1991 (9) TMI 339 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Refund of excess tax paid.
2. Limitation period for filing the application.
3. Unjust enrichment.

Issue-wise Detailed Analysis:

1. Refund of Excess Tax Paid:
The applicant, a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, and the Central Sales Tax Act, 1956, sought a refund of excess tax paid for the periods ending March 1980, 1981, 1982, and 1983. The applicant had paid tax at a rate of fifteen percent on carpet sales to avoid disputes with tax authorities. Following a Calcutta High Court judgment in Madanlal Shroff v. State of West Bengal, which ruled that carpet sales did not attract tax, the applicant stopped collecting sales tax from customers. Notices of demand in form VII indicated excess payments totaling Rs. 4,13,750.17. Despite requests for refunds, the amounts were not refunded, prompting the application under section 8(1) of the West Bengal Taxation Tribunal Act, 1987.

2. Limitation Period for Filing the Application:
The respondents argued that the application was barred by limitation, as the notices indicating excess tax payments were issued between 1986 and 1988, but the application was filed only on June 14, 1991. The Tribunal agreed, citing Supreme Court decisions in State of Madhya Pradesh v. Bhailal Bhai [1964] 15 STC 450 and State of Kerala v. Aluminium Industries Ltd. [1965] 16 STC 689, which established that delays exceeding the prescribed limitation period are generally considered unreasonable. The Tribunal held that the application, filed more than three years after the notices, was barred by limitation.

3. Unjust Enrichment:
The respondents contended that refunding the excess tax would result in unjust enrichment, as the applicant had collected tax from customers and could not return it to numerous purchasers. While the Tribunal did not delve deeply into this issue due to the application being dismissed on limitation grounds, it acknowledged the argument's validity. The Tribunal emphasized that statutory obligations to issue refund payment orders do not negate the necessity of adhering to limitation periods for seeking refunds.

Conclusion:
The Tribunal dismissed the application for refund of excess tax paid, citing the bar of limitation. The Tribunal held that the application, filed after an inordinate delay, was barred by limitation and could not be entertained. The issue of unjust enrichment was noted but not elaborated upon, as the limitation issue was sufficient to dispose of the case. No order as to costs was made.