Calcutta High Court (Appellete Side)
Commissioner Of Commercial Taxes ... vs M/S. Tata Steel Limited & Others on 23 November, 2022
FMA NO. 857 OF 2022
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IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
RESERVED ON: 21.09.2022
DELIVERED ON:23.11.2022
CORAM:
THE HON'BLE MR. JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE SUPRATIM BHATTACHARYA
F.M.A. 857 OF 2022
WITH
I.A. NO. CAN 01 OF 2022
WITH
I.A. NO. CAN 02 OF 2022
WITH
I.A. NO. CAN 03 OF 2022
COMMISSIONER OF COMMERCIAL TAXES & ANOTHER
VERSUS
M/S. TATA STEEL LIMITED & OTHERS
Appearance:-
Mr. S.N. Mookherjee, Ld. Advocate General
Mr. Anirban Ray, Ld. Government Pleader
Mr. T.M. Siddique, Adv.
Mr. Debasish Ghosh, Adv.
Mr. Varun Kothari, Adv.
........For the Appellants
Page 1 of 100
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Mr. Kavin Gulati, Sr. Adv.
Mr. Sumeet Gadodia, Adv.
Mr. Avi Tandon, Adv.
Mr. Avra Mazumder, Adv.
Ms. Shilpi Sandil Gadodia, Adv.
Mr. Binayak Gupta, Adv.
Mr. Sk. Md. Bilwal Hossain, Adv.
........For the Tata Steel Limited
Mr. Jaweid Ahmed Khan, Adv.
Mr. Bhaskar Sengupta, Adv.
Mr. Talha Ahmed Khan, Adv.
......For the Indian Oil Corporation Limited
JUDGMENT
(Judgment of the Court was delivered by T.S.SIVAGNANAM, J.)
1. This intra court appeal is directed against the order dated December 6,
2021 in WPA No. 5306 of 2021 filed by the first respondent herein, M/s.
Tata Steel Limited (hereinafter referred to as the writ petitioner). The
appellants are the Commissioner of Commercial Taxes West Bengal and the
Joint Commissioner, Commercial Taxes Large tax payers Unit, Government
of West Bengal, who were impleaded as the Respondents No. 2 and 3 in the
writ petition. The fourth respondent in this appeal and the first respondent
in the writ petition is the State of West Bengal represented by the Secretary,
Department of Finance, Government of West Bengal who has been shown as
the proforma respondent in this appeal.
2. The writ petition was filed for issuance of writ of certiorari to quash
the assessment order dated June 30, 2020 passed by the second appellant
in the case of the Indian Oil Corporation Limited (IOCL), the fourth
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respondent in the writ petition and the third respondent herein. By the
impugned order, a bunch of writ petitions were allowed, pertaining to the
assessment year 2017-2018 to the extent of submissions of Form "C"
declaration by IOCL pertaining to the writ petitioner which was denied with
consequential directions to the appellants as well as the State of West
Bengal to refund the amount of Rs. 24,61,31,232/- being the amount of
excess differential tax realized from the writ petitioner by IOCL and
deposited with the State of West Bengal in respect of purchase of High
Speed Diesel (HSD) oil. The learned Single Bench allowed the writ petition by
issuing the following direction:-
(i) Impugned order of assessment passed by the
Assessing Officer is set aside to the extent of
refusal of acceptance of relevant "C" Forms
submitted before him impugned assessment
proceedings by the HSD oil purchasing
dealers/petitioners through the oil selling
dealers/HSD relating to the relevant disputed
period which were issued by the purchasing
respective State Government, in favour of the
petitioners on inter-State sales in question and it
shall accept the aforesaid relevant "C" Forms and
allow concessional rate of tax to the petitioners on
the basis of the said relevant "C" Forms subject to
formal verification of the same.
(ii) The respondent State Government of West Bengal
shall within three months from date process and
refund the excess amount of tax collected by it
from the petitioners oil purchasing dealers in
excess of concessional rate of tax through selling
dealers/HSD in West Bengal in course of Inter-
State sales in question during the relevant period
with interest at the rate of 10% per annum on the
basis of relevant "C" Forms submitted by the
seller/HSD during the impugned assessment
proceedings, directly to the petitioners instead of
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refunding the same to the Respondent HSD after
formal verification of the same along with the
relevant documents and by affording
opportunities of hearing to the petitioners and
HSD in course of the said verification and in the
alternate it shall refund the said amount to the
HSD after such verification and in that event HSD
shall refund to the petitioners the amounts so
refunded within 15 days from the date of receipt
of such amount by the Respondent State
Government of West Bengal subject to proper
indemnification by the petitioners and the
Respondents State Government of West Bengal.
The following facts to suffice to decide this appeal.
3. The writ petitioner is a registered dealer under Section 7 of the Central
Sales Tax Act, 1956 (The CST Act), in the State of Jharkhand and are
engaged in the business of manufacturing and mining. The writ petitioner
purchased HSD from IOCL by way of interstate sales from the State of West
Bengal to the State of Jharkhand. Prior to 01.07.2017, the writ petitioner
was issued Form "C" declaration by the State of Jharkhand which was
submitted to IOCL, who in turn submitted the same to the prescribed
authority in the State of West Bengal to claim concessional rate of tax in
terms of Section 8 of the CST Act. With effect from July 1, 2017 the
definition of "goods" as defined under Section 2(d) was amended by Taxation
Law (Amendment) Act, 2017. On October 11, 2017, the State of Jharkhand
issued a circular stating that Form "C" declaration will no longer be issued
to dealers if the final products manufactured by them do not fall within the
amended definition of "goods" in Section 2(d) of the CST Act. By office
memorandum dated November 7, 2017,the Ministry of Finance, Department
of Revenue, Government of India, issued a clarification with regard to the
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definition of "goods" in Subsection (3) (b) of Section 8 of the CST Act,
clarifying that the term "goods" referred to in Section 8 (3) (b) of the CST Act
will have the same meaning as defined and amended under Section 2(d) of
the CST Act, however it will not affect the provisions of the Section 8(3) (b) of
the CST Act relating to tele-communication network or mining or generation
or distribution of electricity, or any other form of power.
4. The writ petitioner challenged the circular by filing the writ petition
before the High Court of Jharkhand. On May 17, 2018, an interim order was
granted directing the State of Jharkhand to issue Form "C" declarations to
the writ petitioner pending disposal of the writ petition. Similar challenge
was made by other interstate purchasers before the High Court of Punjab &
Haryana and one such case being Capro Power Limited Versus State of
Haryana and Others1. By the said decision, the circular similar to the
circular dated October 11, 2017 issued by the State of Jharkhand was
struck down and consequential direction was issued to the State of Haryana
to issue Form "C" declaration to the buyers and they would be entitled to
claim refund of the excess tax from the concerned authorities through the
oil companies or by themselves. The said order was put to challenge by the
State of Haryana before the Hon'ble Supreme Court in Special Leave to
Appeal C No. 20572 of 2018 which was dismissed by order dated August 13,
2018.
(2018) VIL 154 (P & H); (2018) SCC Online P & H 6938
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5. The Ministry of Finance, Department of Revenue, Government of India,
issued a circular dated November 1, 2018 to all the Commissioners of
Commercial Taxes of all the States and Union Territories directing that the
decision in the case of Capro Powers Limited to be complied with in the
respective states. The writ petitioner would state that in spite of the decision
in the case of Capro Powers Limited having been directed to be followed by
all the States and Union Territories full tax was collected and the writ
petitioner was compelled to pay the same in spite of having obtained Form
"C" declaration for the purchases effected during the relevant period. The
writ petitioner was also issued provisional credit notes/credit notes by the
IOCL. The writ petition which was filed by the writ petitioner herein before
the High Court of Jharkhand, challenging the circular dated October 11,
2017 was allowed and the circular was quashed by judgment dated August
28, 2019. In the said judgment, the Court observed that pursuant to the
interim order passed in the writ application Form "C" declaration having
been issued to the writ petitioner and provisional credit notes have also been
given by the IOCL, to the writ petitioner and that being an admitted case, it
was held that the provisional credit notes given to the writ petitioner shall be
given effect to, or in any case in which the provisional credit notes have not
been given, the required refund shall always be given to the writ petitioner.
Further it was observed that if the respective oil companies have made
deposit to the state exchequer, they shall also be entitled to claim the refund
thereof.
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6. The assessment in the case of IOCL was completed by order dated
June 30, 2020 disallowing the claim for concessional rate of tax for the
financial year 2017-2018 on the ground that tax was charged, collected and
deposited at full rate by IOCL and that IOCL had not filed revised return for
claiming concessional rate of tax, they have not submitted amended invoices
for claiming concession and credit notes have not been issued by the IOCL.
Aggrieved by such order of assessment, IOCL had preferred appeal before
the First Appellate Authority which is still pending. On account of the above
development, IOCL by their letter dated August 31, 2020 informed the writ
petitioner that their assessment for the financial year 2017-2018 has been
completed by the authority on June 30, 2020 and the Commercial Tax
department have not accepted the Form "C" declarations submitted
subsequently and since such forms were not accepted, no refund of the
differential tax has been allowed by the West Bengal Commercial Taxes
Authorities. It was further informed since IOCL has not received the refund
from the West Bengal Commercial Taxes Authorities they are unable to pass
it on to their customers (writ petitioner) however, the writ petitioner could
proceed directly with the appropriate authorities of the West Bengal
Government for the refund. IOCL had filed a review petition before the High
Court of Jharkhand, by placing reliance on the decision of the High Court of
Gujarat in Civil Applications No. 15333 of 2019 etc. dated December 18,
2019 wherein the Court held that it was for the purchases of HSD to claim
the refund from the concerned authorities and any claim of refund by selling
dealer would not be appropriate as the question of unjust enrichment would
arise. On the strength of the said decision, IOCL contended that they cannot
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claim any refund of the excess amount of CST already deposited by them to
the State Exchequer in the State of West Bengal and they cannot be made
liable to refund the amount to the writ petitioners. The review applications
were dismissed by order dated October 17, 2020 making it clear that there
is no occasion for review of the order passed in the writ petition and if the
refund of the CST deposited with the State of West Bengal is refused by
authorities of West Bengal, it is open to the writ petitioners or even to the
review petitioners (IOCL) to approach the appropriate forum for required
relief. It was further held that the writ petitioners therein cannot be
governed by the judgment of the High Court of Gujarat in the
aforementioned matter.
7. The writ petitioner filed representation dated December 29, 2020 to the
appropriate authority to refund excess amount of CST collected by the State
of West Bengal for the period from 01.04.2017 to 31.03.2018 through IOCL
who had sold the goods against Form "C" declaration to the writ petitioner
which can only be at the concessional rate of tax as against the full rate of
tax wrongly collected. It appears that the representation was not considered
and the writ petition was filed before this Court by M/s. Tata Steel Limited
for the aforementioned relief. The said writ petition along with the other
connected matters was allowed by common order dated December 6, 2021
which is impugned in this appeal. The learned Single Bench framed nine
issues which in the opinion of the Court was both factual and legal. The
issues were elaborately framed which have been concisely reframed by the
learned Advocate General in the following terms:-
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Issues:-
(i) Locus Standi of the writ petitioner/purchasing dealer to maintain
the writ petition for refund of excess CST collected by IOCL and
remitted to the Government of West Bengal.
(ii) Whether filing of Form "C" declaration by the selling dealers is
mandatory? Can Form "C" declaration be filed belatedly?
(iii) Whether the assessment order dated June 30, 2020 is liable to be
set aside due to the rejection of the Form "C" declaration by the
assessing authority?
(iv) Whether the writ petitioner is entitled to concessional rate of tax,
who have admittedly fulfilled the conditions under Section 8 of the
CST Act?
(v) Whether the writ petitioner is entitled to claim refund of tax
directly from the state or should they claim the refund from the
selling dealers (IOCL)?
(vi) Whether the refund can be denied to the writ petitioners by the
State of West Bengal disregarding the fact that excess tax was paid
under compelling extraordinary circumstances and non-issuances
of Form C declaration?
(vii) Whether the writ petitioner can claim refund directly from the state
in view of the fact that excess tax has been deposited by IOCL with
the State of West Bengal?
(viii) Whether the State Government is legally justified in refusing
refund of excess tax when it is admittedly being allowing the
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concessional rate to the writ petitioner before and after the
disputed period (01.04.2017 to 31.03.2018)?
(ix) Whether the non-refund of excess tax is contrary to the instruction
of the Government of India dated November 01, 2018?
8. Though nine issues had been framed for consideration, the issues are
overlapping and the core issue involved in the matter could be precisely
stated in the following terms:-
Whether the writ petitioner is entitled to refund of the excess Central
Sales Tax collected by IOCL and remitted to the State of West Bengal on
account of production of Form "C" declarations which have not been
disputed by the assessing authority of IOCL and if the answer to this
question is in the affirmative, whether a claim for refund at the instance of
the writ petitioner, the purchasing dealer would be maintainable?
If the above core issue is addressed and in the process of answering
the core issue, the subsidiary issues which are rolled into the nine issues
framed by the learned Single Bench could also be dealt with.
9. On the issues 1,5 and 7 (supra), the learned Advocate General would
contend that the writ petitioner being a purchasing dealer has no locus to
maintain the petition, is not entitled to claim refund from the authority in
the State of West Bengal as the purchasing dealer has no liability to pay tax
under the CST Act as it is the only liability of the seller, IOCL; liability of the
purchasing dealer arises out of the contract with the selling dealer and there
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is no statutory liability on the purchasing dealer as the selling dealer may or
may not chose to recover the taxes paid by him from the purchasing dealer;
it is only a selling dealer who is given the privilege of concessional rate of tax
by virtue of Section 8(1), 8(3) and 8(4) of the CST Act; the selling dealer does
not act as agent of the State of West Bengal for collection of tax. Referring to
Section 6,7,8 and 9 of the CST Act, it is submitted that there is no liability
imposed on the purchasing dealer under the CST Act and the concessional
rate of tax in terms of Section 8 is given only to the selling dealer and there
is no right recognized in favour of the purchasing dealer. Similarly, Section 9
of the Act provides for levy and collection of tax only from the selling dealer.
10. Referring to Section 60 of the West Bengal Sales Tax Act (WBST) and
Section 62 of the West Bengal Value Added Tax Act (WBVAT), it is submitted
that those provisions provided for refund of excess tax only to be paid to the
selling dealer and there is no right conferred on the purchasing dealer under
the statute to claim refund. In support of such contention, reliance was
placed on the decision in Tata Iron and Steel Company Limited Versus
State of Bihar 2, M/s. George Oakes Private Limited Versus State of
Madras 3, Central Wines, Hyderabad Etc. Versus Special Commissioner
Tax Officer Etc. 4 and Mahalaxmi Cotton Ginning Pressing and Oil
Industries Versus State of Maharashtra 5 and the order passed by the
Hon'ble Supreme Court in Special Leave to appeal CC No. 3823 of 2013
AIR 1958 SC 452
AIR 1962 SC 1037
(1987) 2 SCC 371
(2012) SCC Online Bom 733
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dated 25.02.2013 by which the special leave petition against the said
judgment was dismissed.
11. It is further submitted that the writ petitioner had placed reliance on
the decision of the Hon'ble Supreme Court in Anand Swarup Mahesh
Kumar Versus Commissioner of Sales Tax 6 to support their contention
that by virtue of Section 37 of the WBST Act, IOCL is permitted to pass on
the burden of tax to the writ petitioner and, therefore IOCL would be acting
as an agent of the State of West Bengal in collecting the tax from the writ
petitioner.
12. It is submitted that this contention is without any basis as under the
relevant enactment considered in the said case, there was a specific
provision placing a statutory obligation to pay the market fee on the
purchasing dealer and there is no para materia provision under the CST Act.
Further under the relevant Act in the said case the commission agent may
realize the market fee from the purchaser and this expression "may" was
construed as "shall" and the court placed a statutory obligation also on the
seller to collect the market fee from the purchaser and on account of such
interpretation there became a statutory obligation on the part of the
purchaser to pay the market fee. It is submitted that this decision in Anand
Swarup Mahesh Kumar was interpreted in Central Wines. Thus, it is
contended that in the case on hand, there is no statutory liability or
obligation on the writ petitioner/purchasing dealer to pay the tax, nor there
(1980) 4 SCC 451
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is any obligation on the selling dealer/IOCL to collect tax from the
purchaser/writ petitioner.
13. Section 9A of the CST Act was also referred to state that the said
provision does not impose any liability on the purchaser to pay sales tax,
nor does it require the seller to pass on sales tax liability to the purchaser.
Further, it was submitted that in M/s. George Oakes Private Limited, it
has been held that merely because a dealer is unable to pass on the tax
does not mean that the tax is imposed by the Government on the purchaser
or that the seller is a mere collecting agency for the Government.
