Madras High Court

M/S. Susee Auto Limited vs The Commercial Tax Officer (Fac) on 8 September, 2021

                                                                            W.P(MD) No.4912 of 2006
                                            M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

                       BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

                                               DATED: 08.09.2021

                                                      CORAM

                                  THE HON'BLE MR.JUSTICE R.SURESH KUMAR

                                           W.P.(MD)No.4912 of 2006
                                                    and
                                            M.P(MD).No.2 of 2006

                     M/s. Susee Auto Limited,
                     Rep. by its Managing Partner,
                     R.Vadivel Rajan.                                      ...Petitioner

                                                        -Vs-

                     The Commercial Tax Officer (FAC),
                     Tuticorin-I, Assessment Circle,
                     Tuticorin.                                            ... Respondent

                     Prayer: Writ Petition filed under Article 226 of Constitution of India, to

                     issue a Writ of Certiorari, calling for the records on the file of the

                     respondent in his proceedings in TNGST No.844032/5820022/92-93 &

                     94-95 to 2001-2002 dated 09.05.2006 and quash the same and direct the

                     respondent herein to permit the petitioner to set off the excess entry tax

                     paid by the petitioner for future payment of entry tax (in the month of

                     March 2006) as per the petitioner's representations dated 23.12.2003,

                     17.03.2004 and 12.04.2004.



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                                                                                   W.P(MD) No.4912 of 2006
                                                   M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

                                        For Petitioner      : Mrs.R.Hemalatha
                                        For Respondent      : Mr.R.Sureshkumar
                                                             Government Advocate

                                                           ORDER

Prayer sought for herein is for a Writ of Certiorari, calling for the

records on the file of the respondent in his proceedings in TNGST No.

844032/5820022/92-93 & 94-95 to 2001-2002, dated 09.05.2006 and

quash the same, and direct the respondent herein to permit the petitioner

to set off the excess entry tax paid by the petitioner for future payment of

entry tax (in the month of March 2006), as per the petitioner's

representations, dated 23.12.2003, 17.03.2004 and 12.04.2004.

2.The petitioner is an authorised dealer of two and three wheelers

and spare parts at Tuticorin and he is an Assessee, on the file of the

Commercial Tax Officer, Tuticorin-I, Assessment Circle, Tuticorin, who

is the respondent herein, in TNGST No.844032.

3.After scrutinizing the books of accounts, the respondent passed

an order of assessment, in his proceedings for the assessment year 92-93

and 94-95 to 2001-2002 under the Tamil Nadu General Sales Tax Act,

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

1959.

4.It is to be noted that in the meanwhile, the Government

introduced a new legislation called Tamil Nadu Tax on Entry of Motor

Vehicles into Local Areas Act, 1990, which empowers the State

Government to collect tax by way of entry tax on the entry of motor

vehicles into the local areas for use or sale.

5.Therefore, the petitioner, being the dealer in motor vehicles is

liable to pay entry tax under the said enactment. Therefore, as per the rate

of entry tax fixed under the legislation, the petitioner has paid entry tax

in respect of purchase of two wheeler spares and accessories from

outside the State of Tamil Nadu. According to the petitioner, the entry

tax during the relevant point of time was 12%, therefore, insofar as the

sales is concerned of those vehicles against which entry tax was paid at

the 12% rate, the corresponding sales tax was either 11% or 9%,

therefore, the said sales tax, payable by the petitioner has to be set off on

the basis of the entry tax already paid in respect of those vehicles or

accessories concerned.

6.In this regard, it is the further case of the petitioner that insofar

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

as the said assessment year, that is, from 91-92 and 92-93 to 2001-2002,

each year, whatever, the vehicles brought from outside States or

accessories, entry tax at the rate of 12% had been paid, and therefore,

when sales tax had been paid, there must be a set off, at the rate of either

9% or 11%, as the case may be, during the relevant period and this has

been done.

7.However, since the entry tax, according to the petitioner, was

admittedly 12% and the maximum sales tax during the relevant period

was only 11%, and in some cases 9%, therefore, either 3% or atleast 1%,

there had been an excess payment of entry tax in respect of items covered

under the entry tax Act during the relevant point of time, which were

dealt with by the petitioner-dealer and therefore, insofar as the excess

amount or the difference of amount paid by the petitioner by way of entry

tax, shall be refunded to the petitioner, and in this regard, there has been

a provision under the said Act under Section 11, under which, whatever

the excess amount, which is lying with the taxing authority by way of

excess amount, that is, difference amount than the amount payable by

way of sales tax in the entry tax account, shall be calculated and be

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

refunded to the petitioner.

8.When such a request for refund of excess entry tax available

with the respondent was made, the same was since not considered, the

petitioner had approached this Court by filing writ petition and following

the order passed by this Court, dated 03.11.2003, the request of the

petitioner, having been considered, the respondent-assessing authority,

has rejected it through the impugned order, dated 09.05.2006.

