Tripura High Court
Larsen & Toubro Ltd vs The State Of Tripura on 10 September, 2025
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HIGH COURT OF TRIPURA
AGARTALA
WP(C) No.621 of 2022
LARSEN & TOUBRO LTD, having its registered office at L&T House,
Ballard Estate, P.O. Box:-278, Mumbai 400001, India and principal place of
business in the State of Tripura at Agartala Medical College Campus, Agartala
799001, having TVAT TIN:-16040621026, represented by its Authorized
Signatory Mr. Soumick Das, S/O. Late Ananda Mohan Das, residing at 2
Dwarika Nath Ghosh Lane, Sarat Centenary Co-Op Housing Society Limited,
Block E-1, Kolkata, West Bengal, PIN:-700027.
......... Petitioner(s).
VERSUS
1. The State of Tripura, Represented by the Principal Secretary Finance
Department, Government of Tripura, Civil Secretariat, New Capital Complex,
P.O.-Kunjaban, Agartala, West Tripura, PIN-799010.
2. The Commissioner of Taxes, Government of Tripura, Agartala, Tripura at
3rd Floor, Khadya Bhavan, Pandit Nehru Complex, Gurkhabasti, Agartala,
West Tripura-799006.
3. The Additional Commissioner of Taxes, Office of the Chief Commissioner
of State Tax, 3rd Floor, Khadya Bhawan, Pandit Nehru Complex, Gurkhabasti,
Agartala, Tripura (west)-799006.
4. The Superintendent of Taxes Charge I & II, (Other than Adjudication and
recovery Cell), Tripura VAT Department, Agartala Kar Bhawan, Palace
Compound, Agartala, Tripura(W)-799001.
5. The Superintendent of Taxes-Charge I, Agartala, Tripura VAT Department,
Kar Bhawan, Palace Compound, Agartala, West Tripura, PIN-799001.
.........Respondent(s).
For Petitioner(s) : Mr. Rahul Tangri, Advocate,
Mr. Tapas Kumar Deb, Advocate,
Mr. Vasudev A, Advocate,
Mr. Nirnoy Paul, Advocate,
Mr. Nanda Dulal Paul, Advocate,
Mr. B Lakshmi Narasimhan, Advocate.
For Respondent(s) : Mr. Bibhal Nandi Majumder, Sr. Advocate,
Mr. Kohinoor N Bhattacharyya, G.A.,
Mr. Bikash Paul, Advocate.
HON'BLE THE CHIEF JUSTICE MR. M.S. RAMACHANDRA RAO
HON'BLE MR. JUSTICE S. DATTA PURKAYASTHA
CAV reserved on : 28.08.2025.
Judgment delivered on : 10.09.2025.
Whether fit for reporting : YES.
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JUDGMENT & ORDER
(M.S. Ramachandra Rao, C.J.)
1) Heard Mr. Rahul Tangri, counsel for the petitioner as well as Mr.
Bibhal Nandi Majumder, Senior counsel assisted by Mr. Kohinoor N
Bhattacharyya, Government Advocate appearing for the respondents-State.
2) The petitioner is a Public Limited Company registered under the
Companies Act,1956 and is engaged in activities including construction,
engineering, technology, manufacturing etc.
3) As part of it's activities it also executes turnkey work contracts
including drawing, construction of civil and mechanical structures for State
and Central Governments, Public Sector Undertakings, private and Public
Limited Companies.
4) It was performing similar activity in State of Tripura and was
registered under the Tripura Value Added Tax Act,2004 (for short 'the Act').
It's clients included the Oil and Natural Gas Corporation, a Central
Government Corporation and the Public Works Department of the State of
Tripura for whom it was doing works contracts.
5) The issue in this Writ Petition relates to the entitlement of the
petitioner to refund of Value Added Tax (VAT) for the financial years 2006-
07 to 2013-14.
6) During this period it is not in dispute that petitioner filed
quarterly returns as mandated by Section 24 of the Act r/w Rule 18(III) of the
Rules framed under the Act.
