Nav Swadeshi Oil Mills and Refineries Vs. Commercial Tax Officer, Mahaboobnagar - Court Judgment

Excerpt:
sales tax - refund - article 226 of constitution of india, andhra pradesh general sales tax act, 1957 and rajasthan sales tax act - assessment set aside on ground of delay - denial of refund of tax paid with a i return - such denial on ground that assessment was set aside on ground of limitation and tax paid voluntarily by assessee not liable to be refunded untenable. - - the petitioner having paid the tax voluntarily cannot find fault with the assessing authority for not finalising the assessment within 4 years and this limitation of 4 years is provided for the cases where best judgment assessment is made under section 14(1). the filing of the returns indicating the turnovers and payment of taxes thereon voluntarily under rules 15 and 17 do not extinguish even if the assessment is not made and the liability to pay the tax on the voluntarily declared turnover subsists. -(1) if the assessing authority is satisfied that any return submitted under section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such inquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer. according to the terms of section 16(1)(b), there must be a tax due and there must be a failure to pay the tax due within the time allowed. 3,80,641. the disputed tax and the subject-matter of appeal before the first appellate authority and the appellate tribunal as well is confined to the levy of tax of rs. the subject-matter of the appeal before the first appellate authority as well as the appellate tribunal is confined to the disputed turnover and the tax on such disputed turnover is rs.p. rama rao, j.1. this petition is for issue of a writ of mandamus directing the respondents to refund the amount of rs. 3,80,641 being the illegal collection of sales tax from the petitioner for the year 1968-69 under the a.p. general sales tax act. 2. the averments in the affidavit in support of the writ petition may be stated : the commercial tax officer, mahaboobnagar, passes an assessment order under the a.p. general sales tax act on 2nd august, 1973, on the turnover of groundnut seed, oil, etc. as the appeal to the first appellate authority was rejected, the petitioner preferred an appeal to the sales tax appellate tribunal. the appellate tribunal allowed the appeal being t.a. no. 206/77 setting aside the assessment on the ground that the assessment was barred by time. the tribunal followed the judgment of this court in t.r.c. no. 23 of 1978 (nav swadeshi oil mills v. state of a.p. [1983] 54 stc 149) pertaining to the same petitioner for a different assessment year. as a result of the order passed by the tribunal, the petitioner is entitled to the refund of rs. 3,80,641 paid by him towards the tax for the year 1968-69. the order of the tribunal was pronounced on 20th october, 1983, and communicated to the petitioner on 2nd january, 1984. on behalf of the petitioner, an application was filed to the 1st respondent on 1st december, 1984, for refund of the tax. but however there was no response from the 1st respondent or the 2nd respondent. 3. in the three counter-affidavits filed on behalf of the respondents 1 and 2, it is stated that the petitioner was assessed to tax by the commercial tax officer, mahaboobnagar, for the assessment year 1968-69 on 2nd august, 1973, on a net turnover of rs. 1,31,89,451.43. the assistant commissioner dismissed the appeal and the sales tax appellate tribunal in t.a. no. 206/77 dated 20th october, 1983, set aside the assessment order on the ground that the assessment is barred by time. the department filed a tax revision case before this court against the order of the sales tax appellate tribunal. the letter dated 1st december, 1984, by the petitioner seeking refund of sales tax for the year 1968-69 is under consideration and will be considered after the disposal of the tax revision case filed against the order in t.a. no. 206/77. even before the disposal of the t.r.c. filed by the department, the writ petition filed by the petitioner is premature. the question of refund will be considered after the disposal of the t.r.c. by the high court. section 33-c of the sales tax act empowered the department to withhold the amount, as the matter is pending in this court. it is further stated that the petitioner paid a total tax of rs. 1,36,173 provisionally by the date of filing the return in form a-1 for the year 1968-69. in addition the petitioner paid an amount of rs. 16,529.00 as per a-1 return filed by him. the final assessment order was passed on 2nd august, 1973, assessing the net turnover at rs. 1,31,89,451.43 and determining the tax at rs. 3,80,641. out of this amount, the petitioner voluntarily paid an amount of rs. 1,84,202 pursuant to a-1 return thus leaving a balance of rs. 1,96,439.11. the petitioner not only filed the return but also paid the tax as per the returns submitted by him which he admittedly collected from the consumers. the petitioner is a miller and the groundnut turnover is exigible to tax in the hands of the petitioner and as seen from the provisional assessment order dated 6th december, 1969, tax was levied on groundnut oil at 2 per cent and 2 1/2 per cent