2001 (1) TMI 983 - HC - VAT and Sales Tax

Summary

Issues:
Petitioner seeks to quash rejection of application under Section 22 of U. P. Trade Tax Act, 1948 for tax refund on chemical fertilizers sales due to retrospective exemption. Dispute arises on refund procedure under Section 29-A of the Act and Rule 107 of U. P. Trade Tax Rules, 1948.

Analysis:

Issue 1: Application Rejection
The petitioner's application under Section 22 of the U. P. Trade Tax Act, 1948 was rejected by respondent No. 2 on 6th January, 2001, citing non-compliance with the refund procedure prescribed under Section 29-A (3) of the Act read with Rule 107 of the U. P. Trade Tax Rules, 1948. The Assessing Authority found that the tax amount was not refunded as per the prescribed procedure, leading to the rejection of the application.

Issue 2: Compliance with Refund Procedure
The petitioner contended that it had deposited the tax amount realized from purchasers along with the returns for August and September 2000, and subsequently refunded the amount to the purchasers upon the retrospective exemption notification. The petitioner argued that it should not be required to pay the tax amount twice, emphasizing compliance with the refund procedure under Section 29-A (3) of the Act and Rule 107 of the Rules.

Issue 3: Refund to Purchasers
The Court considered the petitioner's claim that the amount was refunded to the purchasers directly, as evidenced by credit notes issued to them. Refund to purchasers is a key aspect governed by Section 29-A (3) of the Act and Rule 107 of the Rules. The Court referred to a previous judgment emphasizing that if the dealer has refunded the amount to the purchaser, it should be taken into account, and the dealer should not be required to deposit the amount again with the Assessing Authority.

Issue 4: Assessing Authority's Role
The Assessing Authority's role is crucial in verifying whether the petitioner had refunded the entire tax amount realized from the purchasers. The Court directed the Assessing Authority to conduct an inquiry to ascertain if the full amount had been refunded. If proven, the petitioner would be entitled to adjustment only for the refunded amount. The Authority was instructed to give notice to purchasers and conduct necessary inquiries to determine the refund status accurately.

Conclusion:
The High Court allowed the writ petition, quashing the rejection order dated 6th January, 2001. Respondent No. 2 was directed to reconsider the matter in light of the observations made in the judgment. The petitioner was instructed to provide a certified copy of the order to the Assessing Authority, and the recovery of the tax amount in question was stayed until the Authority disposed of the matter as per the Court's directions.