The right to refund tax paid under an unconstitutional provision requires proof of non-passing of tax burden to consumers and timely action upon knowledge of legal changes.

ORDER :

T.Vinod Kumar, J.

This Writ Petition is filed to declare the order of 1^st respondent dated 30-05-2005 to the extent of levying tax @ 8% on the material purchased from outside the State and utilized in execution of works contract as illegal, arbitrary and without jurisdiction.

2. Heard Sri Singam Srinivas Rao, learned counsel representing Sri S.Chakrapani, learned counsel for the petitioner and learned Special Standing Counsel appearing on behalf of respondents, and perused the record.

3. Briefly stated, the facts of the case of the petitioner are that, it is in the business of execution of works contract and opted to pay tax in terms of Section 5G of the Andhra Pradesh General Sales Tax Act, 1957 (for short ‘the Act’) by way of composition; that the 1^st respondent had granted permission to pay tax under Composition Scheme for the Assessment Year 2003-04 w.e.f. 01-04-2003 to 31-03-2004 by issuing Form–L1; and that the benefit of payment of tax under composition method has been renewed for a further period of one year upto 31-03-2005 by endorsement dated 22-04-2004.

4. It is the case of the petitioner that by virtue of permission granted by the 1^st respondent permitting the petitioner to pay tax under Composition Scheme, the petitioner would be required to pay tax @ 4% per square feet on plinth area constructed as against the applicable rate of tax on the goods used in the execution of works contract.

5. It is the further case of petitioner that, the officials of the Vigilance and Enforcement Department ( V& E), Government of Andhra Pradesh have caused inspection of petitioner premises on 25-08-2004 and verified the books of accounts; that the said officials during inspection, have pointed out that the petitioner is not entitled to include the value of material purchased from outside the State and used in execution of works contract under the Composite Scheme; and that the petitioner is required to pay sales tax @ 8% of such value of purchases made from outside the State under Section 5 F of the Act.

6. Petitioner further contends that the officials of V&E Department have themselves estimated the value of such purchases made by the petitioner from outside of State to be Rs.70,36,204/- and directed the petitioner to pay tax on the aforesaid value of material, which has been arrived in a sum of Rs.4,55,132/-.

7. It is contended by the petitioner that on the officials of V&E Department holding that the petitioner is not entitled to include the value of material purchased from outside the State for paying tax under Composition Scheme as per the permission granted in Form-L1 under Section 5G of the Act, the petitioner had made the aforesaid payments, and based on the aforesaid payment made by petitioner, the 1^st respondent authority had passed the Assessment Order on 30-05-2005.

8. Petitioner contends that under bona fide belief of said determination made firstly by the V&E Department authorities of petitioner not being eligible to claim composition in respect of material purchased from outside the State and used in execution of works contract and secondly, the 1^st respondent passing the Assessment Order dated 30-05-2005 determining the tax due in a sum of Rs.5,62,896/-, remitted the tax and did not challenge the Assessment Order passed by the 1^st respondent by way of appeal under Section 19 of the Act or in a Writ Petition before this Court.

9. It is the further case of petitioner that while it had accepted the order of Assessmen