2022 (6) TMI 1 - HC - VAT and Sales Tax

Refund/Reimbursement of the local tax paid - Intra-State purchase of declared goods - entitlement to refund is subject to the condition that CST is paid on inter-State sale of such declared goods - Section 36(1) of the AVAT Act, 2003 read with Rule 22(1)(x) of the AVAT Rules, 2005 - HELD THAT - A reading of Section 15 (b) of the CST Act, 1956 goes to show that the reimbursement made under the said provision has to be done in such a manner subject to such condition as provided in any law in force in that State. It is stated that under the law in force in the State of Assam, no such manner has been provided as to how the amount has to be reimbursed. In view of the limited grievance raised, it is provided that in the event any such application is made by the petitioner, the authorities concerned shall pass a reasoned order on the claim for reimbursement purely on the merits of the claim of the petitioner within a period of two weeks from the date of such application along with a certified copy of this order and thereafter, within a period of six weeks from the date of such reasoned order to be passed, the process be brought to its logical end. Petition disposed off.

Summary

Issues:
Entitlement for refund of local tax paid on Intra-State purchase of declared goods subject to CST payment on Inter-State sale, Interpretation of Section 50 of AVAT Act 2003 for refund claim, Reimbursement under Section 15(b) of CST Act 1956, Lack of specific provision for reimbursement in State law, Application for reimbursement under CST Act.

Entitlement for Refund:
The assessment order dated 01.10.2019 concluded that there is an entitlement for refund of local tax paid on Intra-State purchase of declared goods subject to CST payment on Inter-State sale. The petitioner raised a grievance regarding the reimbursement of total tax paid on Intra-State purchase of declared goods. Section 50 of the AVAT Act 2003 was referred to, emphasizing the dealer's right to claim a refund if tax, interest, or penalty was paid in excess. The petitioner sought clarification on the admissibility of refund claimed under Section 15(b) of the CST Act 1956. The Court directed the authorities to pass a reasoned order on the reimbursement claim within a specified timeframe upon receiving an application from the petitioner.

Interpretation of Section 50 of AVAT Act 2003:
Section 50 of the AVAT Act 2003 provides for the refund of tax, interest, or penalty paid in excess by a dealer. The prescribed authority is required to refund the excess amount upon a claim made by the dealer within the prescribed manner and time. The provision also mandates adjusting the refund amount after considering any outstanding dues from the dealer. The Court highlighted the importance of following the prescribed procedure for claiming a refund under Section 50.

Reimbursement under Section 15(b) of CST Act 1956:
Section 15(b) of the CST Act 1956 stipulates the reimbursement of tax levied on the sale or purchase of declared goods inside the State when such goods are sold in the course of Inter-State trade. The reimbursement is subject to conditions specified in the State's law. The petitioner argued that the State law in Assam lacks specific provisions on the manner of reimbursement under Section 15(b). The Court acknowledged the absence of clarity in the State law and directed the petitioner to submit an application for reimbursement under the CST Act.

Application for Reimbursement under CST Act:
The Court directed the petitioner to submit an application to the Finance and Taxation Department of Assam, asserting the entitlement to reimbursement under Section 15(b) of the CST Act 1956. It was emphasized that the authorities must pass a reasoned order on the reimbursement claim within two weeks of receiving the application. The entire process, including the passing of the reasoned order and conclusion of the reimbursement process, should be completed within six weeks from the date of the application. The Court noted the omission of Section 15(b) of the CST Act 1956 but clarified its applicability to claims for the relevant assessment year when the provision was in force. The writ petition was disposed of based on the above terms.