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7) The Works Contract Tax (VAT) TDS was collected and
deposited on petitioner's behalf by the ONGC and the PWD Department of
the State of Tripura for Works Contract activity done by it in the State of
Tripura and appropriate VAT on sale turnover was deposited by petitioner
and this was reflected in its VAT returns.
8) These quarterly returns were found by the respondents to be in
order and no queries were raised by the respondents as to the correctness of
the same.
9) So under Section 29(3) of the Act it has to be deemed that there
was a valid 'self assessment'.
10) Under Rule 7(8) of the Tripura VAT Rules, such TDS deductions
and deposits are deemed to be 'provisional payment of tax' which shall be
adjusted at the time of assessment under Section 29 of the Act.
11) Section 53 of the Act states that dealers, whose gross turnover
exceeds forty lakh rupees or such amount as the Commissioner may prescribe
by notification, shall get their accounts audited by an accountant within 6
months from the end of the year, obtain report of such audit in the prescribed
form, and furnish copy of the report to the Commissioner by the end of the
month after expiry of period of six months during which the audit would have
been completed. There is a penalty prescribed for non-compliance.
12) So the petitioner, in due compliance with Section 53, submitted
statutory VAT audit report within the prescribed period for each of the above
financial years.
13) Though the Act contains no provision for filing of Annual
Return, along with the VAT audit report for each year, petitioner submitted an
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Annual return also calling it "Annual return/Revised Annual Return" wherein
the final VAT liability was stated for each of the financial years along with
applications seeking the refund of VAT.
14) The dates of filing the same are as under:
DATE OF FILING
OF REVISED
ANNUAL DATE OF FILING
SL.NO. FINANCIAL YEAR RETURN/ANNUAL OF REFUND
RETURN AND APPLICATION
STATUTORY VAT
AUDIT REPORT
1. 2006-07 30.9.2007 30.9.2007
2. 2007-08 30.9.2008 30.9.2008
3. 2008-09 30.10.2009 30.10.2009
4. 2009-10 30.10.2010 30.10.2010
5. 2010-11 30.10.2011 30.10.2011
6. 2011-12 31.10.2012 31.10.2012
7. 2012-13 28.10.2013 29.10.2013
8. 2013-14 28.10.2014 28.10.2014
15) Refunds of VAT are dealt with by Section 43 of the Act. It
states:
"Section 43. Refund.
(1) Subject to other provisions of this Act and the Rules made
thereunder, the Commissioner shall, refund to a dealer the
amount of tax, penalty and interest, if any, paid by such dealer in
excess of the amount due from him.
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(2) Where any refund is due to any dealer according to return
furnished by him for any period, such refund may provisionally
be adjusted by him against the tax due or tax payable as per the
returns filed under section 24 for any subsequent period in the
year;
Provided that, the amount of tax or penalty, interest or
sum forfeited or all of them due from, and payable by the dealer
on the date of such adjustment shall first be deducted from such
refund before adjustment."
16) Thus the Commissioner is obligated to refund to a dealer like
petitioner the amount of tax, penalty and interest, if any, paid by such dealer
in excess of the amount due from him subject to the provisions of the Act.
17) Rules 35 deals with the manner of seeking refund. It states:
"Rule 35: REFUNDS :
(1) An application for refund shall be made to the
Superintendent of Taxes and shall include, amongst other, the
following particulars;
(a) the name, address and registration No. of the dealer;
(b) the period of assessment for which refund is claimed;
(c) the amount of dues already paid together with challan
number and the date of payment and;
(d) the amount of refund claimed and the grounds thereof.
(2) An application for refund shall be signed and verified by
the person seeking 159 refund and shall be in Form XXXIII.
(3) Every registered dealer who is entitled to claim refund
under Section 43 shall, within twenty one days from the end of
each return period, submit a statement showing details of refund
claimed in respect of each export sale effected during such
period.
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(4) No claim of any refund shall be allowed unless it is made
within one year from the date of the original order of assessment
or within one year of the final order passed on appeal or revision
as the case may be, in respect of such assessment."
18) As can be seen from the above provisions, limitation of 21 days
is prescribed under sub-Rule (3) of Rule 35 for seeking a refund only from
dealers doing 'export sales', but not from any dealer like petitioner doing
works contracts.
