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TMI Blog2016 (7) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the respective parties, the matter was taken up for final hearing today. 4. The petitioner, a Private Limited Company, is engaged in the business of spinning, weaving and finishing of textiles. In the year 2007, the petitioner company purchased the property of one M/s Arunoday Mills Limited (being land bearing Survey Nos.160/P, 161/A, 162/P, 163-A/P, 163/1/P, 163/1, 164/P and 20P in Morbi) by successfully bidding for the same in an auction conducted by IDBI Bank for sale of the said property on behalf of a consortium of secured creditors under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. M/s Arunoday Mills Ltd. was a registered dealer and was holding sales tax deferment benefit certificate for its Morbi unit. The assessment came to be made in the case of M/s Arunoday Mills Ltd. for financial year 2005-06, which culminated into an order dated 30.11.2008 raising a demand of Rs. 33,40,497/- under the Central Sales Tax Act, 1956 (hereinafter referred to as the "CST Act") and a demand of Rs. 1,16,30,733/- under the Gujarat Sales Tax Act, 1969 (hereinafter referred to as the "GST Act"), which included net tax dues of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Arunoday Mills Ltd. The petitioner also made further payment of Rs. 4,00,00,000/- as per the directions issued by this court by its order dated 29.04.2010 passed in Special Civil Application No.6639 of 2010, pursuant to which, the attachment of the property and the bank account of M/s Arunoday Mills Ltd. was removed. The court while disposing of the petition, made it clear that the order was passed only by way of interim arrangement and without going into the merits of the case. It was further observed that if the petitioners succeed in the matters which are pending before the Tribunal, the Sales Tax Department shall grant the refund to the petitioners, in accordance with law. Pursuant to the above order, the second appeals came to be heard on merits by the Tribunal and came to be partly allowed, inasmuch as, it was held that the petitioner company is not liable to pay any amount of interest and penalty on the sales tax dues of M/s Arunoday Mills Ltd. Being aggrieved, the State Government preferred appeals before this court being Tax Appeals No.345, 346 and 347 of 2015. Civil Applications for stay also came to be filed in the said appeals. By an order dated 05.08.2015, the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted the applications made by the respondents for stay of the order passed by the Tribunal, it was thereafter not permissible for the respondents to resort to the provisions of section 39(1) of the GVAT Act and withhold the amount of refund. It was further pointed out that the refund which the petitioner is entitled to is not under the order of the Tribunal, but in view of the order passed by this court in Special Civil Application No.6639 of 2010 whereby, this court while directing the respondents to lift the attachment on the lands purchased by the petitioner, had directed the petitioner to deposit an amount of Rs. 4,00,00,000/- (rupees four crores) with the Deputy Commissioner of Commercial Tax and had clarified that the order was only by way of an interim arrangement without going into the merits of the matter and that if the petitioner succeeds in the matter, the Sales Tax Department shall grant the refund to the petitioner. It was submitted that the amount not being in the nature of tax, penalty or interest paid by the petitioner under the provisions of the GVAT Act or CST Act, the provisions of section 39(1) of the GVAT Act would not be applicable. In support of his submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject matter of appeal or further proceedings, and that the Commissioner should form an opinion that grant of such refund is likely to adversely affect the revenue. It was contended that in the facts of the present case, the respondents had preferred appeals against the common order passed by the Tribunal and hence, the order giving rise to refund was subject matter of appeal before this court. Referring to the impugned order, it was submitted that the Commissioner of Commercial Tax has recorded an opinion that the grant of refund would adversely affect the revenue. It was submitted that both the requirements for exercise of powers under section 39(1) of the GVAT Act are wholly satisfied and hence, the impugned order wholly meets with the ingredients of section 39(1) of the GVAT Act and therefore, there is no warrant for interference by this court. Under the circumstances, the petitioners are not entitled to any of the reliefs prayed for in the petition and that the petition being devoid of merits, deserves to be dismissed. 