2001 (5) TMI 927 - AT - VAT and Sales Tax

Summary

Issues Involved:
Challenge to rejection of refund of tax by transport company under West Bengal Taxation Tribunal Act, 1987. Determination of limitation for refund of advance tax illegally collected. Date of knowledge of the petitioner for claiming refund. Interpretation of legal principles regarding limitation for recovery of money. Application for refund not barred by limitation. Refusal of stay of operation of the order.

Analysis:

The judgment involves an application under section 8 of the West Bengal Taxation Tribunal Act, 1987, challenging the rejection of a transport company's prayer for refund of tax. The petitioners, a proprietorship concern and its proprietor, are transporters not liable for taxation under relevant Acts. They were intercepted and demanded tax illegally during transport of goods outside West Bengal. The petitioners sought refund of advance tax collected illegally, which was rejected as time-barred by limitation. The main issue is whether the petitioners' claim for refund is barred by limitation.

The petitioner argued that limitation runs from the date of their knowledge, which was when their advocate informed them about entitlement to refund. The State representative contended that limitation starts from the date of judgment publication. The Tribunal considered legal principles on limitation, citing cases where limitation for recovery of money begins when the mistake is discovered. The petitioners claimed they were unaware of the judgment until informed by their advocate, justifying the delay in seeking refund.

The Tribunal referred to Supreme Court decisions emphasizing that limitation does not start until the party discovers the mistake with reasonable diligence. The petitioners' genuine claim for refund, known from their advocate's letter, should not be rejected based on technicalities. The judgment highlighted that public bodies returning wrongly recovered money have no special limitation law. The petitioners' claim, made within time, should not be rejected solely on limitation grounds, especially since they had paid taxes in advance.

The Tribunal concluded that the petitioners' application for refund was not barred by limitation and should not be rejected on that basis. The order disposed of the reference, leaving other aspects for a Division Bench to decide. A verbal prayer for stay of operation was refused since it was an interlocutory order. The application was disposed of accordingly, with the main points left for further hearing by a Division Bench on a specified date.