2015 (3) TMI 739 - HC - VAT and Sales Tax

Government amensty scheme - Payment of excess duty - Claim of refund - Refund barred as per Para 13 of scheme - Held that - The Scheme requires a sealer to pay the principal tax itself and seek amnesty from further proceedings of interest, penalties, recoveries, etc. The requirement was for agreeing to pay such amount, and not to seek refund in any condition. The Scheme clearly envisaged that there would be no further burden of interest and penalty. Under the circumstances, what the Government would collect from an intending dealer was the past tax dues minus the penalty and interest. If for some reason, purely by mistake any amount larger than the principal tax due is collected, the same would not be hit by paragraph 13. Paragraph 13 only prevents a dealer from claiming and Government from refunding any excess refundable under the Scheme. Any amount which is mistakenly paid over and above what was required to be paid by the dealer and collected by the Government cannot be categorized as an amount paid under the Scheme. The conclusions, however, are based on our ad hoc presumption that the petitioner did deposit a sum larger than what was required under the Scheme, and that this has happened because of apparent error of arithmetic calculation on the part of the Government. If either of these two premises are proved to be wrong, the ultimate benefit would not flow to the petitioner. We make it clear that there would be no case of refund, if it is found that the entire amount of ₹ 6,56,713/was towards the principal tax due or that this question itself is a disputable and arguable issue. We must recall that the Scheme desired to put an end to all disputes. We cannot permit the petitioner to raise a fresh dispute and pursue legal proceedings, particularly when the petitioner applied for the benefit of the Scheme and deposited such sum as was told to him by the authority. - impugned communication dated 31.12.2012 is quashed. The authorities are directed to verify the petitioner's claim that under the Amnesty Scheme what was actually payable by the petitioner by way of principal tax due, ignoring interest and penalty, was not ₹ 6,56,713/, but ₹ 4,33,128/. To the extent it is found that there was overpayment, the same shall be returned without interest. - Decided in favour of assessee.

Summary

Issues:
Challenge to communication dated 31.12.2012 regarding sales-tax dues under Amnesty Scheme, refusal of refund under the Scheme, interpretation of Scheme provisions, calculation of overpayment, legality of retaining excess amount.

Analysis:
The petitioner, a company trading in Intravenous Fluids, faced financial difficulties leading to unpaid sales-tax dues. A Government Amnesty Scheme was introduced to waive dues up to a certain limit without application. The Scheme required defaulter companies to apply, pay principal tax, and have interest/penalties waived. The petitioner applied under the Scheme and paid the communicated amount of Rs. 6,56,713. Later, claiming a lower principal tax amount of Rs. 4,33,128, the petitioner sought a refund of the excess Rs. 2,23,585. The request for refund was denied under the Scheme provisions, specifically referring to paragraph 13 which prohibited refunds for dealers benefiting from the Scheme.

The petitioner's subsequent appeal was dismissed based on the undertaking not to seek refunds under the Scheme. The Court noted the absence of a calculation verifying the overpayment claim and emphasized that the Scheme aimed to end disputes. The judgment highlighted that if the petitioner indeed overpaid due to a mistake, the authorities cannot retain the excess amount illegally. The Court clarified that paragraph 13 did not prevent the return of mistakenly paid amounts exceeding the principal tax due. The judgment quashed the communication dated 31.12.2012 and directed authorities to verify the correct principal tax due, refund any overpayment without interest, and complete the process by a specified date.

In conclusion, the Court's decision emphasized the importance of adhering to the Scheme's provisions while ensuring fairness and preventing illegal retention of excess amounts paid. The judgment balanced the intent of the Amnesty Scheme to resolve tax disputes with the petitioner's right to seek a refund of overpaid amounts, ultimately directing authorities to verify and return any verified overpayment.