from 1st april, 1968, to 30th june, 1968, and from 1st july, 1969 to 31st march, 1969, respectively. on the turnover of the sales of oils the tax was paid voluntarily by the petitioner at the rates of 2 per cent and 2 1/2 per cent as per the provisions of the act and this amount was collected from the purchasers. in trade practice, the miller deducts the sales tax payable on groundnut purchases from the price payable to the agriculturists and the petitioner deducted sales tax from the price paid by him to the agriculturists. thus the petitioner is not entitled for unjust enrichment and in the circumstances the claim for refund of the amount is not sustainable. the petitioner having paid the tax voluntarily cannot find fault with the assessing authority for not finalising the assessment within 4 years and this limitation of 4 years is provided for the cases where best judgment assessment is made under section 14(1). the filing of the returns indicating the turnovers and payment of taxes thereon voluntarily under rules 15 and 17 do not extinguish even if the assessment is not made and the liability to pay the tax on the voluntarily declared turnover subsists. 4. the learned counsel for the petitioner contended that on annulling the assessment by the appellate tribunal and also dismissing the tax revision case as against the said order of the tribunal, the petitioner is entitled to refund of tax paid by him as provided under section 33-b of the a.p. general sales tax act and the department is not justified in withholding the refund in spite of the demand. the learned government pleader contended that the assessment was set aside on the sole ground of limitation and as such the merits of levy of sales tax and the assessment are not considered and the petitioner is not entitled to the refund. it is further contended that the tax paid voluntarily pursuant to a-1 returns is not liable to be refunded as the refund under section 33-c is concerned only to the subject-matter of appeal wherein relief is given. in any event, the petitioner is not entitled to the refund as he collected the sales tax from the purchasers and the discretionary remedy under article 226 of the constitution cannot be extended to the petitioner in the circumstances. 5. it is necessary to clear one factual aspect, namely, that the tax revision case filed by the department as against the order of the sales tax appellate tribunal is dismissed. 6. to appreciate the rival contentions, it is necessary to refer to section 13 of andhra pradesh general sales tax act concerned with the filing of the return which is as follows : 'submission of return of turnover by dealer. - every dealer who is liable to tax under this act shall submit such return or returns relating to his turnover, in such manner, within such periods, and to such authority as may be prescribed.' 7. section 14(1) obligating the department to make the assessment within the period prescribed thereunder is as follows : 'assessment of tax. - (1) if the assessing authority is satisfied that any return submitted under section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such inquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer. an assessment under this section shall be made only within a period of four years from the expiry of the year to which the assessment relates.' 8. section 33-b pertaining to refund of tax is as follows : 'refund on appeal, etc. - where as a result of any order passed in appeal or other proceeding under this act, refund of any amount becomes due to the assessee, or licensee, the assessing or licensing authority shall refund the amount to the assessee or licensee without his having to make any claim in that behalf, or adjust or apply such amount as provided in section 33.' 9. section 33 of the a.p. general sales tax act is concerned with the refund of the sales tax paid by the assessee in the situations embodied therein. the main provision provides that in the event of the payment of the excess amount paid provisionally such excess amount shall be refunded save in the situation of adjustment for arrears or exercise of option by the assessee for adjustment of the said amount for any other period. section 33-b entitles the assessee for refund of the amount as a sequel to the order passed in appeal or other proceeding under the act and the assessing authority is obligated to refund the amount without awaiting claim at the instance of the assessee. this provision is a corollary to the result in the appeal. in the event of relief in the appeal the amount to the extent of relief given by the appellate authority is refundable. section 33-c is designed to enable the assessing authority to withhold the refund in the event of the pendency of further remedy at the instance of the department. the power to withhold the refund is hedged in by two conditions, namely, that the refund is prejudicial to the interest of the revenue and it must be done with the prior clearance of the deputy commissioner. 