M/S. Nandini Impex Pvt. Ltd. ... vs The State Of Tripura
2021 Latest Caselaw 812 Tri

                                  Page 1 of 13




                        HIGH COURT OF TRIPURA
                              AGARTALA
                            WP(C) No.139/2021
M/s. Nandini Impex Pvt. Ltd. having its Registered & Head Office at 10,
Biplabi Rash Behari Basu Road, Kolkata-700001 and also corporate office
at „White House‟, 1/18-20, Ground Floor, Rani Jhansi Road, New Delhi-
110055 and Branch Office at Master Para, Agartala, P.O. Agartala, P.S West
Agartala, District West Tripura, represented by its authorized signatory Mr.
Jiban Singh Rana, Deputy Manager (Commercial), 10, Biplabi Rash Behari
Basu Road, Kolkata- 700001 camped at Master Para, Agartala.
                                                             ----Petitioner(s)
                                      Versus

1. The State of Tripura, represented by the Principal Secretary, Finance
Department, Civil Secretariat, New capital Complex, P.O. Kunjaban,
Agartala, District West Tripura, 799006.
2. The State of Tripura, represented by the Principal Secretary, Revenue
Department, Civil Secretariat, New Capital Complex, P.O. Kunjaban,
Agartala, District West Tripura, 799006.
3. The Commissioner of Taxes, Government of Tripura, Gurkhabasti, P.N
Complex, P.S. Capital Complex, District West Tripura, pin 799006.

4. The Superintendent of Taxes, Charge-V, Palace Compound, P.S. East
Agartala, District West Tripura.
                                                   -----Respondent(s)

For Petitioner(s)                 : Mr. T.K. Deb, Advocate.
For Respondent(s)                 : Mr. P.K. Dhar, Sr. G.A.,
                                    Mr. K. De, Addl. G.A.

       HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
        HON'BLE MR. JUSTICE S.G. CHATTOPADHYAY
      Date of hearing                   : 17th August, 2021.

      Date of judgment                  : 31st August, 2021.

      Whether fit for reporting         : YES.





                          JUDGMENT & ORDER

(Akil Kureshi, C.J.)

The petitioner has challenged an order dated 23.04.2018 as at

Annexure-8 to the petition. He has prayed for the grant of refund of a sum of

Rs.24,21,007/- which was deducted from the petitioner‟s bills in course of

execution of a work contract for the assessment period 2010-11 to 2013-14.

These prayers arise in following background:

2. Petitioner is a private limited company and is dealing in laying

down and installation of pipes in the field of Gas, Electric and Telecom

sectors with Trenchless technology called Horizontal Directional Drilling

(HDD, for short). The petitioner was awarded a work order for laying/

installation of pipes through HDD technology in the city of Agartala by one

Kazstrov Services Infrastructure India Private Limited (KSS, in short) on

21.12.2010. For execution of the said work the petitioner obtained a

registration under the then in force Tripura Value Added Tax Act (TVAT

Act, for short) in January, 2021. In the course of the execution of the work

order the petitioner as a service provider paid service tax to the Central

Excise and Service Tax Department, Government of India by depositing or

adjusting service tax.

3. In the course of payment of the bills to the petitioner-company

KSS had deducted tax of Rs.24,21,007/- during the year 2011-12. It appears

that the said action was taken by KSS under the direction of the

Superintendent of Taxes. The petitioner, therefore, wrote to the

Superintendent of Taxes, Charge-V on 18.08.2011 and explained the

detailed mode of execution of the work in order to point out that the

petitioner is a service provider and is exigible to service tax. However, in

absence of any transfer of material or machinery during the course of

execution of the work, no sale takes place as per the provisions of TVAT

Act. It was pointed out that there is no transfer of property in goods and,

therefore, in this transaction the petitioner has no VAT liability.

4. On 01.09.2011 the Superintendent of Taxes, respondent No.4

herein, wrote to the petitioner stating that in pursuance to the work order in

question the petitioner had imported taxable materials and this transaction,

therefore, falls within Section 4 of TVAT Act and the purchase of material

would invite VAT as per specified rate. It was, therefore, necessary that KSS

deducts 4% of the gross amount of bill at the time of payments on

provisional basis.

5. According to the petitioner, the case was covered under the

service tax regime and no value added tax was to be paid. Despite this, in

response to the notice issued by the respondent No.4 the petitioner also filed

the returns under TVAT Act for the assessment period 2010-11 to 2013-14

on 19.09.2014. The company prayed for the refund of amount of

Rs.24,21,007/- collected for the period during 2011-12. Since the petitioner

did not receive any response to its returns filed and the request for refund of

the tax collected in excess, the petitioner wrote to the respondent No.4 on

27.05.2015 and reminded that despite submission of all documents the

assessment for the period 2010-11 to 2013-14 is pending and that the

Superintendent may fix a date of hearing at the earliest. There was no

response to this notice by the respondent No.4. The petitioner, therefore,

wrote to the Superintendent on 19.04.2018 and reiterated the request for

completion of assessment and refund of amount of Rs.24,21,007/- collected.

