TaxTMI 
TaxTMI 
2006 (1) TMI 556
X X X X Extracts X X X X
X X X X Extracts X X X X
....d installation of bio gas at Kesar Sugar Mills, Baheri (District Bareilly). The Assistant Commissioner (Assessment), Trade Tax, Bareilly, by means of three separate assessment orders for the aforesaid three relevant assessment years all dated March 22, 1993 (collectively filed as annexure 1 to the writ petition) held that the supply and installation of bio gas plant is liable to be taxed under the provisions of U. P. Trade Tax Act, 1948 at the rate of 10 per cent as unclassified item. The petitioner unsuccessfully challenged these orders in three separate appeals which were decided by the Deputy Commissioner (Appeals), Trade Tax, by the common order dated March 19, 1994. Thereafter, it filed three second appeals being Appeals Nos. 231 of 1994, 232 of 1994 and 233 of 1994 for the assessment years 1987-88, 1990-91 and 1991-92, respectively, before the Trade Tax Tribunal, Lucknow. The Tribunal allowed all the three appeals. It has recorded a finding that the supplies made by the petitioner through Industrial Finance Corporation of India to Indian Turpentine and Rosin Company Limited, Bareilly, the bio gas generating and effluent treatment supplied by the petitioner is not liable to b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from December 3, 1997 till the date of refund has been claimed. The respondents in their counter-affidavit filed through Shri S.K. Gupta, Trade Tax Officer, Sector 4, Bareily, have not disputed the fact that ultimately the Trade Tax Tribunal, Lucknow, vide its order dated December 2, 1997 allowed all the appeals and held that no tax is payable on the supply and instalation of bio gas plant, and the matter has become final between the parties, vide para 3. In the counter-affidavit two issues have been raised by the respondents to deny petitioner's claim. One is that there is no direction in the order of the Tribunal dated December 2, 1997, by which the appeals were allowed and held that no tax is payable, to refund the tax deposited by the petitioner. Therefore, it has been pleaded that "until and unless there is an order for refund, no refund voucher can be issued vide para 3(ii) of the counter-affidavit". In this connection the further pleading is that the application moved by the petitioner for rectification has been rejected on July 19, 2001 as time-barred by the Tribunal. Therefore, the order dated December 3, 1997 remains unamended to the extent that there is no specific ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uraiya Chamber of Commerce, Allahabad [1986] 62 STC 327 (SC); [1986] 3 SCC 50. 3. Belapur Sugar and Allied Industries Ltd. v. Collector of Central Excise [1999] 4 SCC 103. 4. Assam Roadways (Delhi) v. State of U. P. [2005] UPTC 1106.a The learned Standing Counsel in reply submitted that in absence of any specific direction in the order of Tribunal to refund the amount of tax to the petitioner, the respondents are justified in refusing to refund the amount of tax, if any, deposited by the petitioner. He submitted that in the absence of a specific direction by the higher authority or court no refund can be granted to the petitioner, notwithstanding the fact that ultimately it has been found that the assessment order levying the tax on the petitioner was illegal and has been set aside, by the higher authority. It was also submitted that there is some dispute with regard to the amount, if any, deposited by the petitioner during the relevant assessment years, i.e., 1987-88, 1990-91 and 1991-92. The tax amounting to Rs. 3,37,500 and Rs. 19,700 were deposited in the assessment year 1992-93. In this connection strong reliance was placed by him on the relevant corresponding paragraphs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anner 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 to be refunded in accordance with sub-section (1) is not refunded as aforesaid within three months from the date of order of refund passed by the assessing authority, or as the case may be, from the date of receipt by him of the order of refund, if such order is passed by any other competent authority or court, the dealer shall be entitled to simple interest on such amount at the rate of eighteen per cent per annum from the date of such order or, as the case may be the date of receipt of such order of refund by the assessing authority to the date of the refund: Provided that for calculation of the interest in respect of any period after the 26th day of May, 1975, the sub-section shall have effect as if for the words 'six months' the words 'three months' were substituted and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in para 8 (page 99 of STC) has clarified the law by expressly holding that if a dealer has paid any amount in excess of his sales tax liability as determined under the assessment order he shall be entitled to refund of the excess amount paid. The relevant paragraph reads as follows: ". . . By virtue of the proviso appended to sub-section (1) the amount found refundable to the dealer shall be adjusted towards the tax or any other amount outstanding against him under the State or the Central Sales Tax Act and only the balance is to be refunded. It is also clear that what is to be adjusted is the outstanding dues against the dealer. If on the date when the assessment order is passed nothing is outstanding