14. It is further submitted that the learned Single Bench had also referred
to Section 37 of the WBST Act and held that the purchasing dealer is
entitled to maintain a claim for refund before the Commissioner. It is
submitted that Section 37 is not applicable to the facts of the case as the
case on hand does not relate to excess tax paid to the authority. The said
provision relates to excess amounts collected by the selling dealer from the
purchaser in contravention of the provisions of the act and not deposited to
the authority as tax and only in those situations the selling dealer is
obligated to deposit the excess amount collected to the RBI or the
Government Treasury and only after such deposit the purchasing dealer can
apply for refund of this excess amount. Therefore, it is contended that
Section 37 does not relate to tax paid to the authorities by the selling dealer
for which only the selling dealer is entitled to claim refund. Therefore, it is
contended that the order of the learned Single Bench recognizing an
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independent right on the purchasing dealer in terms of Section 37(3) of the
WBST Act is not sustainable. Hence the reliance placed by the writ
petitioner on the decision in R.S. Joshi, S.T.O. Gujarat Etc. Versus Ajit
Mills Limited, Ahmedabad & Another7 as also the reliance placed on the
decision in Kasturi Lal Harlal Versus State of U.P. & Others 8 are not
applicable to the facts of the case of hand.
15. It is submitted that the writ petitioner had placed reliance on the
decision in M/s. I.D.L. Chemicals Limited Versus Union of India &
Others9 to support their contention that the purchasing dealer would have
locus to maintain a claim for a refund. The said decision is clearly
distinguishable on facts as the Court in the said case was dealing with
provisions under Chapter 10 of the Central Excise Rules, 1944 and noted
that the Rules placed an obligation on the purchaser to pay tax where as
under the CST Act there was no such statutory obligation on the purchasing
dealer to pay tax.
16. It is further submitted that the learned Single Bench had placed
reliance on the decision of the Hon'ble Supreme Court in Corporation Bank
Versus Saraswati Abharansala & Another 10 and State of Punjab and
Others Versus Atul Fasteners Limited11 to hold that IOCL was acting as
an agent of the State of West Bengal in collecting sales tax from writ
(1977) 4 SCC 98
(1986) 4 SCC 704
(1996) 5 SCC 373
(2009) 1 SCC 540
(2007) 4 SCC 471
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petitioner. It is submitted that the said finding is not sustainable as in those
decisions, the Hon'ble Supreme Court was not considering the question as
to the position of the selling dealer or whether it acted as agent of the State;
the said decisions have not taken note of the Constitution Bench decisions
of the Hon'ble Supreme Court in Tata Iron and Steel Company Limited,
George Oakes Private Limited and Central Wines. The decision in
Corporation Bank and R.S. Joshi were considered and distinguished in
the Mahalaxmi Cotton Ginning Pressing & Oil Industries wherein it was
held that the selling dealer does not act as the agent of the State. Therefore,
the finding to the contrary rendered by the learned Writ Court is required to
be set aside.
17. Reliance was placed on the decision in Saraf Trading Corporation
and Others Versus State of Kerala 12wherein it was held that only a
person entitled under the law to claim a refund can do so. In the said
decision, the Hon'ble Supreme Court was considering Section 44 of the
Kerala General Sales Tax Act, 1963 which is similar to Section 60 of WBST
Act. The Hon'ble Supreme Court held that a purchasing dealer would not
have right to claim a refund when the statute allows the refund to be made
only to the selling dealer and the Court will not take a pro-active stance and
grant refund to a purchasing dealer de hors the provisions of the statute,
even though the burden of tax may have been passed on by the selling
dealer to the purchasing dealer. Therefore, it is submitted that in terms of
Section 60 of the WBST Act only the selling dealer is entitled to claim
(2011) 2 SCC 344
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refund. Therefore, it is submitted that the decision in Saraf Trading
Corporation is clearly applicable to the case on hand.
18. The learned Advocate General to support the argument that taxing
authority is only concerned with the assessee and not any other third party
with whom the assessee may have contractual relationship, placed reliance
on the decision of the Hon'ble Supreme Court in Rashtriya Ispat Nigam
Limited Versus M/s. Dewan Chand Ram Saran 13and the decision of the
High Court of Delhi in Delhi Transport Corporation Versus
Commissioner of Service Tax 14.
19. For the proposition that there is no equity about tax, reliance was
placed on the decisions of the Hon'ble Supreme Court in Commissioner of
Income Tax, Madras Versus Ajax Products Limited 15 and
Commissioner of Income Tax Versus Sh. Madho Pd. Jatia 16.
20. It is further submitted that the learned Single Bench has placed
reliance on the decision of the High Court of Allahabad in Indian
Explosives Limited Versus Commissioner, Sales Tax, U.P. & Others17,
for holding that the writ petitioner has locus standi to maintain the claim for
refund. It is submitted that the said decision is not applicable to the case on
(2012) 5 SCC 306
(2015) SCC Online Del 8786
AIR 1965 SC 1358
(1976) 4 SCC 92
(1975) SCC Online All 503
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hand as the Court did not consider the effect of any statutory provision
similar to Section 60 of the WBST Act.
21. On the issue relating to the locus of the writ petitioner reliance was
placed on the decision in N. Bala Baskar Versus Union of India & Others
18and Uttar Pradesh State Road Transport Corporation Versus
Commissioner of Central Excise & Service Tax & Another 19.
22. It is submitted that the learned Single Bench has recorded a
concession made by the learned Government Pleader as regards the locus of
the writ petitioner, such concession is not binding on the State or on this
Court as the same is a concession in law and in any event a concession
made by the Government Pleader is not binding on the State. For such
proposition, reliance was placed on the decision in Employees' State
Insurance Corporation Versus Union of India & Others 20 and Periyar
and Pareekanni Rubbers Limited Versus State of Kerala 21.
23. Further it is submitted that the writ petitioner had placed reliance on
the orders passed by the High Court of Jharkhand, Punjab and Haryana,
Gujarat and Rajasthan. These decisions are clearly not applicable as the
Court was not deciding any question of tax liability or any entitlement of the
writ petitioner or IOCL to get refund. Further, there was no positive direction
MANU/TN/1096/2016
(2011) 15 SCC 451
(2022) SCC Online SC 70
(1991) 4 SCC 195
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or finding by the Jharkhand High Court to the effect that the writ petitioner
was entitled to recover tax from the sales tax authorities in West Bengal or
that the State authority is under an obligation to refund the tax collected
from the writ petitioner. This aspect was clarified in the order passed by the
Court in the review application stating that it is only the oil companies that
are entitled to claim refund. In any event, the decision of the High Court of
Jharkhand is not binding on the State of West Bengal as it was not a party
to the said proceedings. To support the contention that the decision will not
bind a non-party to the litigation, reliance was placed on the decision in
Census Commissioner Versus R. Krishnamurthy22 and Kulwant Singh
& Others Versus Daya Ram & Others 23.
24. Further it is submitted that the decisions of the other High Courts are
not applicable in the case on hand for several reasons and more
particularly, have not taken into consideration the decisions of the
Constitution Bench of the Hon'ble Supreme Court in Tata Iron and Steel
Company Limited and George Oakes Private Limited. It is further
contended that the decision of the Hon'ble Supreme Court in Commissioner
of Commercial Taxes Versus Ramco Cements Limited24by which the
appeal filed before the Hon'ble Supreme Court was dismissed by agreeing
with the view taken in Capro Powers Limited and Tata Iron and Steel
Company Limited but the said order is a simple dismissal of the special
leave petition from an order passed by the High Court of Madras.
(2015) 2 SCC 796
(2015) 3 SCC 177
(2021) SCC Online SC 3209
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25. Alternatively, it is submitted that even if the decision of the High
Court of Jharkhand is accepted and the writ petitioner applies for refund,
such refund could only be claimed from IOCL and not from the State of West
Bengal.
26. Further, it is submitted that the circular dated November 1, 2018 only
related to issue of Form "C" declaration and there is no direction to refund
tax to the purchasers. In any event, it is submitted that if such direction is
issued, it would be contrary to Section 60 of the WBST Act, therefore, not
binding on the West Bengal Sales Tax Authorities.
27. With regard to issues 2, 3, & 4, it is submitted by the learned
Advocate General that in terms of Section 8 of the CST Act, it is only the
seller who is entitled to claim concessional rate of tax. In terms of Section
8(4), the buyer merely hands over the filled up Form "C" declaration to the
seller which would enable the seller to claim the concession, therefore, the
buyer has no right against the taxing authorities to claim any concessional
rate of tax. Further it is submitted that it is only IOCL who can challenge
the assessment order, and the buyer/writ petitioner being a stranger to the
legislation cannot be allowed to bypass the frame work of rights, liabilities
and adjudication mechanism laid down in the Act. In support of such
contention, reliance was placed on the decision of the Hon'ble Supreme
Court in Titaghur Paper Mills Company Limited And Another Versus
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State of Orissa 25 and Thansingh Natwal and Others Versus
Superintendent of Taxes, Dhrubi and Others 26.
28. It is further submitted that the CST Act is a complete code and what
is not expressly provided in the Act is excluded. To support such argument,
reliance was placed on the decisions of Hon'ble Supreme Court in State of
Kerala Versus Ramaswami Iyer and Sons27, Kandla Export
Corporation and Another Versus OCI Corporation and Another 28 and
Fuerst Day Lawson Limited Versus Jindal Exports Limited 29.
29. Further, for the proposition that a concession can be claimed strictly
in the manner provided for in the statute, reliance was placed on the
decisions of the Hon'ble Supreme Court in India Agencies (Regd.)
Bangalore Versus Additional Commissioner of Commercial Taxes,
Bangalore 30 and Ald Automative Private Limited Versus Commercial
Tax Officer now upgraded as Assistant Commissioner (CT) and Others
31. It is further submitted that the learned Writ Court has not held that
IOCL has not claimed the concessional rate of tax in terms of the provisions
of the statute.
(1983) 2 SCC 493
AIR 1964 SC 1419
AIR 1966 SC 1738
(2018) 14 SCC 715
(2011) 8 SCC 333
(2005) 2 SCC 129
(2019) 13 SCC 225
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30. For the proposition that assessment order can be set aside only by
following the provisions of the statute, reliance was placed on the decisions
of Hon'ble Supreme Court in State of Madhya Pradesh Versus Haji
Hasan Dada 32 and Sales Tax Officer, New Delhi Versus East India
Hotels Ltd. And Anr.33
31. It is submitted that Act nowhere provides that the purchasing dealer
would be entitled to the concessional rate automatically by submission of
Form "C". The decision in the State of Tamil Nadu Versus Arulmurugan
and Company is also to the said effect. Such an argument proceeds on the
assumption that it is the buyer being taxed under the Act, which is
incorrect. Further this argument if accepted would also amount to doing
away with the provisions for furnishing returns, scrutiny thereof,
assessment, levy refund of tax, all of which relate to the seller. After
referring to Sections 2(h) (j), 8, 8A, 9(2) of the CST Act, Section 30 and 45 of
WBST Act, and Rule 8 of the WBCST Rules, reliance was placed on the
decisions of the Hon'ble Supreme Court in Kamala Mills Ltd. Versus State
of Bombay 34 and Kamal Brothers and Others Versus The State of
Uttar Pradesh and Anr.35
32. With regard to issues 6,8 and 9, it is submitted that there is no
violation of the Circular dated 01.11.2018, as the Circular only pertained to
AIR 1966 SC 905
(1988) 9 SCC 662
AIR 1965 SC 1942
(1983) 54 STC 31
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the issuance of Form "C" and not the issue of who would be entitled to a
refund under CST Act. Further the direction issued in Ramco Cements for
compliance of the circular can relate only to the issuance of Form "C" and
not the locus of the purchasing dealer to apply for a refund. In any event,
the circular dated 01.11.2018 cannot give a right to the purchasing dealer to
obtain a refund de hors the provisions contained in Section 60 of WBST Act.
Further there can be no estoppel against law and the circular is only the
understanding of the law by the relevant authority and is not binding on the
Court. Further the circular is only a direction to the State where the
purchasing dealer is situated and cannot be construed as a direction to the
State where the selling dealers are situated.
33. On the issue relating to the credit notes, it is submitted that if refund
to IOCL is allowed before IOCL gives effect to the provisional credit notes,
the same would unjustly enrich IOCL, not only that it would be contrary to
the decision in Mafatlal, in this regard paragraph 86, 97 and 108 (iii-v) of
the judgment were referred to.
34. Further it is submitted that there is no admission by the State of West
Bengal that any refund has to be provided to IOCL. In fact, the authorities
by email dated 18.06.2020 addressed IOCL asking whether they have issued
credit notes to the purchasers or not, for which there was no reply given by
IOCL. Therefore, merely because IOCL had stated that it would give effect to
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the provisional credit note after receiving refund from the State of West
Bengal, it does not create any obligation on the State.
35. With regard to the finding of learned Writ Court that Article 265 of the
Constitution was violated, that withholding the excess tax would amount to
unjust enrichment for the State of West Bengal and therefore would justify
granting relief under Article 226 of the Constitution, it is argued by the
learned Advocate General that Article 265 would not stand in the way if
refund of tax would unjustly benefit the assessee (IOCL) who has already
passed on the burden of such tax. It is on the person claiming refund to
establish that he has not passed on such burden of tax. In this regard,
reliance was placed on the decision of the Hon'ble Supreme Court in
Mafatlal Industries and Others Versus Union of India 36.
36. Further it is submitted that there is no question of unjust enrichment
of the State. The benefit being a concession could be claimed upon strict
compliance of the conditions. That apart, it is only IOCL who can claim such
concession and not the writ petitioner.
37. With regard to the order directing payment of interest, it is submitted
that interest on refund should strictly confirm to Section 34, and
modification of the period of charging interest in contravention of the
provisions of the statute is not called for. The decision relied on by the writ
(1997) 5 SCC 536
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petition in Union of India (UOI) Through Director of Income Tax Versus
Tata Chemicals Limited 37 was sought to be distinguished by submitting
that in the said decision, the Hon'ble Supreme Court was dealing with the
specific language of Section 244A of the Income Tax Act, 1961 which
provides for calculation of interest from date of payment of tax, which
provision is different from Section 34 of WBST Act.
38. It is further submitted that in case this Court decides against the
appellant, the State of West Bengal shall be entitled to adjust the refund
amount from the amount due from IOCL in respect of other periods in terms
of Section 60 of WBST Act. It is submitted that the High Court of Rajasthan
had allowed the State to adjust the amount of refund from the amount due
in respect of any other period and such benefit of adjustment provided by
the statute cannot be denied to the State of West Bengal in its entirety. With
the above submissions the learned Advocate General concluded.
39. Mr. Kavin Gulati, learned Senior Advocate appearing for the writ
petitioner submitted that Form "C" can be produced at any stage in view of
proviso to Section 8(4) of the CST Act read with the proviso to Rule 12(7) of
the Central Sales Tax (Registration and Turnover) Rules, 1957. Admittedly
the writ petitioner fulfilled all the three conditions to be entitled to the
benefit of a concessional rate of tax as could be seen from the assessment
order and noted by the learned Writ Court. Therefore, the stand of the State
(2014) 6 SCC 335
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of West Bengal and the Assessing Officer that Form "C" cannot be accepted
without IOCL revising its returns cannot be accepted. In support of the
above contention, reliance was placed on the decisions in State of Tamil
Nadu Versus Arulmurugan and Company 38, M/s. Arvind Remedies
Limited Versus The Assistant Commissioner (CT), Vepery Assessment
Circle, Chennai 39, State of H.P. & Others Versus Gujarat Ambuja
Cement Limited & Another 40, State of Madras Versus Radio and
Electricals Limited & Another 41, State of A.P. & Others Versus M/s.
Hyderabad Asbestos Cement Production Limited & Others 42and
Corporation Bank Versus Saraswati Abharansala & Another 43.
40. It is submitted that Section 30(2) of WBST Act stipulates the period for
filing a return and Section 30(6) for filing revised return, and by the time
Form "C" declaration became available to the writ petition the time
stipulated to file revised return had long expired. The law does not compel
an impossibility (Cochin State Power and Light Corporation Limited
Versus State of Kerala 44). Further by placing reliance on the decisions of
the Hon'ble Supreme Court in Deputy Commercial Tax Officer, Park
Town Division, Madras & Another Versus Sha Sukraj Peerajee 45 and
Commercial of Wealth Tax, Meerut Versus Shravan Kumar Swarup &
(1982) SCC Online Mad 367
(2016) SCC Online Mad 2744
(2005) 6 SCC 499
AIR (1967) SC 234
(1994) 5 SCC 100
(2009) 1 SCC 540
AIR 1965 SC 1688
AIR 1968 SC 67
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Sons 46, it is submitted that filing of returns is only a part of machinery
provision and cannot override the substantive claim of concessional rate of
tax.
41. For the proposition that the purpose of assessment proceedings before
the assessing authority is to correctly assess the tax liability, reliance was
placed on the decision in National Thermal Power Company Limited
Versus Commissioner of Income Tax 47, Jupiter International Limited
Versus The Senior Joint Commissioner Sales Tax 48, Commissioner of
Income Tax Versus Bharat General Reinsurance Company Limited 49,
The Commissioner of Income Tax, Chennai Versus M/s. Abhinitha
Foundation Private Limited 50, and Principal Commissioner of Income
Tax-I Versus Anugraha Valve Castings Limited 51.
