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TMI Blog2021 (12) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... le incorporated in that enactment itself. It being a judicially evolved principle, unjust enrichment would find its applicability to all cases of indirect taxation - wherever an assessee/claimant was found to have passed on the disputed tax liability to another, while resisting its imposition qua the State. Present is not a case of amendment of section 29 of the Erstwhile Act but of repeal and replacement of the Erstwhile Act itself by a completely new enactment namely, VAT Act - Since section 40(1) of the VAT Act is found to be wholly inapplicable viz-a-viz the claim for refund of trade tax for the A.Ys. 2004-04 to 2007-08, the language of section 40(2) of the VAT Act is of no help to the petitioner. That provision of law providing for interest on delayed payment of refund would apply to only those cases that fall under the purview of section 40(1) of the VAT Act, and to no other. That is the plain effect of sub-section (2) of section 40 of the VAT Act. In the present case, the order of refund was passed on 29.6.2020 whereas the refund was adjusted against the demand of entry tax on 07.07.2020 i.e. within the statutory period of thirty (30) days - the petitioner is found n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereinafter referred to as the 'Entry Tax Act'). 4. The petitioner challenged the aforesaid adjustment of refund by means of Writ Tax No. 748 of 2020. It was heard and decided on 16.11.2021. That hearing proceeded on an admission made by the revenue that the claim for refund made by the petitioner [as was dealt with vide communications dated 29.06.2020, 07.07.2020 and 11.08.2020 by the Deputy Commissioner, Commercial Tax, Sector 3, Prayagraj (impugned in that writ petition)], arose and was decided in accordance with the provisions of the VAT Act. 5. Though reference had been made to the provisions of the Erstwhile Act, no doubt was expressed by either party to the eligibility of refund claimed by and granted to the petitioner under the provisions of the VAT Act or to the applicability of that enactment. In view of such concession made by the State, the issue of applicability of the VAT Act to the refund claimed by the petitioner, was assumed to exist. Therefore, and as would be discussed later, on that issue the said decision would remain confined as a decision obtaining on the facts of that case. 6. By means of the present petitions, the issue of interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above judgments, were carried in appeal by the revenue, to the Supreme Court. Vide judgment dated 12.11.2019, in State of Uttar Pradesh and Another vs. Birla Corporation Ltd. (2019) SCC OnLine SC 1569, the Supreme Court dismissed the revenue's appeal with certain observations. Relevant to our issue, paragraph nos. 34 and 36 of the said decisions read as below:- 34. A priori, the respondents and similarly placed persons would be entitled to rebate for the relevant period prescribed in the notification dated 27th February, 1998 which would continue to remain in vogue until the expiry of the specified period, namely, ten years. In the case of BCL up to 13 th December, 2008 and in the case of JPAL up to 17th September, 2014 respectively. The amount of rebate, however, would depend on the verification of their refund claim pending before the concerned authorities and would be subject to just exceptions including the principle of unjust enrichment. The respondents should be able to substantiate that the amount claimed by them has not been passed on to their consumers. Only then, they would be entitled for refund. The competent authority may verify the claim for refund of eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act or the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act ). It reiterated its demand for payment of refund due. In the present writ petition in paragraph 3, it has been specifically stated, there is no amount of tax outstanding or due against the petitioner under the provisions of the Erstwhile Act or the VAT Act or the Central Act. In reply thereto in paragraph 29 of the counter affidavit, only this much has been stated, on the date of the refund order dated 29.06.2020 being passed, interest on Entry Tax ₹ 18,10,01,347/- was outstanding against the petitioner for the A.Ys. 2003-04 to 2009-10. 7. Learned Senior Counsel appearing for the petitioner would submit, unlike section 29 of the Erstwhile Act, section 40 of the VAT Act clearly provides for payment of interest after expiry of thirty (30) days from the date of receipt of the order giving rise to refund. Referring to the order dated 16.04.2010 passed by a division bench of this Court in M/S Birla Corporation Ltd. Vs. State of U.P. Anr., Misc. Bench No. 6176 of 2004 , it has been submitted, the interest became due w.e.f. 16.04.2010. In appeal decision of the Supreme Court in Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that date, the Erstwhile Act did not exist. The only statutory law in force was section 40 of the VAT Act. Therefore, only that provision would govern the claim for interest. Under section 40 of the VAT Act the claim for interest may arise upon an order giving rise to refund passed by a Court and it is not dependent on any further or specific order to be passed by the assessing authority to grant such refund. Therefore, the interest liability accrued upon lapse of thirty days from the order dated 16.04.2010. Last, it has been submitted, the revenue having retained the money without any authority of law, it is liable to compensate the petitioner with interest for such an illegal act. Reliance has been placed on a decision of a Supreme Court in Union of India Vs. Tata Chemicals Ltd., (2014) 6 SCC 335. 