against the dealer the whole amount paid in excess of the dues under the Act is to be refunded. It is not open to the assessing authority to withhold that amount for more than three months without incurring the liability for interest. It would lead to absurd results if it is accepted that unless the assessing authority passes a separate and express order of refund the dealer will not be entitled to any interest on the amount refundable to him. If the dealer has paid any amount in ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the same is not referable to any admitted tax liability, the petitioner is entitled for the refund. Even on a plain reading of section 29(1) of the U. P. Trade Tax Act, it is clear that a duty is cast upon the assessing authority to refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under the Act. Till such time assessment is not made, any amount due under the Act shall be referable to the admitted tax liability only. Any amount which is deposited in excess of the admitted tax liability upon interim orders passed by the appellate authority or by this court, in the absence of determination of the liability either by virtue of an assessment or otherwise, cannot be said to be an amount due under the Act." Under section 10(5), the Tribunal has been given power to pass the various kinds of orders while disposing of an appeal and under clause (c) it may order such amount of tax, fee or penalty or other moneys as has been realised in excess of the due amount to be refunded according to he provisions of the Act. The said provision enumerates the various kinds of orders which may be passed by the Tribunal while disposing of an appeal finally....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing officer) shall refund excess tax or fees or realise the deficit, as the case may be. The rights and the obligations of the parties must be found within the four corners of the Act but in interpreting relevant procedural provisions, fairness and justice should be the approach and even in a fiscal statute, equity should prevail wherever language permits, as observed by the Supreme Court in paragraph 17 of Commissioner of Sales Tax v. Auraiya Chamber of Commerce, Allahabad [1986] 62 STC 327 (SC); [1986] 3 SCC 50 (page 332 of STC). The case before the apex Court also arose under the provisions of the U. P. Sales Tax Act and question of grant of refund of sales tax (now called as trade tax) paid by a dealer on forward contracts on the basis of the unchallenged assessment order when subsequently in another case it was held that such levy is ultra vires of the Act. The Supreme Court approved the judgment of the High Court granting refund of the tax on such contracts even though the assessment order was not subject to challenge in appeal by the assessee. In view of article 265 of Constitution of India and section 72 of the Indian Contract Act, 1872, the payment of tax by the dealer wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erent attitude of the taxmen to the assessee. The taxing authority is under duty to recover the legitimate Revenue from the taxpayers. But in exercise of that power they should not be overzealous to hold the legitimate claim of refund of excess payment of tax. While it is true that collection of revenue is a serious matter for the State and the bounden duty of the authorities functioning under the Act is to implement the provisions of the Act, there should be safety and assurance to an honest taxpayer. An honest taxpayer should not be subjected to unnecessary harassment and an action not warranted in law, which can be of very serious consequence to the taxpayer if it is allowed to remain without correction, such harassment and brow beating of an honest taxpayer will otherwise drive even such honest taxpayer to become cynical and lead to a situation where taxpayers will get a feeling that paying taxes honestly is not a worthwhile exercise; that the tax authorities are a menace to the society rather than simply being representatives of the State for enforcing the tax provisions vide Raghavendra Sherrigar v. Assistant Commissioner of Commercial Taxes [2005] 142 STC 153 (Karn). The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Industrial Finance Corporation of India, i.e., Finance Company who have deposited the tax on behalf of ITRC is immaterial--until and unless there is an order for refund no refund voucher can be issued because under section 29, the order for refund is a must." The letter of the Industrial Finance Corporation of India Ltd. is also reproduced below: "Please refer to our letter No. 317 dated the March 7, 2001 and discussions undersigned had with Shri Prem Chopkar, Accounts Officer of the company today on the subject. 2.. As requested by you, we confirm that sums of Rs. 3,37,500 and Rs. 19,700 were deducted towards sales tax (2 per cent) from the sale consideration of Rs. 188 lakhs payable by IFCI to you, viz., Reva Enviro Systems (Pvt.) Ltd., in regard to supply of bio gas generating and effluent treatment plant installed at factory premises of the Indian Turpentine and Rosin Co. Ltd., at Bareilly, in terms of Allahabad High Court order dated the April 10, 1992. The sum so deducted was paid with sales tax authorities on the August 7, 1992 (Rs. 3,37,500) and on October 9, 1992 (Rs. 19,700) (copies of challans enclosed). Since amount had been deducted from the sale consideration, ....