2013 (1) TMI 799 - HC - VAT and Sales Tax

Court rules for petitioner in purchase tax refund dispute, citing Gujarat Sales Tax Act.

KRISHAK BHARATI COOPERATIVE LIMITED Versus STATE OF GUJARAT & 2

The court ruled in favor of the petitioner, a fertilizer manufacturing company, in a dispute over the refund of purchase tax on low-pressure natural gas. ... Levy of purchase tax - purchase of low pressure natural gas which is used as fuel in the boiler during the manufacturing process - refund of amount paid as purchase tax - extended period of limitation - Held that: - we simply fail to understand how the department can withhold the refund payable to the petitioner arising out of the finalised assessment order which has attained such finality that it is simply not possible to modify the same under any of the provisions contained in the Gujarat Sales Tax Act noticed by us, merely on the ground that the legal issue regarding chargeability of purchase tax on purchase of low pressure natural gas used for fuel is pending before the Supreme Court - petition allowed. Issues Involved:1. Entitlement to refund of purchase tax on low pressure natural gas.2. Legality of withholding the refund due to pending Supreme Court litigation.3. Applicability of Section 52A of the Gujarat Sales Tax Act.Issue-wise Detailed Analysis:1. Entitlement to Refund of Purchase Tax on Low Pressure Natural Gas:The petitioner, a company engaged in manufacturing and selling fertilizers, sought a refund of Rs. 8,03,93,272/- along with interest. The Assistant Commissioner of Commercial Tax, Surat, in an assessment order dated 31.3.2008, determined that the petitioner was not liable to pay purchase tax on low pressure natural gas used as fuel, relying on the Gujarat Sales Tax Tribunal's decision in the case of Pandesara Industries. Consequently, a refund of Rs. 5,94,73,484/- plus interest of Rs. 2,09,19,788/- was granted, totaling Rs. 8,03,93,272/-.2. Legality of Withholding the Refund Due to Pending Supreme Court Litigation:Despite the assessment order, the respondents did not release the refund and instead issued a notice on 4.2.2012 for reassessment under Section 44 of the Gujarat Sales Tax Act, citing the pending Supreme Court appeal in the case of Ami Pigments. The petitioner challenged this notice, and it was subsequently withdrawn. However, the Assistant Commissioner refused the refund, stating that the matter was pending before the Supreme Court. The court found this stance unsustainable, noting that the assessment order for 2003-2004 had attained finality and could not be modified or reopened as the time limits for reassessment, revision, and rectification had expired.3. Applicability of Section 52A of the Gujarat Sales Tax Act:The respondents argued that they withheld the refund under Section 52A, which allows withholding refunds if the order is under appeal or if any other proceeding under the Act is pending. The court clarified that Section 52A applies only if the order giving rise to the refund is the subject of an appeal or further proceedings, or if any other related proceedings are pending. In this case, the assessment order was not under appeal or further proceedings, and no related proceedings were pending. Therefore, Section 52A did not apply, and the withholding of the refund was unjustified.In conclusion, the court directed the respondents to release the refund along with statutory interest by 31.3.2013, emphasizing that the finality of the assessment order precluded any modification or withholding based on pending litigation in unrelated cases.