HIGH COURT OF JUDICATURE AT ALLAHABAD ?Court No. - 9 Case :- WRIT TAX No. - 286 of 2012 Petitioner :- M/S Hira Lal Shubh Karan Respondent :- State Of U.P. And Others Counsel for Petitioner :- Ashok Kumar,Praveen Kumar Counsel for Respondent :- C.S.C. Hon'ble Arun Tandon,J.
Hon'ble Surya Prakash Kesarwani,J.
Heard Shri Praveen Kumar, Advocate on behalf of the petitioner and the Shri C.B.Tripathi, Special Counsel on behalf of the department.
Petitioner before this Court seeks a writ of mandamus directing the respondents to pay interest on the amount directed to be refunded under the order of the Appellate Authority dated 04.10.1988, enclosed at page 44 of the present writ petition.
Facts in short leading of the present petition are as follows :
The assessee, who is engaged in confectionery business and was a registered dealer, was assessed for the year 1982-83 and 1983-84 under the U.P. Sales Tax Act.
Under the assessment order it was held that the assessee was liable to pay tax @ 8% on confectionery items. Accordingly, the tax was deposited by the assessee. However the High Court in the case of Commissioner, Sales Tax vs. M/s. Babani & Co. reported in 1984 UPTC, 81 held that on confectionery items the rate of tax applicable would be 4% only. The assessee made an application under Section 22 of the Sales Tax Act which was allowed and it was held that the assessee was liable to pay tax @ 4% but while passing the said order under Section 22 of the Trade Tax Act, the Assessing Authority decided to proceed against the assessee under Section 15-A (1)(QQ) of the Sales Tax Act. He imposed a penalty of Rs.1,80679/- for the year 1982-83 and Rs.12,565/- for the year 1983-84. This penalty was imposed on the ground that the assessee had charged tax at a higher rate than prescribed from its customers. The amount which had become due to be returned because of reduction of rate of tax from 8% to 4% on the confectionery items was adjusted against the penalty so levied.
Not being satisfied with the order so passed by the Assessing Authority, the assessee filed an appeal before the Deputy Commissioner (Appeals) which was allowed vide order dated 04.10.1988 and it was held that the amount of penalty imposed be returned to the assessee in accordance with the rules applicable. Operative portion of the order reads as follows :
?Appeal Sankhya 442/87, 443/87 sweekar ki jati hai aur aaropit arthdand samapt kiya jata hai. Appealkarta dwara yadi yah rashi jama kar di gayi ho to use niyamanusar wapas kiya jaye.?
We may record that in the said order itself the Appellate Authority had noticed the case of the assessee that the excess amount of tax which he had realized from his customers has been returned to them by issuing credit notes.
The department, not being satisfied with the order of the Appellate Authority, filed an appeal before the Sales Tax Tribunal being Second Appeal No. 190 of 1989. The appeal was dismissed under an order dated 06.04.1989. The department thereafter pursued the matter further by filing a Revision before the High Court being Trade Tax Revision No. 816 of 1999. The revision was also dismissed under an order dated 20.12.2005.
After passing of the order by the Appellate Authority dated 04.10.1985, the assessee made an application for refund of amount in terms of the appellate order. This application of the assessee was rejected by the Assessing Authority vide order dated 16.05.1989 and it was held that in view of Section 29(3) of the Trade Tax Act, the money need not be returned to the petitioner-assessee. For the two years in question i.e. 1982-83 and 1983-84. Identical orders were made which are enclosed at page 58 and 60 of the paper book.
Not being satisfied with the order so passed, the assessee filed an appeal before the First Appellate Authority which was rejected vide order dated 27.02.1991.
Not being satisfied the assessee filed Second Appeal No. 234 of 1991 and no. 235 of 1991 in respect of the aforesaid two years i.e. 1982-83 and 1983-84 before the Tribunal. Both the appeals were allowed vide order dated 07.09.2012. The order under Section 29(3) of the Trade Tax Act as well as the order of the Appellate Authority dated 27.02.1991 were quashed and a direction was issued that the respondents must return the entire money in accordance with the rules applicable. The money so excess deposited by the petitioner has been returned and he has also been paid interest for the period commencing from 12.12.2002 i.e. from the date on which the order of the Tribunal dated 07.09.2002 was received by the Assessing Authority.
In order to keep the record straight, we may record that the Commissioner of Trade Tax filed Revision No. 214 of 2003 against the order of the Tribunal dated 07.09.2002 which has been dismissed by the High Court on 15.03.2010.
The petitioner has come up with the prayer that he should be paid interest on the money which was refundable to him under the order dated 04.10.1988 from the date of the said order. Therefore, he seeks a writ of mandamus for the interest be paid from 04.10.1988 as per the rates which were prevalent during the relevant period till the date the order of the Tribunal was received by the department i.e. 12.12.2002.
Counsel for the department however disputes the correctness of claim so made. It is the case of the department that it is only under the order of the Tribunal dated 07.09.2002 received by the Tribunal on 06.12.2002 that a positive direction for refund of excess deposit by the petitioner has been made, therefore, no money can be claimed prior to the said period.
Counsel for the department has placed reliance upon the Division Bench judgment of this Court in the case of M/s. Indodan Milk Products Ltd. vs. State of U.P. and Another reported in 1983 U.P.T.C., 583 and in the case of M/s. Man Power Services And Security vs. State of U.P. and Others reported in 2006 U.P.T.C., 339.
