1999 (1) TMI 509 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of the writ petition by the State of Andhra Pradesh.
2. Justification of the third respondent in exercising suo motu powers under Section 20(1) and (2) of the APGST Act at the instance of the first respondent.
3. Justification of the first respondent in retaining Rs. 3.70 crores collected towards Central sales tax and whether such retention amounts to unjust enrichment.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The writ petition filed by the State of Andhra Pradesh is maintainable. The Supreme Court has held that a writ of certiorari is available for correcting the error of jurisdiction or if the order is illegal and without authority. The functions discharged by the assessing officers, revisional authorities, and appellate authorities under the APGST Act are quasi-judicial and different from administrative functions. The State, being a litigant before these authorities, is entitled to challenge the orders passed by them if they are illegal, without jurisdiction, and involve irregularities. The absence of an appeal provision in the APGST Act against the order of the revisional authorities necessitates the State's recourse to a writ petition under Article 226 of the Constitution of India.

2. Exercise of Suo Motu Powers:
The third respondent's exercise of suo motu revisional powers under Section 20(2) of the APGST Act at the instance of the first respondent is illegal and unauthorized. Section 20 of the APGST Act confers suo motu powers on the authorities to correct errors or irregularities prejudicial to the interests of the revenue, not at the behest of an assessee. The Supreme Court in "State of Andhra Pradesh v. T.G. Lakshmaiah Setty & Sons" held that an assessee cannot invoke the suo motu revisional powers of the Commissioner/Joint Commissioner, as these powers are meant to safeguard the interests of the revenue. The third respondent's order dated November 23, 1992, allowing the revision filed by the first respondent and ordering a refund of Rs. 3.70 crores, is therefore illegal and without jurisdiction.

3. Retention of Rs. 3.70 Crores and Unjust Enrichment:
The first respondent is not justified in retaining the amount of Rs. 3.70 crores collected towards Central sales tax. This retention amounts to unjust enrichment. The first respondent collected the tax from customers, paid it to the government, and later got a refund based on an erroneous and illegal order dated November 23, 1992. The Supreme Court's later decision in "Commissioner of Sales Tax v. Pine Chemicals Ltd." reversed the earlier judgment, holding that the exemption granted was not general as contemplated under Section 8(2-A) of the Central Sales Tax Act, 1956. The first respondent, having collected the tax from customers, is not entitled to retain the refunded amount. The court directed the first respondent to remit the amount of Rs. 3.70 crores to the petitioner and also pay interest at 12% per annum from the date of refund till the date of remittance.

Conclusion:
The writ petition is allowed, and the orders dated November 23, 1992, and November 27, 1993, passed by the third and second respondents, respectively, are set aside. The first respondent is directed to remit the amount of Rs. 3.70 crores to the writ petitioner forthwith and pay interest at 12% per annum on the said amount from the date of refund till the date of remittance. The first respondent is also ordered to pay costs of Rs. 10,000 to the A.P. State Legal Aid Board within four weeks.