42. With regard to the effect of the decision of the High Court of
Jharkhand, it is submitted that the writ petitioner is entitled to Form "C"
and consequently concessional rate of tax. Such claim cannot be denied on
technicalities, especially when the decision has become final as approved in
Ramco Cements. The State of West Bengal having not pointed out any
defect in the Form "C"s, they are bound to give effect to the decision in its
letter and spirit. Further the circular having been quashed by the Court and
(1994) 6 SCC 623
(1997) 7 SCC 489
(2014) SCC Online Cal 4122
(1970) SCC Online Del 301
(2017) SCC Online Mad 1978
MANU/TN/7483/2019
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direction issued to issue Form "C", the consequences would be to grant
concessional rate of tax to the purchaser/buyer. Cobwebs of procedures and
legal technicalities cannot deter the legal rights of the writ petitioners to get
a refund of excess tax collected by the State of West Bengal. To support
such argument, reliance was placed on the decision of the Hon'ble Supreme
Court in Commissioner of Sales Tax, U.P. Versus M/s. Auriaya Chamber
of Commerce, Allahabad 52, and Hindustan Sugar Mills Versus State of
Rajasthan & Others 53.
43. It is further submitted there is a right with the writ
petitioners/purchaser to receive the goods at a concessional rate of tax.
Equally there is a corresponding obligation on IOCL/seller to sell at
concessional rate of tax on receipt of Form "C" and there is also a
corresponding right on IOCL to be assessed at a concessional rate of tax. To
buttress this submission, reliance was placed on the decisions in State of
Madras Versus Radio and Electricals Limited & Another 54, Assessing
Authority-Cum Excise and Taxation Officer, Gurgaon & Another
Versus East India Cotton Mfg. Company Limited 55.
44. It is submitted that the benefit of concessional rate of tax is to enure
in favour of the writ petitioner and therefore being "person aggrieved" have
locus to maintain the writ petition; this aspect was conceded by the State of
(1986) 3 SCC 50
(1978) 4 SCC 271
AIR 1967 SC 234
(1981) 3 SCC 531
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West Bengal before the learned Writ Court. Further the plea of alternative
remedy was only raised against IOCL and not the writ petitioner. The State
has stated that the writ petitioner is not a dealer, it cannot file a statutory
appeal against the assessment order of IOCL. IOCL has taken a stand that
the writ petitioner can pursue its claims against the State of West Bengal.
Thus, the writ petitioner cannot be left without a legal remedy and cannot
be driven from one forum to another. To support such argument, reliance
was placed on the decisions of the Hon'ble Supreme Court in Union of
India Versus Hindalco Industries 56, and Ghanshyam Mishra and Sons
Private Limited Versus Edelweiss Asset Reconstruction Company
Limited & Others 57.
45. The following decisions were relied on for the proposition that payer of
tax is entitled to challenge the excess levy/collection of tax.
I.D.L Chemicals Limited Versus Union of India & Others 58
Jharkhand State Mineral Development Corporation Limited
Versus Central Coalfields Limited & Others in WP (C) No.
3318/2018.
Indian Explosives Limited Versus Commissioner, Sales Tax, U.P.
& Others 59
(2003) 5 SCC 194
(2021) 9 SCC 657
(1996) 5 SCC 373
(1975) SCC Online All 503
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46. To support the argument that the appeal remedy availed by IOCL is
illusory as already the first appellant, the highest administrative authority
has already taken a stand in the writ petition by filling an affidavit-in-
opposition, reliance was placed on the decision of the Hon'ble Supreme
Court in M/s. Filterco & Another Versus Commissioner of Sales Tax,
Madhya Pradesh & Another 60.
47. With regard to the decisions in George Oakes and Central Wines,
relied on by the learned Advocate General, it is submitted that in those
cases the definition of the term "turnover" which included taxes collected
from buyers was under challenge. The Hon'ble Supreme Court held that the
principal liability to tax was on the seller, collection of tax by the seller,
therefore, was not as an agent of the State Government. Thus, whatever was
received by the seller from the buyers, could legitimately be taken to be the
price of goods and was therefore, intra vires Entry 54 of List II of 7th
Schedule of the Constitution. It is submitted that two extremely important
distinctions were pointed out in the aforesaid two judgments, firstly in
George Oakes, it was noticed there was no definition of "sale price" and
therefore, it could include any sum received by the seller from the buyers.
Further it was noticed that there is a distinction between tax and price,
however, it loses its significance from the point of view of legislative
competence. Secondly, in Central Wines, it was pointed out that there is a
statutory provision allowing the seller to recover or pass on the burden of
tax to the buyers, then the recovery by the seller is as an agent of the State
(1986) 2 SCC 103
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Government and then such a tax is not to be treated as a part of the sale
price. It is submitted that the decisions have no application to the present
case as in none of the judgments the scheme of CST Act was interpreted.
Further perusal of Section 9(1) of the CST Act would indicate the State
Government collects tax as an agent of the Central Government.
48. It is further submitted that as per Section 8(1) of the CST Act, tax is
payable by the seller on his "turnover", which is defined in Section 2(f). The
determination of turnover is provided in Section 8A of the CST Act. This
provision provides for the tax received by the seller to be deducted from the
turnover. The proviso to Section 8A clarifies that if the amount of tax
received by the seller has already been deducted from the aggregate sale
price, then a second deduction would not be permissible. Thus, this Section
clearly points out that tax received by seller is not part of turnover unlike
the cases in George Oakes and Central Wines.
49. It is further submitted that Section 9A of the CST Act mandates that
the seller will not make any collection of tax except in accordance with the
Act and the Rules made thereunder. This collection of tax by the seller from
the buyer is clearly contemplated. If the purchasing dealer produces Form
"C", the selling dealer is obligated to collect only a concessional rate of tax. If
the seller contravenes Section 9A, he would be visited with penalty under
Section 10(f) of the CST Act, similarly if the buyer contravenes any of the
provisions relating to the goods purchased at a concessional rate penalty is
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attracted under Section 10(a) to 10(e) of the CST Act. A combined reading of
the aforesaid provisions clearly shows the CST Act contemplates the passing
of the burden of tax to the writ petitioner by IOCL. In such an eventuality,
the recovery of tax by IOCL is only as an agent of the State of West Bengal.
In this regard, reference was made to paragraph 12 of Central Wines.
Reliance was also placed on the decision of Hon'ble Supreme Court in
Anand Swarup Mahesh Kumar Versus Commissioner of Sales Tax 61.
50. It is submitted that the decision of the High Court of Bombay in
Mahalaxmi Cotton has no bearing to the present dispute.
51. Thus, in none of the four judgments referred by the learned Advocate
General the issue was refund of taxes and the controversy was regarding the
legislative competence of the State Government to include taxes received
from the buyer as part of the turnover of the seller.
52. It if further submitted that a plain reading of Section 37(3) of the
WBST Act shows that anything collected as tax is refundable to the buyer
directly. Thus a combined reading of Section 37(1), (2) and (3) of the WBST
Act makes it clear that if any collection made by IOCL in excess of the
amount of tax permitted under the Act, it has to be deposited by IOCL with
the State of West Bengal, which will vest with the State of West Bengal
subject to the right of the writ petitioner to make an application for refund of
(1980) 4 SCC 451
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the excess amount collected from IOCL. More importantly, Section 37(3) of
WBST Act has been introduced to save Section 37(1) and Section 37(2) from
being declared as unconstitutional. It is submitted that similar provisions
came up for examination before the Hon'ble Supreme Court in R.S. Joshi,
Sales Tax Officer, Gujarat & Others Versus Ajit Mills Limited &
Another 62 and M/s. Kasturi Lal Harlal Versus State of U.P. & Others
63.
53. It is submitted in R.S. Joshi the contention as canvassed by the
learned Advocate General that seller was not the agent of the state was
repelled and the judgment in George Oakes was held to be of no relevance
while deciding the question of refund to the buyer. It is further submitted
that Section 37(3) of the WBST Act is in pari materia with Sections 46(1) and
46(2) of the Bombay Sales Tax Act 1962, which was considered in R.S.
Joshi. Therefore, it is submitted that the judgment in R.S. Joshi will apply
with full force to the case of the writ petitioner which decision was affirmed
in Mafatlal.
54. Reference was made to the decision of the Hon'ble Supreme Court in
State of Maharashtra & Others Versus Swanstone Multiplex Cinema
Private Limited 64, wherein the Hon'ble Supreme Court directed that the
excess duty collected by the State Government would go back to the buyers
(1977) 4 SCC 98
(1986) 4 SCC 704
(2009) 8 SCC 235
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from whom it was collected. Reliance was also placed on the decision of the
West Bengal Taxation Tribunal in Steel Authority of India Versus ACCT,
Durgapur 65, wherein among other things it was held that buyer can
certainly move an application to the Commissioner for refund of the excess
tax deposited and the State of West Bengal would be obliged to refund the
excess tax collected by the buyer.
55. Distinguishing the decision in Saraf Trading Corporation, it is
submitted that in the said decision Section 44 of the Kerala General Sales
Tax Act, 1963 was considered which is materially/significantly different
from Section 37(3) of WBST Act. It is submitted that learned Advocate
General referred to Section 46A(2) of the Kerala General Sales Tax Act which
provision was not considered in Saraf Trading Corporation. In
Corporation Bank, it was held that the buyer was entitled to refund
however, this decision was not noticed in Saraf Trading Corporation. On
the similar issue as to the entitlement of buyer maintain a claim for refund
the decision of the High Court of Gujarat in J.K. Cements Limited Versus
State of Gujarat in Special Civil Appeal No. 15333 of 2019 dated
18.12.2019 was referred. The Special Leave petition filed by the State of
Gujarat before the Hon'ble Supreme Court in Special Leave Petition (C) No.
2279-2280 of 2021 was dismissed by order dated 10.02.2021. For the same
proposition, reliance was placed on the decision of the High Court of Punjab
MANU/ST/0016/2007
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and Haryana in ASI Industries Limited Versus State of Haryana &
Others 66.
56. With regard to the contention that there can be no question of unjust
enrichment in the case of the writ petitioner, reliance was placed on the
decision of the Hon'ble Supreme Court in Indian Council for Enviro-legal
Action Versus Union of India & Others67. On facts, it is submitted that
the writ petitioner has not passed on the tax burden to its customers, and a
specific averment was made in the writ petition, for which there is no
specific denial by the State of West Bengal in their affidavit-in-opposition.
Further the aspect of unjust enrichment by the writ petitioner was never
argued before the learned Writ Court and such plea was raised only against
IOCL. In Mafatlal Industries, the constitution Bench of the Hon'ble
Supreme Court has held that refund can be claimed by the
buyer/purchaser. It is submitted by way of abundant caution an affidavit on
behalf of the writ petitioner dated 29.08.2022 is being filled enclosing
certificate of its Chartered Accountant dated 20.07.2022 that the burden of
the tax refundable has not been passed on by the writ petitioner to its
customers.
57. It is submitted that the learned Advocate General placed reliance on
the decision in State of Madhya Pradesh Versus Haji Hasan Dada 68 ,
wherein it was held that unless and until an assessment order is challenged
MANU/PH/0085/2021
(2011) 8 SCC 161
AIR 1966 SC 905
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no relief for refund can be granted. Therefore, the writ petitioner has
challenged that part of the assessment order of IOCL as was done in the
case of Indian Explosives. It is further submitted that in the Associated
Cement Companies Limited Versus The State of Tamil Nadu and
Another 69 , it was held that the judgment in Haji Hasan Dada would be
inapplicable where the assessment order was under challenge.
58. It is further submitted that the circular dated 01.11.2018 issued by
the Government of India directing all State Governments/Commissioners of
Commercial Taxes to follow the decision in Capro Power Limited is not
contrary to any judgment of any court nor does it interprets the scope of any
statutory provision. The State of Jharkhand did not accept the Circular as is
evident from the judgment in Tata Steel Limited, Jamshedpur, the
Hon'ble Court therefore, interpreted Section 2(d) and 8(3) of the CST Act to
hold that the writ petitioner was entitled to Form "C". Furthermore, the
State of West Bengal by Circular dated 07.08.2018 directed the continuance
of issue of Form "C" as was done prior to 01.07.2017, though other state
governments declined to issue Form "C" after 01.07.2017, therefore the
present stand taken by the state of West Bengal in these proceedings is
diametrically opposite to what was taken earlier. With the above
submissions Mr. Gulati concluded.
(1984) SCC Online Mad 374
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59. Mr. Khan, learned Counsel for IOCL, while adopting the submissions
of Mr. Gulati, submitted that before 01.07.2017 there was no dispute about
the entitlement of the writ petitioners, it is only after the amendment to the
definition of "goods" in Section 2(d) of the CST Act, dispute arose. The
Circular issued by the State of Jharkhand was challenged by the writ
petitioner was quashed by the High Court of Jharkhand by order dated
28.08.2019 and directions were issued. The review petition filed by IOCL
was dismissed with the observation that if State of West Bengal refused
refund it is open to the writ petitioner or IOCL to approach the appropriate
forum for relief. It is submitted that the Form "C" declarations furnished by
the writ petitioner was furnished to the assessing officer by IOCL. By order
dated 12.08.2020, for the assessment year 2017-2018 the assessing officer
rejected the Form "C" declarations on a hyper technical ground that IOCL
has not filed revised returns, the invoices were not revised and credit notes
were not issued by IOCL. The assessing officer failed to appreciate that by
the time Form "C" was received by IOCL the time limit for filing revised
returns had expired, the invoices cannot be revised, but credit
notes/provisional credit notes were issued. Being aggrieved by the
assessment order dated 12.08.2020 and conscious of the legal disputes,
IOCL filed appeal before the appellate authority which is still pending.
60. It is further submitted that the assessment for the period 2018-2019
was completed by order dated 29.06.2021, the Form "C" declarations
submitted by the writ petitioner were rejected on the ground that revised
return was not filed and the invoices have not been amended. As against the
FMA NO. 857 OF 2022
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said order IOCL preferred appeal which was rejected by order dated
24.03.2022 on the ground that this appeal is pending before this Court.
IOCL has preferred Revision petition against the said order before the West
Bengal Taxes Appellate and Revisional Board on 17.05.2022 which is still
pending.
61. It is submitted that the appellants/state are not disputing their
obligation to refund the excess amount deposited with them as such,
however are adopting an unfair, unjust and vexatious stand that refund
would not be made directly to the writ petitioner and that refund would not
be made to IOCL on the alleged ground that it would result in unjust
enrichment. The plea of unjust enrichment raised by the appellant is grossly
misplaced. The doctrine does not forbid the refund of excess collection to the
person who bears the actual burden. The learned Counsel adopts the
arguments of Mr. Gulati on this aspect.
62. It is submitted that the statutory scheme as contained in Section 37
of WBST Act, envisages the excess amount deposited into the state
exchequer would be refunded to the buyer who has borne the burden. The
appropriation of the money by the state of West Bengal would be hit by
Article 265 of the Constitution. It is submitted that the argument as
advanced by the state of West Bengal before this Court is similar to the
argument made by state of Gujarat in the case of J.K. Cements which was
rejected by the High Court of Gujarat and refund was allowed to the buyer.
FMA NO. 857 OF 2022
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63. Mr. Khan, placed reliance on the judgment of the Hon'ble Division
Bench of the High Court of Mysore at Bangalore in Giridharlal Parasmal
Versus the State of Mysore70 and referred to paragraph 6 wherein it was
pointed out that the duty of the assessing officer is not merely to impose tax
that is lawfully excisable but also to give the assessee the benefit of any
reduction or exemption that may become due to them upon facts actually
found to be true by the assessing authorities, whether or not the assessee
out of ignorance or by mistake, make a claim thereto, when the mistake is
so obvious and the matter is taken up on appeal, it is the duty of the
appellate authorities to correct the mistake.
64. It is submitted that several purchasers like the writ petitioners have
paid excess tax, which stands deposited with the State of West Bengal, had
filed similar writ petitions which were allowed, but only one appeal has been
preferred and those writ petitioners seek to join in this appal for which
applications have been filed.
65. It is submitted that after the writ petitioners were allowed the
assessing authority has verified all transactions of IOCL with purchasers
including the writ petitioner where excess tax was collected and deposited
with the State Exchequer, and who have already furnished Form "C"
declarations. The details of the transactions and the amount of refund
claimed have been furnished in a tabulated format, checked and found to be
(1967) 20 STC 64
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in order by the State Tax Officer, Large Taxpayer Unit, Directorate of
Commercial Taxes, Government of West Bengal.
66. Finally, it is submitted that IOCL has no objection if the refund is
made directly to the writ petitioner and other purchasing dealers, however if
for any reason refund is made to IOCL, they would expeditiously make it
over to the purchasing dealers who have actually borne the burden of tax.
The learned counsel also prayed that the order directing payment of interest
on the refund as ordered by the Hon'ble Single Judge may be confirmed.
67. The learned Advocate General by way of reply reiterated that in the
decision in Anand Swarup Mahesh Kumar, the court was considering
Section 17(iii) (b) of the UP Act which provision placed a statutory obligation
on the purchaser to pay the market fee, and there is no such provision in
the CST Act. This decision was interpreted in Central Wines. Further in
George Oakes, it has been held that merely because a dealer is entitled to
pass on the tax does not mean that the tax is imposed by the government on
the buyer or that the seller is a mere collecting agent for the government.
