1999 (9) TMI 954 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of Ext.P1 and Ext.P2 notifications regarding turnover tax.
2. Entitlement to refund of turnover tax paid after Ext.P1 notification.
3. Consideration of burden of duty passed on to a third person for refund eligibility.

Analysis:

Issue 1: Validity of Ext.P1 and Ext.P2 notifications regarding turnover tax
The petitioner appealed against the judgment in O.P. No. 2878/96, challenging Ext.P1 notification levying turnover tax on goods received by consignment or branch transfer. Ext.P1 notification, dated 29th October, 1992, exempted turnover tax except on goods received on consignment or branch transfer. Ext.P2 notification, dated 9-3-1993, stated that turnover tax paid under Ext.P1 shall not be refunded. The Court held the exclusion of certain dealers from Ext.P1 exemption as unconstitutional, allowing the first prayer to quash Ext.P1. The Court found that the collection of turnover tax from the petitioner after 29-10-1992 was illegal and unconstitutional.

Issue 2: Entitlement to refund of turnover tax paid after Ext.P1 notification
The Court considered whether the petitioner was entitled to a refund of turnover tax paid post the Ext.P1 notification. The learned single Judge initially declined the refund, citing no discrimination under Ext.P2 notification. However, the Court found that dealers excluded from Ext.P1 exemption were forced to pay turnover tax illegally post-29-10-1992. Referring to Mafatlal Industries Ltd. v. Union of India, the Court held that the petitioner was entitled to a refund for the turnover tax paid after 29-10-1992.

Issue 3: Consideration of burden of duty passed on to a third person for refund eligibility
The Court analyzed whether the burden of duty was passed on to a third party, affecting refund eligibility. The petitioner contended that the turnover tax was paid out of profit, not collected from customers. The State argued that the payment was factored into the price structure. The Court found the petitioner entitled to a refund as the payment was not reflected in the price structure, relying on Deputy Commr. Andaman v. Consumer Co-op. Stores Ltd. The Court directed the respondents to refund the turnover tax paid by the appellant from 29-10-1992 within six months.

In conclusion, the Court modified the judgment, granting the petitioner a refund of the turnover tax paid after 29-10-1992, emphasizing the illegal collection of tax post the Ext.P1 notification and the absence of burden passed on to customers.