2022 (2) TMI 1166 - HC - VAT and Sales Tax

Disbursal of pending refund - disbursal of interest on account of delay in disbursing refund amount - refund of the amount collected from the writ applicant by the seller of natural gas and deposited with the respondent authorities under the Central Sales Tax Act, 1956 - 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.KI. Cement Ltd. vs. State of Gujarat, 2020 (3) TMI 140 - GUJARAT HIGH COURT where it was held that the respondents are directed to forthwith process the refund claims of the respective petitioners and grant refund of the tax amount collected from the petitioners and deposited by the seller in accordance with law within a period of twelve weeks of the receipt of a copy of this judgment. 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 (IOCL) in accordance with law within a period of eight weeks of the receipt of a copy of this judgment - application allowed.

Summary

Issues Involved:
1. Refund of excess tax collected.
2. Entitlement of refund to the purchaser.
3. Principle of unjust enrichment.
4. Compliance with the Rajasthan High Court's order.
5. Procedural aspects of refund claims.

Detailed Analysis:

1. Refund of Excess Tax Collected:
The writ applicant sought a direction for the refund of INR 2,30,11,188/- collected by the seller (Indian Oil Corporation Limited, IOCL) and deposited with the respondent authorities under the Central Sales Tax Act, 1956. The authorities in Rajasthan had refused to issue "C" Form declarations for the purchase of natural gas at a concessional rate post-GST implementation, leading to the collection of tax at a higher rate.

2. Entitlement of Refund to the Purchaser:
The respondents argued that the refund could only be made to the seller (IOCL) after its assessment for the relevant period, not to the writ applicant, who is not registered as a dealer in Gujarat. However, the court noted that the issue was covered by a previous decision in J.KI. Cement Ltd. vs. State of Gujarat, where it was held that the ultimate burden of tax borne by the purchaser entitles them to the refund.

3. Principle of Unjust Enrichment:
The court emphasized that refunding the tax to IOCL, who had already passed on the tax burden to the writ applicant, would result in unjust enrichment. It referred to the Supreme Court's decision in State of M.P. v. Vyankatlal, which stated that only the person who bore the ultimate burden of tax is entitled to a refund.

4. Compliance with the Rajasthan High Court's Order:
The Rajasthan High Court had directed the authorities to issue "C" Form declarations and refund any excess tax collected. The respondents' stance that the refund claim should be processed during IOCL's assessment and then paid to the writ applicant was deemed impractical and legally untenable. The court highlighted that the Rajasthan High Court's order must be complied with, and the refund should be processed within twelve weeks of the application.

5. Procedural Aspects of Refund Claims:
The court rejected the respondents' argument that the refund application must be made by IOCL. It noted that the petitioners had complied with the procedural requirements by submitting the necessary documents and that the respondents were duty-bound to process the refund claims within the stipulated time frame. The court directed the respondents to process the refund claim of the writ applicant and grant the refund within eight weeks.

Conclusion:
The court allowed the writ application, directing the respondents to process the refund claim and grant the refund of the tax amount collected from the writ applicant and deposited by IOCL within eight weeks. The decision underscored the importance of adhering to judicial directions and ensuring that the party bearing the ultimate tax burden receives the refund, thereby preventing unjust enrichment.