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M/s. Mega Media Solutions Vs. Commissioner Trade & Taxes & Anr.
July, 22nd 2019
+                         W.P.(C) 9282/2017

M/s. MEGA MEDIA SOLUTIONS                                   ..... Petitioner
                  Through:              Mr Varun Nischal, Mr Arif Ahmed
                                        Khan, Ms Gaumi Grover and Mr
                                        Manoj Kumar, Advocates.


COMMISSIONER TRADE & TAXES & ANR.           ..... Respondents
                 Through: Mr Satyakam, ASC for GNCTD.

       %                           17.07.2019
Dr. S. Muralidhar, J.:
1. This is yet another case where the Respondents are seeking to avoid
granting refund to the Petitioner on the basis of ,,zero demand orders

2. The practice of passing ,,zero demand orders to deny refunds was
frowned upon by this Court even earlier. Illustratively, reference may be
made to the orders dated 21st November, 2016 in W.P.(C) No.9252/2016
(Aesthetic Packaging v. Commissioner of VAT) and 6th August, 2018 in
W.P.(C) No.1563/2018 (M/s Arora Enterprises v. Commissioner, Trade &
Taxes). Yet, the practice has not stopped.

3. This petition itself has a chequered history. The Petitioner is a

W.P.(C) 9282/2017                                                 Page 1 of 9
proprietorship registered under the Delhi Value Added Tax Act, 2004
(,,DVAT Act) as well as the Central Sales Tax Act, 1957 (,,CST Act). The
Court is informed that the Petitioner has since sought cancellation of the
CST registration. The Petitioner filed the present petition aggrieved by the
denial of refund in the total sum of Rs.133,87,364/-, in respect of the tax
periods from May to December, 2010 and January, February, March and
May, 2011. Paragraph 2 of the writ petition sets out the details of the refund
amount claimed for each of the above assessment periods and the dates of
the respective returns in which refunds were made. Admittedly, the earliest
of those returns is dated 25th June, 2010 and the last of such returns (for
May, 2011) is 26th June, 2011.

4. In response to the notice issued in this petition, a reply was filed on 4th
January, 2018 by the Respondents alleging suppression of material facts by
the Petitioner. It is stated in para 5 of the counter affidavit that the refunds
for the periods July, 2010 to March, 2011 and May, 2011 were disallowed
by the then Assessing Authority on the ground that the dealer did not furnish
the required information despite time being given to him under Section 59
(2) of the DVAT Act. It was accordingly contended that the Petitioner had
not approached the Court with clean hands. It was stated that by 12th July,
2012, the Petitioner had not furnished any document pertaining to the above
period i.e. July, 2010 to March, 2011 and May, 2011 and that the refund
claims for the said periods were rejected by orders passed on 1 st August,
2012 and 3rd August, 2012. It was contended that the Petitioner had not
challenged those orders in accordance with law and, therefore, the petition
itself was not bonafide.

W.P.(C) 9282/2017                                                  Page 2 of 9
5. In the meanwhile, the Petitioner had filed CM No.747/2018 to bring on
record additional documents in support of its claim for refund.

6. The Court initially passed an order on 5 th July, 2018 disposing of the
present writ petition, inter alia, observing that if the Petitioner was
aggrieved by the adjudication of its claims for refund "and having regard to
its assertions that the orders were never received by it", it was open to the
Petitioner "to seek copies of such order or orders and prefer appeals". It was
observed that in the event that the Petitioner preferred the appeals within 30
days of receipt of such orders, they would be considered by the Objection
Hearing Authority (,,OHA) on their merits. It was noted in the order that the
copies of the orders rejecting the refunds claims for the periods July, 2010 to
March, 2011 "are being handed over to the counsel for the Petitioner".

7. Soon thereafter, the Petitioner filed Review Petition No.274/2018. Inter
alia, it was pointed out by the Petitioner that after going through the
documents handed over to the counsel for the Petitioner by the counsel for
the Respondent, it was found that there were material facts, statutory
provisions and judgments which were not brought to the notice of the Court.
The new material documents revealed that for the tax period 2010-11, orders
raising ,,zero demand had been passed and since these were not available
earlier to the Petitioner and there were no disputed facts, "nothing survives
for the OHA to decide".

