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2020 (8) TMI 222 - HC - VAT and Sales TaxRefund of tax collected from the seller of diesel and deposited with the respondent-authorities, in the absence of C-Forms - Non-issuance of C-forms - purchase of diesel at concessional rate - CST Act, 1956 - denial to issue forms on the ground that after introduction of the GST regime, the registration certificates of the dealers such as the writ applicant, automatically stood cancelled and they were not eligible for making purchases of diesel against C form declarations - HELD THAT - The issue raised in the present litigation is squarely covered by a decision of a Coordinate Bench of this Court in the case of J.K. CEMENT LTD. VERSUS STATE OF GUJARAT 2020 (3) TMI 140 - GUJARAT HIGH COURT where it was held that in the absence of C forms having been issued by the Rajasthan authorities, the respondent authorities have collected excess tax from the seller-Reliance Industries Limited, who in turn has collected the same from the petitioners. Once the Rajasthan authorities issue C forms against the sales made by Reliance Industries Limited to the petitioners and the petitioners produce the requisite documents/forms before the respondent authorities, the respondent authorities are required to process such claim within twelve weeks of the same being made in writing by the petitioners. The respondents are directed to forthwith process the refund claim of the writ applicant and grant the refund of the tax amount collected from the writ applicant and deposited by the seller in accordance with law within a period of twelve weeks of the receipt of a copy of this judgment - Application allowed.
Issues Involved:
1. Refund of excess tax collected 2. Issuance of C form declarations 3. Applicability of CST Act post-GST regime 4. Principle of unjust enrichment 5. Compliance with Rajasthan High Court’s order Issue-wise Detailed Analysis: 1. Refund of Excess Tax Collected: The writ applicant, a Public Limited Company, sought a refund of ?33,85,782 collected as tax by the seller (Reliance Industries Ltd.) and deposited with the respondent authorities under the CST Act. The authorities in Rajasthan refused to issue C form declarations post-GST regime, leading to the collection of tax at a higher rate (20%) instead of the concessional rate (2%). The Rajasthan High Court directed the issuance of C form declarations and refund of excess tax collected. The respondents argued that the refund could only be made to the seller after its assessment was concluded. 2. Issuance of C Form Declarations: The Rajasthan authorities initially refused to issue C form declarations for diesel purchases post-GST regime, claiming the registration certificates were automatically canceled. This refusal led to the seller charging full tax. The Rajasthan High Court ruled that the authorities erred in refusing to issue C form declarations and directed them to issue the forms and refund any excess tax collected. 3. Applicability of CST Act Post-GST Regime: Despite the introduction of the GST regime, certain commodities, including diesel, continued to be governed by the CST Act for inter-State transactions. The refusal to issue C form declarations was based on a misinterpretation that the GST regime nullified existing CST registrations. 4. Principle of Unjust Enrichment: The court emphasized that the refund should be granted to the party bearing the ultimate tax burden to avoid unjust enrichment. The seller (Reliance Industries Ltd.) collected the tax from the petitioner and deposited it with the authorities. Since the petitioner bore the tax burden, they were entitled to the refund, not the seller. The court referred to previous judgments, including the Supreme Court’s ruling in State of M.P. v. Vyankatlal, which established that only the party bearing the ultimate burden is entitled to a refund. 5. Compliance with Rajasthan High Court’s Order: The Rajasthan High Court had directed the authorities to issue C form declarations and refund the excess tax within twelve weeks of the refund claim. The Gujarat High Court reiterated this directive, emphasizing that the respondents must comply with the order and process the refund claims promptly. The court dismissed the respondents' argument that the refund could only be processed after the seller’s assessment, stating it would lead to unnecessary delays and potential unjust enrichment. Conclusion: The Gujarat High Court allowed the writ application, directing the respondents to process the refund claim of ?33,85,782 collected from the petitioner and deposited by the seller within twelve weeks, in accordance with the law. The court emphasized that the refund should be granted to the petitioner, who bore the ultimate tax burden, and not to the seller, to avoid unjust enrichment.
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