9. Opposing the writ petition, Sri C.B. Tripathi, learned Special Counsel placed heavy reliance on the provision of section 29 of the Erstwhile Act and the earlier division bench decisions of this Court in M/S Indodan Milk Products Ltd. Vs. State of U.P. Anr. (supra) and P.P.G. Asian Paints Pvt. Ltd. Vs. Deputy Commissioner, Commercial Tax Ors. (supra) . That view is asser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hoice. 12. Having thus heard learned counsel for the parties and having perused the record, in the first place, we may take note of the certain statutory provisions. Under the Erstwhile Act, the provision of refund existed in the shape of section 29 of that Act. A slightly different provision existed in the shape of section 40 of the VAT Act. It would be useful to our discussion, to extract in tabular form the provisions of sections 29 of the Erstwhile Act and 40 of the VAT Act, as below : Section 29. Refund (1) The assessing authority shall, in the manner prescribed, refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under this Act: Provided that the amount found to be refundable shall first be adjusted towards the tax or any other amount outstanding against the dealer under this Act or under the Central Sales Tax Act, 1956 (Act 74 of 1956), and only the balance, if any, shall be refunded. (2) If the amount found to be refundable in accordance with subsection (1) is not refunded as aforesaid within three months from the date of order of refund passed by the Assessing Authority o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such manner and within such period, as may be prescribed. (2) Any amount deposited by any dealer under sub-section (1) shall, to the extent it is not due as tax, be held by the State Government in trust for the person from whom it was realised by the dealer, or for his legal representatives, and the deposit shall discharge such dealer of the liability in respect thereof to the extent of the deposit. (3) Where any amount is deposited by any dealer under sub-section (1), such amount or any part thereof shall, on a claim being made in that behalf be refunded, in the manner prescribed, to the person from whom such dealer had actually realised such amount or part, or to his legal representatives; and to no other person: Provided that no such claim shall be entertained after the expiry of three years from the date of the order of assessment or one year from the date of the final order on appeal, revision or reference, if any, in respect thereof, whichever is later. Explanation. The expression final order on appeal, revision or reference, includes an order passed by the Supreme Court under Article 32, Article 132, Article 133, Article 136 or Article 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1), is not refunded within thirty days from the date of order of refund passed by the assessing authority or where order giving rise to refund is passed by any other authority or court, from the date of receipt of such order by the assessing authority by due process, the dealer shall be entitled to simple interest on such amount at the rate of twelve percent per annum from the date of such order passed by the assessing authority or from the date of receipt of the order giving rise to refund passed by any other authority or Court, till the date refund is made. Provided that where refund relating to excess amount of input tax credit due on the basis of returns filed by the dealer, is not allowed within the time prescribed under section 15, the dealer shall be entitled to simple interest on such amount at the rate of twelve percent per annum from the date on which refund becomes due and till the date refund is made. (3) Notwithstanding any judgment, decree or order of any Court or authority, no refund shall be allowed of any tax or fee due under this Act on the turnover of sales or purchases or both, as the case may be, admitted by the dealer in the returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of this Act, prescribed date shall be deemed to be the date of refund. (8) The amount refundable under the erstwhile Act may be adjusted against the amount of tax or penalty or any other dues under this Act. 40-A. Withholding of refund in certain cases (1) Notwithstanding anything to the contrary contained in any other provision of this Act or in any judgment, decree or order of any Court, Tribunal or other authority, where after giving reasonable opportunity of being heard to the dealer or the person concerned, the Commissioner is satisfied on the report of the assessing authority that,- (a) the dealer has submitted false return of the turnover or has concealed particulars of his turnover or has deliberately furnished inaccurate particulars of such turnover or has prevented the assessing authority or any other competent