In order to appreciate the controversy raised by means of the present petition, it would be worthwhile to reproduce Section 29 of the Sales Tax Act which reads as follows :
?29. Refunds :
(1) The assessing authority shall, in the matter prescribed, refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under this Act :
Provided that the amount found to be refundable shall first be adjusted towards the tax or any other amount outstanding against the dealer under this Act or under the Central Sales Tax Act, 1956 and only the balance, if any, shall be refunded.
(2) If the amount found to be refundable in accordance with sub-section(1) is not refunded as aforesaid within three months from the date of order of refund passed by the Assessing Authority or, as the case may be, from the date of receipt by him of the order of refund, if such order is passed by any other competent authority or Court, the dealer shall be entitled to simple interest on such amount at the rate of eighteen per cent, per annum from the date of such order or, as the case may be, the date of receipt of such order of refund passed by the Assessing Authority to the date of refund.
Explanation 1 :
The date of refund shall be deemed to be the date on which intimation regarding preparation of the refund voucher is sent to the dealer in the manner prescribed.
Explanation II :
The expression 'refund' includes any adjustment under the proviso to sub-section (1).
(3) Notwithstanding any judgment, decree or order of any court or authority no refund shall be allowed of any tax or fee due under this Act on the turnover of sales or purchases or both, as the case may be, admitted by the dealer in the returns filed by him or at any stage in any proceedings under this Act.
Explanation 1 :
The date of refund shall be deemed to be the date on which intimation regarding preparation of the refund voucher is sent to the dealer in the manner prescribed.
Explanation II :
The expression 'refund' includes any adjustment under the proviso to sub-section (1).?
At the very outset we may record that Section 29(3) as well as Section 29(4) of the Sales Tax Act have been interpreted by the Court to mean that the refund can be refused in cases where the liability has been passed on by the assessee upon any other party. Meaning thereby that on the principle of ?undue enrichment?, there can be a denial of refund of tax or other dues by the department even if there is a direction by the competent authority/Court. There is no dispute in the said principle of law laid down by the Division Benches of this Court in the aforesaid cases [M/s. Indodan Milk Products Ltd. (Supra) and in the case of M/s. Man Power Services And Security (Supra) ] but the facts of this case are entirely different.
From the records we find that an order for refund of the excess amount deposited by the petitioner was made as early as on 04. 10.1988, when the Appellate Authority amongst other specifically recorded that the imposition of penalty was totally unjustified and that excess tax which had been realized by the assessee from its customers had in fact been returned to the consumers by issuance of the credit note. The finding of the Appellate Authority in that regard stands affirmed both under the order of the Tribunal dated 06.04.1999 and under the order of the High Court dated 08.12.2005 whereby the second appeal and the revision filed by the department against the order of the First Appellate Authority had been dismissed.
We may record that on an order being made by the First Appellate Authority on 04.10.1988 that a decision was taken by the Assessing Authority on 16.05.1989 to the effect that the money cannot be returned in view of Section 29 (3) of the Sales Tax Act. The issue of refusal to refund the money due under Section 29(3), in our opinion, would only arise when something becomes payable to the assessee under orders of the competent authority which in the facts of the case would be the order of the First Appellate Authority dated 04.10.1988.
We may further record that under Section 29(1) proviso of the Sales Tax Act, a power has been conferred upon the taxing authority to adjust any amount which is refundable against any other outstanding of the assessee. It is with reference to this power that the amount of excess tax which was paid by the assessee had been adjusted by the department against the amount of penalty which was levied under Section 15-A(1)(QQ). It is also relevant to note that Explanation II to Section 29 provides that the refund would include any adjustment under sub-section 1 of Section 29 of the Act.
What logically follows that the amount of tax which was refundable after the application under Section 22 was allowed and in fact this refundable amount was adjusted in view of Explanation II to Section 29 against the penalty imposed would also carry on interest under Section 29 (2) of the Act, if the condition mentioned therein are satisfied.
We are of the considered opinion that, in the facts of case, the order for refund of the money adjusted against penalty was directed to be returned to the assessee under the order dated 04.10.1988 which order stands affirmed up to the High Court. Therefore, the liability to make payment of interest under sub Section 29(2) would accrue from the date the order of the First Appellate Authority was received by the department.
We are also of the opinion that the order of the Tribunal dated 07.09.2002 insofar as it quashes the order under Section 29(3) will not control the applicability of interest under Section 29(2) of the Act, in the facts of the case, inasmuch as the direction for refund was made by the Appellate Authority as early as on 04.10.1988 which order was affirmed by the Tribunal vide order dated 07.09.2002 as also by the High Court while dismissing the Revision No. 214 of 2003 vide order dated 15.03.2010. These orders also lead to the conclusion that the stand taken by the department in exercise of powers under Section 29(3) for refusing to return the money under orders of the Appellate Authority dated 04.10.1988 was illegal.
For the aforesaid reasons we find it a fit case to issue a writ of mandamus directing the Assessing Authority to re-calculate and pay the interest for the period commencing from the date the Assessing Authority had received the order of the First Appellate Authority dated 04.10.1988 till 27.12.2002 at the rates as were applicable from time to time to the assessee. The said exercise may be completed preferably within eight weeks from the date a certified copy of this order is filed before the Assessing Authority.
Writ petition is allowed. No orders as to cost.
Order Date :- 14.5.2015 VR