2004 (8) TMI 671 - HC - VAT and Sales Tax

Summary

Issues:
- Entitlement to sales tax deferment benefits under Punjab General Sales Tax (Deferment and Exemption) Rules, 1991.
- Refund of sales tax paid by the petitioner for the period before eligibility certificate issuance.
- Interpretation of rules regarding deferment and conditions for eligibility.
- Consideration of delay in application submission and decision-making process.

Entitlement to Sales Tax Deferment Benefits:
The petitioner sought direction for benefits under the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991, and Industrial Policy, 1996. The company commenced production in 1997 and applied for exemption, which was granted in 2001 for a maximum amount of Rs. 62,47,500. The Sales Tax Department admitted the petitioner's entitlement to deferment but stated that deferment becomes operative only after the issuance of the eligibility certificate. The petitioner claimed a refund of tax paid from 1997 to 2001 to avail of the deferment policy.

Refund of Sales Tax Paid:
The petitioner argued for a refund of the tax paid from 1997 to 2001, contending that the tax should be refunded first, and then paid back as per the Rules. The court analyzed the rules and noted that the petitioner did not make a timely application, resulting in a delayed decision. However, the court held that the petitioner was entitled to a refund as of the date of eligibility certificate issuance in 2001, covering the entire period of eligibility.

Interpretation of Rules:
Rule 3(2) stipulates that deferment becomes admissible only after the issuance of the eligibility certificate. The court emphasized that the benefit is operative for the entire eligible period, as determined by the department. The petitioner was found entitled to exemption for the full seven-year period, leading to the conclusion that the tax paid should be refunded. The court also directed the payment of statutory interest on the refunded amount.

Consideration of Delay:
The court considered the delay in the petitioner's application submission and decision-making process. While acknowledging the responsibility of authorities to act promptly, the court noted that the petitioner approached the court three years after the exemption was granted. Despite the delay, the court ruled in favor of the petitioner, emphasizing the entitlement to the refund based on the eligibility certificate issuance date in 2001.

In conclusion, the court allowed the petition, granting the petitioner a refund of the tax paid and statutory interest, while permitting the department to adjust outstanding dues against the dealer and refund any balance amount.