2022 (11) TMI 1274 - HC - VAT and Sales Tax

Refund of the excess Central Sales Tax collected by IOCL and remitted to the State of West Bengal - production of Form C declarations - disallowance of claim for concessional rate of tax - whether the writ petitioner has locus standi to claim refund of the excess tax collected directly from the state of West Bengal and whether can be stated to be a person aggrieved over that portion of the assessment order of IOCL (2017-18), rejecting the Form C declarations filed by the writ petitioner on the grounds that IOCL have not filed revised return, not amended the invoices and not issued credit notes? - applicability of doctrine of unjust enrichment - if refund is ordered should it carry interest? - whether the State of West Bengal can claim for adjustment of the excess tax collected are to be dealt with? HELD THAT - The reasons for refusing to grant concessional rate of tax is on the ground that the IOCL has not revised their returns, they have not amended the invoices and not issued credit notes to the writ petitioner. Therefore, it is to be seen that whether there is a necessity for IOCL to file a revised return so as to enable the assessing officer to take note of the Form C declaration and levy concessional rate of tax. A combined and conjoint reading of Section 8(4) of the CST Act and the proviso to Rule 12(7) of the CST rules shows that the necessity to file revised return does not arise. In Radio and Electricals Limited 1966 (4) TMI 59 - SUPREME COURT , the Hon ble Supreme Court held that though the tax under the Act is levied primarily from the seller; the burden is ultimately passed on to the consumer of goods because it enters into price paid by them. The Parliament with a view to reduce the burden on the consumer arising out of the multiple taxation as provided in respect of sales of declared goods which have special importance in interstate trade or commerce and other classes of goods which was purchased at an intermediate stage in the stream of trade or commerce prescribed low rates of tax when transactions take place in the course of interstate trade or commerce. It was further held that the seller can have in these transactions no control over the purchaser and he has to rely upon the representation made to him, and he must satisfy himself that the purchaser is a registered dealer and the goods purchased are specified in the certificate and his duty extends no further. When Form C declarations are filed beyond the time prescribed the prescribed authority is empowered to accept such forms on being satisfied that the dealer was prevented by sufficient cause for not filing the forms within the time prescribed - In the instant case, the appellants/state have not raised any such contention that the dealer has not shown sufficient cause for having not been able to produce the form C declaration along with their returns or within the time prescribed. Thus, it goes without saying that the appellants are aware of the legal position as time limit prescribed for filing the form C declaration was directory as the statute empowered the prescribed authority to accept the declarations even after the expiry of the time prescribed. The underlying principle behind this interpretation is Article 265 of the Constitution of India. Whether the decisions which was referred to by the learned Advocate General more particularly the decision in George Oakes 1961 (4) TMI 78 - SUPREME COURT and Central Wines could be applied to the facts and circumstances of the case on hand? - HELD THAT - George Oakes (Private) Limited where dealers in motor cars, spare parts and accessories, for the years 1951-1952 and 1952-1953, they submitted their return and claimed exemption from tax with regard to the certain amount realized on transactions of sales which the appellant therein contended as interstate sales and hence exempt from tax under Article 286 of the Constitution as it stood at the relevant time. The assessing officer not only rejected the claim for exemption but added to the turn over certain amounts which the appellant had collected by way of tax - In Paragraph 12 of the decision, the Hon ble Supreme Court while rejecting the argument with regard to the validity of the statute observed that either the Principle Act or the impugned Act (Madras Act 17 of 1954) proceeds on any immutable distinction between sale price and tax as contended by the appellant. It was further pointed out that the Principle Act does not contain any separate definition of sale price and after referring to the definition of sale and turn over, it was held that there is nothing in those provisions which would indicate that when the dealer collects any amount by way of tax that cannot be part of the sale price and so far as the purchasing dealer is concerned, he pays for the goods what is sellers demand namely price even though it may include tax and therefore there is no reason why the whole amount paid to the seller by the purchaser should not be treated as the consideration for the sale and included in the turn over. Further the Hon ble Supreme Court pointed out that when the seller passes on the tax and the buyer agrees to pay sales tax in addition to the price, the tax is really part of the entire consideration and the distinction between the two amounts tax and price loses all significance. Firstly, the decision cannot be applied to the facts of the case on hand as in the said decision, the Hon ble Supreme Court was considering the constitutional validity of statute which did not contain a definition for sale price . Secondly, in paragraph 14, the observation made by the Hon ble Supreme Court that distinction between the two amounts, tax and price loses significance is from the point of view of legislative competence. Therefore, the decision in George Oakes cannot be made applicable to the case on hand. The writ petitioner is entitled to the concession rate of tax as they have fulfilled the conditions in Section 8 of the Central Sales Tax Act, 1956 and the Form C declarations having been verified and found to be in order by the concerned authority of the State of West Bengal - Refund cannot be denied to the writ petitioners by the State of West Bengal disregarding the fact that excess tax was paid under compelling circumstances namely non-issuance of form C declarations - the writ petitioner can claim refund directly from the appellants/State of West Bengal having borne the burden of tax which have been collected from the writ petitioner and deposited by IOCL with the Exchequer of the State of West Bengal - The State of West Bengal/ appellants are unjustified in refusing to refund the excess tax as it had been allowing concessional rate to the writ petitioners before and after the disputed period. The circular issued by the Union of India dated 01.11.2018 is binding on the appellants/State of West Bengal as they being the agent of the Central Government for levy and collection of Central Sales Tax and non-refunding of the excess tax collected is contrary to the instruction dated 01.11.2018. The order and directions issued by the learned Single Bench stands affirmed and the appellants/State of West Bengal is directed to effect the refund of the excess tax collected directly to the writ petitioner within 45 days from the date of receipt of the server copy of this order together with interest at the statutory rate as stipulated under the WBST Act, from 01.07.2020 that is the day after the date on which the assessment order in the case of IOCL was passed that is 30.06.2020 till the date on which refund is effected. If there is any discrepancy in the date, it is clarified that interest shall be payable from the next day after the date of the assessment order till the date of payment.

