1978 (12) TMI 162 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to refund of sales tax paid on purchases of cotton yarn.
2. Applicability of amended Section 15(b) of the Central Sales Tax Act, 1956.
3. Interpretation of Section 44 of the Bombay Sales Tax Act, 1959, and Rule 47 of the Bombay Sales Tax Rules, 1959.

Issue-wise Detailed Analysis:

1. Entitlement to Refund of Sales Tax Paid on Purchases of Cotton Yarn:
The assessee purchased cotton yarn from registered dealers and paid sales tax on these purchases. The Sales Tax Officer levied Central sales tax on the inter-State sales of the yarn, but the assessee was granted a refund of the sales tax paid on purchases under Rule 47 of the Bombay Sales Tax Rules, 1959. The Assistant Commissioner initially agreed with the assessee's contention that no Central sales tax could be levied, directing a refund of Rs. 947.20. However, he later withdrew the refund of Rs. 924.50, arguing that the assessee was not entitled to it since no Central sales tax was paid on the inter-State sales. The Tribunal, however, set aside the Assistant Commissioner's order, holding that Section 44 of the Bombay Sales Tax Act, 1959, read with Rule 47, did not require the payment of Central sales tax as a condition for refund.

2. Applicability of Amended Section 15(b) of the Central Sales Tax Act, 1956:
The revenue argued that the amendment to Section 15(b) of the Central Sales Tax Act, 1956, effective retrospectively from 1st October 1958, required that Central sales tax be paid on inter-State sales for a dealer to be entitled to a refund of the State sales tax. The Tribunal disagreed, stating that since neither Section 44 of the Bombay Sales Tax Act, 1959, nor Rule 47 of the Bombay Sales Tax Rules, 1959, incorporated this condition, the assessee was entitled to a refund based on the existing state provisions.

3. Interpretation of Section 44 of the Bombay Sales Tax Act, 1959, and Rule 47 of the Bombay Sales Tax Rules, 1959:
Section 44 of the Bombay Sales Tax Act, 1959, and Rule 47 of the Bombay Sales Tax Rules, 1959, provide for a refund of sales tax on declared goods sold in inter-State trade or commerce, without explicitly requiring the payment of Central sales tax. The Tribunal held that the absence of this condition in the state provisions meant the assessee was entitled to a refund. However, the High Court noted that Section 15 of the Central Sales Tax Act was designed to override state tax provisions, ensuring that declared goods are not taxed multiple times. The retrospective amendment to Section 15(b) meant that the condition of paying Central sales tax was always intended to be part of the law, overriding state provisions.

Conclusion:
The High Court concluded that the Tribunal erred in its interpretation. The retrospective amendment to Section 15(b) of the Central Sales Tax Act, 1956, meant that the payment of Central sales tax was a necessary condition for claiming a refund of state sales tax. Therefore, the Tribunal's decision to uphold the refund of Rs. 924.50 to the assessee was incorrect. The reference was answered in the negative, in favor of the revenue, and against the assessee. No order as to costs was made since the assessee did not appear in person or through an advocate.