2001 (2) TMI 1006 - HC - VAT and Sales Tax

Summary

Issues:
- Controversy over retrospective operation of exemption certificate leading to refund claim
- Validity of the cumbersome refund procedure prescribed by the Commissioner of Commercial Taxes

Analysis:
1. The primary issue in this case revolves around the retrospective operation of an exemption certificate granted to the petitioner, a dealer under the Bihar Finance Act, 1981. The petitioner was entitled to exemption from sales tax on raw materials, with the exemption certificate issued in July 1999 but made effective from September 1995. This retrospective application entitles the petitioner to claim a refund of taxes paid on raw material purchases from selling dealers. The petitioner approached the court seeking relief under Article 226 of the Constitution of India.

2. The respondents relied on a communication from the Commissioner of Commercial Taxes, Bihar, prescribing a complex refund application procedure. However, the High Court found that this communication was not supported by any legal provision under the Bihar Finance Act, 1981. The court emphasized that a dealer entitled to exemption and refund should not be burdened with an impractical refund process. Additionally, the court highlighted that selling dealers, who collect taxes, should not be involved in the refund process, as their role ends with depositing taxes with the tax authority.

3. In its judgment, the High Court directed the petitioner to submit a fresh application to the Deputy Commissioner, Commercial Taxes, claiming adjustment or refund of the tax amount paid on raw materials. The Deputy Commissioner was instructed to review the application within three weeks, verify the relevant facts, and issue an appropriate order. The Deputy Commissioner was given the discretion to either refund the amount or adjust it for future payments. The court disposed of the writ application, allowing the petitioner's claim for refund without imposing any costs.

In conclusion, the High Court's judgment addressed the retrospective application of the exemption certificate, the impractical refund procedure, and provided a clear directive for the petitioner to seek refund through a simplified process.