The decision in Anand Swarup Mahesh Kumar was considered in State of
Punjab Versus Chhabra Rice Mills and Others71 and it was held that
there was a statutory obligation on the purchaser to pay market fee. Further
it is reiterated that in R.S. Joshi the Hon'ble Supreme Court notes a
provision like Section 37 of WBST Act and holds that it would apply to a
(2005) 13 SCC 221
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case where the tax is "collected and kept as his" by the selling dealer and
not where the tax has been deposited with the state.
68. With regard to the decision in I.D.L Chemicals, Jharkhand State
Mineral Development Corporation Limited Versus Central Coalfield
Limited and Others in WP(C) No. 3318 of 2018, High Court of Jharkhand
and Indian Explosives Limited, it is submitted that the obligation to pay
tax was on the buyer.
69. It is reiterated that the circular dated 01.11.2018 is only a direction to
the states where the purchasing dealers are situated and cannot be
construed as a direction where the purchasing dealer is situated, hence
cannot be construed as a direction to the State where the selling dealer is
situated and in no way relates to the locus of the purchasing dealer to
maintain an action for refund against the seller's state. The decision in Tata
Chemicals relied on by the writ petitioner for grant of interest on the
refund, is sought to be distinguished by contending that in the said case the
Hon'ble Supreme Court was dealing with the specific language of Section
244A of Income Tax Act, 1961, which is different from Section 34 of the
WBST Act. Section 244A of the Income Tax Act, 1961provides for interest
calculation from the date of payment of tax, whereas there is no such
provision in Section 34 of WBST Act, therefore no interest is payable. It is
further submitted that the High Court of Rajasthan in Hindustan Zinc
FMA NO. 857 OF 2022
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Limited Versus The State of Rajasthan and Others 72, the court held
that the petitioners therein shall be entitled to refund and/or adjustment of
the same from the concerned authorities who collected the excess tax.
70. We have heard the learned Counsels for the parties and carefully
noted their submissions.
71. The core issue involved in this appeal is whether the writ petitioner
has locus standi to claim refund of the excess tax collected directly from the
state of West Bengal and whether can be stated to be a person aggrieved
over that portion of the assessment order of IOCL (2017-18), rejecting the
Form "C" declarations filed by the writ petitioner on the grounds that IOCL
have not filed revised return, not amended the invoices and not issued credit
notes? If the above core issue is answered, the secondary issues as to
applicability of doctrine of unjust enrichment, if refund is ordered should it
carry interest and whether the State of West Bengal can claim for
adjustment of the excess tax collected are to be dealt with.
72. The undisputed facts are, IOCL is a registered dealer in the State of
West Bengal, it is the selling dealer. The purchasing dealer, the writ
petitioner is a registered dealer in the State of Jharkhand. The writ
petitioner purchased HSD during the disputed period, 01.07.2017 to
October 2018 from IOCL and used and claimed concessional rate of tax
under Section 8 of the CST Act. The benefit was denied as IOCL informed
2018-VIL-233 Raj
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the writ petitioner by letter dated August 31, 2020 that the assessment for
the relevant year has been completed by order dated June 30, 2020 and the
Commercial Tax department have not accepted the Form "C" declarations on
the ground that they have not filed revised return, they have not amended
the invoices and not issued credit notes to the writ petitioner. Though such
was the reason assigned in the assessment order for rejecting the Form "C"
declarations.
73. Section 8 of the CST Act deals with the rate of tax on sales in the
course of inter-state trade or commerce. Sub-Section (1) of Section 8 states
that every dealer, who in the course of interstate trade or commerce, sells to
a registered dealer goods of the description referred to in Sub Section 3 of
Section 8 shall be liable to pay tax under the Act which shall be 2% of his
turn over or at the rate applicable to the sale or purchase of such goods
inside the appropriate state under the Sales Tax Law of that state,
whichever is lower. In terms of the proviso, the Central Government may by
notification in the official gazette reduce the rate of tax under Sub-Section
(1). Sub-Section (2) of Section 8 states that the tax payable by any dealer on
his turn over in so far as the turn over or any part thereof relates to the sale
of goods in the course of interstate trade or commerce not falling within
Sub-Section (1) of Section 8, shall be at the rate applicable to the sale or
purchase of such goods inside the appropriate state under the Sales Tax
Law of that state. The goods referred to in Sub Section 1 of Section 8 of the
Act on which the liability to pay tax arises have been enumerated under Sub
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Section 3 of Section 8. Sub-Section (4) of Section 8 states that the provisions
of Sub Section (1) shall not apply to any sale in the course of interstate trade
or commerce unless the dealers selling the goods furnishes to the prescribed
authority in the prescribed manner a declaration duly filled and signed by
the registered dealer to whom the goods are sold containing the prescribed
particulars in a prescribed form obtained from the prescribed authority. The
proviso states that the declarations should be furnished within the
prescribed time or within such time as that the authority may for "sufficient
cause", permit. Sub-Section (5) empowers the State Government to exempt
dealers from payment of tax or lower rate of tax as spelt out under Clauses
(a) and (b) of Sub-Section (5). In exercise of the powers conferred under
Section 13 of the CST Act, the Central Government notified the Central
Sales Tax (Registration and Turnover) Rules, 1957. In terms of Rule 12(1),
the declaration and the certificate referred to in Sub Section (4) of Section 8
shall be in Forms "C" and "D" respectively. Sub Rule (2) and Sub Rule (3) of
Rule 12 deal with contingencies where the declaration form is lost and as to
the procedure to be adopted in such an event. Rule 12(7) states that the
declaration in Form "C" or Form "F" or the certificate in Form E-i or Form E-
(ii) shall be furnished to the prescribed authority within three months after
the end of the period to which the declaration or the certificate relates. The
proviso under the Rules states that if the prescribed authority is satisfied
that the persons concerned was prevented from furnishing such declaration
or certificate within the aforesaid time, the authority may allow such
declaration or certificate to be furnished within such time as the authority
may permit. Thus, the rule empowers the prescribed authority to allow the
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dealer to submit the declaration forms beyond the prescribed period of three
months provided the prescribed authority is satisfied that the persons
concerned was prevented by "sufficient cause" from furnishing such
declaration within the time stipulated in Rule 12(7) of the Act. It is not
disputed by the appellants/State that the Form "C" declaration submitted
by the IOCL to their assessing officer was accepted. To mean that the
prescribed authority was satisfied that IOCL was prevented by "sufficient
cause" from furnishing such declaration form within the time stipulated
under Rule 12(7).The appellant/state also do not dispute the correctness of
the Form "C" declarations submitted by the IOCL which were furnished to
them by the writ petitioner. The reasons for refusing to grant concessional
rate of tax is on the ground that the IOCL has not revised their returns, they
have not amended the invoices and not issued credit notes to the writ
petitioner. Therefore, it is to be seen that whether there is a necessity for
IOCL to file a revised return so as to enable the assessing officer to take note
of the Form "C" declaration and levy concessional rate of tax. A combined
and conjoint reading of Section 8(4) of the CST Act and the proviso to Rule
12(7) of the CST rules shows that the necessity to file revised return does
not arise.
74. In Arulmurugan and Company, the question which was referred for
the decision before the Full Bench was whether the appellate authority can
entertain Form "C" declarations filed by the registered dealer at the appellate
stage either under the CST Act or the Rules made thereunder. While
answering the question, it was held that the proviso in the Act simply says
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that "C" Form shall be filed before the prescribed authority either within the
prescribed time or within such further time as that authority may for
"sufficient cause", permit. It was pointed out that as a matter of
construction of the proviso in the statute, if there is "sufficient cause"
further time will have to allowed. The proviso to the section does not insist
that the assessee should establish before the prescribed authority that he
was prevented by "sufficient cause" from filing "C" Forms in time, though
"sufficient cause" spoken of by Parliament in Section 8(4) is sufficient cause
which appeals to the mind of the authority concerned and which enable it to
allow further time without bothering about any onus on the assessee. The
proviso to Rule 12(7) however, is a study in contrast. The power to allow
further time under this Rule is severely circumscribed by the language of its
proviso. It was further pointed that this proviso is more of less fashioned
after Section 5 of the Limitation Act. Under the requirement laid down by
the rule making authority, the burden is on the assessee to make out
sufficient cause by explaining why he did not file and what prevented him
from filing the "C" forms before the completion of the assessment. It is for
the assessing authority to be satisfied about the existence of "sufficient
cause" and its having prevented the assessee from filing the declarations
within time. The difference between two provisos is not merely one of
language or emphasis. The difference lies in the basic approach to the
substance of the power to allow further time. Further it was held that where
an assessee seeks to file "C" Forms beyond the stage of assessment, the
relative power which the concerned authority should invoke is the power
defined in the proviso to Section 8(4) and not the power defined in the
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proviso to Rule 12(7). Finally it was held that the tribunal has the power to
receive "C" Form at the time of the appeal for "sufficient cause"; the tribunal
can then proceed to the next stage of applying the concessional rates of tax
to the turn over covered by this "C" Forms or the tribunal may remand the
case to the Appellate Assistant Commissioner; the remand may be for the
specific purpose of going into the question of sufficient cause or the remand
may also be loaded with a finding by the tribunal that there has been
sufficient cause leading the scrutiny of the "C" Forms alone to be
undertaken on remand. Further it was held that the tribunal may, if
satisfied about the sufficient cause set aside even the assessment order and
direct the assessing authority to redo the assessment in which event there
would be no occasion for the assessing authority to go into any question of
delay in filing the "C" Form for with the setting aside of the assessment the
whole thing is once again at large.
75. In Gujarat Ambuja Cement Limited, the Hon'ble Supreme Court
pointed out that under Rule 12(7) of the CST Rules, the declaration forms
can be filed at a subsequent point of time and not necessarily along with
returns. On application being made before the assessing authority, the
exemption can be granted. It was held that the object of the rule is to ensure
that the assessee is not denied the benefit which is available to it under law
on a technical plea and the assessing officer is empowered to grant time
which means that the provisions requiring filing of declaration forms "C"
along with the return is a directory provision and not mandatory provision.
The declarations forms can be filed before the appellate authority as an
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appeal is continuance of the assessment proceedings. The appellate
authority if satisfied that the assessee was prevented by reasonable and
sufficient cause which disenabled him to file the forms in time it can be
accepted. It can also be accepted as additional evidence in support of the
claim for reduction. On the facts of the said case, it was noted that the
company had made a specific request before the revisional authority which
was turned down and therefore it was held that the question of any non-
compliance with the relevant statute does not arise. The decision in the case
of M/s. Sahney Steel and Press Works Limited Versus Commissioner
Tax Officer 73 was noted where in it was held that in the given case the
assessee can be given an opportunity to collect declaration forms and
furnish them to the assessing authority, if the challenge of the assessee to
the taxability of a particular transaction is turned down.
76. In Radio and Electricals Limited, the Hon'ble Supreme Court held
that though the tax under the Act is levied primarily from the seller; the
burden is ultimately passed on to the consumer of goods because it enters
into price paid by them. The Parliament with a view to reduce the burden on
the consumer arising out of the multiple taxation as provided in respect of
sales of declared goods which have special importance in interstate trade or
commerce and other classes of goods which was purchased at an
intermediate stage in the stream of trade or commerce prescribed low rates
of tax when transactions take place in the course of interstate trade or
commerce. It was further held that the seller can have in these transactions
(1985) 4 SCC 173
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no control over the purchaser and he has to rely upon the representation
made to him, and he must satisfy himself that the purchaser is a registered
dealer and the goods purchased are specified in the certificate and his duty
extends no further. Further it was held if he is satisfied on this two matters
on a representation made to him in a manner prescribed by the rules and
the representation is recorded in the certificate in Form "C" as selling dealer
is under no further obligation to see to the application of the goods for the
purpose for which it was represented that the goods were intended to be
used. Further it was held that the selling dealer is under the Act authorised
to collect from the purchasing dealer as amount payable by him as tax on
the transaction and he can collect the amount only in the light of the
declaration mentioned in the certificate in Form "C", he cannot hold an
enquiry whether the notified authority who issued the certificate of
registration acted properly or ascertain whether the purchaser
notwithstanding the declaration was likely to use the goods for the purpose
other than purpose mentioned in the certificate in form "C". It was further
held that if the purchasing dealer holds a valid certificate the goods which
are to be purchased and furnished and furnishes the required declaration to
the selling dealer the selling dealer becomes on production of the certificate
entitled to the benefit of Section 8(1) of the Act.
77. In M/s. Hyderabad Asbestos Cement Production Limited, after
examining the provisions of the Act and the rules particular Sub Rule (7) of
Rule 12, it was held that Form "C" shall be furnished up to the time of
assessment by the first assessing authority but in the proper case the
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prescribed authority which would mean to be the assessing authority may
permit such forms to be filed within further time as he may permit and this
necessarily means that the assessing authority will complete the assessment
but at the same time permit the dealer to file form "C" within time specified
by him. It was further held that in case, the dealer files form C within the
time specified, it is obvious the assessing authority will revise the order of
assessment granting the requisite relief.
78. The legal principle that can be culled out from the above decision is
that when Form "C" declarations are filed beyond the time prescribed the
prescribed authority is empowered to accept such forms on being satisfied
that the dealer was prevented by "sufficient cause" for not filing the forms
within the time prescribed. In the instant case, the appellants/state have
not raised any such contention that the dealer has not shown "sufficient
cause" for having not been able to produce the form "C" declaration along
with their returns or within the time prescribed. Thus, it goes without
saying that the appellants are aware of the legal position as time limit
prescribed for filing the form "C' declaration was directory as the statute
empowered the prescribed authority to accept the declarations even after the
expiry of the time prescribed. The underlying principle behind this
interpretation is Article 265 of the Constitution of India.
79. In Corporation Bank's case, the Hon'ble Supreme Court held that in
Article 265 of the Constitution mandates that no tax shall be levied or
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collected except by authority of law. It was further held that in terms of the
said provisions all acts relating to the imposition of tax, inter alia for the
point at which the tax is collected the rate of tax as also its recovery must be
carried out strictly in accordance with the law. It was further held that if the
substantive provisions of statute provide for refund the state ordinarily by a
subordinate legislation could not have laid down that the tax paid even by
mistake would not be refunded. It was further held that if the tax has been
paid in excess of the tax specified, save and except the cases involving the
principle of unjust enrichment, excess tax realized must be refunded.
Further the state is bound to act reasonably having regard to the equality
clause contained in Article 14 of the Constitution. Therefore, the stand
taken by the appellant that Form "C" declarations submitted cannot be
considered as IOCL has not filed revised return or that the invoices have not
been amended or credit notes have not been issued is a stand which is
legally unsustainable. If the contention raised by the appellant is to be
accepted, it will fall foul of Article 265 of the Constitution as the State can
levy or collect tax except by authority of law and the rate of tax to be
recovered must also be carried out strictly in accordance with law.
Therefore, we have no hesitation to hold that the reason for not accepting
the Form "C" declaration was wholly untenable. While on this issue we need
to consider as to whether the appellants could have not suited to the claim
for concessional rate of tax on the ground that revised return have not been
filed by IOCL. Section 30 (2) of the WBST Act prescribed the period for filing
the return and Sub-section (6) of Section 30 prescribed the time limit for
filing the revised return. Admittedly on the date on which the Form "C"
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declaration was filed before the assessing authority of IOCL, the time
stipulated for filing revised return under Section 30(6) had expired. If that be
so can IOCL be compelled to do an act which is legally impermissible and
impossible to perform. The Hon'ble Supreme Court in Cochin State Power
and Light Corporation Limited applied the maxim lex non cogitia ad
impossible and held that the performance of an impossible duty must be
excused. Therefore, on this ground also the appellants were wholly
unjustified in taking a stand that IOCL ought to have filed revised return. In
any event filing of a return is a procedural aspect forming part of the
machinery provision under the statute and such machinery provision
cannot override the substantive claim of concessional rate of tax.
80. In Sha Sukraj Peerajee, the question which arose for consideration
was whether Rule 21A of the Madras Sales Tax Rules is intra vires of the
power of the State Government under Sections 19(1)(2)of the Madras
General Sales Tax Act, 1939. Section 3(1) of the said Act is the charging
section which imposes a liability to pay sales tax on every dealer for each
year and the tax is to be calculated on his turn over for that year. The
question was whether the State Government has the authority under its rule
making power under Section 19 of the said Act to create a legal fiction by
which the transferee of the business is construed as the dealer liable to pay
tax in respect of turnover of the transferor. The state government contended
that it has power under Section 19(1) and 19(2)(c) of the said Act to frame
the impugned rule. This argument was rejected holding that Section 19(1) of
the said Act empowers the State Government to make rules to carry out the
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purposes of the Act but the section cannot be utilized to enlarge the scope of
Section 10 regarding recovery and payment of tax from some other persons
other than the dealer under the Act. Further it was held that Section 19(2)
(c) of the said Act deals with assessment to tax of businesses which are
discontinued or the ownership of which has changed. After referring to the
decision of the Hon'ble Supreme Court and the Federal Court, it was held
that the liability to tax does not depend upon the assessment, the liability
which are under the charging sections and the assessment order only
quantifies the liability which has already been definitely and finally created
by the charging sections and the provision in regard to the assessment
relates only to the machinery of taxation. Thus, it was held that the Rule
21A of the said rules is beyond the rule making power of the state either
under Section 19(1) or Section 19(2)(c) of the said Act. While on this issue,
we wish to reiterate that the purpose of assessment proceedings is to
correctly asses the tax liability. The Hon'ble Supreme Court in National
Thermal Power Corporation Limited held that the purpose of the
assessment proceedings before the taxing authorities is to assess correctly
the tax liability of an assessee in accordance with law. An illustration was
given where as a result of judicial decision it was found that a non-taxable
item was taxed or an impermissible deduction was denied. It was pointed
out that in such circumstances the assessee should not be prevented from
raising that question before the tribunal for the first time so long as the
relevant facts are on record in respect of that item. Reference was made to
the decision in Jute Corporation of India Limited Versus Commissioner
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of Income Tax 74, wherein while dealing with the powers of the Appellate
Assistant Commissioner it was observed that an appellate authority has all
the powers which the original authority may have in deciding the question
before it subject to the restrictions or limitations if any prescribed by the
statutory provisions.