19) The contention of respondents that this period of 21 days
prescribed under sub-Rule (3) of Rule 35 also applies to petitioner though it
is doing 'works contracts' and not 'export sales' cannot be accepted for the
aforesaid reason.
20) Moreover, as held by the Supreme Court in Bharat Barrel and
Drum Manufacturing Co. Ltd v. ESI Corporation1 where substantive rights
of parties are likely to be affected and extinguished, only the legislature
should prescribe the limitation, and such limitation cannot be prescribed by
the Rules made under the Statute. It was held :
"5. The question which directly confronts us is whether the
power to prescribe periods of limitation for initiating
proceedings before the Court is a part of, and is included, in the
power to prescribe "the procedure to be followed in proceedings
before such Courts ... ....
.........
7. ... ...The law of limitation appertains to remedies because the
rule is that claims in respect of rights cannot be entertained if not
commenced within the time prescribed by the statute in respect of
(1971) 2 SCC 860
that right. Apart from Legislative action prescribing the time,
there is no period of limitation recognised under the general law
and therefore any time fixed by the statute is necessarily to be
arbitrary.
.........
14. ... ... It appears to us that where the Legislature clearly
intends to provide specifically the period of limitation in respect
of claims arising thereunder it cannot be considered to have left
such matters in respect of claims under some similar provisions
to be provided for by the rules to be made by the Government
under its delegated powers to prescribe the procedure to be
followed in proceedings before such Court. What is sought to be
conferred is the power to make rules for regulating the
procedure before the Insurance Court after an application has
been filed and when it is seised of the matter. That apart the
nature of the rule bars the claim itself and extinguishes the right
which is not within the pale of procedure. Rule 17 is of such a
nature and is similar in terms of Section 80. There is no gain-
saying the fact that if an employee does not file an application
before the Insurance Court within 12 months after the claim has
become due or he is unable to satisfy the Insurance Court that
there was a reasonable excuse for him in not doing so, his right
to receive payment of any benefit conferred by the Act is lost.
Such a provision affects substantive rights and must therefore be
dealt with by the Legislature itself and is not to be inferred from
the rule-making power conferred by regulating the procedure
unless that is specifically provided for. It was pointed out that in
the Constitution also where the Supreme Court was authorised
with the approval of the President to make rules for regulating
generally the practice and procedure of the Court, a specific
power was given to it by Article 145(1)(b) to prescribe limitation
for entertaining appeals before it. It is therefore apparent that
the Legislature does not part with the power to prescribe
limitation which it jealously retains to itself unless it intends to
do so in clear and unambiguous terms or by necessary
intendment. The view taken by the Madhya Pradesh, Madras,
Punjab and Andhra Pradesh High Courts in the case already
referred to are in consonance with the view we have taken."
(emphasis supplied)
21) This was also followed by a Bench of the Jharkhand High Court
in M/s Kirloskar Brothers Ltd v. State of Jharkhand and others2.
22) In the absence of prescription of limitation for claiming refunds
in the substantive law/statute i.e., Section 43 of the Act by the State
Legislature, Section 87 of the Act which empowers the State to make Rules
'for carrying out the purposes of the Act' and in clause (f) to prescribe 'the
manner in which refunds shall be made' (in exercise of which Rule 35 is
made), cannot prescribe a period of limitation for filing a refund application if
the substantive provisions of the statute do not prescribe such limitation.
23) So even assuming for the sake of argument without conceding
that the sub-Rule (4) of Rule 35 is valid, for the aforesaid reason, it will not
also be applicable to petitioner as it is ultra vires the Act.
24) The applications for refund for each financial year have been
filed by petitioner within 7-8 months from end of the financial year on 31st
of March, and within one year from the end of the financial year in question,
and therefore they cannot be said to have been filed after an unreasonable
period of time or time barred. So they needed to be considered by the
respondents.
Judgment dt.26.4.2023 in W.P.No.3944 of 2022
25) The record reveals that after the Writ Petition was filed, a
counter affidavit was filed by respondent nos.4 and 5 initially stating in para 8
thereof that no claim for refund would lie without assessment of 'final
amount' of tax, that no refund can be allowed to any dealer without
conducting 'assessment', but admitting that petitioner had filed it's self
declaration/return, and contending that the TDS deductions are provisional in
nature.
