2024 (1) TMI 330 - HC - VAT and Sales Tax

Refund of the Central Sales Tax (CST) amounts deposited by the petitioner - rejection of refund without assigning any reasons - violation of principles of natural justice - HELD THAT - It was necessary for the Assessing officer/Deputy Commissioner of State Tax to have addressed the issue of refund as claimed by the petitioner in a more elaborate manner. He ought to have furnished adequate reasons on the case which was put up by the petitioner for his consideration, in taking a decision on such refund claim of the petitioner. It is noted that the refund application of the petitioner dated 20 June, 2017 have raised substantive grounds which were required to be dealt with reasons. However, considering the meager reasons, as recorded by the Deputy Commissioner of State Tax, it is opined that such reasons are surely not sufficient so as to amount to an appropriate adjudication of the refund claim of the petitioner, as the law would mandate. The Assessing Officer/Deputy Commissioner of State Tax needs to de novo consider the proceedings and pass appropriate assessment orders, which may be a consolidated order or otherwise, however, by furnishing appropriate reasons on the refund application of the petitioner in accordance with law. Petition disposed off.

Issues Involved:
1. Legality of the collection and retention of CST amounts by the Respondents.
2. Entitlement of the Petitioner to a refund of CST amounts collected during the investigation and assessment stages.
3. Adequacy of reasons provided by the Deputy Commissioner of State Tax in rejecting the refund claim.

Summary:

1. Legality of Collection and Retention of CST Amounts:
The petitioner challenged the collection and retention of Rs. 12.38 crores collected during the investigation stage in December 2016 and an additional Rs. 2.03 crores adjusted at the assessment stage towards purported CST liability. The petitioner argued that these actions were ultra vires the statutory scheme of taxation under the Constitution of India and the provisions of the Central Sales Tax Act, 1956, as well as Articles 14, 265, and 300A of the Constitution.

2. Entitlement to Refund:
The petitioner sought a writ of mandamus directing the Respondents to refund the collected amounts. The case had a history of litigation, with earlier petitions (Writ Petition No. 3023 of 2017 and Writ Petition No. 2763 of 2021) where the Court had directed the Deputy Commissioner of State Tax to reconsider the refund claims. Despite these directions, the Deputy Commissioner passed orders without adjudicating the refund entitlement, leading to further petitions.

3. Adequacy of Reasons for Rejecting Refund Claim:
The petitioner contended that the Deputy Commissioner rejected the refund claim without adequate reasons. The impugned orders stated that the refund claim would be considered only after determining the tax liability, which resulted in dues, hence rejecting the refund. The Court found that the reasons provided were insufficient and did not amount to an appropriate adjudication of the refund claim as mandated by law.

Court's Directions:
The Court quashed the impugned orders dated 31 January 2019 and 18 March 2020, and remanded the matter for de novo consideration by the Deputy Commissioner of State Tax. The Deputy Commissioner was directed to furnish adequate reasons and consider all submissions of the petitioner within three months. The Court emphasized the need for a detailed and reasoned order addressing the refund claim.

Conclusion:
The petition was disposed of with directions for a fresh assessment and adjudication of the refund claim by the Deputy Commissioner of State Tax, keeping all contentions of the parties open. The Deputy Commissioner was instructed to provide a personal hearing to the petitioner and issue a reasoned order in accordance with law.

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