Retrospective tax amendment and refund of appeal deposit: once liability is erased ab initio, the deposited amount remains refundable.

A retrospective statutory amendment that deleted the condition forming the basis of a tax demand erased the underlying liability from the earlier effective date, so an amount deposited as a pre-condition for appeal was no longer legally payable and became refundable. A later notification stating that such deposits would not be refunded could not defeat the legal effect of the retrospective deletion. The amount was therefore refundable, and the assessee was entitled to refund of the deposit made for filing the appeal.

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Issues: Whether an amount deposited as a pre-condition for filing an appeal under Section 84(3) of the Rajasthan Sales Tax Act, 1994 was refundable after a retrospective amendment deleted the very condition that had given rise to the tax demand, notwithstanding a notification stating that amounts deposited would not be refunded.

Analysis: The notification issued under Section 8(3) of the Rajasthan Value Added Tax Act, 2003 deleted the relevant condition with effect from 23.05.1987. Once the deletion operated retrospectively, the disqualification underlying the demand stood effaced from that date, and the amount earlier deposited could no longer be treated as legally payable. The expression "payable" was understood as legally recoverable in the context of the relevant demand. A clause in the later notification barring refund could not override the consequence of the retrospective deletion where, in law, no amount was payable from the inception of the amended period.

Conclusion: The deposited amount was refundable, and the denial of refund was unsustainable.

Final Conclusion: The revision petitions were allowed and the assessee was held entitled to refund of the amount deposited as a condition for appeal.

Ratio Decidendi: Where a statutory amendment is given retrospective effect so as to erase the very basis of liability from an earlier date, any amount deposited on that basis is treated as not legally payable and is refundable, unless the law validly and expressly preserves the liability in a manner consistent with the retrospective change.

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