81. In Goetze (India) Limited, the assessee claimed a deduction under
provision of the Income Tax Act after filing the return. The deduction was
disallowed on the ground that there is no provision under the Income Tax
Act to make amendment in the return of income by modifying the
application at the assessment stage without revising the return. The
assessee therein filed appeal before the Commissioner (Appeals) which was
allowed. However, on an appeal filed by the department before the Tribunal
the order was set aside and the assessee approached the Hon'ble Supreme
Court contending that it is open to the assessee to raise the points of law
even before the appellate tribunal. To support such contention, the assessee
relied upon the decision in National Thermal Power Corporation Limited
Versus Commissioner of Income Tax 75. The Hon'ble Supreme Court
though dismissed the appeal held that the case is limited to the power of the
assessing officer and does not impinge on the power of the Income Tax
Appellate Tribunal under Section 254 of the Income Tax Act, 1961. The
aforementioned three decisions were followed in Commissioner of Income
(1991) 187 ITR 688
(1998) 229 ITR 383 (SC)
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Tax Versus Jai Parabolic Spring Limited 76, and it was held that there is
no prohibition on the powers of the Income Tax Appellate Tribunal to
entertain the additional ground which according to the tribunal arises in the
matter and for the just decision of the case. Similar view was taken in the
case of Commissioner of Income Tax, Chennai Versus M/s. Abhinitha
Foundation Private Limited 77 wherein it was held that even if the claim
made by the assessee company does not form part of the original return or
even revised return it could still be considered if, the relevant materials was
available on record either by the appellate authorities by themselves or on
remand by the assessing officer. In M/s. Bali Trading Private Limited
Versus Principal Commissioner of Income and Another 78 after taking
note of the decisions in National Thermal Power Corporation Limited,
Goetze (India) Limited and other decisions it was held that material which
was not available to the Income Tax Officer when he made the assessment
could be taken into consideration by Commissioner of Appeals after holding
an enquiry, though such materials has come on record subsequent to the
making of the assessment; the embargo placed on an assessing officer in
considering a new claim would not impinge on the power of the appellate
authority or the revisional authority. Similar view was taken in Anugraha
Valve Castings Limited.
82. In Areva T and D India Limited Versus Commissioner of Income
Tax, the assessing officer, the Commissioner of Income Tax (Appeals) and
(2008) 306 ITR 42
(2017) 396 ITR 251
(2018) 402 ITR 271
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the Tribunal found fault with the assessee in not filing a return or the
revised return raising that the transactions done by them cannot be
considered as a sale of business. After noting several decisions including the
decision in Goetze India Limited it was held that failure to advert to the
claim in the original return or the revised return could not denude the
appellate authorities of their power to consider the claim if the relevant
material was available on record and was otherwise tenable in law. In
Commissioner of Income Tax Versus Perlo Telecommunication and
Electronics Components India Private Limited 79 it was held that the
power of tribunal under Section 254 of the Income Tax Act, 1961 cannot be
curtailed, after referring to the decision in Goetze (India) Limited and the
facts of the case it was noted that the assessee therein was only claiming
expenditure which was left out at the time of filing of original income tax
return and noting that the assessing officer has power to make upward or
downward adjustment in the income return filed by the assessee and when
the assessee had not claimed certain expenditure clearly evident from the
records and it comes to the knowledge of the assessing officer at the time of
assessment proceedings, the assessing officer should grant relief to the
assessee. Thus, on a cumulative application of all the above legal principles
leads us to the only conclusion that can be arrived at is that the stand taken
by the appellant for refusing to accept Form "C" declaration filed by IOCL is
unsustainable in law, arbitrary and perverse.
MANU/TN/6874/2021
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83. We will now revert back to the decision of the High Court of
Jharkhand wherein the challenge was to the circular issued by the State of
Jharkhand refusing to issue Form "C" declarations on ground of the
amendment made to Section 8 of the CST Act with effect from 01.07.2017.
The writ petition was admitted by the Division Bench by order dated
17.05.2018 having found that the writ petitioners have made out the prima
facie case and the State of Jharkhand was directed to issue necessary "C"
Forms without prejudice to the rights and contentions and such "C" Forms
may be utilized by the writ petitioners with the undertaking that if they are
unsuccessful, they will deposit forthwith the balance of tax benefit which the
writ petitioners otherwise have derived by use of such form "C" declaration.
The writ petitions including the writ petition filed by the present writ
petitioner were allowed by common order dated 28.08.2019 and the circular
issued by the State of Jharkhand was quashed. Noting the interim order
which was passed when the writ petitions were admitted, it was made clear
that the provisional credit notes given to the writ petitioners shall be given
effect to or in any case in which the provisional credit notes have not been
given the required refund shall always be given to the writ petitioners and if
the respective oil companies have made deposit to the state exchequer, they
also be entitled to claim the refund thereof. IOCL filed review application
before the High Court of Jharkhand on the ground that they could not claim
any refund of the extra amount of CST already deposited by them to the
state exchequer in the State of West Bengal and they cannot be made liable
to refund the amount to the writ petitioners. By order dated 17.10.2020, the
review application was dismissed with an observation/direction that if the
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refund of the CST deposited to the state exchequer of the State of West
Bengal is refused by the State authorities of West Bengal, it is open to the
writ petitioners or even to the review petitioners to approach the appropriate
forum for the required relief. As pointed out earlier in Capro Power Limited
Versus State of Haryana 80, the assessee similarly placed to that of the
writ petitioner before us challenged the orders of the State of Haryana
refusing to issue form C declaration in respect of natural gas purchased by
them in the course of interstate trade or commerce and used by it for
generation of electricity. The said writ petition was allowed holding that the
state of Haryana was liable to issue Form "C" declaration in respect of
natural gas purchased by the petitioners therein from the oil companies in
the State of Gujarat and used in the generation or distribution of electricity
at its power plant in Haryana. Further it was observed that in the event the
petitioners therein had to pay oil companies any amount on account of the
wrongful refusal of Form "C" declaration, the writ petitioners therein shall be
entitled to refund and/or adjustment of the same from the concerned
authorities, who collected the excess tax through oil companies or
otherwise. The special leave petition filed against the said decision in SLP C
No. 20572 of 2018 was dismissed by order dated 13.08.2018.The decision in
the case of the writ petitioner before us in the case filed before the High
Court of Jharkhand reported in 2019 SCC Online Jharkhand 1255 was
approved by the Hon'ble Supreme Court in its decision dated 24.03.2021. In
an appeal arising out of the order passed by the High Court of Madras in the
case of the Commissioner of Commercial Taxes and Another Versus
(2018) VIL 154 P&H
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Ramco Cements Limited dated 24.03.2021, the Hon'ble Supreme Court
while dismissing the special leave petition by order dated 24.03.2021
observed that nine High Courts have taken the same view and once such
decision rendered by the High Court of Rajasthan was affirmed by the
Hon'ble Supreme Court by dismissal of special leave petition vide order
dated 03.02.2020 and considering the consistent view of nine High Courts
including the dismissal of the special leave petition by the different benches
of the Hon'ble Supreme Court and being satisfied about the exposition on
the matters in issue by the High Court of Madras that being a possible view,
the Hon'ble Supreme Court declined to interfere with the same. Further the
Hon'ble Supreme Court noted that after the decision of the Punjab and
Haryana High Court, the Union of India has issued memorandum dated
01.11.2018 directing all the States and Union Territories to follow the
decision taken by the High Court of Punjab and Haryana Court in Capro
Power Limited. Thus, the decision rendered in Capro Power Limited,
Usha Martin Limited, and Tata Steel Limited have all attained finality.
The circular issued by the Central Government dated 01.11.2018 is binding
on the state Government since the State Government is acting as an agent
of the Central Government for recovery of Central Sales Tax. Notably the
State of West Bengal understood this legal position in a correct manner and
even much earlier by circular dated 07.08.2018 directed the continuance of
issuance of Form "C" declaration as was done prior to 01.07.2017 though
the other State Governments declined to issue Form "C" declaration on or
after 01.07.2017. Therefore, it is rather surprising to note as to the contrary
plea being taken before this Court by the State of West Bengal which is
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diametrically opposite to the stand taken by them in their circular dated
07.08.2018 and as to how understood the legal position. As mentioned
above the circular issued by the Central Government dated 01.11.2018
directs the State of West Bengal to follow the decision in Capro Power. The
state Government being as an agent of the Central government for levy and
collection of Central Sales Tax is bound by the circular. The State of West
Bengal did not question the circular issued by the Central Government
dated 01.11.2018 in such factual scenario it is specious plea raised by the
State of West Bengal before this Court stating that the circular would not
bind the State Government and at best the circular is only understanding of
the decision of the Court. The State of West Bengal cannot be heard to take
such a stand because the decision which was directed to be followed in the
circular was upheld by the Hon'ble Supreme Court and has become a
binding legal precedent. The delegatee cannot over step or supersede the
delegator and this being an elementary principle, the State of West Bengal
cannot and could not wriggled out of their obligation in following the
decision and continuing to accept the Form "C" declaration submitted by the
selling dealers. After the legal issue had settled down and the state of
Jharkhand issued Form "C" declaration to the writ petitioners who in turn
submitted the same to the IOCL, the selling dealer, who in turn have filed
the same before their assessing officer when time came to consider the Form
"C" declaration and extend the concessional rate of tax, a road block has
been created by the appellants and the state presumably with a view to
continue retaining the excess tax collected by raising certain unsustainable
grounds and non-suiting IOCL and the writ petitioners on hyper technical
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and untenable grounds. That apart yet another hyper technical stand has
been taken before us by stating that the circular dated 01.11.2018 issued by
the Central Government pertains to Form "C" declaration only and there is
no direction to refund tax to the purchasers This is yet another specious
plea. If direction has been issued to issue Form "C" declaration,
consequences which flow thereafter are to be sequential. None gains by
holding in his hands a Form "C" declaration without realizing the fruits of
such declaration. The purchasing dealer namely the writ petitioners have
borne the burden of tax, in the purchasing state Form "C" declaration were
not issued on account of the stand taken by State of Jharkhand which
stand was held to be unsustainable and direction was issued to issue Form
"C" declarations. It is only thereafter such declaration forms were issued
which were in turn submitted by the writ petitioner to IOCL, the selling
dealer. By the time IOCL received the Form "C" declaration, the time for
filing the revised return had already expired. During the course of
assessment proceedings, the IOCL had produced Form "C" declaration.
Therefore nothing prevented the assessing officer to scrutinize those forms
and if there is no defect in the same and it complies with the provisions of
the Rule 12, the necessary consequence would be to extend the benefit of
concessional rate of tax. Having been fully aware that the Form "C"
declaration could be accepted at any stage of the assessment proceedings
including the appellate stage and revisional stage by sheer dint of ingenuity
the appellants have attempted to retain the excess tax collected by taking a
stand that the Form "C" declarations cannot be accepted unless and until
the revised return was filed by IOCL which to their knowledge was
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impossible of being performed. As pointed out earlier, no person can be left
without a remedy and none can be compelled to do the impossible.
Therefore, the stand taken by the appellant and the State of West Bengal is
liable to be outrightly rejected.
84. Learned Advocate General had elaborately made submission with
regard to the locus standi of the appellant to file the writ petition. The
contentions advanced by the learned Advocate General have been set out by
us in the preceding paragraphs. It is not in dispute that the selling dealer
IOCL has passed on the tax burden to the purchasing dealer, the writ
petitioner. The writ petitioners have specifically averred in the writ petition
that they have not passed on the tax burden. As rightly pointed out by Mr.
Gulati, the appellants have not specifically denied or disputed such an
averment in their affidavit in opposition. That apart in the present appeal
writ petitioner has filed an affidavit of their chartered accountant affirming
that the tax burden has not been passed on by the writ petitioner to their
customers. Therefore, the appellant and the state cannot raise any
contention in this regard nor attempt to plead the theory unjust enrichment
qua the writ petitioners.
85. In India Council for Enviro-Legal Action, the concept of unjust
enrichment was discussed. It was pointed out that unjust enrichment has
been defined as benefit obtained from another, not intended as a gift and
not legally justifiable for which the beneficiary must make restitution or
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recompense. Further by referring to the Black's Law Dictionary 8 th Edition,
(Bryan A. Garner) it was stated that the claim for unjust enrichment arises
where there has been an unjust retention of a benefit to the loss of another
or the retention of money or property of another against the fundamental
principles of justice or equity and good conscience. Considering the facts of
the present case, we can safely hold that there is nothing brought on record
by the appellants to hold that the writ petitioners have unjustly retained a
benefit to the loss of another nor they have retained money of another
against the fundamental principles of justice or equity and good conscience.
Therefore, such a plea of unjust enrichment can never be raised against the
writ petitioners. In more or less identical circumstances, M/s. ASI
Industries Limited a writ petition was filed before the High Court of Punjab
and Haryana challenging the order passed by the taxing authority rejecting
the claim for refund of excess tax. The said writ petitioner was engaged in
mining of kota stone in the State of Rajasthan and duly registered as a
dealer under the CST Act. For the purpose of operating the earth moving
equipment and for operating generation sets they purchased HSD from IOCL
located in the State of Haryana. Prior to introduction of the goods and
service tax, the authorities of state of Rajasthan issued form "C" declaration
to the said writ petitioner enabling it to purchase HSD at concessional rate
of tax. For the sales till 01.07.2017 "C" Forms were issued by the State of
Rajasthan and goods were being purchased at the concessional rate. On
01.07.2017, the CGST Act, 2017 was enacted and the petitioner therein had
to switch over its registration as dealer under the CGST Act. It is thereafter
the State of Rajasthan refused to issue Form "C" declarations for purchase
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of HSD at concessional rate despite the fact the commodity was governed by
the respective state value added tax laws. In the absence of Form "C" the
writ petitioner there in had to purchase HSD after paying higher rate of tax
during the period October 2017 to March 2018. The petitioner filed a writ
petition before the Rajasthan High Court seeking refund of the said amount
of excess tax paid. The writ petition was allowed. Aggrieved by the same, the
state preferred the appeal before the Division Bench which was dismissed
and the said decision was upheld by the Hon'ble Supreme Court.
Subsequently Form "C" declarations were issued by the State of Rajasthan
to the petitioner therein. IOCL informed the petitioner therein that they have
deposited the tax with the Haryana Sales Tax Department and they should
approach the concerned department for refund of the tax paid by the
petitioner therein. Pursuant there to, they approached the authorities in
Haryana claiming refund which came to be rejected on the ground that
excess tax can be refunded only to those to whom it was charged as per the
provisions of the Haryana Value Added Tax Act, 2003. Challenging the said
order, the writ petition was filed. The writ petition was allowed and refund
was directed to be granted to the petitioner, purchasing dealer. The
operative portion of the judgment is as follows:-
It is not disputed that the Petitioner/Company has furnished
proof of bearing the burden of the excess tax to the
respondent authorities. The stand taken by the respondent
authorities while rejecting the representation of the
Petitioner/Company is that the excess tax can be refunded
only to those from whom it was charged as per the Section
20(1) and (7) of HVAT Act. A similar controversy came up for
consideration before this Court in the case of Capro Power
Limited (supra) as also before Gujarat High Court in J.K.
Cement's case (supra), wherein a number of judgments of the
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Hon'ble Supreme Court have been discussed. The relevant
observations recorded in J.K. Cement's case (supra) read as
under:-
"19. In the opinion of this Court, in the light of the
clear directions issued by the Rajasthan High Court
in the judgment and order referred to hereinabove,
which the respondent authorities are bound to
comply with, upon the petitioners making
applications for refund along with the requisite
documents, the respondents were duty bound to
process such claim within a period of twelve weeks
from the date of such application. The stand adopted
by the respondents that the refund can be made to
only to Reliance Industries Limited flies in the face of
the order passed by the Rajasthan High Court as
well as the above-referred decisions on which
reliance has been placed by the learned advocate for
the petitioners and is nothing but a purely hyper
technical stand adopted by them. Once Reliance
Industries Limited has, in clear terms, written to the
authorities that various buyers who have purchased
HSD in the course of inter-state trade for use in
mining activities will be approaching their office for
refund of the differential tax amount and has
enclosed therewith Customer-wise details of inter-
state sales made to buyers in Rajasthan at full rate,
it is evident that Reliance Industries Limited is not
disputing the fact that it is the petitioners who are
entitled to claim the refund. Under the circumstance,
the respondent authorities are not justified in not
processing the refund claims of the petitioners.
