2021 (12) TMI 128 - HC - VAT and Sales Tax

Seeking permission to petitioner to set off the excess entry tax paid by the petitioner for future payment of entry tax - HELD THAT - The petitioner is a dealer dealing with motor vehicles and he had to pay the sales tax as per the rate prevailing during the relevant point of time. The main contention on the side of the revenue for rejecting the claim of the petitioner for refund of the excess entry tax is concerned, it is based on the law declared by this Court in KHIVRAJ MOTORS LIMITED VERSUS ASSISTANT COMMISSIONER (CT) , 2010 (2) TMI 1164 - MADRAS HIGH COURT referred by the writ Court and accordingly, they have taken a stand that the payment of sales tax and payment of entry tax are two different separate entities, and therefore, based on the claim anything made by the dealer, that he has paid excess entry tax, after set off, towards the sales tax, still if there is excess entry tax, should it be refunded or not is concerned, it need not be refunded, it can be retained by the Government. After verifying the total entry tax paid by the petitioner, for each of the assessment years referred, and the sales tax paid or set off, can be taken into account with the aid of the books of account of the petitioner, which can be submitted by him, the assessing officer can very well arrive at a figure as to what was the excess entry tax paid and it is available with the Government, and after finding out the same, the excess entry tax can very well be refunded to the petitioner. Petition disposed off.

Issues Involved:
1. Entitlement to refund of excess entry tax paid.
2. Legal interpretation of Sections 4 and 11 of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.
3. Burden of proof on the petitioner to establish excess payment of entry tax.

Detailed Analysis:

1. Entitlement to refund of excess entry tax paid:
The petitioner, an authorized dealer of motor vehicles, sought a Writ of Certiorari to quash the respondent's order and direct the refund of excess entry tax paid. The petitioner argued that the entry tax rate was 12%, while the sales tax was 9% or 11%, leading to an excess payment of entry tax. The petitioner contended that this excess amount should be refunded under Section 11 of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990.

2. Legal interpretation of Sections 4 and 11 of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990:
The respondent rejected the refund claim, citing a previous judgment in Tvl. Kivraj Motors Ltd. v. Assistant Commissioner (CT), which held that entry tax and sales tax are separate entities, and excess entry tax need not be refunded. However, this judgment was later overturned by a Division Bench, which clarified that the purpose of the Entry Tax Act is to curb sales tax evasion, and Section 4 allows for proportionate reduction in liability. The Division Bench stated that any excess entry tax paid should be refunded under Section 11.

3. Burden of proof on the petitioner to establish excess payment of entry tax:
The respondent argued that the petitioner must prove the excess payment of entry tax by producing books of accounts. The court agreed that the petitioner must establish the excess payment through proper documentation. The court noted that the entry tax was 12% and the sales tax was either 9% or 11%, implying a potential excess payment. The court directed the assessing officer to verify the petitioner's accounts and calculate the excess entry tax for refund.

Conclusion:
The court quashed the impugned order, stating it did not stand legal scrutiny. The petitioner was directed to produce the books of accounts to the assessing officer to establish the excess entry tax paid. The assessing officer was instructed to calculate the excess amount and refund it to the petitioner within three months. The writ petition was disposed of with these directions, and no costs were ordered.

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