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2019 (4) TMI 1639 - HC - VAT and Sales Tax100% EOU - Refund claim - Section 4-E of the TNGST Act 1959 - HELD THAT - On reading Section 4-E, it is evident that the word used therein is 'unit' and not 'dealer'. As such, there is no doubt that a 100% EOU is entitled to the refund on satisfying the prescribed conditions. The use of the word 'unit' instead of the word 'dealer' is significant especially in the context of a statute wherein tax is ordinarily imposed on the dealer. In the instant case, it is the admitted position that the two units of the Petitioner are 100% EOU s. From the Registration certificate, it is evident that Rajapalayam Textiles and Rajapalayam Spintex are not separate legal entities but are branches/divisions of the dealer, Rajapalayam Mills Limited, in whose name the Registration Certificate was issued. If the meaning ascribed to the word 'unit' in the aforementioned dictionaries is applied and viewed in the factual context of the Registration Certificate and the Assessment Order, it becomes clear that the two units are constituents of the Petitioner. Whether the condition prescribed in Rule 23(2C) read with Form A-5 is satisfied in the instant case? - HELD THAT - A fortiori , in the context of a refund application, the principle of substantial compliance would apply. If so applied, it is clear that the two 100% EOUs paid taxes at 2-4% on the purchases made by them and thereby substantially complied with the conditions under Section 4-E read with Rule 23 (2C) and Form A-5. Therefore, the claim for refund is valid and, consequently, the Impugned Order is liable to be quashed. Refund allowed - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to refund under Section 4-E of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act). 2. Validity of rejection of refund claim by the Third Respondent. 3. Maintainability of the Revision Petition under Section 33 of the TNGST Act. 4. Interpretation of the term "unit" under Section 4-E of the TNGST Act. 5. Compliance with Rule 23(2C) and Form A-5 of the TNGST Act. Issue-wise Detailed Analysis: 1. Entitlement to Refund under Section 4-E of the TNGST Act: The Petitioner, a limited company with two 100% Export Oriented Units (EOUs), claimed a refund of ?10,98,993/- under Section 4-E of the TNGST Act for the assessment year 1996-97. Section 4-E entitles a 100% EOU to a refund of tax paid on the purchase of goods used in the manufacture and export of goods. The Original Assessment Order dated 05.05.1998 acknowledged the entitlement of the two EOUs to the refund, stating that the refund would be made separately. 2. Validity of Rejection of Refund Claim by the Third Respondent: The Third Respondent rejected the refund claim on 29.11.1999, citing three reasons: (a) non-payment of tax on the purchase value of cotton to the sellers, (b) the Petitioner not being a 100% EOU, and (c) the claim for refund being made after the completion of the final assessment. The Petitioner argued that Section 4-E does not specify that tax should be paid to the seller and that the tax was paid while filing monthly returns. The Petitioner also contended that the refund claim was made before the completion of the final assessment, as evidenced by the Original Assessment Order. 3. Maintainability of the Revision Petition under Section 33 of the TNGST Act: The Petitioner filed a Revision Petition under Section 33 of the TNGST Act after the refund claim was rejected. The Second Respondent rejected the Revision Petition, stating that the rejection of a refund claim is a continuation of the Original Assessment Order and should have been appealed. The Court found this reasoning untenable, noting that the Original Assessment Order recorded the entitlement to a refund, and the grievance arose from the subsequent rejection of the refund claim, making the Revision Petition maintainable. 4. Interpretation of the Term "Unit" under Section 4-E of the TNGST Act: The Court emphasized that Section 4-E uses the term "unit" rather than "dealer," indicating that a 100% EOU is entitled to a refund if the prescribed conditions are met. The term "unit" was interpreted based on common or trade parlance, with the Court concluding that the two EOUs, being branches/divisions of the Petitioner, are constituents of the Petitioner and eligible for the refund. 5. Compliance with Rule 23(2C) and Form A-5 of the TNGST Act: The Respondents argued that the refund claim required a certificate from the selling dealer confirming tax payment. The Petitioner countered that taxes were paid on the purchases of cotton, albeit not to the sellers, due to the point of imposition of tax. The Court referred to the principle of substantial compliance, as affirmed by the Supreme Court in relevant cases, and concluded that the Petitioner had substantially complied with the conditions under Section 4-E, Rule 23(2C), and Form A-5, thereby validating the refund claim. Conclusion: The Writ Petition was allowed, and the Impugned Order dated 15.02.2006 was quashed. The Respondents were directed to refund ?10,98,993/- to the Petitioner within 90 days, failing which the amount would carry interest at 12% per annum from the 91st day until payment. No order as to costs was made.
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