2023 (9) TMI 1368 - HC - VAT and Sales Tax

Principles of natural justice - rejection of application for recovery of arrears in mechanical manner without assigning any reasons - authority to adjust under Rule 51 of the Bombay Sales Tax Rules, 1959 against dues payable under the Maharashtra Purchase Tax on Sugarcane Act, 1962 - HELD THAT - The reply affidavit does not justify order dated 21st August 2019 passed by the Deputy Commissioner of State Tax in rejecting the Petitioner s application under Section 7 of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Ordinance, 2019. It does not furnish any reasons whatsoever to disentitle the Petitioner for such settlement. Insofar as the refund adjustment order is concerned, it also appears that the Deputy Commissioner has proceeded to issue such orders patently without jurisdiction as he could not have assumed jurisdiction of an authority under the 1962 Act. On such count, the impugned refund adjustment order is rendered bad and illegal. It appears that although such refund order is passed on 25th July 2019, the Deputy Commissioner has proceeded to exercise jurisdiction under Rule 51 of the Bombay Tax Rules, 1959 (the 1959 Rules), whether it was at all permissible to invoke the provisions of the 1959 Rules is another question, which also goes to the root of the matter. Be that as it may, the refund adjustment order cannot be sustained for want of jurisdiction. The impugned order dated 21st August 2019 is quashed and set aside. The refund application of the Petitioner would be required to be restored to the Deputy Commissioner to be decided in accordance with law - Petition allowed.

Summary

Issues:
The primary contention was the rejection of the application under Section 7 of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Ordinance 2019 without providing reasons. The second issue involved the authority of the Deputy Commissioner to adjust dues under the Bombay Sales Tax Rules against dues payable under the Maharashtra Purchase Tax on Sugarcane Act, 1962.

Issue 1: Application Rejection
The Petitioner challenged the rejection of the settlement application, arguing that it was done in a mechanical manner without reasons. The Deputy Commissioner's order was criticized for not considering the Petitioner's contentions and lacking justification. The Petitioner claimed that the impugned order was illegal due to the absence of any reasoning, rendering it unsustainable in law.

Issue 2: Authority to Adjust Dues
The second contention focused on the Deputy Commissioner's authority to adjust dues under the Bombay Sales Tax Rules against liabilities under the Maharashtra Purchase Tax on Sugarcane Act, 1962. It was argued that the Deputy Commissioner exceeded jurisdiction by adjusting dues under the 1962 Act, which falls outside the scope of the MVAT Act and the CGST Act. The intermixing of jurisdictions was highlighted as a primary concern, leading to the assertion that the impugned refund adjustment order was invalid and unlawful.

Judgment:
The High Court quashed and set aside the impugned order dated 21st August 2019, directing the refund application to be reconsidered by the Deputy Commissioner in accordance with the law. The Court also permitted the Petitioner to apply under the subsequent enactment, the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2023. The Court declared the Deputy Commissioner's refund application as legally flawed and instructed that any future applications by the Petitioner be decided lawfully. All contentions of the parties were expressly kept open, and the petition was disposed of without costs. Additionally, a separate writ petition was disposed of in line with the decision made in the main petition, with agreement from both the Petitioner's and Revenue's counsels.