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IN THE HIGH COURT OF ALLAHABAD
Naheed Ara Moonis, Saumitra Dayal Singh, JJ.
M/s Birla Corporation Limited - Petitioner
Vs.
State Of U.P. And Others - Respondent
WRIT TAX No. - 748 of 2020
Decided On : 16-11-2021
Entry Tax Act - Section 13(xv) - VAT Act - Sections 40, 33 and 2(k) - Erstwhile Act - section 5 and 29 - Assam Land (Requisition and Acquisition) Act, 1948 - Section 8(1) - Refund and adjustment - Refund payment has been denied on a solitary ground of entire amount - Undisputedly amount of refund was found due to petitioner under the provisions of U.P. Trade Tax Act, 1948 Owing to legislative changes, that claim was made and considered under UP VAT Act, 2008 refund payment has been denied on a solitary ground of entire amount adjusted against dues of interest on Entry Tax claimed against the petitioner - Petitioner set up a unit to manufacture cement using fly ash as a raw material - Government of U.P had issued a rebate notification granting rebate on payment of tax under Erstwhile Act - Petitioner was granted that benefit for period Mid-way into that scheme rebate notification came to be rescinded.
Finding of the Court :
Mutatis mutandis to the Entry Tax Act, it would provide for refund of excess amount of Entry tax, fees or other dues deposited by a dealer under the Entry Tax Act, after adjustment of any other amount due either under the Entry Tax Act or Central Tax Act or Trade Tax Act, 1948 that any amount of VAT may remain unpaid upon such refund of Entry Tax being paid would remain an extraneous consideration to a refund claim made under Entry Tax Act - Petitioner was not seeking any refund under the Entry Tax Act of that Act could not be invoked while rejecting a claim for refund made under the VAT Act. It is for that reason, we have chosen to first consider the interpretation to be given to Section 40(1) of VAT Act in context of a refund claimed arising under VAT Act as that is only factual and legal context that exists in present case - Only to deal with merits of advanced by the revenue – Court have chosen to consider the effect of Section 40(1) of the VAT Act as applied in statutory context of Entry Tax Act –Applied Section 40 of the VAT Act, mutatis mutandis to the Entry Tax Act, it would provide for refund of excess amount of Entry tax, fees or other dues deposited by a dealer under the Entry Tax Act, after adjustment of any other amount due either under the Entry Tax Act or the Central Tax Act or the Trade Tax Act, 1948. Correspondingly, the fact that any amount of VAT may remain unpaid upon such refund of Entry Tax being paid would remain an extraneous consideration to a refund claim made under the Entry Tax Act. The provision of section 40 having been applied mutatis mutandis to the provision of the Entry Tax Act it would require, no amount of Entry Tax be refunded to an assessee unless other specified tax amounts due against that assessee were first adjusted.
Result: Writ petition allowed
JUDGMENT :
1. Heard Shri Santosh Kumar Bagaria, learned Senior Advocate assisted by Shri Sujeet Kumar and Ms. Chhaya Gupta, learned counsel for the petitioner and Shri C.B. Tripathi, learned Special Counsel for the revenue.
2. Present petition has been filed to quash the communications dated 07.07.2020 and 11.08.2020 issued by the Deputy Commissioner, Commercial Tax, Sector 3, Prayagraj and for a further direction in the nature of Mandamus to refund Rs. 17,45,68,741/-along with interest at the rate of 15% from 04.07.2020.
3. In short, undisputedly, the aforesaid amount of refund was found due to the petitioner under the provisions of the U.P. Trade Tax Act, 1948 (hereinafter referred to as the “Erstwhile Act”) for the A.Y. 2004-05 to 2007-08. Owing to legislative changes, that claim was made and considered under UP VAT Act, 2008 (hereinafter referred to as the “VAT Act”). The refund payment has been denied on a solitary ground of the entire amount Rs. 17,45,68,741/-adjusted against the dues of interest on Entry Tax claimed against the petitioner, being Rs. 18,10,01,347/-arising under the U.P. Tax on Entry of Goods into Local Areas Act, 2007 (hereinafter referred to as the “Entry Tax Act”).
4. The core issue to be addressed is, whether by virtue of section 13(xv) of the Entry Tax Act read with section 40 of the VAT Act, the amount of refund under the VAT Act could be adjusted against the dues arising under the Entry Tax Act.
5. In brief, the petitioner set up a unit to manufacture cement using fly ash as a raw material. At the relevant time, on 18.06.1997, the Government of U.P. (in exercise of its power under section 5 of the Erstwhile Act), had issued a rebate notification granting rebate on payment of tax under the Erstwhile Act, to eligible units, for a period of ten years. Admittedly, the petitioner was granted that benefit for the period 14.12.1998 to 13.12.2008. Mid-way into that scheme, the said rebate notification came to be rescinded on 14.10.2004, by the State Government. Consequently, for the period 14.10.2004 to 13.12.2008, no rebate was allowed to the petitioner under the Erstwhile Act. Consequently, tax payments were made.
6. The notification dated 14.10.2004 rescinding the rebate notification dated 18.06.1997 was challenged by the petitioner and others before this Court. First, writ petition M/s Jai Prakash Associates Ltd. vs. State of U.P. and Another 2010 UPTC 757, came to be decided by the judgment dated 29.03.2010. Paragraph 125 of the said decision reads as under:-
7. On 16.04.2010, the petition filed by the present petitioner being Writ Petition (Misc. Bench) No. 6176 of 2004, M/s Birla Corporation Ltd. vs. State of U.P and others came to be decided by the order dated 16.04.2020 on the following terms:-
No order as to costs.”
8. The above judgments, were carried in appeal by the revenue, to the Supreme Court. Vide judgment dated 12.11.2019, in State of Uttar Pradesh and Another vs. Birla Corporation Ltd. (2019) SCC OnLine SC 1569, the Supreme Court dismissed the revenue's appeal with certain observations. Relevant to our issue, paragraph nos. 34 and 36 of the said decisions read as below:-
Point of Law : Tax - In absence of express words used to that effect, it is neither permissible nor required to read into the language of section 40 of the VAT Act, any word or introduce any meaning ....
Provision of law providing for interest on delayed payment of refund would apply to only those cases that fall under the purview of section 40(1) of the VAT Act and to no other. That is the plain eff....
The main legal point established is that the refund under the DVAT Act should be processed within the stipulated period, and interest is payable from the date the refund was due to be paid.
Adherence to time limits for processing refunds and conditions for withholding refunds under Section 38 of the DVAT Act.
The main legal point established in the judgment is that the right to interest on a refunded amount accrues to the assessee on the date specified in Section 38(3)(a)(ii) of the Delhi Value Added Tax ....
Settlement Act is self-contained code; post-payment under scheme, no outstanding dues exist for MVAT refund adjustment from prior period against settled subsequent period demand.
Adjustment of service tax payments can only occur through a formal refund claim under Section 11B, and the claimant must prove that the tax burden has not been passed to third parties.
The main legal point established in the judgment is the entitlement of a dealer to receive interest on the refund amount as per the provisions of section 38 of the VAT Act, and the requirement for th....
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