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2020 (8) TMI 27 - HC - VAT and Sales TaxRefund of excess collection of tax - payment of tax at higher rate, in the absence of Form C - Section 9A of the CST Act - inter-state trade and commerce - HELD THAT - When the assessee has sold the goods on the price, which is inclusive of tax, the turnover is to be calculated as per the formula provided in Section 8A of the CST. In the facts of the case the rate of CST applicable for the goods supplied by the respondent-assessee is 4%. Therefore, 4% tax is required to be applied on the turnover as calculated under Section 8A of the CST Act. As observed above, the respondent-assessee deposited the CST at the rate of 10%/12.5% by making reverse working of the turnover under Section 8A of the CST Act. The correct amount of tax payable would be therefore, much less than what the respondent-assessee has deposited. This has resulted into the excess amount of tax deposited by the respondent-assessee amounting to Rs. ₹ 1,81,49,641/-. Moreover, on perusal of the facts on record and as per the findings of fact given by the Tribunal, it cannot be said that that the respondent-assessee has collected the excess amount of CST from its buyer/receiver of the goods. In the facts of the present case, the respondent-assessee cannot be said to have collected the CST at the rate of 10% or 12% from its buyers/receiver of the goods in view of the contract of fixed price, there is no question of passing over the same to its buyer in view of the aforesaid decisions of the Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT - Even otherwise the provisions of the CST Act do not contemplate any power to forfeiture of refund by the Revenue. Thus, as held by the decision of the Supreme Court in the case of KHEMKA CO. (AGENCIES) PVT. LTD. VERSUS STATE OF MAHARASHTRA STATE OF MYSORE VERSUS GULDAS NARASAPPA THIMMAIAH OIL MILLS 1975 (2) TMI 91 - SUPREME COURT , the provisions of Section 31 of the VAT Act enabling the Assessing Officer to forfeit the excess amount of tax deposited by the assessee cannot be applied to the provision of the CST Act. The Appeal deserves to be dismissed and re-framed questions of law are answered in favour of the assessee and against the Revenue - Appeal dismissed.
Issues Involved:
1. Whether the excess tax collected from the petitioner under the CST Act can be forfeited by the respondent authorities or the same is required to be refunded. 2. Whether the respondent-assessee is eligible for a refund of central sales tax paid by it contrary to the provisions of Section 9A of the CST Act or whether the appellant-Revenue was entitled to forfeiture of the excess central sales tax deposited by the respondent-assessee. Comprehensive, Issue-wise Detailed Analysis: Issue 1: Forfeiture of Excess Tax Collected The petitioner, a company incorporated under the Companies Act, 1956, engaged in the sale of machinery to public sector companies in the oil and gas sector, filed a Special Civil Application seeking a direction for the respondents to comply with an order by the Gujarat Value Added Tax Tribunal, which directed a refund of ?1,82,71,928. The respondents had withheld the refund on the grounds that a related Tax Appeal was pending. The Tribunal had previously ruled that the petitioner was eligible for a refund of excess tax collected, as there was no express provision in the CST Act for the forfeiture of such excess collection. The Tribunal noted that the petitioner had mistakenly paid tax at a higher rate due to the absence of Form 'C' and had deposited excess tax amounting to ?1,81,49,641. The Tribunal's decision was based on the interpretation that the CST Act does not provide for the forfeiture of excess tax collected, unlike the GVAT Act, and that the assessing authority under the CST Act has no power to forfeit any amount collected in contravention of the provisions of Section 9A of the CST Act. The Tribunal referenced several case laws, including the Supreme Court's decision in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra, which held that the provisions of the State Sales Tax Act providing for such power of forfeiture or levy of penalty are not attracted to such a case. The Tribunal concluded that the excess tax collected could not be forfeited under the CST Act, and the order of the first appellate authority confirming the forfeiture of tax by the assessing authority was set aside. Issue 2: Eligibility for Refund of Central Sales Tax The petitioner argued that the fixed price contract with the buyer included all taxes, and the recipient of the goods was not concerned with the amount of tax payable. The petitioner had calculated the CST payable by reverse working, applying the incorrect rate of 10%/12.5% instead of the correct rate of 4%, resulting in excess tax deposit. The Tribunal, applying the correct interpretation of Sections 8A, 9, 9A, 10, and 10A of the CST Act, allowed the appeal filed by the respondent-assessee. The Tribunal held that the provisions of the CST Act do not contemplate any power to forfeit the excess tax collected and that the respondent-assessee is entitled to a refund of the excess amount of CST. The Tribunal's decision was supported by several judicial precedents, including the Allahabad High Court's decision in Swadeshi Polytex Limited v. Commissioner of Income Tax, U.P., Lucknow, and the Supreme Court's decision in India Carbon Ltd. v. State of Assam. These cases established that there is no provision for forfeiture of tax deposited in the CST Act, unlike the Central Excise Act, and that the doctrine of unjust enrichment does not apply to the CST Act. The Tribunal also noted that the Apex Court's decision in Mafatlal Industries Ltd. v. Union of India, which upheld the provisions of the Central Excise Act regarding the refund of duty, does not apply to the CST Act. The CST Act does not contain provisions for forfeiture of excess tax collected, and the respondent-assessee is entitled to a refund of the excess amount deposited. Conclusion: The appeal was dismissed, and the re-framed questions of law were answered in favor of the assessee and against the Revenue. The special civil application filed by the assessee was allowed, and the respondents were directed to issue a refund order in favor of the assessee within three months from the date of receipt of the writ of this order, together with simple interest at the rate of 6% p.a. from the date of deposit till the date of realization. The rule was made absolute accordingly with no order as to costs.
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