8. A reply was filed to the review petition by the Respondents, inter alia,
pointing out that a set of scanned orders were emailed to the counsel for the
Petitioner on 26th October, 2017. It is pointed out that from the annexures to

W.P.(C) 9282/2017                                                  Page 3 of 9
the review petition it was plain that the earlier assertions by the Petitioner
about not receiving the orders were false. It was pointed out that along with
the review petition, the Petitioner itself had submitted copies of some of the
orders made available to it in 2014 itself. It was accordingly prayed that the
review petition be dismissed.

9. The review petition came up for hearing before this Court on 28 th
September, 2018. The operative portion of the said order reads as under:
       "This Court had merely disposed of the order on the assumption
       that the petitioner can approach the Objection Hearing
       Authority (hereafter 'OHA'). It is apparent from the order issued
       at the relevant time that the so-called assessments were
       completed without any demand since the VATO indicated 'zero'
       demand. In these circumstances, the merits of the petition need
       to be gone into - including as to whether the Court should or
       should not entertain the question of refund belatedly. Review
       petition is allowed and disposed of accordingly."

10. By the same order, the Court also permitted the parties to file further
affidavits "if needed".

11. Pursuant thereto, the Respondents filed an additional affidavit on 15th
December, 2018. This affidavit basically reiterated the earlier stand of the
Respondents that the refunds claims already stood rejected. Reference was
made to the notices issued to the Petitioner under Section 59 (2) of the
DVAT Act to produce documents, to which the Petitioner did not respond. It
was contended that the writ petition was barred by laches since the
department "cannot reopen the assessment and rectify the defect in these
orders". It was reiterated that there is suppression of material facts in the
petition and that the claim was barred by laches. Again, copies of the orders

W.P.(C) 9282/2017                                                 Page 4 of 9
sent to the counsel for the Petitioner were enclosed with this affidavit.

12. The Petitioner has on 18th January, 2019 filed a response to the above
additional affidavit setting out the history of the present case. It is pointed
out that the Respondent is relying on ,,zero demand orders to deny refund
and that in similar instances, this Court had negated such attempts. It is
pointed out further that in another case involving a similar denial of refund
on account of a ,,zero demand order, viz., W.P.(C) No. 8849/2018 (Vijiman
Electronic Pvt. Ltd. v Commissioner of Trade & Taxes), the Respondents
had voluntarily withdrawn the zero demand orders and issued refunds for the
period of 2009-10 along with interest. It is pointed out that an order dated
24th October, 2017 was passed issuing refund to the Petitioner for the period
May, 2010, but in the ,,remarks section, an assessment was framed in the
refund order itself and this was done only to defeat the refund claim of the
Petitioner for that period. For June, 2010, a refund order had been issued
without interest on the refund amount. This was in the teeth of the judgment
of this Court in IJM Corporation Berhad v. CT&T (2018) 48 GSTR 102
(Del). It is pointed out that in the refund order from May, 2010, the
Respondents had illegally deducted up-to-date interest @ 15% per annum
from 2010 onwards while, at the same time, denying the Petitioner statutory
interest @ 6% on account of delay.

13. This Court has heard the submissions of learned counsel for the parties.
Learned counsel for the Petitioner reiterated what has been urged in the
main petition, and the additional affidavit, which has been referred to
hereinbefore. He submitted that there was no justification in law for denying

W.P.(C) 9282/2017                                                   Page 5 of 9
refund on the basis of such ,,zero demand orders.

14. Mr Satyakam, learned Standing Counsel for the Respondents, on the
other hand, reiterated the contention regarding suppression of material facts
by the Petitioner and not coming to the Court with ,,clean hands. He also
brought up the issue of the petition being barred by ,,laches. While he was
not in a position to defend the ,,zero demand orders, his contention was that
the conduct of the Petitioner should disentitle it to any relief.