Summary

Issues Involved:
1. Locus Standi of the writ petitioner/purchasing dealer to maintain the writ petition for refund of excess CST collected by IOCL and remitted to the Government of West Bengal.
2. Whether filing of Form "C"� declaration by the selling dealers is mandatory and if it can be filed belatedly.
3. Whether the assessment order dated June 30, 2020, is liable to be set aside due to the rejection of the Form "C"� declaration by the assessing authority.
4. Whether the writ petitioner is entitled to a concessional rate of tax, having fulfilled the conditions under Section 8 of the CST Act.
5. Whether the writ petitioner is entitled to claim a refund of tax directly from the state or should they claim the refund from the selling dealers (IOCL).
6. Whether the refund can be denied to the writ petitioners by the State of West Bengal disregarding the fact that excess tax was paid under compelling extraordinary circumstances and non-issuances of Form C declaration.
7. Whether the writ petitioner can claim a refund directly from the state in view of the fact that excess tax has been deposited by IOCL with the State of West Bengal.
8. Whether the State Government is legally justified in refusing a refund of excess tax when it is admittedly allowing the concessional rate to the writ petitioner before and after the disputed period (01.04.2017 to 31.03.2018).
9. Whether the non-refund of excess tax is contrary to the instruction of the Government of India dated November 01, 2018.

Issue-wise Detailed Analysis:

1. Locus Standi of the writ petitioner/purchasing dealer:
The court held that the writ petitioner, being a purchasing dealer, has the locus standi to maintain the petition for refund of excess CST collected by IOCL and remitted to the Government of West Bengal. The court rejected the contention that the purchasing dealer has no statutory liability to pay tax under the CST Act and that only the selling dealer can claim a refund.

2. Filing of Form "C"� declaration:
The court held that filing of Form "C"� declaration is mandatory but the time limit prescribed for filing such declarations is directory and not mandatory. The court noted that the assessing officer had accepted the Form "C"� declarations and considered the same, implying that the assessing officer was satisfied that there was sufficient cause for the delay in filing.

3. Assessment order dated June 30, 2020:
The court set aside the assessment order dated June 30, 2020, to the extent of refusal of acceptance of relevant "C"� Forms submitted by IOCL. The court held that the rejection of the Form "C"� declarations was erroneous, unsustainable, and illegal.

4. Entitlement to concessional rate of tax:
The court held that the writ petitioner is entitled to the concessional rate of tax as they have fulfilled the conditions under Section 8 of the CST Act. The Form "C"� declarations were verified and found to be in order by the concerned authority of the State of West Bengal.

5. Claiming refund directly from the state:
The court held that the writ petitioners are entitled to claim a refund of tax directly from the State of West Bengal and are not required to make the claim through the selling dealer, IOCL. The court rejected the argument that only the selling dealer can claim a refund.

6. Denial of refund by the State of West Bengal:
The court held that the refund cannot be denied to the writ petitioners by the State of West Bengal, disregarding the fact that excess tax was paid under compelling circumstances, such as the non-issuance of Form "C"� declarations.

7. Claiming refund directly from the state:
The court held that the writ petitioner can claim a refund directly from the appellants/State of West Bengal, having borne the burden of tax which has been collected from the writ petitioner and deposited by IOCL with the Exchequer of the State of West Bengal.

8. Refusal of refund by the State Government:
The court held that the State of West Bengal/appellants are unjustified in refusing to refund the excess tax, as they had been allowing concessional rates to the writ petitioners before and after the disputed period.

9. Non-refund contrary to Government of India instructions:
The court held that the circular issued by the Union of India dated 01.11.2018 is binding on the appellants/State of West Bengal as they are the agent of the Central Government for levy and collection of Central Sales Tax. Non-refunding of the excess tax collected is contrary to the instruction dated 01.11.2018.

Conclusion:
The appeal was dismissed, and the issues were resolved in favor of the writ petitioner. The court directed the appellants/State of West Bengal to refund the excess tax collected directly to the writ petitioner within 45 days from the date of receipt of the server copy of the order, together with interest at the statutory rate as stipulated under the WBST Act from 01.07.2020 till the date of payment.