2017 (1) TMI 1059 - HC - VAT and Sales Tax

Sale of Diesel Engine Pump Sets of less than 10 horse power - demand of tax for the period from October to December, 2008 - tax paid duly and claimed refund - circular dated 5.9.2012 - circular states that realization of tax above 4% together with interest was granted remission provided such amount has not been realized by the seller from its consumers - whether assessee has not realized the tax from its consumers before it can claim any benefit of circular? - Held that - this is a question of fact, which ought to be gone into by the authorities based upon the evidence led by the revisionists. In the absence of any finding returned by the authorities on this count, it would be appropriate to remit the matter to the assessing authority. Whether the relief of remission of tax could be denied to the revisionist merely because the circular contains no provision of refund? - Held that - reliance placed in the case of Anand Gramodyog Samiti Versus Commissioner of Trade Tax 2005 (5) TMI 613 - ALLAHABAD HIGH COURT , where it was held that mere absence of enabling provision would not be a ground to deny refund of tax, in case tax is not otherwise liable to be realized from the assessee. In case State s action is allowed to stand, it would mean that an honest tax payer would be discriminated since those who have not paid tax have already been granted relief of remission - the authorities were not justified in refusing to grant relief of remission merely on the ground that an enabling provision does not exist in the circular. Revision partly allowed - Matter is remitted to the Assessing Authority for a fresh consideration on the question as to whether revisionist has realized tax over and above 4% from its consumers or not - revision disposed off.

Summary

Issues:
Levy of demand of tax for the period from October to December, 2008; denial of refund under circular dated 5.9.2012; discrimination against sincere taxpayer; denial of remission based on absence of refund provision in circular; factual determination of tax realization by the assessee; denial of relief of remission due to absence of enabling provision in circular.

Analysis:
The judgment pertains to a dispute regarding the levy of tax for a specific period and the subsequent denial of refund under a circular issued by the State of Uttar Pradesh. The revisionist, engaged in selling Diesel Engine Pump Sets, claimed not to have realized any tax from consumers and deposited the amount under protest. The assessing authority rejected the refund application based on the absence of a provision in the circular for refunds already realized, a decision upheld by the tribunal. The revisionist contended discrimination as assessees who did not deposit similar tax were granted remission, citing a judgment emphasizing fairness for taxpayers who paid tax out of their pocket.

The revisionist relied on a Supreme Court decision highlighting discrimination due to the absence of refund provisions, emphasizing that tax collection beyond legal limits leads to unjust enrichment and violates constitutional principles. The revisionist argued that denial of refund solely based on the circular's lack of a refund provision contradicts established legal principles. The State's position was that the revisionist had already collected tax from consumers, making it ineligible for circular benefits.

The Court identified two key issues for resolution. Firstly, the factual determination of whether the revisionist had indeed collected tax exceeding 4% from consumers, requiring further examination by the assessing authority. Secondly, the legality of denying remission solely due to the circular's lack of a refund provision. The Court found merit in the revisionist's argument, citing previous judgments and constitutional principles, concluding that the denial of remission based on the absence of an enabling provision in the circular was unjust. As a result, the revision succeeded, and the matter was remitted to the Assessing Authority for a fresh consideration within a specified timeframe, emphasizing the need for a fair assessment of tax realization and adherence to legal principles.

In conclusion, the judgment addresses the issues of tax levy, denial of refund under a circular, discrimination against sincere taxpayers, and the legality of denying remission based on the absence of a refund provision. It underscores the importance of fair treatment for taxpayers, adherence to legal principles, and the need for a thorough factual assessment in tax-related disputes.