15. The above two aspects raised by the Respondents i.e. the suppression of
material facts by the Petitioner, and ,,laches, were raised by the Respondents
even earlier in response to the review petition filed by the Petitioner.
Nevertheless, this Court allowed the review petition in the manner indicated
hereinbefore, thereby rejecting the above pleas. This Court was of the view
that the writ petition had to be heard on merits. The parties were permitted to
file additional affidavits. This liberty was utilized by the Respondents to file
an additional affidavit reiterating the same pleas, which it did in response to
the review petition.

16. The plea of the Respondents that the Petitioner was already aware of
these orders in 2014 did not find favour with this Court when it was first
raised in the reply to the review petition. In fact, the review petition was
allowed and it was directed that the writ petition be heard on merits. That
order, allowing the review petition, has attained finality. The plea of laches
and suppression of material facts having been impliedly rejected by this
Court earlier, cannot be permitted to be raised again in these proceedings.

W.P.(C) 9282/2017                                                   Page 6 of 9
17. Even otherwise the plea of laches raised by the Respondents seems to be
futile. On their own showing, the Respondents have for two periods i.e.
May, 2010 and June, 2010, granted refunds to this very Petitioner by passing
separate orders in January 2018. However, the order granting refund for
May, 2010 is strange. While on the one hand, it accepts the plea for refund,
it utilizes that opportunity to create a demand in the ,,remarks column and
additionally charges interest on the Petitioner for more than 10 years. The
Court can only speculate that this reveals either a total non-application of
mind by the Assessing Officer or that the software is so riddled with errors
that it produces orders of that kind. Likewise for the period June, 2010,
refund was granted while denying interest that is due to the Petitioner for the
period in question. If for these months of May and June, 2010, refund orders
could be passed on January 2018, then clearly the Respondents were not
allowing the plea of ,,laches to come in the way of grant of refund. In any
event, the orders denying refund were never ever communicated to the
Petitioner till the filing of the present petition.

18. The fact of the matter is that the only ground on which refund has been
refused to the Petitioner is the passing of ,,zero demand orders, which have
been enclosed by the Respondents themselves to the additional affidavit
filed by them. The Court is further informed that the copies of such orders
were handed over in Court on the first date of hearing of the writ petition

19. When repeatedly asked as to what is the purpose of passing such ,,zero
demand orders, and then requiring the dealer to challenge such orders in

W.P.(C) 9282/2017                                                  Page 7 of 9
accordance with law before the OHA, the learned counsel for the
Respondents was unable to give any satisfactory answer. The fact also
remains that the earlier orders of this Court in Aesthetic Packaging v.
Commissioner        of   VAT   (supra)   and   M/s   Arora   Enterprises        v.
Commissioner, Trade & Taxes (supra) and other similar orders including
the order dated 22nd May, 2019 in W.P.(C) No. 8851/2018 (M/s. Robust
Technologies Inc. v. Commissioner of Trade & Taxes) are all within the
knowledge of the Respondents. There is no purpose served in passing such
,,zero demand orders as they end up only multiplying litigation needlessly
and delaying the grant of refunds to which the dealers are legitimately

20. For all of the aforementioned reasons, the pleas raised by the
Respondents to deny the Petitioner the refunds are not sustainable in law and
are hereby rejected.

21. The question now remains as to the consequential orders that are
required to be passed. Of the entire period for which refund has been
claimed in the present petition, orders granting refund have been passed only
for two months i.e. May and June, 2010, and that too erroneously.
Consequently, even those orders are required to be set aside by this Court.

22. A direction is now issued to the Respondents to process the Petitioners
claim for refunds, without raising any of the objections that have been raised
before this Court and proceed to issue the refund orders in accordance with
law, together with the interest due on the refund amounts, not later than

W.P.(C) 9282/2017                                                 Page 8 of 9
eight weeks from today. The Court makes it clear that the refund amount
together with interest should be credited to the Petitioners account within
the above period, failing which the Respondents will be liable for wilful
disobedience of this Courts orders.

23. The writ petition is allowed in the above terms, but in the circumstances,
with no orders as to cost.

24. Dasti under the signatures of the Court Master.

                                                      S. MURALIDHAR, J.

                                                      TALWANT SINGH, J.
JULY 17, 2019

W.P.(C) 9282/2017                                                 Page 9 of 9
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