2020 (12) TMI 276 - HC - VAT and Sales Tax

Condonation of inordinate delay in filing the petition - transportation of fertilizers, food grains etc. at various places for and on behalf of the State of Tripura - stand of petitioner is that there was no sale or transfer of the right to use the goods or execution of work order and that therefore; this transaction did not invite Value Added Tax - HELD THAT - Though, exercise of writ jurisdiction under Article 226 of the Constitution of India is not governed by any statutory provision of limitation, the Courts proceed on the basis that such discretionary exercise of power would not be done in favour of a person who is not vigilant in pursuing his rights and remedies. The Court would not favour a litigant who is tardy, has approached the Court after gross delay that too without any explanation for inordinately long time consumed. In this context, thus, the Courts while exercising writ jurisdiction, invoke the principle of delay and laches, though not limitation. One of the guiding principles that may persuade the Court to exercise or not to exercise writ jurisdiction is, what is the period of limitation prescribed for filing the suit, if the petitioner had to file such a civil proceeding. If the petitioner has missed the limitation for filing a suit, the Court would be reluctant to exercise the writ jurisdiction, unless of course either there is a valid explanation for delay or there are some special or extraordinary reasons for entertaining petition at such a late stage. This preamble was necessary because in the present cases the taxes were collected during the period between the financial year 2013-2014 to 2015-2016. Present petitions came to be filed on or around 21st August, 2020. There is, thus, minimum delay of only five years in raising the demands. All that the petitioner has offered by way of explanation for such delay is that the petitioner first approached the authorities under RTI Act for collecting information and then made a request for refund of the taxes. The decision in case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT was distinguished on the ground that the said case arose in the backdrop of the Customs Act and Central Excise and Salt Act. The question of delay and laches was not involved in the said petition. Petition dismissed.

Summary

Issues Involved:
1. Legality of VAT deduction on transportation services.
2. Delay and laches in filing the petition for refund of VAT.
3. Applicability of previous judgments and legal principles to the present case.
4. Authority of the Court to grant refunds of taxes collected without authority of law.

Comprehensive, Issue-Wise Detailed Analysis:

1. Legality of VAT Deduction on Transportation Services:
The petitioner, a goods carriage contractor, argued that the VAT department of Tripura collected tax at source at 6% on the bill amount for transportation services rendered during the financial years 2013-2014 to 2015-2016. The petitioner contended that the transportation of goods such as fertilizers, seeds, and food grains did not involve any sale or transfer of property in goods, nor was it a works contract, and hence, VAT was not applicable. The petitioner relied on previous judgments, including *Sri Dipak Bhattacharjee Vs. State of Tripura* and *Shri Ashish Kumar Dey Vs. State of Tripura*, where the Court held that transportation services do not attract VAT and directed the refund of such taxes.

2. Delay and Laches in Filing the Petition for Refund of VAT:
The Court noted that the petitions were filed after a significant delay, with the taxes being collected between 2013-2014 and 2015-2016, and the petitions being filed only in August 2020. The petitioner explained the delay by stating that he sought information under the RTI Act in January 2020 and subsequently requested a refund in June 2020. However, the Court found this explanation insufficient, emphasizing that the petitioner had previously approached the Court for similar refunds in 2015 and should have been aware of his rights and remedies. The Court highlighted the principle that discretionary writ jurisdiction would not favor a tardy litigant without a valid explanation for the delay.

3. Applicability of Previous Judgments and Legal Principles to the Present Case:
The petitioner relied on the Supreme Court's decision in *Mafatlal Industries Ltd. Vs. Union of India*, arguing that the principles laid down therein, which dealt with the Customs and Central Excise Acts, should not apply to the present case under the Tripura Value Added Tax Act, 2004, which lacks a specific refund mechanism. The Court, however, referred to the principles established in *Mafatlal Industries*, particularly the requirement for each assessee to challenge the levy and seek refunds within a reasonable time, and not to rely on judgments in other cases years later. The Court reiterated that delay and laches could not be ignored, even in cases of tax collected without authority of law.

4. Authority of the Court to Grant Refunds of Taxes Collected Without Authority of Law:
The Court acknowledged that it has the power to order refunds of taxes collected without authority of law, as established in cases like *Salonah Tea Company Ltd. Vs. Superintendent of Taxes, Nowgong* and *U.P. Pollution Control Board Vs. Kanoria Industrial Ltd.*. However, it emphasized that such power should be exercised sparingly and not in cases involving inordinate and unexplained delays. The Court distinguished the present case from those cited by the petitioner, noting that the earlier cases did not involve significant delays or laches.

Conclusion:
The petitions were dismissed due to the inordinate and unexplained delay in filing them. The Court held that the petitioner could not seek a refund of VAT collected years earlier without a valid explanation for the delay, despite the tax being collected without authority of law. The principles of delay and laches were applied, and the Court emphasized the need for timely pursuit of legal remedies. Pending applications, if any, were also disposed of.