26) In para 12 of the counter affidavit this is reiterated by
respondents as under:
".. 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 stated that:
"a dealer is selected for assessment on random basis and after
completion of assessment, the actual tax liability of the dealer
can be determined and the excess amount of tax may be refunded
to the dealer".
27) If the respondents do assessments on random basis, and they did
not select the petitioner's case for assessment under Section 30 or for an
Audit assessment under Section 31 or Section 34 of the Act on such random
basis, they cannot deny refund saying that there was no 'assessment' of the
petitioner. The petitioner cannot be blamed for the inaction of the respondents
in not making an 'assessment' and it cannot deny a refund on that basis.
28) The respondents cannot be allowed to plead mistake, if any, in
not disputing petitioner's quarterly returns and take advantage of their own
wrong, particularly, when the window for making 'assessments' is fixed as 5
years under Section 33 of the Act and the said period of 5 years had expired
long back.
29) Moreover admittedly, in the instant case, the quarterly returns
filed by petitioner have been accepted by the respondents after finding them
to be in order (as they did not raise any query or dispute), and as per Section
29(3), the said return has to be accepted as 'self assessment'. Thus 'self
assessment' under Section 29(3) is also a form of 'assessment' under the Act
and so this plea about lack of 'assessment' cannot be raised by respondents.
30) This can also be looked at in another way.
31) Under Section 53 of the Act, every dealer whose turnover
exceeds Rs. 40 lakhs or such other amount as many be notified, has to get it's
accounts audited by an accountant within 6 months from the end of the year
and obtain report of an audit, and then furnish it to the Commissioner by the
end of the month after expiry of period of 6 months during which the audit
would have to be completed, and in para 24, it is stated that this was done by
petitioner.
32) This is not disputed by the respondents.
33) Under Section 52 of the Act, the Commissioner may, for any
purpose related to the administration or enforcement of the provisions of the
Act, by notice require any person to provide to the Commissioner within such
reasonable time as may be stipulated in the notice, with any information or
additional information.
34) Thus after getting such information, the Commissioner can take
appropriate action against the dealer which may include assessment under
Section 31 or Section 32 of the Act.
35) When the statute prescribes for an audit by an accountant of
dealers like the petitioner who have more than the prescribed turnover, and
petitioner obtained such an audit report and submitted it to the respondents as
directed under Section 53, and they never disagreed with those reports when
they were submitted, these audit reports will also fall in the category of
'additional information' under Section 52 of the Act available to the
Commissioner to initiate appropriate action under the Act.
36) Had the audit reports indicated that petitioner had paid less tax
that what it is liable for, proceedings would have been undoubtedly initiated
against the petitioner for assessment under Section 30 within the period of 5
years prescribed under Section 33 of the Act, on basis of the audit report to
collect shortfall in tax and penalty by the respondents.
37) Conversely, when those audit reports filed by the petitioner
within the time prescribed by the Act indicate that petitioner should get a
refund, the respondents cannot deny the same raising untenable objections.
38) The respondents have also contended that petitioner did not
submit the claim for Refund in Form XXXIII and it had given the request for
refund on plain paper and so petitioner cannot seek the refund.
39) This plea was raised for the first time in a Letter dt.9.7.2015 to
the petitioner by the Joint Commissioner of Taxes. It is highly belated as the
disputes pertain to period 2006-07 onwards.
40) The petitioner then made an application in the said Form XXXIII
on 31.5.2016 (Annexure XV to the rejoinder).
41) When the bar of limitation is not prescribed in the Act (as
discussed supra) in respect of 'self assessment' returns under Section 29 of
the Act, and when the petitioner submitted the refund claims for each of the
financial years in question on 31.5.2016 (in addition to the previous refund
applications within 7-8 months of end of financial years in question), the
respondents ought to have processed it and could not have rejected it.
