1. The latest judgment of the Bombay High Court in the case of E-Lands Apparels Ltd. v. The State of Maharashtra and Others, WP No. 1819 of 2019, judgment dated October 5, 2021 is an eye opener for the all the negligent assessees. The judgment has far-reaching effects. There are speculations in the profession about the ratio of this judgment. Therefore, this article.

  2. The facts recorded by the Hon’ble High Court in this case are as follows. The petitioner company had taken over another company, namely, ‘Mudra Lifestyle Ltd.’, prior to 2011. The name of the erstwhile company was changed to ‘E-Land Apparel Ltd.’. The new management did not inform the assessing authority the change which had taken place. Section 18 of the MVAT Act, 2002 provides that any registered dealer liable to pay tax under the Act, who transfers by way of sale or otherwise disposes of his business or any part thereof, or effects or knows of any other change in the ownership of the business, and changes the name of his business, should, within the prescribed time, inform the prescribed authority accordingly. It was not done. An application in Form No. 501 for part refund was made on September 30, 2011. It was rejected on September 20, 2012 and was served on the Petitioner on September 26, 2012 by pasting. The roznama produced by the Respondents before the Court recorded that on August 29, 2012 a notice for assessment in Form No. 301 was issued. The roznama also recorded that the dealer (Petitioner) was not available at the place of business and was not responding for last two years and the case was closed for rejection. It was stated that many opportunities were given but the dealer was not available at the place of business and there was no response and hence the application for refund was rejected. The roznama dated March 25, 2014 recorded that the application made by the dealer for the year 2009-2010 was rejected on September 20, 2012 and served on September 26, 2012 by pasting.

  3. The Petitioner had written letter to the Sales Tax Department on October 4, 2015, stating that no cognizance was taken by the Department on the refund application filed by them in the year 2011. The Petitioner thereafter applied on April 20, 2018 under Right to Information Act seeking status of the refund application. The Department replied on May 30, 2018 stating that no details were available with them. The Petitioner persisted with the remedy under Right to Information Act. Ultimately, a reply was received by the Petitioner on October 9, 2018 from the Department wherein it was mentioned that the application for refund was rejected. It was the Petitioners grievance that the copy of the rejection order was not provided. The Petitioner was therefore left with no other alternative but to approach the Court under Article 226 of the Constitution of India. It was contended that the cause of action survived and having regard to the explanation in the petition, the live link with the dispute had not snapped. The Petitioner submitted that after exhausting all the possible remedies they had approached the Court.

  4. The Court observed that it did not find any substance in the contentions of the Petitioner that as the copy of the refund rejection order was not served the cause of action survived. The Court observed that there was a failure to take steps as per the requirement of the Act. It was therefore not possible to ignore or brush aside the stand of the Respondents that the order had been served by way of pasting as the assessee named in the application was not found at the place of business.

  5. The Court observed that the right to seek the refund in the instant case crystalized on September 30, 2011 itself, viz. the date of transaction stated in Form 501. In the opinion of the Court by filing an application on April 20, 2018 under Right to Information Act the Petitioner attempted to resurrect the cause of action. The communication dated October 9, 2018 was merely a response indicating the status of the Petitioner’s claim having been rejected. The department merely supplied information as regards the decision already made. The claim made by the Petitioner was a stale/dead claim, and the representation thereto was belated representation. The issue of limitation or delay and laches as regards the claim should be considered with reference to the original cause of action which in the opinion of the Court arose on September 30, 2011 itself. The Court relied on the decision of the Hon’ble Supreme Court in the case of Union of India and Others v. M. K. Sarkar (2010) 2 SCC 59to come to this conclusion. The Court therefore held that the reply given by the Department on October 9, 2018 could not therefore be considered as furnishing a fresh cause of action for reviving a dead issue or a stale claim.

  6. The Court further observed that the Petitioner woke up from its slumber on October 14, 2015. Though the right to claim refund was crystalized way back on September 30, 2011, the Petitioner chose not to enforce their rights with diligence and promptitude. This was a case where by passage of time the Petitioner had allowed the remedy of claiming refund to be lost. Mere making an application on October 14, 2015 and then trying to obtain information under the Right to Information Act since 2018 onwards would not revive a stale claim. The law is well settled that making of repeated representations does not have the effect of keeping the claim alive. The Petitioner had referred to the application dated October 14, 2015 and the application made under the under Right to Information Act from 2018 onwards to explain the delay in filing the Writ Petition. However, the explanation, in the opinion of the Court was unsatisfactory. Those repeated representations did not give a fresh cause of action to the Petitioner and mere making of representation could not justify a belated approach. It could not be said that Petitioner was perusing the Statutory remedies in respect of the refund claim. The Petitioner was not vigilant of its rights and therefore the Court stated that they did not feel that they should exercise their extraordinary Writ jurisdiction in the favor of the Petitioner.

  7. The Court relied on another Supreme Court judgment in the case of Karnataka Power Corporation Ltd. and anr. v. K. Thangappan and anr. AIR 2006 SC 1581 and stated that the discretion had to be exercised judicially and reasonably. They also relied on another judgment of the apex court in the case of State of M. P. v. Nandalal AIR 1987 SC 251which said that the High Court in exercise of its discretion does not ordinarily assist the tardy and the indolent or the acquiescent and the lethargic.

  8. The Court also considered the present matter from the point of view that the application for refund was in the nature of a money claim. The Court relied on the judgment of the Supreme Court in the case of The State of Madhya Pradesh and anr. v. Bhailal Bhai and others 1964 AIR 1006. The apex court in that case had observed that the maximum period fixed by the legislature as the time within which the relief by a suit in a civil court must be brought may ordinarily taken to be a reasonable standard by which delay in seeking remedy under Article 226 could be measured. The Court may consider the delay unreasonable even if it is less than the period of limitation prescribed for civil action for the remedy but where the delay is more than this period, it will almost always be proper for the Court to hold that it is unreasonable. Hon’ble Bombay High Court held that the present case was squarely covered by the Bhailal Bhai’s case and dismissed the Writ Petition.

  9. This judgment of the Bombay High Court is now a booster shot for Department. The quasi-judicial authorities are bound to take advantage of this. One error on the part of the Petitioner, of failure to inform the Department of the changes effected in the status of the Petitioner, has invited so many observations of the Court which are now detrimental to all other similar cases involving delay. Each litigant has now to be careful. The explanation for the delay caused should be set up properly. Advisably it should be done after proper inspection of the Department’s records. Each day of delay, irrespective of whether it is for the refund or it is in filing appeal has to be explained properly.

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