2013 (11) TMI 561 - HC - VAT and Sales Tax

Refund of tax - Notification 7038 dated 31.1.1985 - Exemption under Section 8 (2-A) of the Central Sales Tax Act - Held that - A person who has deposited tax out of his own pocket cannot be permitted to be placed in a disadvantageous position than those who have not deposited tax at all. It has further been held that keeping in mind the object of the circular and the factual background for which it was issued, it is implied that the persons who have not paid tax etc. if already paid by a person without passing on the burden to the customer, the same shall be refunded to the dealer - Once the remission of tax is granted on the turnover of seeds prior to 1.7.1998 it ceases to be tax due and any amount deposited in excess is liable to be refunded under Section 29 (1) of the Act in the absence of anything to the contrary. There is nothing in the circular which prohibits or restricts refund of the excess amount. Therefore, in my view, the amount deposited in pursuance of the assessment order against the disputed amount of tax, in the absence of any prohibition, is liable to be refunded. It is not the case of the assessing authority that such tax has been admitted by the revisionist at any stage either in return or subsequently. There is nothing on record to show that the tax has been realized from the customer - Following decision of Anand Gramodyog Samiti Vs. Commissioner of Trade Tax, reported in 2005 (5) TMI 613 - ALLAHABAD HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Claim for exemption on the sale of certified seeds under Section 8 (2-A) of the Central Sales Tax Act - Refusal of refund by authorities despite waiver of tax and interest on sales of seeds - Interpretation of circular on remission of tax and interest - Entitlement of revisionist for refund under Section 29 (1) of the U.P. Trade Tax Act.

Analysis:
The revisions involved a common question of law regarding exemption claimed by the revisionist, a seed manufacturer, under the U.P. Trade Tax Act and Central Sales Tax Act for assessment years 1993-94, 94-95, and 95-96. The revisionist's claim for exemption on the sale of certified seeds was initially rejected by the assessing authority, leading to appeals and subsequent remand by the Tribunal. A circular issued by the Additional Commissioner regarding waiver of tax and interest on sales of seeds in sealed bags after 1.7.1998 was central to the dispute. The revisionist sought a refund of the tax deposited earlier, which was denied by the authorities, citing the circular's provision for waiver but not refund.

The revisionist contended that since the circular provided for waiver of tax and interest, it implied that no tax was legally due, thus justifying a refund under Section 29 (1) of the U.P. Trade Tax Act. Reference was made to a previous judgment emphasizing that a person who had paid tax out of their own pocket should not be disadvantaged. The court held that if tax had not been realized from customers and remission of tax had been granted, the amount deposited should be refunded to the dealer.

The court found that the present case aligned with the previous judgment, stating that once tax remission was granted, the amount ceased to be due, necessitating a refund of any excess deposit. Since the circular did not prohibit or restrict refunds, the revisionist was deemed entitled to a refund of the disputed tax amount deposited earlier. Noting the absence of evidence that tax had been admitted or realized from customers, the court concluded that the revisionist was eligible for a refund as per the interim order issued by the appellate authority.

Consequently, the court allowed all three revisions, ruling in favor of the revisionist's entitlement to a refund of the tax deposited against the disputed amount, as supported by the legal provisions and absence of contrary indications in the circular.