Challenging the same, the present writ petition has been filed.

9.Assailing the said impugned order, Mrs.R.Hemalatha, learned

counsel for the petitioner-Assessee, would submit that, the assessing

authority rejected the claim of refund made by the petitioner on the only

ground that, the difference between the tax payable under sales tax and

the tax paid under entry tax, are two different entities, therefore, the

Government is entitled to retain their different entry tax, if any paid. In

support of this stand taken by the Government, they have taken clue from

the order passed by this Court in Tvl. Kivraj Motors Ltd., vs. Assistant

Commissioner(CT), Fast Track Assessment Circle-III, Chennai,

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

reported in 139 STC 233, that is, W.P.Nos.38111 to 38114 of 2003,

dated 16.04.2004.

10. In the said Judgment, the proposition held by the writ Court

was that, the entry tax paid by the Assessee as well as the sales tax paid

by the same Assessee, in respect of the vehicles or spare parts of motor

vehicles concerned, are two different entity of tax, therefore, eventhough

set off is permitted, the question of refund of excess of entry tax does

not arise, and that can be retained by the Government, because, it is the

separate entity, therefore, once, the assessment is completed, the question

of refund of the alleged excess entry tax does not arise.

11.Therefore, taking the support from the said decision in the

Kivraj motors case, cited supra, the respondent has taken a stand that if

the entry tax excess anything paid by the petitioner, that cannot be

claimed for refund, therefore, accordingly, the plea of the petitioner was

rejected through the impugned order, hence, the learned counsel for the

petitioner submits that, the impugned order, whether to be sustained or

not can be gone into only on the basis of the said judgment.

12.In this context, the learned counsel would further submit that,

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

the said judgment in Kivraj motors, cited supra, has been appealed by the

said Assessee in W.A.(MD).Nos.3201 and 3204 of 2004, where a

Division Bench of this Court, by order, dated 04.02.2010, in the matter

of Kivraj Motors Limited v. Assistant Commissioner (CT), Fast Track

Assessment Circle-III, Chennai and another, has set aside the said

judgment and allowed the writ appeal.

13.In this context, the learned counsel has relied upon paragraph

No.11 of the Division Bench order, which throw some light on the issue,

therefore, it is extracted hereunder:

“11.We may also refer to the object of the Entry Tax Act, which is only to curb the evasion of sales tax on the sale of motor vehicles, which are purchased outside the State and brought into this State. In the process, the State is entitled to levy entry tax as well.

But, for the purpose of giving benefit for the dealer, who is liable to pay both entry tax and local sales tax, the provision of Section 4 has been made for proportionate reduction in liability whenever the entry tax is paid on the higher side. When once Section 4 is made applicable, correspondingly the excess amount if any paid by the dealer is to be refunded in terms of

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

Section 11 of the Act.

12.For all the above reasons, the applications of the appellant/assessee seeking for rectification ought to have been accepted by the authorities concerned. In that view of the matter, the orders impugned in the writ petitions are liable to be set aside and accordingly, set aside. Consequently, the order passed in the writ petitions is also set aside. The writ appeals are allowed. No costs.”

14.Relying upon this judgment, the learned counsel for the

petitioner would submit that, as against this judgment and against the

further orders passed by in some other matters by the Division Benches

of this Court, though two attempts have been made by the Government to

prefer SLP, those cases were dismissed at the threshold on condone delay

stage itself, therefore, according to the learned counsel for the petitioner,

the prevailing law is that, the excess entry tax paid by the dealer, after set

off towards the payment of sales tax, if any, still available to the

Government, that is to be refunded to the dealer under Section 11 of the

Entry Tax Act, therefore, based on such legal position, according to the

learned counsel for the petitioner, the impugned order does not stand in

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

the legal scrutiny, therefore, it is liable to be interfered with, he

contended.

15.Per contra, Mr.R.Suresh Kumar, learned Government Advocate

appearing for the respondent, has relied upon the following averments

made in the counter affidavit:

“On verification of the accounts of the dealer, the assessing officer have already passed order. But the assessing officer have never passed any orders for the refund of any excess amount paid under Entry tax on Motor Vehicles Act 1990 from 1992-1993, 1994-95 to 2001 – 2002.