10. The facts as emerging from the record reveal that against the order passed by the first appellate authority, the petitioners had preferred appeals befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 12. Ultimately, the petitioners partly succeeded in the appeals before the Tribunal, which held that the petitioners are not liable to pay interest and penalty on the amount of tax referred to in certificate of deferment. The State of Gujarat, being aggrieved, has preferred the appeals before this court against the order passed by the Tribunal. Along with the appeals, the State had also preferred civil applications for stay being Civil Applications No.414, 415 and 416 of 2015. The said applications came to be rejected by an order dated 05.08.2015. However, the respondents, at the relevant time, did not deem it fit to pass any order under section 39(1) of the GVAT Act. The petitioners herein, therefore, pursued the matter with the respondent authorities seeking refund of the amount deposited by them pursuant to the order of this court. When there was no response from the respondent authorities, the petitioners filed the present petition. This court issued notice on 17.12.2015, which was made returnable on 13.01.2016. In the meanwhile, after service of notice upon the respondents, the fourth respondent Assistant Commissioner of Commercial Tax issued a notice dated 08.01.2016 to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal would not arise. Therefore, such amount would not partake the character of tax or penalty, as contemplated under the proviso to section 73 of the GVAT Act. 16. From the facts noted hereinabove, it clearly emerges that the amount of Rs. 4,00,00,000/- deposited by the petitioners pursuant to the order dated 24.09.2010 passed by this court in Special Civil Application No.6639 of 2010, not only does not take the colour of tax or penalty, it is also not in the nature of pre-deposit. It is merely an amount deposited by the petitioners under the directions of the court as a condition for lifting the attachment over the lands of the petitioners. In terms of the order of the court, if the petitioners succeeded, the amount was required to be returned to them. Since such amount is not in the nature of tax or penalty or even pre-deposit, in the opinion of this court, the respondent authorities have no authority to withhold the same. 17. At this juncture, reference may be made to the unreported decision of this court in the case of State of Gujarat v. Essar Steel Ltd. (supra), on which reliance has been placed by the learned counsel for the petitioners, wherein it has been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sely affect the revenue, he may, after giving the dealer an opportunity of being heard, withhold the refund till such time as he may determine. Sub-section (2) thereof provides that where a refund is withheld under sub-section (1), the dealer shall be entitled to interest as provided under section 38, if as a result of the appeal or further proceeding, he becomes entitled to refund. 20. Thus, what section 39 of the GVAT Act contemplates is that where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under the Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue, he may withhold such amount, after giving an opportunity of hearing to the party. In the opinion of this court, the question of refund under section 39 of the GVAT Act would arise provided there is a payment of tax. Though the expression refund may also be used for returning the amount of pre-deposit, there is a clear distinction between the character of the amount paid by way of tax and by way of pre-deposit pending the appeal. This court is in agreement with the view taken by the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to approach this court with stay applications, and having invited orders on merits, whereupon the court has turned down the plea of the respondents for staying the order of the Tribunal, now cannot seek to overreach the order passed by this court under the purported exercise of powers under section 39(1) of the GVAT Act. Besides, the sequence of events that have unfolded as noticed hereinabove, also indicate mala fide intention on the part of the officers of the respondents to avoid refund of the amount payable to the petitioner under one pretext or the other. As noticed earlier, despite the fact that the order passed by the Tribunal in the second appeals is dated 22nd February, 2015, against which, tax appeals came to be preferred before this court and stay applications came to be rejected on 05.08.2015, at no point of time the respondents thought it fit to exercise powers under section 39(1) of the GVAT Act. The petitioners had been pursuing the matter before the respondent authorities seeking refund of the amount in question, however, to no avail. Left with no other option, the petitioners approached this court by way of the present petition wherein, notice came to be issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2010, whereas, against the order of the Tribunal, the Government has preferred appeals which are still pending. Since, the proceedings of the appeals are pending and, grant of refund is likely to adversely affect the revenue, the notice under section 39(1) of the GVAT Act has been issued to the petitioner. However, nowhere in the order has it been recorded, as to why grant of refund would adversely affect the revenue. Thus, the Assistant Commissioner of Commercial Tax has mechanically passed the order under section 39(1) of the GVAT Act without recording the necessary satisfaction. Thus, even on merits, the impugned order is unsustainable. 22. In light of the above discussion, the court is of the view that the respondents having elected to prefer stay applications against the impugned order passed by the Tribunal and having invited an order on merits, there was no justification in thereafter invoking the provisions of section 39(1) of the GVAT Act for withholding the refund which arose in the light of the order of the Tribunal. The impugned order dated 11.01.2016 passed under section 39(1) of the GVAT Act, therefore, cannot be sustained. 23. For the foregoing reasons, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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