20. In case of the petitioners, it is an admitted
position that the HSD has been purchased by them
from Reliance Industries Limited in the course of
inter-state trade for use in mining activities and they
are, therefore the ultimate consumers thereof and
hence, the question of passing on the tax burden to
anyone would not arise. Consequently, the question
unjust enrichment would also not arise."
From the reading of the above-said judgment, it can be safely
concluded that the HSD has been purchased by the
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Petitioner/Company from Indian Oil Corporation in the course
of inter-State trade for use in mining activities and therefore,
the question of passing of the tax burden to anyone would
not arise and the respondent authorities are not justified in
not processing the refund claims of the Petitioner/Company.
In view of the above-said discussions, the present writ
petition is allowed. The respondents are directed to process
the refund claim of the petitioner and grant refund of the tax
amount collected from the petitioner an deposited by the
seller in accordance with law within a period of four (4)
weeks from the date of receipt of certified copy of this
judgment. However, it is made clear that once the refund
claim of the petitioner is processed, Indian Oil Corporation
would not be entitled to claim any such refund.
86. The Learned Advocate General referred to the decision in Tata Iron
and Steel Company Limited for the proposition that the liability to pay tax
is on the seller, consequently, the question of seeking for refund of tax by
the writ petitioner, purchasing dealer does not arise. Referring to paragraph
17 of the said decision, wherein the argument that the sales tax is an
indirect tax on the consumer; the idea is that the seller will passes it on to
the purchaser and collect it from them. The seller collects the sales tax from
the purchaser on the occasion of the sale and once the time passes, the
seller loses the chance of realizing it from the purchaser and if it cannot be
realized from the purchaser, it cannot be called sales tax. This argument
made by the Attorney General before the Hon'ble Supreme Court was
rejected and it was held that under the Bihar Sales Tax Act, 1947 the
primary liability to pay the sales tax so far as the state is concerned is on
the seller. Before the amendment to the said 1947 Act, the seller had no
authority to collect the sales tax as such from the purchaser. After the
amendment, the Act permitted the seller who was a registered dealer to
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collect the sales tax as a tax from the purchaser and it does not do away
with the primary liability of the seller to pay the sales tax. Further it was
pointed out that the registered dealer need not, if he so pleases or chooses to
collect the tax from the purchaser and was sometimes by the reason of
competition with other registered dealers, he may find it profitable to sell his
goods and to retain its old customers even at the sacrifice of the sales tax. It
was further submitted that in the said decision the Hon'ble Supreme Court
pointed out that the buyer is under no liability to pay sales tax in addition to
the agreed price unless the contract specifically provide otherwise. Reliance
was placed on the decision of the George Oakes (Private) Limited wherein
it was held that when the seller passes on the tax and the buyer agrees to
pay the sales tax in addition to the price, the tax is really part of the entire
consideration and the distinction between the two amongst taxes and price
loses all significance from the point of view of legislative competence. The
said decision was also pressed into service to support the contention that
the seller is not an agent of the state for collecting the tax. For the same
proposition, reliance was placed on the decision in Central Wines and
Mahalaxmi Cotton Ginning Pressing and Oil Industries. After referring
to the above decisions, the learned Advocate General submitted that the
Section 6 of the CST Act makes only the seller liable to pay tax and there is
no liability on the buyer. Section 8 provides for concessional rate of tax to be
given only to the seller and there is no right recognized in favour of the
buyer and Section 9 provides for levy and collection of tax only from the
seller. Section 60 of the WBST Act and Section 62 of WBVAT Act provide for
refund of excess tax only to be paid to the dealer who was paid such excess
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tax under the Act namely the selling dealer and there is no right of the
purchasing dealer recognized by the statute to claim refund.
87. Thus, we are required to examine as to whether the decisions which
was referred to by the learned Advocate General more particularly the
decision in George Oakes and Central Wines could be applied to the facts
and circumstances of the case on hand. George Oakes (Private) Limited
where dealers in motor cars, spare parts and accessories, for the years
1951-1952 and 1952-1953, they submitted their return and claimed
exemption from tax with regard to the certain amount realized on
transactions of sales which the appellant therein contended as interstate
sales and hence exempt from tax under Article 286 of the Constitution as it
stood at the relevant time. The assessing officer not only rejected the claim
for exemption but added to the turn over certain amounts which the
appellant had collected by way of tax. Aggrieved by such order, appeals were
preferred before the First Appellate Authority which was dismissed and the
matter was taken to the Sales Tax Appellate Tribunal. By the said time, the
Madras Legislature had passed The Madras General Sales (Definition of
Turnover and Validation of Assessments) Act, 1954. The Constitutional
validity of the said Act was also put to challenge. The tribunal negatived the
claim of the appellant therein arising out of the contention that some of the
sales transactions were interstate sales and therefore exempt from tax. With
regard to the Constitutional validity of the Act, the Tribunal declined to go
into the same. The Revision Petitions filed to the High Court against the said
order of the tribunal were dismissed in. Aggrieved by the same, appeals were
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preferred before the Hon'ble Supreme Court. In Paragraph 12 of the
decision, the Hon'ble Supreme Court while rejecting the argument with
regard to the validity of the statute observed that either the Principle Act or
the impugned Act (Madras Act 17 of 1954) proceeds on any immutable
distinction between sale price and tax as contended by the appellant. It was
further pointed out that the Principle Act does not contain any separate
definition of sale price and after referring to the definition of sale and turn
over, it was held that there is nothing in those provisions which would
indicate that when the dealer collects any amount by way of tax that cannot
be part of the sale price and so far as the purchasing dealer is concerned, he
pays for the goods what is sellers demand namely price even though it may
include tax and therefore there is no reason why the whole amount paid to
the seller by the purchaser should not be treated as the consideration for
the sale and included in the turn over. Further the Hon'ble Supreme Court
pointed out that when the seller passes on the tax and the buyer agrees to
pay sales tax in addition to the price, the tax is really part of the entire
consideration and the distinction between the two amounts tax and price
loses all significance. Firstly, the decision cannot be applied to the facts of
the case on hand as in the said decision, the Hon'ble Supreme Court was
considering the constitutional validity of statute which did not contain a
definition for "sale price". Secondly, in paragraph 14, the observation made
by the Hon'ble Supreme Court that distinction between the two amounts,
tax and price loses significance is from the point of view of legislative
competence. Therefore, the decision in George Oakes cannot be made
applicable to the case on hand. In Central Wines, the Court was examining
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the question whether the amount collected by the seller from the buyer
which comprises of two components the actual sale price and the sales tax
is a part of turnover and comes within the expression "any other sum
charged by the dealer whatever be the description, paid or object thereon"
occurring in Section 2(s) of the Andhra Pradesh General Sales Tax Act,
1957. While examining the provisions of the said Act, it was held that the
dealer under the said Act who sells the goods does not act as agent of the
state in collecting sales tax from the person to whom he sells the goods
because the act does not cast any obligation on the purchaser of the goods
to pay any tax and therefore what is collected by the vendor from the vendee
by way of consideration for passing the property in the goods to the vendee
is the sale price charged by whom and not taxed collected by whom from the
purchaser. As rightly pointed out by Mr. Gulati in none of these decisions,
the provisions of the Central Sales Tax Act was subject matter of
consideration; the scheme of taxation under the CST Act is unique and the
decisions referred by the learned Advocate General which were interpreting
the state Acts could have no application to the case on hand. Notably
Section 9 of the CST Act makes the position amply clear. Section 9 deals
with levy and collection of tax and penalties. Sub section 1 of Section 9
states that the tax payable by any dealer under the CST Act on sale for
goods effected by him in the course of interstate trade or commerce, whether
such sales fall within clause (a) and clause (b) of Section 3 shall be levied by
the Government of India and the tax so levied shall be collected by that
Government in accordance with the provisions of the sub section 2 in the
state from which the movement of goods commenced. A closer examination
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of certain other provisions of the CST Act would also be beneficial. Section
2(j) defines "turnover" used in relation to any dealer liable to tax under the
CST Act to mean the aggregate of the sale prices received and receivable by
him in respect of sales of any goods in the course of interstate trade or
commerce made during any prescribed period and determined in accordance
with the provisions of the CST Act and the rules made thereunder. In terms
of the said definition what is important is not only the sale price received
and receivable by the dealer, but determined in accordance with the
provisions of the CST Act. We have seen Section 9 of the Act which deals
with rates of tax on sales in the course of inter-state trade or commerce.
Section 8A deals with determination of turnover. Therefore, the
determination as mentioned in Section 2(j) has to be in accordance with
Section 8A of the CST Act. Sub-Section (1) of Section 8A states that in
determining the turnover of a dealer for the purposes of the CST Act, the
following deduction shall be made from the aggregate of the sale prices;
namely :-
the amount arrived at by applying the following formula-
rate of tax * aggregate of sale prices
100 + rate of tax
88. The proviso states that no deduction on the basis of the above formula
shall be made if the amount by way of tax collected by a registered dealer, in
accordance with the provisions of the Act, has been otherwise deducted from
the aggregate sale prices. Thus, the proviso prohibits a second deduction
from being made. The scheme of the CST Act and in particular by a
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conjoined reading of Section 2(j) with Sections 8 and 8A clearly shows that
the tax received by the seller under the CST Act does not form part of the
turnover. This is a very important and distinguishing feature in the scheme
of the CST Act which would lead us to hold that the decision in George
Oaks P. Ltd. and Central Wines can have no application to the facts of the
case. The above aspect is further clear from a reading of Section 9A of the
Act which deals with the collection of tax to be only by registered dealers. It
states that no person who is not a registered dealer shall collect in respect of
any sale by him of goods in the course of Inter-State Trade and Commerce
any amount by way of tax under the CST Act and no registered dealer shall
make any such collection except in accordance with the Act and the Rules
made thereunder. If the dealer violates the said provision penalty is imposed
under Section 10(f) of the Act. The purchasing dealer also is liable for
penalty if there is violation as spelt out to Clauses (a) and (b) of Section 10 of
the Act. Therefore, the scheme of the Act clearly shows that the tax burden
is being passed on by the selling dealer to the purchasing dealer and if that
be the scheme then it goes without saying that the selling dealer is an agent
of the State for collection of tax. The Hon'ble Supreme Court in Anand
Swarup Mahesh Kumar held that where a dealer is authorized by law to
pass on any tax payable by him on the transaction of sale to the purchaser,
such tax does not form part of the consideration for the purposes of levy of
tax on sales or purchasers but where there is no statutory provision
authorizing the dealer to pass on the tax to the purchaser, such tax does not
form part of the consideration when he includes it in the price and realizes
the same from the purchaser. It was further pointed out that the essential
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factor which distinguishes the former class of cases from the latter class is
the existence of a statutory provision authorizing a dealer to recover the tax
payable on the transaction of sale from the purchaser.
89. While on this issue it is of relevance to note the decisions of the West
Bengal Taxation Tribunal in the case of Steel Authority of India Limited
Versus ACCT, Durgapur and Others.81 The appellant therein in course of
its business sold its different products to different purchasers, realized full
taxes from them and deposited with the State Exchequer. Ultimately it was
found that the appellant had paid excess tax. The excess amounts had been
generated due to the fact that the appellant realized full amount of tax from
its purchases at the time of sales as those purchases could not supply
declarations forms in time. The appellant approached the tribunal seeking
refund of the said excess amounts of tax. The state of West Bengal resisted
the claim by contending that only the customers from whom the tax had
been realized, could seek for refund. The Tribunal referred to the judgment
of the Hon'ble Supreme Court in Sahakari Khand Udyog Limited Versus
Commissioner of Central Excise and Customs reported in
MANU/SC/0187/2005 and held:-
9. It is thus clear from the judgment of the
Supreme Court in Sahakari Khand Udyog Mandal
Limited MANU/SC/0187/2005 that even if there is
no restriction or prohibition in the statute, no private
person can claim to retain or to enjoy an undue
benefit. Doctrine of unjust enrichment is of universal
application. It applies even to the state. State is also
under an obligation to return any unlawfully or
MANU/ST/0016/2007
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unauthorized realized tax, penalty of interest to the
person who has actually paid the same. But as the
State holds and spends money lying with it for
public interest every individual in the State is
directly or indirectly benefited by State expenditure.
Unjust enrichment of the State, if any, is in the
ultimate analysis, for the benefit of the public at
large. Private unjust enrichment serves only private
interest. Unjust enrichment of private persons is to
be avoided. Enrichment of the State, even if unjust,
is preferred to unjust enrichment of private persons
so long as the person who has paid the money does
not claim or demand it. Once the person from whom
tax has been actually collected comes forward,
demands within prescribed time and proves that
he/it has paid the tax found to be not payable, State
is under an obligation to refund or adjust, as the
case may be.
11. Although Section 37 is not strictly
applicable those buyers from whom tax has been
collected but have been ultimately found to be
exempted from paying tax cannot be left without
remedy. State cannot retain money not legally
payable by a person as same will amount to
realization of tax without authority of law and State
is under an obligation to refund/ return such money
to the person who has actually paid the amount if
such person demands refund. So long as the
realized tax does not become unlawful realization
and refundable no occasion to apply for refund
arises. In case of buyers who had to pay tax to the
seller as they could not submit the declaration forms
or did not get the eligibility certificate at the time of
purchase, taxes cannot be said to be unduly realized
until necessary declaration forms are obtained and
cause of action for applying for fund does not arise
until required declaration forms are made available.
In such situations the buyers may approach the
Commissioner with request for refund within the
prescribed time, if any commencing from the date of
obtaining declaration forms. If approached the
Commissioner himself or his delegate should
consider the claim and take appropriate steps for
refund in accordance with the prescribed procedure.
A seven judge Bench of the Supreme Court in R.S.
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Joshi, Sales Tax Officer, Gujarat Versus Ajit Mills
Limited [1977] 40 STC 497, expected " a sensitive
Government not to bluff but to hand back" and
directed that "State shall disgorge the sums by some
easy process back to the buyers helps the dealers
against claims from the former".
18. According to us, under Section 60 of the
1994 Act, the Commissioner or the appropriate
assessing authority is under a legal obligation to
refund the excess amount of tax in the manner
indicated therein to the dealer or to the buyer/
customer of the dealer, as the case may be, and
doctrine of unjust enrichment is applicable in
appropriate cases even for refund under Section 60
of the 1944 Act. It is for the appropriate assessing
authority to decide whether doctrine of unjust
enrichment is to be applied in a particular case.
Thus before directing refund in the manner indicated
in Section 60 of the 1994 Act the assessing
authorities may follow the procedure and act in the
manner indicated below so long as appropriate
Rules are not framed:
(i) Before directing refund of the
determined excess tax the assessing
authorities will ascertain whether such
excess tax has been paid by the assessee
himself/ itself or the assessee has
deposited such excess tax after realizing the
same from customers/ buyers, shoo were at
the time of realization, liable to pay such
tax. If it is found that excess tax has been
paid by the assessee itself out of its own
fund, the concerned authority will pass
appropriate order in accordance with
Section 60 of the 1944 Act.
(ii) In cases where the assessing
authority finds that excess tax or non-
payable tax has been realized from buyers
or customers, he will direct the assessee to
submit a statement disclosing particulars of
the buyers/ customers from whom such tax
has been realized but who, because of
subsequent developments, ceased to be
liable to pay such tax, including their
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registration numbers, amounts realized
from them and to produce documents in
support of the statement.
(iii) In cases where the assessee
has realized the tax amount from buyers/
purchasers the assessing authority will
mention in the assessment order the names
of such buyers/ purchasers who are
entitled to get actual refund if necessary
particulars are made available.
(iv) The assessing authority will
direct the assessee to communicate the said
order to the buyers/ customers found to be
entitled to get refund.
(v) Whatever possible, the assessing
authority will also communicate such
assessment order to the buyers/ customers
found to be entitled to get refund.
(vi) If the assessee can satisfy the
assessing authority that he has already
paid back the amount realized from the
buyers/ customers, the assessing authority
will record such finding and refund to or
adjust such excess amount in favour of the
assessee.
(vii) If the assessee has issued
credit notes in favour of any buyer/
customer from whom taxes has been
realized and such buyer/ customer submits
a written declaration that he has received
such credit note and he has no objection to
refund of the amount to the assessee, the
assessing authority will refund such excess
amount in favour of the assessee in the
manner indicated in Section 60 of the 1994
Act.
(viii) Upon receipt of the copy of the
assessment order the buyers/ customers
who has actually paid the tax may apply
before the Commissioner of Commercial
Taxes for refund with supporting materials
and if such application is made, the
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Commissioner or an officer duly authorised
by him, after being satisfied that such
applicant is entitled to get the refund under
the assessment order, will refund the
amount refundable to such applicants.
90. This decision would fully support our conclusion in holding that the
writ petition is entitled to refund of the excess tax collected and deposited
with the State Exchequer.
