The Hon'ble High Court of Delhi in the case of New Age Generators vs. The Commissioner, Value Added Tax, has vide its order dated July 12, 2016, passed strictures against the DVAT department for not complying with clear time limits set out for making the refund set out under Section 38 (3) of the DVAT Act i.e. within two months of furnishing of return or claim of return was filed. The court held that once an application for refund is found to be in order and has been duly verified by the concerned authority, there can be no justification for not releasing of the refund amount in terms of Section 38 of the DVAT Act. It further stated that in any event, the time period within which the refund is to be made cannot possibly exceed that stipulated time under Section 38 of the DVAT Act. It rejected the contention of the Department and held that "Whatever be the 'fail-safe' mechanism the Commissioner wishes to devise, unless the statute permits staggering of the refund payments through the devise of administrative instructions, it is not permissible for the Department to delay the release of the amounts of refund and interest beyond the period specified under Section 38 of the DVAT Act."

In the light of above judgment of Hon'ble High Court of Delhi, Department of Trade & Taxes has issued a circular No. F .3(378)/Policy/VAT/2016/489-494 dated July 21, 2016, whereby, it is that all refunds that are processed and found in order in respect of a registered assessee should be released in a time bound manner. Further, in case of multiple refunds of the same assessee if are needed to be issued within a week, the prior approval of the concerned zonal officer should be taken by the Ward Incharge. The System branch of department has been directed to make necessary changes in the workflow and security checks to incorporate these provisions.

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