2019 (10) TMI 677 - HC - VAT and Sales Tax

Refund claim - amount deposited towards its liability of turnover tax under Section 3-G of the U.P. Trade Tax Act, 1948 - period 24.01.2005 to 31.01.2005 - HELD THAT - The fact that the assessee deposited that amount two days after withdrawal of the ordinance, would also be of no relevance as what is relevant to be seen is the date on which the liability arose and whether the withdrawal of the ordinance had any impact on the liability that stood crystallized. Examined in that perspective, the withdrawal of the offending ordinance was only prospective. There is no case of the assessee it was made with retrospective effect. Accordingly, the turnover tax liability existed in law up to 23.02.2005. The case of the assessee falls in the last category as discussed above, where the liability related to the period prior to 03.02.2005 but it stood realized and thus recovered. The assessee could not have claimed for refund either under the existing law or the administrative decision of the State contained in the communication dated 26.07.2005. There is no room to examine the issue any further, in the present revision application - revision dismissed.

Summary

Issues:
1. Refusal to refund turnover tax deposited by the assessee.
2. Legality of retaining the tax imposed and subsequently withdrawn.

Analysis:
1. The revision was filed against the Tribunal's order refusing to refund the amount of turnover tax deposited by the assessee under Section 3-G of the U.P. Trade Tax Act, 1948 for a specific period. The assessee claimed that the tax was deposited under the demand notice and was subsequently withdrawn by a notification. The key argument was that the tax was not collected from customers and was deposited involuntarily. The court noted that the liability arose before the withdrawal of the ordinance, making the prospective withdrawal ineffective on the crystallized tax liability. The court also emphasized that the withdrawal was not retrospective, and the liability existed until the specified date, justifying the refusal to refund the amount.

2. The second issue raised was regarding the retention of the tax imposed but later withdrawn, and whether it violated principles of natural justice and undue enrichment. The court highlighted that the administrative decision not to recover the tax for a certain period did not apply to cases where the amount had already been recovered. The communication from the Additional Commissioner clarified that no fresh recoveries were to be made for a specific period unless the amount had already been collected. Since the assessee had paid the tax for the period in question, the court concluded that there was no legal basis for a refund, either under existing law or administrative decisions. The court dismissed the revision, affirming the Tribunal's decision not to refund the tax amount deposited by the assessee.