42) Not only is the objection raised by the respondents highly belated
because prior to 9.7.2015, it was never made, but it cannot also be
countenanced since the substantive right conferred by Section 43 of the Act to
get a refund of tax cannot be denied for non compliance with a procedural
provision i.e. non submission of Refund claim in Form XXXIII.
43) In Ramnath Exports (P) Ltd. v. Vinita Mehta3, the Supreme
Court declared:
"15. It is trite law that the procedural defect may fall within the
purview of irregularity and capable of being cured, but it should
not be allowed to defeat the substantive right accrued to the
litigant without affording reasonable opportunity."
44) In Lakshmi Rattan Engg. Works Ltd. v. CST4, the Supreme
Court had declared as under:
"11. It is to be remembered that all rules of procedure are
intended to advance justice and not to defeat it."
45) The respondents 4 and 5 went to the extent of contending in para
11 of the Counter affidavit that no copy of the refund application in Form
XXXIII could be located in the concerned charge office and that the Chief
Commissioner of State Taxes wrote a letter dt.7.1.2022 that no copies of
(2022) 7 SCC 678 : (2022) 4 SCC (Civ) 150, at page 683 :
(1968) 1 SCR 505 : AIR 1968 SC 488 : (1968) 2 SCJ 1 : (1968) 1 SCWR 433 : 21
STC 154
refund applications in Form XXXIII could be located in the concerned charge
Office.
46) Petitioner then filed the letters dt.31.5.2016 (pg. 141-148 along
with the Writ Petition) enclosing the Form XXXIII applications for refund of
each of the financial years in question. They were also resubmitted on
31.1.2022 to the respondent No.3.
47) The respondents admitted during the course of hearing of the
Writ Petition before the Court during submissions and by filing affidavits that
records were not being maintained in register form of receipt of refund
applications and the Court also gave directions from time to time in that
regard (order dt.1.8.2023, order dt.10.8.2023, 13.12.2023).
48) It appears that every effort was made by the respondents to avoid
disposal of the Writ Petition by dragging the proceedings taking one pretext
or the other and by filing multiple pleadings each time raising some new
objection. Their conduct is not bona fide.
49) Counsel for respondents contended that petitioner should have
also produced the challans for tax paid by ONGC and the PWD Department
of the State Government.
50) Admittedly the petitioner is the beneficiary of the TDS deducted
for payments made to it by ONGC and the PWD Department of the State
Government.
51) Under Rule 7(1), TDS is to be deducted by the above referred
organizations and under Rule 7(3), and ONGC and the PWD Department of
the State have to pay it by challan to the State Government.
52) Though Rule 7(4) directs furnishing of challan copies to the
dealer/petitioner (works contractor), and Rule 7(7) states the dealer has to
enclose the challans to the Superintendent of Taxes along with the quarterly
returns, the respondents had not rejected the quarterly returns saying these
challans were not given by petitioner. They are therefore presumed to have
been submitted by petitioner along with the returns. Maybe they were
misplaced by the respondents.
53) In any event, petitioner is a Works Contractor for both ONGC
and PWD department of the State Government. Any doubts regarding the
TDS certificates or challans which the respondents entertained could have
easily been be cross-checked by them with the said parties by the respondents
by invoking power under Section 52 and calling for information. Such State
or Central Government organizations/Departments cannot be normally
accused of giving incorrect TDS certificates and they have to be believed.
54) In fact in the affidavit filed by the under Secretary to the Finance
department on 29.1.2024, at para 6, the respondents admit that they did ask
ONGC and the PWD department of the State, that ONGC has given them 34
out of 38 challans relevant to the TDS claim of petitioner. In para 11 thereof it
is stated that even TDS certificates submitted by petitioner had signature of
the Executive Engineer of the PWD Department.
55) On 15.2.2024, petitioner filed a rejoinder enclosing thereto as
Annexure P-18, a 6 page VAT TDS reconciliation with corresponding details
of Treasury Vouchers date and Sl.No. They also enclosed as Annexure P-19,
a Letter dt.22.12.2023 of the Executive Engineer, PWD Department details of
deposit of VAT to the Government exchequer deducted from petitioner from
2005-06 to 2017-18.