                                        Year          Date of order Date of order
                                                      under         under TN-Entry
                                                      TNGST Act tax on motor
                                                                    vehicles
                                        1992-1993     1/2/1994         1/2/1994
                                        1994-1995     29/3/1996        29/3/1996
                                        1995-1996     7/3/1997         7/3/1997
                                        1996-1997     9/3/1998         9/3/1998
                                        1997-1998     26/3/1999        26/3/1999
                                        1998-1999     31/8/2000        31/8/2000
                                        1999-2000     5/4/2002         5/4/2002
                                        2000-2001     5/4/2002         5/4/2002
                                        2001-2002     24/4/2003        24/4/2003


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                                                                                W.P(MD) No.4912 of 2006

M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

I humbly submit that the dealer have purchased automobiles, spares and accessories from outside of State of Tamil Nadu and brought into the Local Areas the dealer have paid entry tax as per Section 4 of Tamil Nadu Entry of Motor Vehicles Act. As per Section 4 of Entry tax on Motor Vehicles Act(1) Where an importer of a motor vehicle liable to pay tax under this Act, being a dealer in Motor in vehicles becomes liable to pay tax under the Tamil Nadu General Sales Tax Act and additional sales tax under the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act XIV of 1970) by virtue of the sale of such motor vehicle, then his liability under those Acts shall be set off to the extent of tax paid under this Act.

8. I humbly submit that the assessing officer has already finalized the assessment proceedings without passing any excess amount ie., refund of excess paid by the dealer as per Section 11 of Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.

As per Section 11, Refund of tax The assessing authority shall refund to a person the amount of tax and penalty, if any, paid by such person in excess of the amount due from him. The refund may be either by cash payment or, at the option of the person, by deduction of such excess from the amount

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

of tax and penalty, if any, due from that person in respect of any other period:

9. I humbly submit that the dealer have made assumptions that they have paid excess of entry tax on vehicles into Local Area Act 1990 after set off against the Tamil Nadu General Sales Tax Act, 1959.

10. I humbly submit that the petitioner has also not approached for re-assessment under Section 9 of Tamil Nadu Entry Tax on Motor Vehicles Act, 1991.

As per Section 9 – Reassessment if, after a person, liable to pay tax has been assessed under Section 8, for any period, the assessing authority has reason to believe that any purchase value or part thereof, has, in respect of that period, escaped assessment, or has been under assessed or assessed at a lower rate, then the assessing authority may, within five years from the date of the order of assessment of the particular period, after giving the person a reasonable opportunity of being heard, reassess, to the best of his judgment, the tax due from him.”

16.Relying upon these averments made in the counter affidavit,

learned Government Advocate would contend that, first of all, the

petitioner is not entitled to get any refund of alleged excess payment of

entry tax under the provisions of the Entry Tax Act, assuming that he is

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

legally entitled in view of the subsequent judgments made by this Court,

then, it is the fact that, whether the petitioner has paid any excess tax,

which, in turn, make him entitle to get refund of the same, in this aspect,

the burden of proof lies only on the Assessee to establish that, he has

paid the excess entry tax than the sales tax payable during the relevant

period for the said sales, and unless and until, the books of accounts are

produced by the Assessee to establish that he has paid the entry tax in

excess, the question of claiming any refund does not arise. Therefore, on

the basis of the law laid down in the Kivraj Motors case by the writ

Appellate Court, which has been heavily relied upon by the assessee,

however, even on factual matrix, the petitioner, since has not proved that

he has paid the excess entry tax, is not entitled to get any refund.

Therefore, the impugned order can be sustained on these reasons

assigned, hence, the learned Government Advocate seeks sustainment of

the impugned order.

17.I have considered the said rival submissions made by the

learned counsel appearing for the parties and have perused the materials

placed before this Court.

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

18.The petitioner is a dealer dealing with motor vehicles and he

had to pay the sales tax as per the rate prevailing during the relevant

point of time.

19.Insofar as the assessment years, referred to above, are

concerned, whether the petitioner has paid any entry tax in excess, based

on the Entry Tax Act, that is, Tamil Nadu Tax on Entry on Motor

Vehicles into Local Areas Act (13 of 1990), and in that case, whether the

petitioner is entitled to get a refund as provided under Section 11 of the

Act, is also a question.

20.In this context, if we peruse the impugned order of rejection

passed by the respondent, he mainly relied upon the judgment of this

Court in Kivraj Motors case, cited supra, that is, 139 STC 233, in order

to appreciate the same, the relevant portion of the impugned order is

extracted hereunder:

“5.Recently, the Madras High Court in the case of Tvl.Khiviraj Motor Ltd Vs Assistant Commissioner(CT), Fast Track Assessment Circle No.III, Chennai reported in 139 STC 233(WP.No.

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

38111 to 38114/2003 and W.P.M.P 46271 to 46274/2003 dated 16.04.2004) after elaborately discussing the case of Ganesh Automobile and other, has held as follows:-

Section – 4 provides reduction of tax liability of the dealer to the extent of Sales Tax and Additional Sales Tax to be paid on the sales of vehicles under TNGST Act on such vehicles Section – 11 provides for the refund of entry tax collected over and above what the dealer is legally liable to pay. The dealers are entitled to claim set-off only in respect of sales tax payable on the entry tax paid under entry tax Act. If there is difference between the tax payable under Sales Tax Act and tax paid under entry tax Act, the Government is entitled to retain it, as it is totally different tax dealers are not entitled to get back the entry tax amount on the ground that they have paid Sales Tax.

