1972 (2) TMI 87 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the appellate order set aside the assessment order in full or in part.
2. Whether the petitioner is entitled to a refund of the advance tax paid.
3. Interpretation and application of Section 5 and Section 33 of the Andhra Pradesh General Sales Tax Act (A.P.G.S.T. Act).
4. Applicability of judicial precedents regarding tax liability and refund.

Detailed Analysis:

1. Whether the appellate order set aside the assessment order in full or in part:
The appellate authority considered two contentions raised by the appellant: (1) against the levy of tax on Rs. 68,641.09, and (2) against the rate of tax at 4% on Rs. 3,46,992.14 for the year 1959-60. The appellate authority directed the assessing authority to verify the transactions and conduct inquiries in the matter and pass fresh orders pursuant to the results thereof. It was observed that the entire turnover could not be assessed at 4% as the rice and paddy were sold for consumption inside the State. The appellate order remitted the matter back to the assessing authority for fresh disposal according to law. It was concluded that the order of the first respondent was completely set aside by the appellate authority, and the assessing authority was directed to pass a fresh assessment order, which was never done.

2. Whether the petitioner is entitled to a refund of the advance tax paid:
The petitioner argued that since no fresh assessment order was passed, there was no tax assessed and quantified, thus entitling him to a refund of the entire advance tax paid. The Government Pleader contended that the liability to pay tax arises as soon as the taxable event occurs, and since the petitioner admitted to selling rice within the State, he was liable to pay tax at 3%. However, the court held that for purposes of refund, the tax must be assessed and quantified. Since no assessment order was made, the petitioner was entitled to the refund of the advance tax paid.

3. Interpretation and application of Section 5 and Section 33 of the A.P.G.S.T. Act:
Section 5 of the A.P.G.S.T. Act states that every dealer shall pay a tax at the rate of three paise on every rupee of his turnover. Section 33 relates to refunds and specifies that the assessing authority shall refund the tax paid provisionally if it is found to be in excess of the tax payable. The court emphasized that the term "tax payable" connotes a legally enforceable payment, and for refund purposes, the amount due must be quantified through an assessment order. Mere liability to pay tax does not deprive the person of his right to a refund unless the assessment order is made, and that liability is quantified.

4. Applicability of judicial precedents regarding tax liability and refund:
The court referred to the Supreme Court decision in State of Madhya Pradesh (now Maharashtra) v. Haji Hasan Dada, where it was held that refund may be granted only of the amount which is not lawfully due, and whether a certain amount is lawfully due or not must be determined by the assessing authority. This principle was applied to the present case, affirming that the refund is contingent upon the assessment and quantification of tax.

The Government Pleader's reliance on cases like Chatturam v. Commissioner of Income-tax and Kedarnath Jute Mfg. Co. Ltd. v. Commissioner of Income-tax was found inapplicable as they dealt with the general principle of tax liability independent of assessment, not specifically with the issue of tax refund.

Conclusion:
As there was no assessment order against the petitioner, there was no amount of tax payable by him. Consequently, the petitioner was entitled to claim the whole of the advance tax paid by way of refund. The writ petition was allowed with costs, and the respondents were directed to refund the amount claimed by the petitioner.

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