10. the learned counsel for the petitioner relied upon lakshminarayana v. commercial tax officer [1974] 33 stc 558 (ap). in this case, the assessee paid tax pursuant to the provisional xssessment and demand by the sales tax authorities and the assessment was made for the year 1959-60. on appeal, the assistant commissioner set aside the assessment order and remanded the case for fresh disposal. thereafter the authorities closed the assessment proceedings without passing any order of assessment and the assessee filed a writ petition for refund of the amount. it was contended on behalf of the department that the liability to pay tax arises as soon as the taxable event occurs and as the petitioner admittedly made sales he was not entitled to claim any refund. in the context of considering this contention vaidya, j., held that in the absence of any assessment order the tax is not payable and therefore the assessee is entitled to claim refund of the amount paid by him. in state of rajasthan v. ghasilal : [1965]2scr805 the assessee filed return under the rajasthan sales tax act for the fourth quarter ending 22nd october, 1957, and an amount of rs. 11,898.31 was deposited as tax. while making the assessment the sales tax officer imposed a penalty of rs. 400 under section 16(1)(b) of the rajasthan sales tax act as the assessee did not deposit the tax for the fourth quarter on the due date. again on 6th december, 1960, the sales tax officer assessed the respondent in respect of the accounting period 23rd october, 1957, to 10th november, 1958, and imposed a penalty of rs. 1,000 for not depositing the tax in time. thereupon the assessee filed a writ petition under article 226 of the constitution challenging the imposition of penalty in respect of the said period. in the context of considering the contention that the tax is not due till the return is filed and the assessment is made under section 10 of the act, the supreme court held as follows at page 322 : 'in our opinion, there has been no breach of section 16(1)(b) of the act, and consequently, the orders imposing the penalties cannot be sustained. according to the terms of section 16(1)(b), there must be a tax due and there must be a failure to pay the tax due within the time allowed. there was some discussion before us as to the meaning of the words 'time allowed', but we need not decide in this case whether the words 'time allowed' connote time allowed by an assessing authority or time allowed by a provision in the rules or the act, or all these things, as we are of the view that no tax was due within the terms of section 16(1)(b) of the act. section 3, the charging section, read with section 5, makes tax payable, i.e., creates a liability to pay the tax. that is the normal function of a charging section in a taxing statute. but till the tax payable is ascertained by the assessing authority under section 10, or by the assessee under section 7(2), no tax can be said to be due within section 16(1)(b) of the act, for till then there is only a liability to be assessed to tax.' 11. in r. gopal ramnarayan v. third income-tax officer : [1980]126itr369(kar) the assessee-firm paid a sum of rs. 94,179 as advance tax and also a further sum of rs. 4,880.89 was deducted as tax at source and the sum of rs. 2,367 towards self-assessment was paid for the assessment year 1973-74 and similarly for the assessment year 1975-76 the amounts under the same heads were paid. on appeal, the appellate tribunal annulled the assessment orders on the ground that the income-tax officer signed the assessment orders and quantified the tax due in a separate sheet annexed to the assessment order. the revenue did not pursue the matter further. therefore, the petitioner made a demand for refund of the tax paid and this request was rejected by the income-tax officer. on the writ petition filed by the assessee, chandrakantaraj urs, j., of the karnataka high court while considering the contention of the revenue that the income as and when received in liable to tax held that the mere obligation to pay tax pursuant to section 210 of the act or otherwise cannot be considered as levy of tax unless the assessment is made. in kedarnath jute mfg. co. ltd. v. commissioner of income-tax : [1971]82itr363(sc) the assessee-company which followed the mercantile system of accounting incurred a liability of rs. 1,49,776 on account of sales tax determined to be payable by the sales tax authorities on the sales made by it during the calendar year 1954, the previous year relevant to the assessment year 1955-56. the income-tax officer rejected the assessee's claim for deduction of that amount on the ground that the assessee contested the sales tax liability in appeals and that it made no provision in its books with regard to the payment of the amount. in the context of considering the liability to pay the sales tax on the basis of mercantile system of accounting the supreme court held as follows at page 675 : 'now under all sales tax laws including the statute with which we are concerned, the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted. although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax in independent of the assessment. it is significant that in the present case, the liability had even been quantified and a demand had been created in the sum of rs. 1,49,776 by means of the notice dated 21st november, 1957, during the pendency of the assessment proceedings before the income-tax officer