2019 (6) TMI 893 - HC - VAT and Sales Tax

Refund claim - amount paid under protest - validity of reassessment order under section 35 of GVAT Act - Petitioner No.1 was however given to understand by the respondent VAT authorities that they had the liability to pay tax on administrative charges collected towards supply of fly ash made available free of cost to cement and brick manufacturers under the GVAT Act. Therefore even though no order was passed against the petitioner No.1 it deposited tax with interest on administrative charges for the years 2006-2007 to 2010-2011 under protest. HELD THAT - There is nothing to show that any reassessment order under section 35 of GVAT Act or any revision order under section 75 of the GVAT Act has been passed by the respondent VAT authorities. The petitioners have deposited the aforesaid amount under protest. There is no return filed by the petitioners which can be considered as self assessed tax in the year 2006-2007. Therefore the question of payment of tax would arise only when VAT liability is crystallized either by way of self assessment or by way of assessment by the authorities. When the petitioners have deposited the amount of 46, 43, 174/under protest for which no adjudication order is passed by the authorities such claim being outside the purview of enactment can be made either by way of a suit or by way of writ petition. As the amount is paid neither by way of self assessment or pursuant to any demand it is always open for the petitioners to bring it to the notice of the authorities concerned and claim the refund of amount of such deposit - Since the amount is deposited under protest by the petitioners and no order of assessment reassessment or revision is passed till date the amount retained by the authority is not backed by any authority of law in the light of Article 265 of the Constitution of India and therefore the respondents have no authority to retain the same. Petition is allowed by directing the respondents to refund the amount of 46, 43, 174/with simple interest at the rate of 6% per annum from 11.11.2015 that is three months from 11.8.2015 viz. the date when the first application for refund was made by the petitioner. Such exercise shall be completed by the respondents latest by 31.7.2019 - petition allowed by way of remand.

Issues Involved:
1. Refund of amount deposited under protest.
2. Tax liability on administrative charges for fly ash.
3. Legal authority to retain the deposited amount.
4. Application of the Gujarat Value Added Tax Act, 2003 (GVAT Act).
5. Jurisdiction under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Refund of Amount Deposited Under Protest:
The petitioners sought a direction to refund ?46,43,174 deposited under protest for the year 2006-2007, along with appropriate interest. They argued that the amount was deposited under protest without any assessment order imposing tax liability on administrative charges for fly ash. The court noted that the petitioners had made repeated requests for refund, and no reassessment or revision order had been passed by the authorities. The court concluded that the amount deposited under protest remained a deposit held in trust by the government until any assessment order was framed.

2. Tax Liability on Administrative Charges for Fly Ash:
The petitioners contended that administrative charges for fly ash were not "sale price" under the GVAT Act, as fly ash was supplied free of cost. The court observed that the petitioners had deposited the amount under protest, and no tax liability had been crystallized either by self-assessment or by assessment by the authorities. The court held that the question of payment of tax would arise only when VAT liability is crystallized, which had not occurred in this case.

3. Legal Authority to Retain the Deposited Amount:
The court emphasized that the retention of the amount by the respondent authorities was without authority of law, as no assessment, reassessment, or revision order had been passed. The court cited Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by authority of law. The court concluded that the respondents had no authority to retain the amount deposited under protest.

4. Application of the Gujarat Value Added Tax Act, 2003 (GVAT Act):
The court analyzed the provisions of the GVAT Act, particularly sections 34, 35, and 75, and concluded that the time limit for reassessment and revision had expired. The court noted that the petitioners had not filed any return of income for the year 2006-2007, and no assessment order had been passed. Therefore, the amount deposited under protest could not be treated as payment of tax under the GVAT Act.

5. Jurisdiction under Article 226 of the Constitution of India:
The court held that the petitioners had no alternative efficacious remedy but to approach the court under Article 226 of the Constitution, as the refund of the amount deposited under protest could not be adjudicated under the GVAT Act. The court concluded that the petitioners were entitled to a refund of the amount deposited under protest, along with interest, as the retention of the amount by the authorities was not backed by any authority of law.

Conclusion:
The court allowed the petition and directed the respondents to refund the amount of ?46,43,174 with simple interest at the rate of 6% per annum from 11.11.2015, three months from the date when the first application for refund was made. The court ordered the respondents to complete the refund process by 31.7.2019.

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