authority from making inspection and examination of books, accounts or documents maintained or goods shown to be held in stock by such dealer or obstructed any competent authority in performing his functions under this Act; or (b) any purchase in respect of which input tax credit in any return has been claimed, is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made, or confiscation made, or any penalty or fine imposed, any forfeiture, cancellation or any other thing done or any action taken under the repealed enactment, and in force immediately before such commencement shall, so far as it is not inconsistent with the provisions of this Act, be deemed to have been issued, made granted, done or taken under the corresponding provisions of this Act. (b) any right, privilege, obligation or liability acquired, accrued or incurred under the repealed Act, shall not be affected and (manufacturing units) enjoying facility of moratorium for payment of tax under section 8 (2-A) of the said Act shall be entitled to claim moratorium for payment of tax in accordance with provisions of section 42. (3) Any officer, authorised by the Commissioner under the repealed enactment, to exercise powers under section 10-B and subsection( 6) of section 13-A thereof, shall be deemed to have been authorised by the Commissioner to exercise such powers under section 56 and sub-section(7) of section 48 respectively. (4) Any order made or direction issued by the State Government or by the Commissioner under the repealed Act, for carrying out purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The challenge raised by the petitioner to the notification dated 14.10.2004 issued by the State Government in exercise of its powers under section 5 of the Erstwhile Act was pending consideration in Misc. Bench No. 6176 of 2004. That writ petition came to be decided on 16.04.2010. 16. Since, on the date of repeal, the earlier rebate notification dated 27.02.1998 stood withdrawn and only a challenge thereto was pending before this Court (under Article 226 of the Constitution of India), it may never be said that any right or privilege as to rebate had been acquired or had accrued in favour of the petitioner as may have been protected or saved under section 81(2)(b) of the VAT Act. 17. By way of effect caused by the repeal of the Erstwhile Act and by virtue of section 6(e) of the UP General Clauses Act, 1904, any remedy or legal proceeding if it had been commenced before the repeal (with respect to any right, privilege etc.) would remain intact. However, the proceeding here being a constitutional remedy availed by the petitioner, the same may even otherwise have survived the repeal. In any case, that remedy remained wholly untouched and/or unblemished by the repeal of the Er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 40(1) of the VAT Act only provides for refund of any amount paid by an assessee in excess of the amount due from him under this Act . Since the disputed amount of trade tax had not been paid by the present petitioner by virtue of any notification and/or provision or proceeding under the VAT Act and, in fact, that deposit was made and the dispute arising therefrom, pre-dated the enforcement of the VAT Act section 40(1) of the VAT Act has absolutely no application to the present facts. 22. Since section 40(1) of the VAT Act is found to be wholly inapplicable viz-a-viz the claim for refund of trade tax for the A.Ys. 2004-04 to 2007-08, the language of section 40(2) of the VAT Act is of no help to the petitioner. That provision of law providing for interest on delayed payment of refund would apply to only those cases that fall under the purview of section 40(1) of the VAT Act, and to no other. That is the plain effect of sub-section (2) of section 40 of the VAT Act. 23. As noted above, neither section 81 of the VAT Act nor section 6 of the U.P. General Clauses Act, 1904, offer any assistance to the petitioner. They do not make applicable the provisions of the subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Tax Ors. (supra) ; Lucent Technology (P) Ltd. Vs. Commissioner, Trade Tax U.P. Lucknow (Full Bench) (supra) and; the Supreme Court decision in Commissioner of Sales Tax, U.P. Vs. Hind Lamps Ltd. (supra) . 28. In the present case, the order of refund was passed on 29.6.2020 whereas the refund was adjusted against the demand of entry tax on 07.07.2020 i.e. within the statutory period of thirty (30) days. The merits of that decision apart (considered in our earlier decision dated 16.11.2021 in Writ Tax No. 748 of 2021), for both reasons noted above, the petitioner is found not entitled to interest on the amount of refund of trade tax ₹ 17,90,61,418/-, up to the date 07.07.2020. 29. As to the interest for the subsequent period, we have already provided for that payment at the rate equal to the statutory rate of interest. Such direction (though obtained on an unreconciled concession made by the revenue in that case), may remain referable to the inherent powers of this Court in exercise of jurisdiction under Article 226 of the Constitution of India where, in exercise of equity jurisdiction, interest awarded may be quantified with reference to a statutory provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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