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2020 (3) TMI 996 - HC - VAT and Sales TaxRefund of differential tax - Input tax credit - rate of tax on LNG - situation post GST regime - It is the case of the petitioners that prior to coming into force of Goods and Service Tax regime in India, LNG was taxable under the Act 2003 at the rate of 15%, the IOCL-respondent No.3 charged tax at the rate of 15% on sales of LNG to the petitioners. The petitioners under the VAT Act were entitled to claim input tax credit of the tax so charged by the IOCL after reduction at the rate of 4% under Section 11(3) (b)(iii) of the Act 2003. HELD THAT - The petitioners are entitled to get refund of amount of tax paid by it at the rate of 9% when the respondent No.3 has collected the tax at the rate of 15% instead of 6% as per remission order dated 05.09.2017 from the respondent-State. The petitions succeeds and are accordingly allowed - the respondents are directed to process refund claim of the petitioners for refund of the 9% tax amount collected from the petitioners and deposited by the respondent No.3 IOCL within a period of three months from the date of receipt of copy of the writ of this judgment.
Issues Involved:
1. Legality of Condition No.2 of the remission order dated 05.09.2017. 2. Refund of excess tax collected due to the interpretation of Condition No.2. 3. Clarification on the applicability of remission order to inter-state sales. Detailed Analysis: 1. Legality of Condition No.2 of the Remission Order Dated 05.09.2017: The petitioners initially challenged Condition No.2 of the remission order dated 05.09.2017, which mandated that the selling dealer charge and collect full tax on inter-state sales of natural gas. However, during the proceedings, the petitioners decided not to press prayers A and B, which sought to strike down this condition and to seek clarification on its applicability. The petitioners restricted their plea to prayer C, focusing on the refund of excess tax collected. 2. Refund of Excess Tax Collected Due to the Interpretation of Condition No.2: The petitioners argued that IOCL, the respondent No.3, misinterpreted the remission order and continued to charge tax at the rate of 15% instead of the remitted rate of 6% on sales of LNG. The petitioners sought a refund of the excess tax collected from 05.09.2017 to July 2019. The court noted that the State had clarified that the remission order did not override the Central Sales Tax Act, 1956, and if Form 'C' was furnished, the sales would be governed by the Central Tax Act. Consequently, the petitioners were entitled to a refund of the excess tax collected. 3. Clarification on the Applicability of Remission Order to Inter-State Sales: The court referred to the affidavit-in-reply filed by the State, which clarified that the remission order did not overreach the Central Sales Tax Act, 1956. If Form 'C' was furnished, the inter-state sales would be governed by the Central Tax Act, and the remission order would apply accordingly. IOCL had started charging tax at the remitted rate of 6% from August 2019, and the petitioners sought a refund for the period before this correction. Conclusion: The court allowed the petitions concerning prayer C, directing the respondents to process the refund claim for the excess tax collected. The court emphasized that the petitioners, who bore the ultimate burden of the tax, were entitled to the refund. The respondents were instructed to process the refund within three months from the date of receipt of the judgment, ensuring compliance with the remission order dated 05.09.2017. The judgment was made absolute to the extent of granting the refund, with no order as to costs.
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