Section 39(1-A) of Punjab VAT Act, 2005 was added recently by an Ordinance dated 21-02-2011 whereby provisional refund upto one crores of rupees was allowed against an indemnity bond to those dealers who are not able to produce the statutory declarations forms under CST Act(i.e C,H, E1, EII forms etc.) as per the requirement of Rule 52(4) of PVAT Rules, for claiming the refund.
Uptill now there was confusion what will be the format of such indemnity bond and what will be the procedure for claiming such provisional refund. Now the Punjab Govt has issued a notification
NO. G.S.R. 25/P.A.8/2005/S.70/Amd.(35)/2011 dated 25-04-2011 whereby a new Rule 52A of PVAT Rules has been added which explains the procedure for claiming such provisional refund under newly added sub section (1-A) of section 39.
Sub Rule (1) of newly added rule 52A provides that where provisional refund u/s 39(1-A) is allowed on account of excess ITC then the provisions of rule 52(4) (i.e obligation of submitting statutory declaration forms under CST Act for claiming refund) shall not apply till the following 31st March from the close of the financial year to which refund relates or till such provisional refund exceeds Rs one Crore whichever is earlier.
In simple words it means that person claiming provisional refund u/s 39(1-A) may not be required to submit requisite statutory declaration forms till the next following 31st March to the year to which refund relates or till the time when such provisional refund exceeds Rs One crore, whichever is earlier.
Proviso to Rule 52A(1) further provides that the provisional refund shall be allowed only if the dealer claiming provisional refund has submitted the requisite forms relating to all previous years as required under Rule 52(4) or has paid due tax, if any relating to such previous years.
Thus if a person wants to claim provisional refund u/s 39(1-A) for year 2010-11, then he will have to submit all statutory declaration forms of all earlier previous year preceding year 2010-11 and will also have to pay all taxes due, if any of such earlier previous years before any provisional refund for year 2010-11 is allowed to him.
Sub rule (2) of this newly added Rule 52A further provides that provisional refund will not be allowed to the dealers who are found to be indulged in claiming bogus ITC against which no tax has been paid to the Government treasury. Now it is here to be noted although this provision has been made to plug in the loophole to avoid misuse of provision of section 39(1-A) but to prove that a person is claiming bogus ITC is not an easy task and it will delay the process of allowing the refund and it may also result in converting the refund proceedings into assessment proceedings.
However these provisions will provide a big relief to the innocent dealers whose refunds were withheld due to non submission of statutory declarations under CST Act as required under Rule 52(4) of PVAT Rules. Indemnity bond will be in the form VAT-59 which is also provided in the notification issued.
The said notification can be downloaded at following link:
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