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IN THE HIGH COURT OF ALLAHABAD
RAJESH BINDAL, C.J., J.J. MUNIR, J.
Vinay Rai – Appellant
Versus
State of U.P. and others - Respondents
Civil Misc. Writ Petition (Tax) No. 167 of 2021
Decided on : 02-01-2023
Refund - Tax Recovery - U.P. Trade Tax Act, 1948 - Sections 29(2) - The court emphasized the right to refund after quashing of demand, interpreting the Act to ensure compliance with constitutional provisions against unlawful retention of funds.
Fact of the Case:
The petitioner sought a refund of tax deposited as a precondition for appeal after a demand against him was quashed by the Tribunal. The refund was denied, leading to the writ petition.
Finding of the Court:
The court found that the petitioner was entitled to a refund after the Tribunal quashed the demand, and the delay in processing the refund was illegal.
Issues: Whether the petitioner is entitled to a refund of the tax amount deposited as a precondition for appeal after the demand was quashed.
Ratio Decidendi: The court held that retention of the deposited amount after the demand was quashed violated constitutional provisions, affirming the right to a refund.
Result: The writ petition is allowed, directing the refund of the amount along with interest.
JUDGMENT :
By the Court.-Present writ petition has been filed praying for quashing of the order dated September 17, 2020 passed by respondent No. 3 vide which the prayer of the petitioner for issue of refund of the amount of tax deposited by the petitioner, in terms of the order dated October 1, 2007 passed by a Division Bench of this Court in Civil Misc. Writ Petition No. 1260 of 2007 titled as, Sri Anil Rai v. State of U.P. and others, was rejected. vide aforesaid order, the petitioner was relegated to avail of his statutory remedy and as a precondition for hearing of appeal, an amount of Rs. one crore was directed to be deposited.
2. As pleaded in the writ petition, in the year 2003 ex parte orders were passed under the U.P. Trade Tax Act, 1948 (for short, ' the Act of 1948') for the assessment years 1999-2000 and 2000-2001 against three different companies namely, M/s. Shristi Agencies (Pvt.) Limited, M/s. Rudder Steels (Pvt.) Ltd. and M/s. Shivalik Ispat and Fabricators Private Ltd., raising a demand of Rs. 20,80,00,000/-, Rs. 6,08,40,000/- and Rs. 6,44,00,000/-, respectively. The petitioner was not a director or the shareholder in the aforesaid three companies. The recovery was sought to be made from M/s. Usha India Ltd. and M/s. Malvika Steel Pvt. Ltd. being debtor of aforesaid companies. In the later companies, the petitioner was a director and shareholder.
3. The recovery notices issued to the petitioner in individual capacity was challenged by him by filing a writ petition being Writ Tax No. 782 of 2007. The same was disposed of in terms of detailed order passed in Civil Misc. Writ Petition No. 1260 of 2007 titled as 'Sri Anil Rai v. State of U.P. and others'. The petitioner was relegated to avail of his remedy of appeal and as a condition for hearing the appeal on merits, a sum of Rs. one crore was directed to be deposited vide order dated October 1, 2007. The petitioner as well as his brother preferred appeals before the Commercial Tax Tribunal, Ghaziabad. The same were allowed vide order dated June 9, 2016. The impugned demand raised against the petitioner was quashed and matter was remitted back to the Assessing Officer to continue with the proceedings initiated under Section 8(3) of the Act of 1948 for recovery of the trade tax dues, outstanding against M/s. Shristi Agencies (Pvt.) Limited, M/s. Rudder Steels (Pvt.) Ltd. and M/s. Shivalik Ispat and Fabricators Private Ltd. from M/s. Usha India Ltd. and M/s. Malvika Steel Pvt. Ltd.
4. After passing of the aforesaid order by the Tribunal, the petitioner filed an application for refund of the amount on August 25, 2017, which was followed by a reminder dated July 23, 2020. It was on the aforesaid application that the impugned order dated September 17, 2020 was passed by respondent No. 3, stating that the Tribunal in its order having not directed for refund of the amount deposited by the petitioner after acceptance of the appeal filed by him, the petitioner should approach the Tribunal for clarification of the order. The application for refund was rejected.
5. After filing of the present writ petition, the respondents challenged the order passed by the Tribunal by filing Sales/Trade Tax Revision Defective No. 28 of 2021 after a delay of 1766 days. The same was dismissed by this Court vide order dated September 2, 2021, as there was no satisfactory explanation available for condonation of inordinate delay of 1766 days in filing the revision. Despite this development, the petitioner has not been refunded the amount deposited in terms of the direction issued by this Court for hearing of the appeal by the Tribunal.
6. The prayer is for a direction to the respondents to refund the amount deposited by the petitioner. The prayer is also for grant of interest in terms of Section 29(2) of the Act of 1948.
7. Learned counsel for the State fairly submitted that after setting aside of the order raising demand against the petitioner by the Tribunal vide order dated June 9, 2016, the pet
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