91. It would be beneficial to refer to the commentary on Central Sales Tax
Act, 1956, by K. Chaturvedi's, Tenth Edition 2012 on the question of
inclusion of sales tax component in the sale price and in the turnover. The
commentary takes note of various decisions of the Hon'ble Supreme Court
and English decisions and in particular the decision of the Full Bench of the
Andhra Pradesh High Court in Government of Andhra Versus East India
Commercial Company Limited, ((1957) 8 STC 114 (APFB) and elucidates the
concept in the following manner:
Broadly speaking, so far as the question of
inclusion of sales tax component in the 'sale-
price' and for that matter in the 'turnover', is
concerned the sales tax statutes may be divided
as under:-
(1) Where the statute specifically contains
provisions for the inclusion of the amount
so collected in the sale price or the
turnover, as the case maybe. Such
instances would no present with any
difficulty.
(2) Where there is provision in statute
enabling the seller to collect tax and to
pass the same onto the Government, the
seller acts as if he were acting as an
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agent of the Government. The amount so
collected would not form part of sale price
or turnover.
(3) Where there is provision in the Sales Tax
Statute, permitting a seller to pass on the
sales tax to the purchases, the amount
collected as sales tax would not form part
of the sale price or the turnover.
(4) Where the sales tax statute is silent on
the point, the amount so collected would
form part of the sale price or the turnover.
The matter was elaborate considered by the Andhra
Pradesh High Court. After reviewing many a cases on
the topic, both foreign as well as Indian, both of
Supreme Court and other High Courts, the said
Andhra Pradesh High Court observed as below:-
"What is deductible from these decisions and in fact
uniformly laid down is that the burden of paying
sales tax is on the "dealer". If any tax is levied by a
particular enactment on the purchaser and if such tax
is collected by the dealer at the time of sale
specifically showing that he has paid it as tax, then
the dealer, in such a case, collects it not as a part of
the price for the sale of the goods but collects it as tax
as an agent of the Government. In such an event, the
tax so collected, not being the consideration for the
sale of goods, is not includible in the turnover, much
less is it includible in the taxable turnover. Also in a
case where a particular enactment expressly
authorizes the dealer to pass on the tax to the
purchaser and in fact it is passed on at the time of
sale to the purchaser, the amount of tax so collected
by the dealer cannot be treated as part of the
turnover. But where the particular enactment is silent
and the seller collects a certain amount for the sale of
the goods, even if he specifies part of that amount in
the bill to be sales tax and the rest of the amount to
be the price of the goods the entire amount so
collected from the purchaser is paid by the purchaser
as price for the purchase of the goods. When the seller
is not expressly empowered by law to collect tax
under the provisions of the Act from the purchaser,
the amount so paid, forms part of the consideration
for the purchase of the goods.
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Deduction for sales tax.- When there was no
specific provision in the Act or the rules made
thereunder for the exclusion of sales tax in the
computation of sale-price and turnover, sales tax was
to be included in such computation. In fact, when the
Central Sales Tax (Registration and Turnover) Rules,
1957, came into force, rule 11 did not contain any
provision for exclusion of the amount of sales tax
collected by the selling dealer. By Notification S.R.O.
No. 3613, dated 6th November, 1957, a formula for
deduction of sales tax was first introduced in rule
11(2) whereby a dealer could deduct from his receipts
on account of the sale-consideration an amount
equivalent which works out to the
rate of tax * aggregate of the sale prices
100 plus rate of tax
amount of sales tax. For example, if goods are sold for
Rs. 2,000 and sales tax at the rate of 10 per cent.
amounting to Rs. 200 is charged thereon, the formula
provides for a deduction, out of the total sale-
consideration of Rs. 2,200 of
Rs. 10*2200 = Rs. 22000 = Rs. 200
By Notification No. G.S.R. 896, dated 23rd September,
1958, rule 11(2) was substituted and this particular
deduction was omitted in such substitution. Rule
11(2) was again substituted by Notification No. G.S.R.
770, dated 2nd June, 1961, and the provision for
exclusion of tax collected again came in on the basis
of the same formula. If, however, sales tax was
separately charged in the relative bill, the amount so
charged by way of sales tax could itself be deducted
without the application of the formula.
Later by Section 5 of the Central Sales Tax
(Amendment) Act, 1969, Section 8A was introduced,
with retrospective effect, in the principal Act providing
the same formula for effective deduction of the tax-
element from the sale-price for the purpose of avoiding
tax on tax. As a result, rule 11(2) was omitted by
Notification No. G.S.R. 1362, dated 9th June, 1969.
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92. The above exposition clearly supports the argument of Mr. Gulati. The
decision in Giridharlal Parasmal referred to by Mr. Khan in no uncertain
terms holds that the duty of the assessing officer is not merely to impose tax
that is lawfully exigible but also to give to the assessees the benefit of any
reduction or exemption that may become due to them upon facts actually
found to be true by the assessing authorities, whether or not the assesses
out of ignorance or by mistake make a claim thereto. Further when the
mistake is so obvious and the matter is taken on appeal, it is the duty of the
appellate authority to correct the mistakes.
93. It is matter of regret to note that in respect of the period 2018-19 the
assessing officer by order dated 29.06.2021 rejected the Form "C"
declarations on the similar grounds as done for the previous period, the
appeal filed by the IOCL was dismissed on the ground that this appeal is
pending before this Court. To say the least the approach of the appellate
authority in rejecting the appeal by order dated 24.03.2022 is perverse. The
appellate authority has abdicated his duties as an appellate forum.
Presumably he was of the opinion that he is the recovery agent of the state.
The least that he could have done is to keep the appeal pending till we
decide the matter. The said officer be sensitized as to the independent role of
an appellate authority. In any event the appeals which are pending before
the appellate authority/Revisional Board can no longer be proceeded in view
of our above conclusion and the same are to be allowed in terms of this
judgment and order. The appellate authority/Revisional Board are directed
to allow the appeals/revision in terms of this judgment and order.
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94. The contention raised by the writ petitioner that they are entitled to
refund in terms of Section 37 of the WBST Act, 1994 was accepted by the
learned Single Bench. The learned Advocate General would submit that the
said provision is not applicable to the facts of the case as it does not relate
to excess tax paid to the authority. It is argued that Section 37 realizes the
excess amount collected by the selling dealer from the purchaser in
contravention of the provisions of the Act and not deposited to the authority
as tax and only in those situations the selling dealer is obligated to deposit
the excess amount collected to the RBI or the Government Treasury. It is
further submitted that Section 37 does not relate to tax paid to the
authorities by the selling dealer for which the selling dealer is entitled to
claim refund. Therefore, it is contended that the learned Single Bench's
reliance on Section 37(3) to recognize an independent right to refund of tax
by the purchaser is wholly misplaced. Section 37 of the WBST Act, 1994 is
as follows:
(1) No dealer who is not liable to pay tax under
this Act shall collect, in respect of any sale of
goods by him, any amount of tax under this
Act, and no dealer, who is liable to pay tax
under this Act, shall make any such collection
except in accordance with the provisions of this
Act or in excess of the amount of tax payable by
him under this Act.
Provided that the provisions of this
sub-section shall not apply to any dealer who
avails of the benefit of exemption from payment
o tax under section 39 or the benefit o remission
of tax under Section 41, Section 42 or Section
(2) If any dealer contravenes the provisions of sub-
section (1), he shall, notwithstanding anything
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contained elsewhere in this Act, deposit the
amount collected by way of tax or the amount
collected by way of tax in excess of the amount
payable under this Act, as the case may be,
into a Government Treasury or the Reserve
Bank of India within thirty days from the date
of such collection and intimate the
Commissioner of such deposit along with a
receipt from such Treasury or Bank showing
payment of such amount.
(3) The Commissioner shall, on application made
by the buyer in respect of sales of goods to him
referred to in sub-section (1) and on such terms
and conditions as he may deem fit and proper,
refund to such buyer the tax or the excess tax,
as the case may be, collected from such buyer
and deposited by the dealer in the manner
referred to in sub-section (2):
Provided..........
95. Sub-Section (1) of Section 37 recognizes two categories of dealers the
first of which are the dealers who are not liable to pay tax and the second
category are dealers who are liable to pay tax. The first category shall not
collect tax in respect of any sale of goods by him under the provision of the
Act and in the second category, the collection should be in accordance with
the provisions of the Act and not in excess of the amount of tax payable by
him under the Act. In terms of Sub-Section (2), if the dealer contravenes the
provisions of Sub-section (1), he shall, notwithstanding anything, contained
elsewhere in the act, deposit the amount collected by way of tax or the
amount collected by way of tax in excess of the amount payable under the
Act as the case may be into a Government Treasury or the Reserve Bank of
India within a time frame. Sub-Section (3) empowers the Commissioner, on
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an application made by the buyer in respect of sales of goods to him referred
to in Sub-section (1) of Section 37, refund to such buyer the tax or excess
tax as the case may be collected from such buyer and deposited by the
dealer in the manner referred to in Sub-section (2) of Section 37. Thus,
while recognizing two categories of dealers, those who were not liable to pay
tax under the Act and those who are liable to pay the tax under the Act, the
provision makes it clear that if a dealer who is not liable to pay tax, collects
any amount of tax under the Act, he shall deposit the same in accordance
with Sub-section (2). Likewise, if a dealer who is liable to pay tax, collects by
way of tax in excess of the amount payable under the Act, he shall also
deposit the same in terms of Sub-section (2). Upon such deposit, when an
application is made by the buyer from whom the tax or excess tax was
collected by the seller and deposited or in terms of Sub-section (2) of Section
37 is entitled to refund to such buyer the tax or the excess tax as the case
may be collected from such buyer and deposited by the dealer. Thus, if Form
C declarations produced by a selling dealer are accepted, then it goes
without saying that the tax which was recovered from the writ petitioner and
deposited by IOCL to the State of West Bengal is a tax in excess of the
amount payable as tax and if that be so Section 37 could be applied. While
on this issue it is beneficial to refer to the decision of the Constitution Bench
in R.S. Joshi. The core of the dispute in the said case was whether it was
permissible for the State Legislature to enact a law to the effect that sums
collected by the dealers by way of sales tax who are not exigible under the
State law, but prohibited by it, shall be forfeited to the public exchequer
punitively under Entry 54 read with Entry 64 of List 2 of the Constitution.
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The Hon'ble Supreme Court was examining the Bombay Sales Tax Act, 1959
and in particular, Section 46 of the said Act which we find to be in para
materia with Section 37(1) of the WBST Act, as also Section 46 of the said
Act is para materia with Section 37(2) of the WBST Act, held as follows:
In a developing country, with the mass of
the people illiterate and below the poverty
line and most of the commodities
concerned constitute their daily
requirements, we see sufficient nexus
between the power to tax and the
incidental power to protect purchasers
from being subjected to an unlawful
burden. Social justice clauses, integrally
connected with the taxing provisions,
cannot be viewed as a mere device or
wanting in incidentality. Nor are we
impressed with the contention turning on
the dealer being an agent (or not) of the
State vis a vis swales-tax; and why should
the State suspect when it obligates itself to
return the moneys to the purchasers? We
do not think it is more feasible for ordinary
buyers to recover from the common run of
dealers small sums than from
Government. We expect a sensitive
government not to bluff but to hand back.
So, we largely disagree with Ashoka while
we generally agree with Abdul Quader.
We must mention that the question as to
whether an amount which is illegally
collected as sales-tax can be forfeited did
not arise for consideration in Ashoka.
96. The argument as was placed before us, contending that the seller was
not an agent of the State of West Bengal, was also considered and rejected
in the said decision. Furthermore, the decision in George Oaks which was
also referred to was held to be not relevant while deciding the question of
refund to the buyer. The decision in R.S. Joshi has been affirmed in
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Mafatlal Industries. After taking note of the decision in Mafatlal
Industries and other decisions, it was held that the excess entertainment
duty which was collected should be returned back to the buyers and
Paragraph 31 of the judgment would be relevant which as follows:
In the absence of any express
statutory provision, allowing the proprietors of
the multiplex theatre to retain the benefit, it is
difficult for us to arrive at such an inference.
The State has power to impose tax. The State
has a power to grant exemption or concession
in respect of payment of tax. It has no power
in terms of the provisions of the Constitution or
otherwise to allow an assessee to collect the
tax and retain the same. We will assume that
to that effect the provisions are not very clear
but the superior courts will not interpret the
statute in such a way which will confer an
unjust benefit to any of the parties i.e. either
the taxpayer or tax collector or the State. The
statute must be interpreted reasonably. It
must be so interpreted so that it becomes
workable. Interpretation of a statute must
subserve a constitutional goal. A statute of
this nature, in our considered opinion, cannot
be interpreted in such a manner so as to
enable an entrepreneur to get undue
advantage to the effect that he would collect
tax from the cinema-goers and appropriate the
same. When a person collects tax illegally, he
has to refund it to the taxpayers. If the
taxpayers cannot be found, the court would
either direct the same to be paid and/or
appropriated by the State.
97. The learned Advocate General referred to Section 6 of the CST Act and
submitted that only a selling dealer is liable to pay tax under the said
provision. Reference was also made to Section 60 of the WBST Act and
Section 62 of the WBVAT Act and submitted that under those enactments as
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well, it is only the selling dealer who has paid excess tax is entitled for
refund. Reliance was placed on the decision in Saraf Trading Corporation
and submitted that the Hon'ble Supreme Court has held that only a person
entitled under law to claim the refund can do so. It is submitted that in the
said case the Hon'ble Supreme Court was considering Section 44 of the
Kerala General Sales Tax Act, 1963 which is similar to Section 60 of the
WBST Act and it was held that the purchasing dealer would have no right to
claim a refund when the statute allows the refund to be made only to the
selling dealer and that the court will not take a proactive stand and grant
refund to a purchasing dealer de hors the provision of the statute, even
though the burden of tax may have been passed on by the selling dealer to
the purchasing dealer. Further it is submitted that the learned Single Bench
had referred to the decision of the Hon'ble Supreme Court in Indian
Explosive Limited Versus Commissioner, Sales Tax U.P and Others 82
to hold that the writ petitioner has locus standi.It is submitted that the said
conclusion is incorrect as in the said case the court did not consider the
effect of a provision similar to Section 60 of the WBST Act and in the light of
the decision in Saraf Trading Corporation, the writ petitioner will have no
locus to claim the refund. For the same proposition, reliance was placed on
the decision in N Bala Baskar and in the case of Uttar Pradesh Road
Transport Corporation Versus Commissioner of Central Excise and
Service Tax and Another 83. Further it is submitted that the concession
which was made before learned Single Bench as to the locus of the writ
(1978) 41 STC 315
(2011) 15 SCC 451
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petitioner would not be binding on the state or the court as the same is the
concession in law and in any event the concession made by the Government
Pleader is not binding on the state. For such proposition, the decision in the
case of Employees' State Insurance Corporation Versus Union of India
and Others 84 and the decision in Periyar and Pareekanni Rubber
Limited Versus State of Kerala 85.
98. To consider as to whether the decision in Saraf Trading
Corporation would have application to the facts of the present case we have
to first note as to whether the language of Section 44 of the Kerala General
Sales Tax Act is similar to the provisions of the WBST Act. On a reading of
the Section 44 of the Kerala General Sales Tax Act and Section 37(3) of the
WBST Act, we find that the language of both the Sections are different, this
aspect of the matter was dealt with by the learned Single Bench elaborately
to which we fully agree. This position becomes clear question on a reading of
paragraph 8, 9 21, 22 and 23 of the decision in Saraf Trading
Corporation, after considering the provisions of the Kerala General Sales
Tax, it was concluded that the court cannot overlook the mandate of the
provisions of the Kerala General Sales Tax Act which clearly rules that it is
only the dealer on whom the assessment has been made can claim for
refund of tax and no one else. The learned Advocate General had also
referred to Section 46A(2) of the Kerala General Sales Tax Act and submitted
that the provisions is similar to Section 37(3) of the WBST Act. Mr. Gulati is
(2022) SCC Online SC 70
(1991) 4 SCC 195
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right in his submission that if Saraf Trading Corporation the Hon'ble
Supreme Court was only considering Section 44 of the Kerala General Sales
Tax Act as to whether the appellants therein are entitled for refund of tax
collected from them at the time of purchase of in view of the provision for
refund as contained in Section 44 of the Kerala General Sales Tax Act. We
find that the Hon'ble Supreme Court had no occasion to examine Section
46A of the Kerala General Sales Tax Act. Therefore, the said contention
cannot be pressed into service by the state. Interestingly, in Corporation
Bank, Section 44 of the Kerala General Sales Tax Act was considered and
the Court directed refund of the excess tax collected to the purchaser. The
decision in Corporation Bank was rendered on 19.11.2008 which decision
was not placed for consideration before the Hon'ble Supreme Court in Saraf
Trading Corporation which was decided on 13.01.2011.In any event the
factual position in the case on hand is of paramount consideration. The
litigation which commenced in the State of Jharkhand and the circular
issued by the said State was challenged before the High Court of Jharkhand
and the circular was quashed and the said decision had attained finality.
The selling dealer, IOCL filed review application which was dismissed.
