2015 (2) TMI 884 - HC - VAT and Sales Tax

Refund of amount deposited as the Entry Tax - In the light of the decision of the Tribunal, as affirmed by the High Court, the petitioner was not liable to pay any Entry Tax on Carbon Black Feed Stock (CBFS) - Held that - A perusal of the Section 29 indicates that the assessing authority shall refund to dealer any amount of tax, which is paid in excess of the amount due from him under the Act along with interest @ 12% per annum after adjusting towards the tax or any amount outstanding against the dealer under the Act or under the Central Sales Tax Act. Sub-clause (3) of Section 29 of the Act further stipulates that no amount would be refunded where the dealer admits the liability to pay tax in its return. - In the light of the provision there is a specific direction of the Tribunal to refund the amount deposited by the petitioner as no amount of Entry Tax was payable on CBFS as it was not a notified item. The order of the Tribunal has been affirmed by the High Court and, consequently, the respondents were duty bound to refund the amount under Section 29 of the Act. The Tribunal also found that the petitioner had not admitted its liability to pay the tax and had deposited the same under protest in terms of the interim order passed by the High Court. This finding of the Tribunal has also become final and, consequently, it was no longer open to the respondents to reject the petitioner s application on the same ground, which has been dealt and decided by the Tribunal and which has been affirmed by the High Court. Impugned order passed by the assessing authority dated 16.7.2014 cannot be sustained and is quashed - writ of mandamus is issued commanding the assessing authority to refund the amount deposited towards Carbon Black Fee Stock (CBFS) for the assessment years 2006-07 and 2007-08, upto 31st December, 2007. - Interest payable under Section 29(2) of the Act of 1948 would also be calculated from the date of service of the order of the Tribunal @ 12 % per annum till actual refund is made. The said amount shall be paid within six weeks from the date of the production of a certified copy of this order. - Decided in favour of appellant.

Summary

Issues Involved:
1. Imposition of Entry Tax on Carbon Black Feed Stock (CBFS).
2. Refund of the Entry Tax paid along with interest.
3. Admittance of tax liability in returns.
4. Pending litigation before the Supreme Court affecting the refund process.

Detailed Analysis:

Imposition of Entry Tax on CBFS:
M/s Hi-Tech Carbon Co., engaged in the manufacture and sale of "Carbon Black," was subjected to Entry Tax on Carbon Black Feed Stock (CBFS) for the assessment periods 2004-05, 2006-07, and 2007-08 under the U.P. Tax on Entry on Goods Act, 2000, and U.P. Tax on Entry of Goods into Local Areas Act, 2007. The petitioner disputed this imposition, arguing that CBFS was not a notified good under the Acts. The High Court initially upheld the validity of the Entry Tax Act, 2007, but the petitioner filed a Special Leave Petition, resulting in an interim order from the Supreme Court.

Refund of the Entry Tax Paid Along with Interest:
The Tribunal ruled that CBFS was not liable to Entry Tax, ordering a refund of the tax paid. This decision was affirmed by the High Court, making the petitioner not liable for Entry Tax on CBFS. Despite this, the assessing authority failed to refund the amount, leading the petitioner to file an application for refund, which was rejected. The petitioner then sought a writ of mandamus to compel the refund along with interest.

Admittance of Tax Liability in Returns:
The respondents argued that the tax deposited by the petitioner was admitted in its returns, thus not refundable under Section 29(3) of the U.P. Trade Tax Act, 1948. However, the Tribunal found that the petitioner had not admitted liability to pay Entry Tax in its returns, a finding that became final and binding. Consequently, the respondents' rejection of the refund application on this ground was erroneous.

Pending Litigation Before the Supreme Court Affecting the Refund Process:
The State contended that the refund should be withheld until the Supreme Court's final decision on the Special Leave Petition. However, the Supreme Court's interim order required the State to refund the amount with interest if it lost the case. The Tribunal's decision, affirmed by the High Court, rendered the issue of the Entry Tax's validity before the Supreme Court academic concerning the petitioner. Thus, the respondents were obligated to refund the amount irrespective of the pending litigation.

Conclusion:
The court quashed the assessing authority's order dated 16.7.2014 and allowed the writ petition, issuing a writ of mandamus to refund the amount deposited towards CBFS for the assessment years 2006-07 and 2007-08. Interest payable under Section 29(2) of the Act of 1948 was to be calculated from the date of service of the Tribunal's order at 12% per annum until the actual refund was made. The amount was to be paid within six weeks from the production of a certified copy of the order.