6. In response to the said letter, the Superintendent wrote to the

petitioner on 23.04.2018 as under:

"Sir,

With reference to your letter No. Nil, dated 19.04.2018 I would like to inform you that due to provisional Bar under section 33 of the TVAT Act, 2004 it is not possible at this moment to take up the assessment case for the period from 2010-11 to 2012-13. However, in respect of assessment case for the period 2013-14 it is to be mentioned h ere that there is no time bar limit up to the period 31.03.2019. So, the

assessment case for the period may be taken up under section 31 of the TVAT Act, 2004.

This is for your information."

7. As per this communication of the Superintendent thus

assessment for the period between 2010-11 to 2012-13 had become time

barred. However, for the assessment period of 2013-14 time limit was up to

31.03.2019 which had not till then expired.

8. The petitioner thereupon approached the revisional authority

under the TVAT Act and sought refund of the tax collected in excess. The

revisional authority, i.e. Commissioner of Taxes passed an order on

18.12.2018 in which he came to the conclusion that he cannot take

cognizance against the communication sent by the Superintendent of Taxes.

The revision petition was dismissed.

9. The petitioner thereafter filed further revision petition before

the High Court being CRP No.43 of 2019 and challenged the order passed

by the revisional authority on 18.12.2018. This petition was disposed of by

an order dated 24.11.2020 observing that the revisional authority was not

wrong in holding that the communication issued by the Superintendent was

not open to revision. However, it would be open for the petitioner to institute

appropriate proceedings as may be advised. Thereupon the present petition

has been filed.

10. The case of the petitioner is brief namely that under the

insistence of the Superintendent of Taxes from the bills of the petitioner

KSS was compelled to deduct provisional tax. According to the petitioner

the transaction was not exigible to tax under the TVAT Act since there was

no sale of the goods in course of execution of the work contract. The

Superintendent of Taxes ought to have adjudicated on this issue by passing

an order of assessment. He cannot retain the provisionally collected tax on

the ground that such assessment has now become time barred.

11. On the other hand, the case of the respondents is that the

petitioner had appeared before the Superintendent in response to a notice

dated 12.02.2014 but had prayed for adjournment. The case of the

respondents as emerging from the affidavit-in-reply is as under:

"That, with regard to the statements made in paragraph No.14 and 15 of the Writ Petition, I say that, the Works Contract tax deducted by M/S KSS for the bill of the petitioner was provisional. Without making any assessment of the dealer/petitioner the actual amount of tax cannot be ascertained and the claim raised by the petitioner cannot be proved conclusively. It is further submitted that the dealer is selected for assessment on random basis and after

completion of assessment the actual tax liability of the dealer is determined and after assessment if it is found that the dealer is entitled to net the refund the same is done.

xxx xxx xxx It is pertinent to mention here that the contention raised by the Petitioner that the assessment was kept pending is not true. The selection of dealer for assessment is done randomly and in the present case also the the assessment could not be done within time as the petitioner was not selected for assessment. In the meantime due provisional bar under section 33 of the TVAT Act, the assessment could not be done. Thereafter the Petitioner filed one revision petition before the Revisional Authority with a plea to complete the assessment process for the period 2010-11 to 2013-14. But the Revisional Authority did not take up the matter as it was already time barred.

xxx xxx xxx That, with regard to the statements made in para 24 of the Writ Petition, I say that, the Petitioner without appearing for scrutiny of documents including books of accounts, TDS certificate etc. to the Assessing Authority for reconciliation, had dropped his books of accounts in the central receipt section. Without physical hearing of the petitioner the assessment could not be conducted."

12. The record would thus suggest that the petitioner from the

beginning objected to any collection of tax from its payment for execution of

the work in question. According to the petitioner there was no transfer of

property in course of execution of work and, therefore, tax under TVAT Act

was not exigible. According to the petitioner, it was liable to pay service tax

which it had paid. The Superintendent of Taxes, however, prima facie

formed a belief that on the imports made by the petitioner for execution of

the work value added tax had to be paid. In the present case, we are not

concerned with the correctness or validity of the rival stands. What was of

importance is that this issue had to be decided by a formal order to be passed

by the Superintendent. Since the petitioner had objected to collection of tax

from its running bills, the Superintendent had to take into account the

petitioner‟s objection and pass a formal order either accepting or rejecting

the objections which can be done only through assessment to be made in

case of the petitioner for the period in question. If this assessment was

adverse to the petitioner, he had a right of appeal.

13. The Superintendent did not undertake this exercise and allowed

the assessments to get time barred. As is well-known, TVAT Act contains

limitation provisions under which the assessments of returns filed by the

dealers would become time barred. Section 31 of the TVAT Act pertains to

Audit assessment. Section 32 pertains to assessment of dealer who fails to

get himself registered. Section 33 provides that no assessment under section

31 and 32 shall be made after expiry of five years from the end of the tax

period to which the assessment relates. Section 34 which pertains to

turnover escaping assessment and permits assessment of such turnover, also

contains a similar limitation clause in sub-section (2) which provides that no

order of assessment shall be made under sub-section (1) after the expiry of

five years from the end of the year in respect of which the tax is assessable.

