1971 (10) TMI 106 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability to pay Central sales tax despite pending refund applications under the State Act.
2. Timing and conditions for considering refund applications under the State Act.
3. Relationship between the Central Sales Tax Act and the State Act regarding tax refunds and liabilities.

Issue-wise Detailed Analysis:

1. Liability to Pay Central Sales Tax Despite Pending Refund Applications under the State Act:

The petitioners, dealers in coconuts, were served notices to pay Central sales tax for specified periods. They argued that they should not be required to pay the Central sales tax until their applications for refund of the State tax were disposed of. The court, however, held that under sections 6 and 9 of the Central Sales Tax Act and rule 14-A of the Central Sales Tax (Andhra Pradesh) Rules, dealers are required to submit monthly returns and pay the full amount of Central sales tax simultaneously. There is no provision allowing the postponement of Central sales tax payment until the refund applications are processed. The court concluded that the obligation to pay Central sales tax is independent of the refund process under the State Act.

2. Timing and Conditions for Considering Refund Applications under the State Act:

The court addressed the contention that the refund applications should be considered only after the final assessment under the State Act is completed. The relevant rule, rule 27-A of the Andhra Pradesh General Sales Tax Rules, requires that the application for refund be filed within three months from the end of the month in which the goods were sold in the course of inter-State trade. The court found no provision in the Act or Rules that precludes the authorities from considering and disposing of the refund applications before the assessment is completed. The authorities must be satisfied that the tax under the State Act has been paid and that the declared goods were sold in the course of inter-State trade. The court emphasized that the timing of refund application consideration is at the discretion of the authorities, and undue delay could amount to a refusal to consider the application.

3. Relationship between the Central Sales Tax Act and the State Act Regarding Tax Refunds and Liabilities:

The court clarified that the right to levy Central sales tax must be decided based on the provisions of the Central Sales Tax Act and the Rules made thereunder. The mere fact that the petitioners have applied for a refund or are entitled to a refund under the State Act does not affect the demand for Central sales tax. The claim for refund under the State Act is a separate and independent right that must be worked out separately. The levy of Central sales tax depends on the transactions' liability under the Central Sales Tax Act and cannot be contingent upon the right to obtain a refund under the State Act.

Conclusion:

The court dismissed the writ petitions, holding that the petitioners are not entitled to a writ of mandamus directing the respondent to forbear from collecting Central sales tax until their refund applications are disposed of. However, the court directed that the refund applications for the periods January to March 1971 be heard and disposed of expeditiously along with the assessments for those years, as the assessment year was over. The petitions were dismissed without costs, and an advocate's fee of Rs. 50 was awarded in each case.