56) In spite of having all the above material with it, on 11.3.2024, the
Superintendent of Taxes, Charge-I, Agartala (respondent no.5) passed a
refund rejection order under Section 29 of the Act.
The refund rejection order and challenge to it
57) This order, having been passed pending the Writ Petition with
permission of the Court, an IA No.1/2024 was filed by petitioner to take it on
record and quash it.
58) The said application was allowed on 15.5.2024, the said order
was taken on record and parties were asked to file submissions regarding it.
59) The respondents filed written objections why the said order
cannot be quashed.
Consideration of correctness of the order dt.11.3.2024 passed by 5th respondent
and objections filed by the respondents in support thereof by the Court
60) Firstly, the heading of the order says that it is passed under
Section 29 of the Act.
Refunds are provided under Section 43 of the Act. Section 29
deals with 'self assessment'.
Consideration of refund application cannot be under Section 29
of the Act because the quarterly assessments made had been accepted without
demur and the same had attained finality and cannot be reopened at this stage.
61) Next, the respondent No.5 admits that petitioner filed both
quarterly and annual returns, but states that annual returns are not according
to the Act, and actual refund was claimed on figures incorporated in the
annual return.
The respondent no.5 might be correct in stating that annual
returns are not permitted by the Act and they cannot be considered.
But each of the refund applications given in the financial years in
question mention the statutory VAT audit report as well. In fact the statutory
audit report under Section 53 is the basis for the annual return as well.
Conveniently, the respondent no.5 ignores the fact that the claim
for refund is also based on the statutory VAT audit report. This is a dishonest
consideration of the VAT refund claim by the said official.
62) The respondent no.5 then states that the returns for the year
2006-07 to 2013-14 is not incorporated with proper TDS certificates and
challan copies. It is even said that there are discrepancies between the
quarterly returns and annual returns and the quarterly returns are not
acceptable. It is concluded that petitioner has submitted 'false' information in
the returns filed by it.
When the respondents had accepted the quarterly returns filed
within time by petitioner without demur, and there is under Section 29(3) of
the Act, a deemed 'self assessment', in 2024, long after 5 years limitation for
assessment under section 33 of the Act has expired, it is not open to the
respondent no.5 to find fault with the returns filed by petitioner.
This is wholly without jurisdiction as the respondent no.5 cannot
act contrary to the Act and do a re-assessment of the returns which is utterly
time barred.
63) Moreover the respondent no.5 cannot ignore whatever challans
and TDS certificates have now been furnished by ONGC and the PWD
Department of the State and by the petitioner to the respondents in this Writ
Petition. This shows that the respondent no.5 wants to somehow or other
reject the refund claim with a pre-determined approach and with a mala fide
intention.
64) A doubt is also expressed on the certificate of the Chartered
Accountant submitted by the petitioner along with the statutory VAT audit
reports for the financial years 2006-07 to 2013-14 by saying that it is not in
prescribed format.
Admittedly, when the Act was passed and the Rules were made
in 2005, the respondents had omitted to prescribe the format for the Chartered
Accountant's certificate under Section 53 of the Act for filing the statutory
VAT audit report and the same came to be prescribed only on 7.12.2021
through a notification of the Tripura Value Added tax (Eighth Amendment)
Rules,2021. Rule 45A was inserted and a format Form XLIV was prescribed.
To expect that in 2006-07 to 2013-14, the certificates issued by
the Chartered Accountants to petitioner should be in the format prescribed for
such a certificate in 2021 is perverse and shocking to the conscience of the
Court.
65) In Popatrao Vyankatrao Patil v. State of Maharashtra5, the
Supreme Court directed that the State should act as a model litigant; that it is
no ordinary party trying to win a case against one of its own citizens by hook
or by crook; and that it is the State's interest to meet honest claims, vindicate
a substantial defence and never to score a technical point or overreach a
(2020) 19 SCC 241, at page 245 :
weaker party to avoid a just liability or secure an unfair advantage, simply
because legal devices provide such an opportunity. It declared:
"5. This Court, has time and again held, that the State should
act as a model litigant. In this respect, we can gainfully refer to
the following observations made by this Court in Urban
Improvement Trust, Bikaner v. Mohan Lal6 : (SCC pp. 515-16,
paras 6-9)
"6. This Court has repeatedly expressed the view that
Governments and statutory authorities should be model or ideal
litigants and should not put forth false, frivolous, vexatious,
technical (but unjust) contentions to obstruct the path of justice.
