date for submission of refund application u/s 51 of the MVAT Act, 2002 for the period 2009-10 was September 30, 2011. Representations were received for extension of this date. Considering the difficulties faced by the trade, the due date for submission of refund application in form 501 for the year 2009-10 has been extended up to December 31, 2013.

Needless to state that no further extension shall be provided.

This circular cannot be made use of for the legal interpretation of provisions of law, as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.

You are requested to bring, the contents of this circular to the notice of all the members of your association.

It is submitted on behalf of the revenue that the above circular was given wide publicity and, therefore, the petitioner ought to have submitted its application for refund by December 31, 2011 or at least up to January 7, 2012 which was the extended date. Further the learned, counsel submits that the petition ought to be dismissed as this court has upheld the validity of section 51(7) of the MVAT Act, 2002 in M/s.Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur Vs. The State of Maharashtra and Ors, (Writ Petition No. 33 of 2012 decided on May 11, 2012). Further reliance is placed upon the decision of the Supreme Court in Union of India and Another Vs. Kirloskar Pneumatic Company Limited, , wherein it was held that the court cannot direct the authorities under the Act to ignore the statutory-provision of limitation and extend the period provided under the statute.

Having heard the learned counsel for the parties, we find considerable substance in the submission made by the learned counsel for the petitioner that the matter is squarely covered by the decision of this court in Universal Drinks Private Ltd., Nagpur Vs. Union of India and another, . In the said decision, this court dealt with the similar question in the context of the Central Excise Rules, particularly rule 11 thereof. The period of limitation there was reduced from one year to six months, with effect from August 6, 1977. This court held that right to claim refund is a vested right and that even if it is held to be an existing right and not vested right, such a right cannot be taken away unless it is taken away by a statutory enactment expressly or by necessary implication. An amendment reducing the period of limitation takes effect prospectively unless it has retrospective effect by express terms or by necessary intendment. Accordingly such an amendment will apply to cases in which right to claim refund arose after the amendment and it cannot govern the cases where the right to claim refund has arisen prior to the date of amendment. In fact, this court in Electrofronts Vs. Union of India (UOI), has observed:

. . . Statutes which enable a person to enforce a cause of action which was then barred or provide a bar to an existing cause of action by abridging the time for its institution could hardly be described as merely procedural. They would affect substantial rights.

In the facts of the instant case, it is clear that when the petitioner sought to submit the application on August 20, 2012 claiming refund for the year 2009-10, the three years period of limitation had not yet expired as the same was to expire on March 31, 2013. In this view of the matter, the right which was vested in the petitioner or at least which was an existing right on the date of amendment on April 21, 2011, could not have been taken away without express terms or necessary intendment in the Amending Act. Having gone through the provisions of the amending Act, as quoted hereinabove, we find that the amended section 51(7) of the MVAT Act, 2002 reducing the period of limitation from three years to 18 months is clearly prospective and not retrospective. Hence, the petitioner was entitled to claim refund within the limitation period of three years which was to expire on March 31, 2013. When the refund application was made on August 20, 2012, the respondent authority clearly erred in law in rejecting the refund application on the ground that it was time-barred.

The decisions of this court in M/s.Mahalaxmi Cotton Ginning Pressing and Oil Industries, Kolhapur Vs. The State of Maharashtra and Ors, and of the apex court in Union of India and Another Vs. Kirloskar Pneumatic Company Limited, , have no application to the present facts. This is so as neither the validity of section 51 of the MVAT Act, 2002 is challenged before us nor are we directing the authority under the MVAT Act, 2002 to ignore the statutory period of limitation. Thus we see no reason not to allow the petition.

Though the learned counsel for the petitioner sought to raise other contentions, it is not necessary to deal with the other contentions as the petitioner is entitled to succeed on the above ground. In view of the above, the petition is allowed and the Rule is made absolute. The respondents are directed to consider the petitioner''s refund application for the year 2009-10 by treating it as having been made within the period of limitation.