and before the finalisation of the assessment. it is not possible to comprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the contention of the assessee did not prevail with regard to the quantum of liability, etc. an assessee who follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being computed. it cannot be disputed that the liability to payment of sales tax had accrued during the year of assessment even though it had to be discharged at a future date.' 12. it is not in dispute that pursuant to the provisional assessment and along with a-1 returns, the petitioner paid total amount of rs. 1,84,202. this amount is merged in the final assessment order and the demand pursuant to the final assessment order is rs. 3,80,641. the disputed tax and the subject-matter of appeal before the first appellate authority and the appellate tribunal as well is confined to the levy of tax of rs. 1,84,202. the appellate tribunal is admittedly seized of the consideration of the validity of levy of disputed tax of rs. 1,96,439 only. the subject-matter of the appeal before the first appellate authority as well as the appellate tribunal is confined to the disputed turnover and the tax on such disputed turnover is rs. 1,96,439. the learned counsel for the petitioner contends that when the assessment is annulled, the entirety of the amount paid under such assessment order is refundable. section 33-b is prefaced by caption 'refund on appeal' and the assessee is entitled to refund of the amount forming the subject-matter of appeal and in the event of allowing the appeal in toto, the assessee cannot aspire for more relief than that sought for in the appeal and the appellate authority cannot travel beyond the subject-matter or quantum of relief in the appeal. it is true that the assessee paid tax along with a-1 returns and pursuant to provisional assessment the said amount though assimilated in the assessment order cannot be considered as the amount due pursuant to the assessment order and in any event the assessability of the said amount is not questioned in the appeal. considered from this perspective, the payment of this tax and assessability of the same has become final as the assessee acquiesced and did not question the validity to that extent. in conjunction with this perspective, section 33-b is solely concerned with the refund as a consequence of the relief in the appeal. it is true that the charging section envisages liability to sales tax as and when sales are effected and this liability should not be confused with the tax due on passing the assessment order and refund of tax as a follow-up of the relief given in the appeal. section 33-b is envisioned to apply in a situation when the relief is given in the appeal and the assessee is entitled to the refund of the amount for which appeal is filed and to the content of relief given in the appeal. the decision in lakshminarayana v. commercial tax officer [1974] 33 stc 558 (ap) is concerned with the payment of tax in excess of the tax payable on provisional assessment and this is plainly covered by the main provision in section 33 and does not apply to the situation in the instant case. 13. the learned government pleader however contended that section 33-b does not warrant refund in the event of an appeal allowed on the point of limitation and the refund is only concerned with setting aside the assessment on merits. this subtle distinction projected by the learned government pleader is not rooted in section 33-b of the act. section 33-b taken in its sweep all situations of annulling the assessment or giving relief and if the assessee is entitled to refund as a result of the appeal, the reason for setting aside or interfering with the assessment order is not germane to the claim of refund. section 14(1) of the act prescribes four years of limitation for making the assessment. this limitation is prescribed with a view to finalise the assessments and the assessment made beyond the stipulated time is stripped of enforceability as such assessment is outside the purview of the act. the learned government pleader further contended that the tax sought for refund is already collected by the assessee from the consumers and there is absolutely no evidence or material in support of this contention. further it is contended that the petitioner should not be permitted to have unjust enrichment and the learned government pleader relied upon the decision in state of madhya pradesh v. vyankatlal : [1985]3scr561 wherein it is held that the recovery by the sugar factory of the 'sugar fund' the difference between the supply price and the ex factory price paid by it under the notification dated 14th january, 1950 is not permissible when the burden of paying the amount was transferred by the factory to the purchasers and the factory was not obliged to pay the amount from its coffers and grant of such refund amounts to unjust enrichment. this decision is far removed from the situation in the instant case. 14. the respondents are directed to refund the sum of rs. 1,96,439.11 to the petitioner within one month from the date of the receipt of this order. writ petition partly allowed. no costs. advocate's fee rs. 150. 15. writ petition partly allowed.