2018 (6) TMI 1616 - HC - VAT and Sales Tax

Refund of amount paid in excess alongwith interest - Sales Tax Deferment scheme - Relief under OTS Scheme - outstanding Sales Tax Deferment dues on electricity duty - HELD THAT - The petitioner is asking for refund of ₹ 79.79 lakhs which the petitioner deposited with the Department for the period 16.08.2006 to 25.02.2008. It is the case on behalf of the petitioner that the said amount of ₹ 79.79 lakhs was paid by the petitioner for the period 16.08.2006 to 25.02.2008 towards the Sales Tax Deferment amount and the same was credited by the Sales Tax Officer, Bharuch, pending its application for registration under the GBIFR and the said amount was paid to avoid coercive action for non-payment of principal dues and as such the said amount was deposited towards principal dues and therefore, while considering the outstanding dues as on 31.03.2010, the amount of ₹ 79.79 lakhs already paid for the period 16.08.2006 to 25.02.2008 was required to be adjusted / appropriated towards principal dues and consequently, the outstanding dues as on 31.03.2010 can be said to be ₹ 1,70,20,866/- lakhs and therefore, the amount paid in excess of the said amount, i.e. ₹ 79.79 lakhs can be said to be paid in excess and therefore, the petitioner is entitled to the refund of the same. It is required to be noted that whatever the amount was deposited by the petitioner, in the present case for the period 16.08.2006 to 25.02.2008 was paid by the petitioner before even the petitioner was registered as a sick unit under the GBIFR as per the earlier Scheme of 12.05.2004. The said Scheme came to be withdrawn and thereafter, the petitioner applied afresh for getting the benefit under the subsequent Scheme dated 15.07.2010. Therefore, the outstanding amount as on 31.03.2010 was required to be considered. The outstanding dues were required to be considered as on 31.03.2010 which was ₹ 250 lakhs as observed hereinabove. The earlier payment of ₹ 79.79 lakhs was already earlier adjusted towards the amount of interest as per the relevant provisions of the Sales Tax Act, more particularly, Section 47(4B) of the Act. Under the circumstances, it cannot be said that the petitioner made th e payment of ₹ 79.79 lakhs in excess for which he shall be entitled to the refund. Petition dismissed - decided against petitioner.

Issues Involved:

1. Whether the petitioner is entitled to a refund of ?79.79 lakhs deposited towards Sales Tax Deferment dues.
2. Whether the amount deposited by the petitioner should be adjusted towards the principal dues or interest.
3. The applicability of the provisions of the Gujarat Sales Tax Act, specifically Section 47(4B).

Detailed Analysis:

1. Entitlement to Refund of ?79.79 Lakhs:

The petitioner, a Public Limited Company engaged in the business of aluminium extruded products, sought a refund of ?79.79 lakhs deposited towards Sales Tax Deferment dues. The petitioner argued that this amount was paid to avoid coercive action and should be adjusted against the principal dues of ?250 lakhs. The petitioner contended that the amount was paid under verbal instructions from the Sales Tax Department and should be credited towards the principal dues as per the Government Resolution dated 12.05.2004.

The court, however, noted that the amount was deposited before the petitioner was registered as a sick unit under the GBIFR. The court found that the petitioner applied afresh for benefits under a subsequent scheme dated 15.07.2010, and the outstanding amount as on 31.03.2010 was ?250 lakhs. The court held that the petitioner was not entitled to a refund of ?79.79 lakhs as the amount was rightly appropriated towards interest as per the provisions of the Gujarat Sales Tax Act.

2. Adjustment of Amount Towards Principal Dues or Interest:

The petitioner argued that the amount of ?79.79 lakhs should be adjusted towards the principal dues of ?250 lakhs. The petitioner claimed that the payment was made to avoid coercive recovery and should be credited towards the principal dues as per the Government Resolution. The petitioner also contended that there is no provision in law that entitles the respondents to adjust the payment towards interest first.

The court, however, found that the amount of ?79.79 lakhs was paid before the petitioner was declared a sick unit under the GBIFR. The court held that the amount was required to be adjusted towards interest as per Section 47(4B) of the Gujarat Sales Tax Act, which mandates that any payment made by a dealer should first be applied towards interest, then penalty, and finally towards tax. The court concluded that the amount was rightly appropriated towards interest, and the principal amount due as on 31.03.2010 was ?250 lakhs.

3. Applicability of Section 47(4B) of the Gujarat Sales Tax Act:

The petitioner contended that the amount of ?79.79 lakhs should be adjusted towards the principal dues and not interest. The petitioner argued that the payment was made under verbal instructions and should be credited towards the principal dues as per the Government Resolution.

The court, however, held that the provisions of Section 47(4B) of the Gujarat Sales Tax Act were applicable. The court noted that the section provides that any payment made by a dealer should first be applied towards interest, then penalty, and finally towards tax. The court found that the amount of ?79.79 lakhs was rightly appropriated towards interest, and the principal amount due as on 31.03.2010 was ?250 lakhs.

Conclusion:

The court dismissed the petition, holding that the petitioner was not entitled to a refund of ?79.79 lakhs. The court found that the amount was rightly appropriated towards interest as per Section 47(4B) of the Gujarat Sales Tax Act. The court concluded that the principal amount due as on 31.03.2010 was ?250 lakhs, and the petitioner was not entitled to any refund. The petition was dismissed with no costs.

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