2019 (8) TMI 1873 - HC - VAT and Sales Tax

Levy of Luxury Tax - Refund claim - HELD THAT - The Honourable Apex Court in the case of M/s.Godfrey Philips India Ltd., V. The State of U.P. 2005 (1) TMI 391 - SUPREME COURT , had held that the State Government imposing Luxury Tax on gold, silver, platinum jewellery and precious stones is ultra vires the Constitution of India. Following the decision in M/s. Godfrey Philips India Ltd., V. The State of U.P., this Court had set aside the assessment orders therein, and directing the respondents to pass orders on the refund claim made. The present impugned assessment orders are also set aside - petition allowed.

Summary

Issues involved:
Challenge to assessment orders under the Tamil Nadu Tax on Luxuries Act, 1981 for the years 2002-03, 2003-04, and 2004-05 based on the decision of the Apex Court in M/s.Godfrey Philips India Ltd. v. The State of U.P.

Analysis:

The judgment concerns writ petitions challenging assessment orders under the Tamil Nadu Tax on Luxuries Act, 1981 for specific years. It references the decision of the Apex Court in M/s.Godfrey Philips India Ltd. v. The State of U.P., where it was held that the imposition of Luxury Tax on certain items by State Governments is ultra vires the Constitution of India. The High Court had previously set aside assessment orders in similar cases and directed refunds based on this decision (M/s.Godfrey Philips India Ltd. v. The State of U.P.). The Court emphasized the need for the respondents to consider refund claims in light of the Apex Court's decision and directed the petitioner to provide evidence that the tax liability was not passed on to customers.

The Court found that the respondents' rejection of refund claims lacked logic and failed to adhere to the Apex Court's decision. It emphasized that as the tax was indirect, the respondents should ensure that the liability was not transferred to customers by the assessee. Consequently, the Court set aside the assessment orders and directed the respondents to process refund claims within specified timelines, requiring the petitioner to submit necessary documentation to support their claim.

In light of the Apex Court's decision in M/s.Godfrey Philips India Ltd. v. The State of U.P. and the Court's previous rulings, the High Court set aside the impugned assessment orders for the relevant years. It granted the petitioner the liberty to seek refunds within 30 days, with the respondents instructed to process such applications promptly and make decisions within three months. The writ petitions were allowed, and no costs were imposed on the petitioner.

This judgment illustrates the application of legal principles established by the Apex Court in determining the validity of Luxury Tax imposition by State Governments and the subsequent refund claims by affected parties. The High Court's decision ensures compliance with constitutional provisions and upholds the rights of taxpayers in challenging unjust tax assessments.