2015 (10) TMI 359 - HC - VAT and Sales Tax

Levy of interest - tribunal confirmed the demand of interest without considering the heavy amount of refund, due for the previous period, available for adjustment against the dues for the succeeding year - Held that - On the date when the appellant exercised the option under section 52 of the Act for adjustment of refund for the year 1999-2000 against the tax dues of the year 2000-2001, his entitlement to refund for the year 1999-2000 was not yet adjudicated, therefore, there was no question of exercising option under section 52 of the Act at that stage. The appellant ultimately succeeded in its appeal before the first appellate authority on 8.11.2004, whereupon the appellant became entitled to the refund. Therefore, amount due by way of refund under an order dated 8.11.2004 could not have been adjusted against the tax liability of the year 2000-2001. It may be that for the period the Department retained the moneys of the appellant, it may be entitled to interest thereon from the date on which such amount had been paid, however, the claim for adjustment of such amount towards the tax dues of the year 2000-2001 at the relevant time was wholly without any basis. Under the circumstances, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, so as to warrant interference. - Decided against assessee.

Summary

Issues:
- Interpretation of section 47(4A)(b) of the Sales Tax Act
- Consideration of heavy refund against dues for the succeeding year
- Interpretation of section 52 of the Sales Tax Act for refund adjustment
- Granting due interest on refund amount due to excess payment in earlier year
- Passing a just and proper order under section 60(6) of the Sales Tax Act

Interpretation of section 47(4A)(b) of the Sales Tax Act:
The appellant appealed against an order passed by the Gujarat Value Added Tax Tribunal, challenging the levy of interest under section 47(4A)(b) of the Sales Tax Act. The Tribunal partly allowed the appeal, confirming the interest levy but deleting the penalty. The appellant contended that the interest should not have been levied as they had exercised the option under section 52 of the Act to adjust a refund due from a previous year against the tax demand for the current year. The High Court agreed with the Tribunal's decision, stating that the appellant could only exercise the option for refund adjustment after the refund amount had been determined by the competent authority. As the refund for the previous year was not yet adjudicated when the appellant sought to adjust it against the current year's tax liability, the interest levy was deemed justified under section 47(4A)(b).

Consideration of heavy refund against dues for the succeeding year:
The appellant argued that the heavy amount of refund due from the previous year should have been considered for adjustment against the dues for the succeeding year, leading to no case for levying interest. However, the Tribunal found that the appellant could not unilaterally decide the refund and adjust it against any tax liability. The Tribunal held that the refund could only be claimed once it was decided by the competent authority, which occurred after the first appeal in November 2004. Therefore, the Tribunal concluded that the appellant was liable to pay interest under section 47(4A)(b) of the Act.

Interpretation of section 52 of the Sales Tax Act for refund adjustment:
The appellant relied on section 52 of the Act, which allows for refund adjustment against tax dues of another period. The High Court clarified that for entitlement to such refund adjustment, there must be a determination by an authority under the Act that the person has paid an amount in excess of what is due. As the refund for the previous year was not yet determined when the appellant sought to adjust it against the current year's tax dues, the High Court upheld the Tribunal's decision that the interest levy was justified.

Granting due interest on refund amount due to excess payment in earlier year:
The appellant also contended that interest should have been granted on the refund amount arising from an excess payment in the earlier year. The High Court, however, found that the appellant's claim for adjustment of the refund against the current year's tax liability was premature as the refund amount had not been determined at that time. Therefore, the High Court upheld the Tribunal's decision to levy interest under section 47(4A)(b) of the Act.

Passing a just and proper order under section 60(6) of the Sales Tax Act:
The Tribunal was criticized for not passing a just and proper order as contemplated under section 60(6) of the Sales Tax Act. However, the High Court found that the Tribunal's decision to levy interest under section 47(4A)(b) was legally sound and did not warrant interference. Therefore, the appeal was dismissed.