1976 (9) TMI 146 - HC - VAT and Sales Tax

Summary

Issues:
1. Refund of sales tax to a dissolved firm.
2. Application for review of a judgment based on subsequent statutory amendments.
3. Interpretation of newly added sub-section (3) to section 29 of the U.P. Sales Tax Act.
4. Validity of a mandamus issued against a statutory provision.
5. Conflict between a statutory rule and a statutory provision regarding tax refunds.

Analysis:

1. Refund of sales tax to a dissolved firm:
The case involved a dissolved firm seeking a refund of sales tax paid after the firm's dissolution. The Sales Tax Officer initially passed an order of assessment, which was later set aside, leading to multiple assessment orders and appeals. Ultimately, the Judge (Appeals) directed the refund of the tax paid by the dissolved firm, which was challenged by the Sales Tax Officer.

2. Application for review of a judgment based on subsequent statutory amendments:
The Sales Tax Officer filed a review application following the enactment of U.P. Act No. 38 of 1975, which added sub-section (3) to section 29 of the U.P. Sales Tax Act. This sub-section prohibited refunds of tax admitted by the dealer in returns, even if ordered by a court. The review application was based on the retrospective effect of the amendment.

3. Interpretation of newly added sub-section (3) to section 29 of the U.P. Sales Tax Act:
The court analyzed the implications of the newly added sub-section (3) to section 29, emphasizing that no refund could be allowed for tax admitted by the dealer in returns, regardless of court orders. The retrospective nature of the amendment was crucial in determining the legality of the refund.

4. Validity of a mandamus issued against a statutory provision:
The court highlighted that a mandamus could not direct actions contrary to statutory provisions. In this case, the issuance of a mandamus for tax refund conflicted with sub-section (3) of section 29, which barred refunds for admitted tax liabilities. The court concluded that the mandamus was invalid due to the statutory provision.

5. Conflict between a statutory rule and a statutory provision regarding tax refunds:
The respondent argued that Rule 71 of the U.P. Sales Tax Rules mandated the refund of tax based on the Judge (Appeals) order, but the court clarified that a rule cannot expand the scope of a statute. The court held that if a rule contradicts the statute, the statute prevails. In this case, Section 29(3) governed tax refunds, rendering the rule ineffective.

In conclusion, the court allowed the review application, recalling the previous order directing the tax refund to the dissolved firm. The judgment of the learned single Judge was set aside, and the writ petition was dismissed. The court emphasized the supremacy of statutory provisions over rules and upheld the statutory bar on refunds for admitted tax liabilities, even in the face of court orders.