Thereafter, Form "C" declarations have been issued. The said Form "C"
declarations were submitted by the writ petitioner to IOCL who in turn have
filed the same before their assessing officer. The State of West Bengal cannot
contend that the decision rendered by the State of Jharkhand will not bind
them as they are not parties to the said litigation. In our view, the State of
West Bengal is neither proper nor necessary party to the litigation in the
State of Jharkhand. The appropriate authority in the purchasing state is
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competent authority to issue the Form "C' declarations. Once the Form "C"
declaration is issued all that the selling dealer can examine is whether the
products have been registered in the certificate issued to the purchasing
dealer. It is not for the selling dealer to examine as to what use the products
were put to by the purchasing dealer and once the statutory form satisfies
the basic requirement, nothing further can be done by the selling dealer who
has to submit the same to his assessing officer for claiming concessional
rate of tax. No doubt, it is true that the assessing officer is entitled to verify
the correctness of the Form "C" declaration. In the case on hand such an
exercise appears to have been done and no defect has been pointed out by
the assessing officer of IOCL as could be seen from the order of the
assessing officer refusing to extend the benefit of concessional rate of tax. As
mentioned above, the concessional rate of tax was denied not on account of
any defect in the Form "C" declarations but on the specious plea that revised
return has not been filed by the IOCL which we have held is unnecessary,
not required to be done an act impossible of performance. That apart, the
learned advocate appearing for the IOCL along with their written submission
has produced a list showing that all the form "C" declarations have been
verified by the State Tax Officer and found to be correct. In such
circumstances, the writ petitioner has locus standi to approach the court for
seeking refund having borne the burden of tax and therefore the contention
advanced by the state in this regard does not merit acceptance. Having held
so, the next aspect is the purported concession made by the Government
Pleader with regard to the locus of the writ petitioner. We are fully satisfied
that in law the writ petitioner had locus to maintain the claim for refund
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and the same having not been acceded to by the State of West
Bengal/appellants was entitled to file the writ petition before this Court.
Therefore, in our view the observations made by the learned Single Bench
recording the concession stated to have been made by the learned
Government Pleader becomes superfluous, be eschewed and accordingly
stand eschewed in its entirety.
99. Learned Advocate General contended that the decision in Ramco is of
no application to the case on hand. It is his submission that there was no
question of law decided by the Hon'ble Supreme Court and the order is
simple dismissal of the special leave petition arising from an order passed by
the High Court of Madras. It is submitted that at the highest decision in
Ramco can be said to approve issuance of Form "C' declarations which were
prevented by reason of the circulars of the Government and the decision
cannot be said to be law decided for the case involving refusal of refund to
the buyer. Equally the decisions of the High Courts at Punjab and Haryana,
Rajasthan and Jharkhand which have been noted in the orders passed by
the Hon'ble Supreme Court in Ramco also pertain only to issuance of Form
"C' declaration and not regarding the issue of whom would be entitled to a
refund under the CST Act. Further it is submitted that the decision of the
Gujarat High Court dated 18.10.2019 is the only case where the matter had
gone from the stage of issuance of Form "C' declaration to the stage of
refund and the said decision was not under consideration in Ramco.
Further the question of applicability of Section 36 which is para materia
with Section 60 of the WBST Act had been left open to the special leave
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petition preferred from the decision of the Gujarat High Court. Further it is
submitted that even if the decision of the Jharkhand High Court is accepted
and the writ petitioner was to apply for refund such refund could be claimed
by the writ petitioner from IOCL and not from the State of West Bengal.
100. On perusal of the decision of the Hon'ble Supreme Court in Ramco,
we find that the order is not a simple dismissal of the special leave petition
but the Hon'ble Supreme Court has assigned reasons. The Hon'ble Supreme
Court has pointed out that they are in agreement with the view taken by the
Punjab and Haryana High Court in Capro Power Limited and also pointed
out that the said decision has been upheld by the Hon'ble Supreme Court as
Special Leave Petition (C) No. 20572 of 2018 was dismissed by order dated
13.08.2018. Furthermore, the Hon'ble Supreme Court also noted that the
High Court of Jharkhand on the very same issue in the case of Tata Steel
Limited has exhaustively answered all the points which were urged in the
case of Ramco before the Hon'ble Supreme Court. Furthermore, the Hon'ble
Supreme Court noted that 9 High Courts have taken the same view and
even the decision of the High Court of Rajasthan has been affirmed by the
Hon'ble Supreme Court as Special Leave Petition (C) No. 27529 of 2019 and
connected cases were dismissed by order dated 03.02.2020. After nothing
these decisions which were affirmed by the Hon'ble Supreme Court it was
held that considering the consistent view of 9 High Courts, including
dismissal of special leave petitions by different Benches of the Hon'ble
Supreme Court and being satisfied about the exposition on the matters in
issue by the High Court of Madras vide impugned judgment and order being
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a possible view, the Hon'ble Supreme Court declined to interfere with the
said order. Furthermore, the Hon'ble Supreme Court noted that after the
decision in Capro Power Limited the Union of India has chosen to act upon
the said decision by issuing office memorandum dated 01.11.2018 and
directing all the States and Union Territory to follow the view taken by the
Punjab and Haryana High Court in Capro Power Limited. With these
reasons the special leave petitions were dismissed. Therefore, it would be
incorrect to state that the special leave petition was a simple dismissal. The
reasons assigned by the Hon'ble Supreme Court will clearly show that the
law on the subject has been fully settled. It would not be permissible for the
State of West Bengal to contend that the decisions which was referred to in
Ramco and the decision in Ramco cannot apply to the facts and
circumstances of the case on hand because those decisions related only to
the validity of the circular refusing to issue Form "C' declaration and those
decisions did not consider as to who would be the entitled to maintain an
application for refund of excess tax. In our opinion, this would be as
incorrect way of interpreting the decision which has laid down the legal
principle. The core issue itself was as to the entitlement for Form "C"
declaration. The said issue having been settled and conclusively held that
Form "C" declarations have to be issue and the same having been issued
and found to be in order the plea raised by the State of West Bengal to deny
refund to the writ petitioner is absolutely untenable. We have in the earlier
paragraphs referred to several decisions of the Hon'ble Supreme Court
which have held that the person who has borne the burden of tax is entitled
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to maintain a claim for refund. Therefore, we are of the clear view that the
applications for refund at the instance of writ petitioner were maintainable.
101. The learned Advocate General had contended that if refund to IOCL is
allowed before IOCL gives effect to the provision credit notes the same would
unjustly enrich IOCL and such refund would be contrary to the decision in
Mafatlal. Further it was contended that there is no admission by the state
that any refund has to be provided to IOCL. Further, at the time
assessment, IOCL was asked by way of email dated 18.06.2020 whether
they have issued any credit notes to the purchaser or not and no reply was
given by the IOCL. It is contended that merely because IOCL has stated that
it would give effect to provisional credit notes after receiving refund from the
state, does not create any obligation on the state. Having held that the writ
petitioner who would be entitled to maintain an application for refund and
seek for refund to be directly made to them the issue as to whether
provisional credit notes were given effect to by IOCL or not has become
purely academic. Therefore, nothing turns out of the said submission made
on behalf of the state.
102. The learned Advocate General submitted that the finding of the
learned Single Bench that withholding the excess tax would amount to
unjust enrichment for the State of West Bengal cannot be sustained as
Article 265 of the Constitution would not stand in the way if the refund of
tax would unjustly benefit the assessee who has already passed on the
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burden of such tax. Further it is submitted that there is no question of
unjust enrichment as the lower rate of tax is only the concession granted by
the state which cannot be claimed as a matter of right but strictly in terms
of the conditions prescribed for claiming such concession. Further it is only
IOCL who can ask for this concession and the writ petitioner cannot claim
any right in this regard from the taxing authority.
103. Firstly, we need to mention that the lower rate of tax granted is under
a Central Legislation and the State of West Bengal is only an agent of the
Central Government to collect the correct rate of tax in accordance with the
provisions of the CST Act. It is not disputed by the State of West Bengal that
the conditions prescribed for claiming lower rate of tax have not been
fulfilled by the writ petitioner. In such circumstances, the right to be
assessed at lower rate of tax becomes a vested right and such vested right
accrues in favour of the writ petitioner who has borne the burden of tax.
Furthermore, the concept of unjust enrichment was dealt with by the High
Court of Gujarat in J.K. Cements Limited wherein the stand taken by the
State of Gujarat, similar to the stand taken before us by the State of West
Bengal was repelled by pointing out that the selling dealer (Reliance
Industries in the said case) cannot make an application for refund in as
much as the such claim would be barred by the principles of unjust
enrichment, and it was held that if the refund claim of the selling dealer is
processed during the course of assessment, it may take years together and
in the mean time, the purchasing dealer would be deprived of such amount
and moreover while processing the refund claim during the course of
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assessment of the selling dealer (Reliance Industries) the state may even
adjust the refund amount against its dues. With these observations, the
Court held that the stand of the State of Gujarat that Reliance Industries
Limited (selling dealer) should file the refund claim and then the amount so
refunded to the purchasing dealer is neither legally tenable nor is it
practically workable. The special leave petition filed against the decision in
J.K. Cements was dismissed by the Hon'ble Supreme Court on 10.02.2021.
The decision in J.K. Cements was followed by the High Court of Punjab and
Haryana in ASI Industries Limited and it was held that the HSD
purchased by the ASI Industries from IOCL in the course of interstate trade
for use in mining activities, the question of passing of tax burden to anyone
would not arise and the authorities in the State of Haryana are not justified
in not processing the refund claims of ASI Industries, the purchasing
dealer. As discussed above, there would be no question of unjust
enrichment in the case of the writ petitioner as the concept of unjust
enrichment would apply only if a tax is collected from the third party which
is not the case on hand. On the contrary, if argument of the State of West
Bengal is to be accepted then it would tantamount to the State retaining the
excess tax collected without authority of law and it would fall foul of Article
265 of the Constitution.
104. The next aspect which was submitted by the learned Advocate General
is that if this Court is to decide against the appellant, the State of West
Bengal should be permitted to be adjust the refund amount from the
amount due from IOCL in terms of Section 60 of the WBST Act. We are
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unable to persuade ourselves to agree with the said submission. In fact,
similar submission was repelled by the High Court of Gujarat in J.K.
Cements Limited and we borrow the finding rendered by the Court in
paragraph 18 of the judgment to reject the argument made on behalf of the
State of West Bengal. That apart, we have held that the writ petitioner is
entitled to maintain claim for refund and the contention raised on behalf of
the State of West Bengal that refund can be claimed only by IOCL has been
rejected. In such circumstances, the refund has to be directly made to the
writ petitioner and the question of adjusting the same against the tax dues
of IOCL would not arise. We are conscious of the fact that there has been
long drawn litigation and the period in dispute is from 01.07.2017 to
October 2018. There is no dispute for the period prior to 01.07.2017 or post
October 2018. Therefore, this Court while exercising jurisdiction under
Article 226 of the Constitution is empowered to grant such relief which will
ensure finality, considering the facts and circumstances of the dispute
before it. The Hon'ble Supreme Court in M Sudakar Versus V Manoharan
and Others 86 held that the power to mould relief is always available to the
court possessed with the power to issue prerogative writs. It was further
held that in order to do complete justice, it can mould the relief, depending
upon the facts and circumstances of the case. Further it was held that in
the facts of the given case, the writ petitioner may not be entitled to the
specific relief claimed by him but this itself will not preclude the writ court
to grant such other relief which he is otherwise entitled. In the instant case,
the order of assessment passed in the case of IOCL has been challenged by
(2011) 1 SCC 484
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the writ petitioner, in so far as it denies the benefit of concessional rate of
tax by not accepting the Form "C" declarations, having held that the
rejection of Form "C" declarations to be not sustainable, the consequences
that should follow is to issue a writ of mandamus to direct the appellants
and the State of West Bengal to refund the excess tax collected directly to
the writ petitioner and this court exercising jurisdiction under Article 226 of
the Constitution is fully empowered to issue such a direction.
105. The last aspect which needs to be considered is with regard to the
payment of interest. The learned Single Bench in the impugned order has
directed the appellant/State of West Bengal to refund amount to the writ
petitioner with interest at the rate of 10% per annum. The learned Advocate
General referred to Section 34 of the WBST Act and submitted that the said
provisions deals with interest payable by the Commissioner in case of refund
and interest is payable per month of delay starting from the first day of the
month following the order of refund up to the month preceding the month in
which refund is waived as per Section 60 by the statutory authority. It is
submitted that interest on refund is to be strictly in terms of the statutory
provisions and modification of the period of charging such interest in
contravention to the provisions of the statute is not called for. Further it is
submitted that the writ petitioner had placed reliance on the decision of the
Hon'ble Supreme Court in the case of Union of India Versus Tata
Chemicals Limited 87 to contend that interest on refund is always available
for the excess tax paid and enjoyed by the authorities. It is submitted that
(2014) 6 SCC 335
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the said decision has no application to the facts of the case since the
Hon'ble Supreme Court was dealing with Section 244A of the Income Tax
Act, 1961, the language of which is different from Section 34 of the WBST
Act. While it may be true that the language of Section 244A of the Income
Tax Act is quite different from that of Section 34 of the WBST Act, the
appellant having erroneously rejected the Form "C" declaration, it goes
without saying that retention of the excess tax paid after submission of the
Form "C' declaration is unauthorized and unlawful. Therefore, the writ
petitioner would be entitled to statutory interest as per the WBST Act, from
the date on which the Form "C' declarations were refused to be accepted by
the assessing authority of IOCL. We are not convinced to grant interest for
the anterior period, i.e. the period commencing from the date of payment of
the tax in full. This is so because the issue as to whether Form "C"
declaration should be issued or not was subject matter of legal
interpretation and attained finality only after the decision of the High Court
of Jharkhand. Pursuant to the direction issued by the said court Form "C"
declarations were issued by the authority of the State of Jharkhand which
were in turn submitted by the writ petitioner to IOCL which were filed before
the assessing officer during the course of assessment proceedings.
Therefore, it would not be appropriate to grant interest for the period prior to
which the assessing officer of IOCL rejected the Form "C" declaration as the
legal position was uncertain during the anterior period and stood settled
only after the decision of the High Court of Jharkhand. Therefore, the writ
petitioner would be entitled to grant of statutory interest as per the WBST
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Act, from the date on which the form "C" declaration were rejected by the
assessing officer of IOCL.
106. In the result, the appeal is dismissed and the issues which were
raised are answered in the following terms:-
Issues:-
(1) The writ petitioner/purchasing dealer has locus standi to maintain
the claim for refund of the excess tax collected directly to them and
the writ petition is maintainable.
(2) To be entitled to concessional rate of tax filing of Form "C" declaration
is mandatory. However, the time limit prescribed for filing such
declarations is directory and not mandatory and in the case on hand
the assessing officer having accepted the Form "C" declarations and
considered the same, it is deemed that the assessing officer of IOCL
was satisfied that there was sufficient cause which prevented the
dealer from filing Form "C" declaration within the time stipulated
under the Act and the rules framed thereunder.
(3) Having held that the rejection of the Form "C" declarations was
erroneous, unsustainable and illegal the assessment order dated
30.06.2020 to the said extent is set aside.
(4) The writ petitioner is entitled to the concession rate of tax as they
have fulfilled the conditions in Section 8 of the Central Sales Tax Act,
1956 and the Form "C" declarations having been verified and found to
be in order by the concerned authority of the State of West Bengal.
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(5) For the reasons set out above, it is held that the writ petitioners are
entitled to claim refund of tax directly from the State of West Bengal
and they are not required to make the claim through the selling
dealer, IOCL.
(6) Refund cannot be denied to the writ petitioners by the State of West
Bengal disregarding the fact that excess tax was paid under
compelling circumstances namely non-issuance of form "C"
declarations.
(7) For the reasons set out above, it is held that the writ petitioner can
claim refund directly from the appellants/State of West Bengal having
borne the burden of tax which have been collected from the writ
petitioner and deposited by IOCL with the Exchequer of the State of
West Bengal.
(8) The State of West Bengal/ appellants are unjustified in refusing to
refund the excess tax as it had been allowing concessional rate to the
writ petitioners before and after the disputed period.
(9) The circular issued by the Union of India dated 01.11.2018 is binding
on the appellants/State of West Bengal as they being the agent of the
Central Government for levy and collection of Central Sales Tax and
non-refunding of the excess tax collected is contrary to the instruction
dated 01.11.2018.
107. In the light of the conclusion which we have arrived at, the order and
directions issued by the learned Single Bench stands affirmed and the
appellants/State of West Bengal is directed to effect the refund of the excess
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tax collected directly to the writ petitioner within 45 days from the date of
receipt of the server copy of this order together with interest at the statutory
rate as stipulated under the WBST Act, from 01.07.2020 that is the day
after the date on which the assessment order in the case of IOCL was
passed that is 30.06.2020 till the date on which refund is effected. If there is
any discrepancy in the date, it is clarified that interest shall be payable from
the next day after the date of the assessment order till the date of payment.
(T.S. SIVAGNANAM, J.)
I Agree.
(SUPRATIM BHATTACHARYA, J.)
(P.A.- PRAMITA/SACHIN)
