1993 (2) TMI 304 - AT - VAT and Sales Tax

Issues Involved
1. Legality of the entry tax assessment and collection.
2. Applicability of Section 19(3) of the 1972 Act and Rule 25 for refund.
3. Compliance with the 60-day time limit and prescribed form for refund application.
4. Vires (validity) of Section 19(3) of the 1972 Act and Rule 25 under Article 265 of the Constitution of India.

Detailed Analysis

1. Legality of the Entry Tax Assessment and Collection
The applicant, a private limited company, contested the assessment and collection of Rs. 72,000 as entry tax by the Inspector of Entry Tax at K.P. Docks, Calcutta. The applicant argued that the empty containers sent from Bombay Port to Calcutta Port for stuffing export cargo were not for consumption, use, or sale in the Calcutta Metropolitan Area and thus were not subject to entry tax under the 1972 Act. This contention was upheld in an appeal by the Assistant Director of Entry Tax, who annulled the assessment and ordered a refund of Rs. 72,000.

2. Applicability of Section 19(3) of the 1972 Act and Rule 25 for Refund
The applicant argued that Section 19(3) of the 1972 Act, which deals with the refund of excess tax paid, was not applicable as the entire assessment had been annulled. The Tribunal agreed, stating that the provisions of Section 19(3) are not attracted in cases where no tax was leviable under the Act, and the applicant's representation that no tax was leviable was accepted in the appeal.

3. Compliance with the 60-day Time Limit and Prescribed Form for Refund Application
The applicant initially applied for a refund on May 15, 1991, within the 60-day period, to the Assistant Director of Entry Tax. However, the application was rejected by the Superintendent of Claims and Refund on the grounds that it was not in the prescribed form and was beyond the 60-day limit. The Tribunal found that the applicant had substantially complied with the requirements by addressing the application within the prescribed time and forwarding a copy to the Superintendent. The Tribunal held that the failure to apply in the specified form could not deprive the applicant of the substantive right to a refund.

4. Vires of Section 19(3) of the 1972 Act and Rule 25 under Article 265 of the Constitution of India
The applicant challenged the vires of Section 19(3) and Rule 25, arguing that these provisions were contrary to Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by the authority of law. The Tribunal did not find it necessary to express an opinion on this issue, as it concluded that the provisions of Section 19(3) and Rule 25 were not applicable in this case.

Conclusion
The Tribunal allowed the application, quashing the order dated September 13, 1991, by the Superintendent, Claims and Refund, which refused the refund. The respondents were directed to refund the sum of Rs. 72,000 to the applicant within sixty days and to pay costs assessed at Rs. 1,000 within the same period. The Tribunal emphasized that the retention of the amount ordered to be refunded in the appeal could not be justified under the provisions of Section 19(3) of the 1972 Act or Rule 25 of the Entry Tax Rules.

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