Sales tax deferral scheme refund claim rejected unlawfully; adjustment against tax dues directed instead of cash refund

The Madras HC held that rejection of the taxpayer's claim for refund of sales tax collected during the relevant period was inconsistent with the Government order extending and rescheduling the sales tax deferral scheme. Although the revenue accepted that the amount was due to the taxpayer, it sought adjustment against existing sales tax liabilities instead of cash refund. The Court set aside the rejection order and granted relief by directing adjustment of the amount against outstanding sales tax dues, with any excess to be paid by the taxpayer.

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Issues: Whether the order rejecting the claim for refund of sales tax paid during the relevant period, despite the Government order extending and rescheduling the sales tax deferral scheme, was sustainable.

Analysis: The petitioner had paid TNGST and CST for the period in question and sought refund on the footing that, under the Government order extending the benefit of the interest free sales tax loan and rescheduling the repayment period, the amount should not have been collected. The respondent accepted that the amount was due to the petitioner, but requested that it be adjusted against the petitioner's existing sales tax liabilities instead of being refunded in cash. The Court found that the rejection of the refund claim was contrary to the Government order and therefore could not stand.

Conclusion: The rejection order was set aside and the petitioner was granted relief by way of adjustment of the amount against existing sales tax dues, with payment of any excess due by the petitioner.

Final Conclusion: The petitioner succeeded in having the adverse order annulled, but the monetary relief was moulded as an adjustment against tax dues rather than an outright refund.

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