In the present case, the Superintendent himself conveyed to the petitioner

under a letter dated 23.04.2018 that the assessment for the period 2010-11 to

2012-13 can no longer be made since the time limit for scrutiny assessment

was over. Whatever be the reason which prevented the Superintendent from

completing the assessments within the statutory period permitted, once the

assessment gets time barred it would no longer be possible for the

Superintendent to withhold provisionally collected tax which was disputed

by the petitioner at the very outset. As stated by the respondents in the

affidavit-in-reply the petitioner in addition to furnishing documents did not

appear for physical hearing before the Superintendent. This alleged non-

cooperation of the petitioner also did not limit the power of the

Superintendent to frame what is popularly referred to as a best judgment

assessment. The Superintendent had to take into account whatever the

documents the petitioner had placed on record and thereafter ought to have

expressed his legal opinion on the disputed issue in form of an order of

assessment. The Superintendent having failed to do so, having allowed the

assessment to get time barred, now cannot withhold the provisionally

collected tax, collection of which was resisted and payability of which was

disputed by the petitioner. At the time of filing of the return in response to

the notice issued by the Superintendent, the petitioner had claimed refund of

the excess tax collected. To deny this refund to the petitioner, the

Superintendent had to make an assessment for the period in question and

appropriated the provisionally collected amount towards the petitioner‟s tax

liability under the TVAT Act if the Superintendent was finally of the

opinion that such tax was payable. Any such decision, as observed earlier,

would be open to challenge in the form of appeals and revision. The

Superintendent by not passing the assessment order, cannot terminate the

petitioner‟s dispute of taxability of the transaction at his level without any

opportunity to file appeal, that too without passing any order of assessment.

In plain terms, the Superintendent has not expressed his own legal opinion

of the vital question of taxability of the transaction in question. Any

appropriation of tax in such a manner would be without authority of law.

14. Reference in this respect may be made to a decision of the

Supreme Court in case of Commissioner of Income Tax vs. Shelly Products

reported in 229 ITR 383 (SC) in which the question of refund of the tax

deposited by the assessee by way of advance tax, self assessment tax or tax

deducted at source when the assessment had become time barred came up

for consideration. It was observed that the Income Tax Act provides for the

manner in which advance tax is to be paid and deduction of tax at source is

to be made, failure of both of which would result into penalties. It is

therefore apparent that the act provides for payment of tax in such manner

by the assessee and further enjoins upon the assessee the duty to file a return

of income disclosing his true income. On the basis of the income so

disclosed, the assessee is required to make a self assessment and to compute

tax payable on such income and to pay the same in the manner provided by

the act. Thus the filing of the return on payment of tax computed on the

basis of the income disclosed amounts to an admission of tax liability by the

assessee. Charging of such tax under section 4 of the Income Tax Act is thus

not dependent on the assessment being made. However one cannot lose sight

of the fact that the failure or inability of the revenue to frame an assessment

should not place the assessee in a more disadvantages position then what it

would have been an assessment had been made. In a case where an assessee

chooses to deposit by way of abundant caution advance tax or self

assessment tax which is in excess of his liability on the basis of the return

furnished or there is any arithmetical error or inaccuracy, it is open to him to

claim refund of the excess tax paid in the course of assessment proceeding.

Section 240 of the Act enjoins an obligation on the revenue to refund the

amount to the assessee without his having to make any claim in that behalf.

In appropriate cases it is open for the assessee to bring facts to the notice of

the concerned authority on the base of the return furnished which may have

a bearing on the quantum of the refund. The concerned authority for the

limited purpose of calculating the amount to be refunded under section 240

may take all such facts into consideration and calculate the amount to be

refunded. So viewed, assessee will not be placed in a more disadvantages

position then in what he would have been, had an assessment made in

accordance with law.

15. In the case before us the assessee had not paid tax voluntarily.

From the beginning the assessee had contested any collection of tax from its

payments by KSS. The Superintendent of taxes however insisted that such

deduction be made and the amount so deducted be deposited with the

government revenue. The assessee had every right to dispute such collection

and such dispute when raised in the return filed, had to be adjudicated by the

Superintendent. The amount so collected cannot be retained without

adjudication. Not framing the assessment till the return gets time barred

cannot be the ground for retaining such tax.

16. The Superintendent not having framed assessment, must refund

the amount in question to the petitioner with statutory interest. Accordingly,

the respondent No.4 shall refund the said sum of Rs.24,21,007/- to the

petitioner with interest as prescribed under the Act. This shall be done

within four months from today.

17. Petition disposed of accordingly.

Pending application(s), if any, also stands disposed of.

   (S.G. CHATTOPADHYAY), J                       (AKIL KURESHI), CJ




Pulak