2015 (5) TMI 883 - SC - VAT and Sales Tax

Validity of High Court s order - Order of refund when order already attained finality - Held that - High Court should not have passed the order of refund as the assessment order passed by the assessing authority for the assessment year 1995-96 has attained finality. It is only when a rectification of application is considered and decided by the assessing authority then only the respondent would be entitled for refund of the tax paid. - Decided in favour of Revenue.

Summary

Issues:
1. Rectification of assessment order under the Haryana General Sales Tax Act, 1973.
2. Refund of tax amount with statutory interest.
3. Finality of assessment order and entitlement to refund.

Analysis:
1. The respondent, a proprietorship firm engaged in building works contracts, faced an assessment for the year 1995-1996 by the assessing authority. The authority raised an additional demand of &8377; 1,05,511/- due to dissatisfaction with the filed returns and non-appearance of the respondent before them. Subsequently, the respondent applied for rectification under Section 33 of the Haryana General Sales Tax Act, 1973, which was rejected in 2005 by the assessing authority citing the limitation of rectification to clerical or arithmetical mistakes apparent within two years of the assessment order.

2. Following the rejection, the respondent filed a Writ Petition before the High Court seeking a refund of the tax amount of &8377; 15,91,662/- deducted at the source. The High Court acknowledged the timely filing of the rectification application by the respondent and criticized the assessing authority for not considering the application promptly. Despite the finality of the assessment order, the High Court directed the appellant to refund the tax amount with interest, a decision challenged in the Supreme Court.

3. The Supreme Court, in its judgment, noted that the assessment order's finality precluded the immediate refund of the tax amount. The Court emphasized that a refund could only be granted upon the consideration and decision of the rectification application by the assessing authority. Consequently, the Supreme Court allowed the appeal, setting aside the High Court's judgment, and directed the assessing authority to review the respondent's rectification application filed within the prescribed time, ensuring due process and appropriate orders in compliance with the law.

In conclusion, the Supreme Court's decision highlights the importance of procedural compliance and the necessity for the assessing authority to duly consider rectification applications within the statutory framework before determining the entitlement to a refund of tax amounts.