2011 (5) TMI 889 - HC - VAT and Sales Tax

Whether under the facts and circumstances of this case when the refund of amount of ₹ 5,32,742 to RPSCL is admitted there is no justification for remanding the matter? Held that - In the present case such an enquiry has been made and it has been found that the revisionist has refunded the amount of ₹ 5,72,742 to the purchaser RPSCL who owe the liability to pay the tax. Thus, the liability to pay/deposit the said amount cannot be fastened upon the revisionist.In the facts and circumstances detailed above, as necessary verification with regard to the refund of the above amount has already been done by the assessing authority and a report submitted, there is no useful purpose in maintaining the order of remand as passed by the Tribunal. Accordingly, the revision is allowed in part and the order of the Tribunal dated January 25, 2011 is modified only to the extent it remands the matter for verification of refund of the aforesaid amount.

Summary

Issues:
1. Tax liability on supply of concrete
2. Refund of tax amount to purchaser
3. Validity of the refund

Analysis:
1. Tax liability on supply of concrete:
The revisionist, a registered partnership-firm, supplied concrete to Rosa Power Supply Company Limited (RPSCL) under a contract. Initially, the revisionist admitted tax liability at 4%, but the assessing authority imposed tax at 12.5% considering the supply as unclassified. Subsequently, a notification was issued by the State Government shifting the tax liability to industries engaged in power generation with investments over 1,000 crores. The revisionist refunded the tax amount to RPSCL as per the notification, which was certified and acknowledged. The appellate authorities disagreed on the recognition of the refund, leading to the matter being taken to the Commercial Tax Tribunal.

2. Refund of tax amount to purchaser:
The Commercial Tax Tribunal, in its order, reduced the tax liability but remanded the matter to verify the validity of the refund of Rs. 5,32,742. The revisionist contended that since the refund was admitted, there was no need for remand. The High Court directed the assessing authority to examine the authenticity of the refund following a submission by the standing counsel. The subsequent report confirmed the refund, removing any dispute regarding the refund being made to RPSCL.

3. Validity of the refund:
Section 43 of the U. P. VAT Act was crucial in determining the validity of the refund. The provision mandates that any tax amount realized in contravention of specific sections must be deposited with the Department. In this case, the revisionist's refund to RPSCL was in compliance with the law as per the retrospective notification. Previous court decisions emphasized that refund to the agent of the dealer suffices as compliance. The assessing authority verified the refund and confirmed that the revisionist had indeed refunded the amount to the liable party, RPSCL. Consequently, the High Court held that there was no legal obligation on the revisionist to deposit the refunded amount with the Department, thereby allowing the revision in part and modifying the Tribunal's order to eliminate the need for further verification of the refund.