1995 (11) TMI 401 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of withholding the refund of Rs. 85,735 by the Commercial Tax Officer.
2. Compliance with Section 33-C of the Andhra Pradesh General Sales Tax Act.
3. Application of Section 33-BB of the Andhra Pradesh General Sales Tax Act regarding unjust enrichment.

Issue-Wise Detailed Analysis:

1. Legality of withholding the refund of Rs. 85,735 by the Commercial Tax Officer:

The petitioner sought a declaration that the respondents' action in not refunding Rs. 85,735 with interest was illegal and arbitrary. The Sales Tax Appellate Tribunal had allowed the petitioner's appeal, resulting in a refundable amount of Rs. 85,735. Despite the petitioner's application for a refund on April 6, 1994, and subsequent reminders, the refund was withheld. The Commercial Tax Officer cited potential adverse effects on revenue and the pending return of records from the State Representative as reasons for withholding the refund. The court found that the Commercial Tax Officer's decision to withhold the refund lacked proper justification and indicated non-application of mind.

2. Compliance with Section 33-C of the Andhra Pradesh General Sales Tax Act:

Section 33-C allows the assessing authority to withhold refunds if certain conditions are met. These conditions include the pendency of an appeal or further proceeding, the opinion that the refund would adversely affect revenue, and the previous approval of the Deputy Commissioner. The court determined that the first condition-pendency of an appeal or further proceeding-was not satisfied. The court noted that there was no proof of a tax revision case being filed against the Tribunal's order. The inter-departmental correspondence and the decision to file a revision did not constitute a proceeding under the Act. Consequently, the court quashed the order dated February 22, 1995, and the communication dated May 20, 1995, withholding the refund.

3. Application of Section 33-BB of the Andhra Pradesh General Sales Tax Act regarding unjust enrichment:

Section 33-BB stipulates that a refund is not necessary unless the dealer proves that the tax was not collected from the purchaser. This provision aims to prevent unjust enrichment. The court emphasized that the absence of an allegation in the counter-affidavit does not negate the applicability of Section 33-BB. The court highlighted its duty to ensure compliance with statutory provisions before granting refunds. The petitioner did not provide evidence that the tax burden was borne by them and not passed on to the purchaser. The court directed the assessing authority to conduct an enquiry to determine whether the petitioner had satisfactorily proven that the tax was not passed on to the purchaser.

Conclusion:

The court declared the Commercial Tax Officer's action of withholding the refund under Section 33-C as arbitrary and illegal, quashing the orders dated February 22, 1995, and May 20, 1995. However, the court did not grant an immediate refund, directing the Commercial Tax Officer to conduct an enquiry under Section 33-BB to verify whether the tax burden was passed on to the purchaser. The enquiry was to be completed within two months from the receipt of the judgment. The writ petition was allowed to the extent indicated, with no costs awarded.