6. In view of the above findings and discussions made supra of this reference and as per latest High Court decision, the dealers are not entitled to claim the refund of Entry Tax already paid. It is therefore concluded that the presentations made in their letter dated 3.11.2003 and 12.9.2005, deserves no merit and consideration and accordingly

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

they are rejected.”

21.Therefore, the main contention on the side of the revenue for

rejecting the claim of the petitioner for refund of the excess entry tax is

concerned, it is based on the law declared by this Court in Kivraj Motors

case, referred to above, by the writ Court and accordingly, they have

taken a stand that the payment of sales tax and payment of entry tax are

two different separate entities, and therefore, based on the claim anything

made by the dealer, that he has paid excess entry tax, after set off,

towards the sales tax, still if there is excess entry tax, should it be

refunded or not is concerned, it need not be refunded, it can be retained

by the Government.

22.However, after the rejection order made through the impugned

order by the respondent, the very order of the writ Court in Kivraj

Motors case, cited supra, had been appealed in Kivraj Motors v.

Assistant Commissioner as referred to above, in W.A.(MD).Nos.3201

and 3204 of 2004, where a Division Bench of this Court, by order, dated

04.02.2010, has passed a detailed order, where at paragraph Nos.11 and

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

12, they have stated or reiterated, what is the purpose, for which entry tax

was brought in and after entry tax was brought in, when Section 7 is to

be made applicable for proportionate deduction in liability, whenever the

entry tax paid on the higher side vide Section 11 of the Act, shall not be

made applicable for refunding such excess entry tax, was considered and

decided. The relevant portion of the said order of the Division Bench has

already been quoted hereinabove.

23.As against these orders, it seems that, though attempts have

been made to file SLP that become unsuccessful on the part of the

respondent, and therefore, as pointed out by the learned counsel for the

petitioner, the prevailing law is that, Section 4 as well as Section 11 of

the Act, would apply to the case in hand, therefore, if the petitioner has

paid any excess entry tax, certainly, he would be entitled to get the

refund of the same.

24.However, the learned Government Advocate has raised a point

that, ofcourse on the basis of the counter affidavit filed by the

respondent, the burden of proof, as to whether the petitioner has paid

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excess entry tax, which, in turn, make him entitled to get refund of the

same, lies only on the shoulders of the petitioner alone, and in this

regard, by filing the books of accounts, only the petitioner has to

establish before the respondent-assessing authority that, he has paid the

excess entry tax, during the relevant point of time, and that make him

entitle to claim the remaining entry tax after set off towards the sales tax,

to be refunded, unless this is established by the petitioner, he would not

be entitled to get any refund, and merely because of the statement that

he has paid entry tax, it does not become automatic to seek for any

refund is concerned, no doubt, whether the petitioner has paid excess

entry tax or not, during the relevant point of time, has to be proved only

by the petitioner, however, in this context, it is to be noted that the entry

tax was 12% during the relevant point of time and the sales tax was

either 9% or 11% during the relevant point of time, and therefore, against

the sale, to be made in this regard by the dealer for which entry tax had

already been paid, certainly, there would be a difference of either 3% or

atleast 1% and that kind of excess tax paid in the name of entry tax even

after setting off is made, would be made available as excess amount in

the hands of the Government, therefore, in this regard, after verifying the

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W.P(MD) No.4912 of 2006 M/s.Susee Auto Limited v. The Commercial Tax Officer (FAC)

total entry tax paid by the petitioner, for each of the assessment years

referred to above, and the sales tax paid or set off, can be taken into

account with the aid of the books of account of the petitioner, which can

be submitted by him, the assessing officer can very well arrive at a figure

as to what was the excess entry tax paid and it is available with the

Government, and after finding out the same, the excess entry tax can very

well be refunded to the petitioner.

25.In that view of the matter, based on the afore-stated

discussions, this Court is inclined to dispose of this writ petition with the

following orders:

“that the impugned order, for the reasons stated

above, since would not stand in the legal scrutiny, is

liable to be quashed, accordingly, it is quashed.

As a sequel, it is open to the petitioner to produce

the books of account to the respondent assessing officer

to establish that during the relevant point of time, the

petitioner has paid entry tax, which is admittedly 12%

and also the corresponding sales tax paid or set off,

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which is admittedly, either 9% or 11%, therefore, what

shall be a difference of the entry tax paid by the

petitioner as excess, can be easily calculated by the

assessing officer with the help of the petitioner-assessee,

and based on which, the ultimate excess entry tax