We may refer to some of the decisions in this behalf."
7. In Dilbagh Rai Jarry v. Union of India7 this Court
extracted with approval the following statement [from an earlier
decision of the Kerala High Court (P.P. Abubacker case8, AIR
pp. 107-08, para 5)] : (SCC p. 562, para 25)
'25. ... "5. ... The State, under our Constitution, undertakes
economic activities in a vast and widening public sector and
inevitably gets involved in disputes with private individuals. But
it must be remembered that the State is no ordinary party trying
to win a case against one of its own citizens by hook or by crook;
for the State's interest is to meet honest claims, vindicate a
substantial defence and never to score a technical point or
overreach a weaker party to avoid a just liability or secure an
unfair advantage, simply because legal devices provide such an
opportunity. The State is a virtuous litigant and looks with
unconcern on immoral forensic successes so that if on the merits
the case is weak, Government shows a willingness to settle the
dispute regardless of prestige and other lesser motivations which
move private parties to fight in court. The layout on litigation
(2010) 1 SCC 512
(1974) 3 SCC 554
AIR 1972 Kerala 103
costs and executive time by the State and its agencies is so
staggering these days because of the large amount of litigation in
which it is involved that a positive and wholesome policy of
cutting back on the volume of law suits by the twin methods of
not being tempted into forensic showdowns where a reasonable
adjustment is feasible and ever offering to extinguish a pending
proceeding on just terms, giving the legal mentors of
Government some initiative and authority in this behalf. I am not
indulging in any judicial homily but only echoing the dynamic
national policy on State litigation evolved at a Conference of
Law Ministers of India way back in 1957." '
8. In Madras Port Trust v. Hymanshu International9 this
Court held : (SCC p. 177, para 2)
'2. ... It is high time that Governments and public authorities
adopt the practice of not relying upon technical pleas for the
purpose of defeating legitimate claims of citizens and do what is
fair and just to the citizens. Of course, if a Government or a
public authority takes up a technical plea, the Court has to
decide it and if the plea is well founded, it has to be upheld by the
court, but what we feel is that such a plea should not ordinarily
be taken up by a Government or a public authority, unless of
course the claim is not well founded and by reason of delay in
filing it, the evidence for the purpose of resisting such a claim
has become unavailable.'
9. In a three-Judge Bench judgment of Bhag Singh v. State
(UT of Chandigarh10) this Court held : (SCC p. 741, para 3)
'3. ... The State Government must do what is fair and just to the
citizen and should not, as far as possible, except in cases where
tax or revenue is received or recovered without protest or where
the State Government would otherwise be irretrievably be
prejudiced, take up a technical plea to defeat the legitimate and
just claim of the citizen.'"(emphasis supplied)
(1979) 4 SCC 176
(1985) 3 SCC 737
66) We are of the view that in the instant case, the respondents have
consistently taken false, vexatious and unjust pleas all through and have
exhibited bad faith.
67) In this era where States are expected to be business friendly and
there is much talk of the 'ease of doing business', it behoves the respondents
to eschew conduct of the above nature if it were to attract business
investments in the State and make the State prosperous.
68) Therefore for all the above reasons, the Writ Petition is allowed
and the order dt.11.3.2024 passed by the 5th respondent is set aside. The
respondents shall take into account the details furnished by petitioner in the
statutory VAT audit reports, and the challans, TDS certificates and other
documents on record and process and grant refund to the petitioner of the
amounts due to it. They shall also pay interest thereon to the petitioner under
Section 45 of the Act. The respondents shall also pay costs of Rs.2 lakhs to
the petitioner. These payments shall be made within 3 months from today.
69) All pending applications are disposed of.
(S. DATTA PURKAYASTHA, J) (M.S. RAMACHANDRA RAO, CJ)
PULAK BANIK Digitally signed by PULAK BANIK
Date: 2025.09.10 14:39:02 +05'30'
