ORAL JUDGMENT

(Per: HONOURABLE THE CHIEF JUSTICE)

Date : 20-04-2023 The issue raised in the above case is as to whether the excess payment made under one head of tax can be set off in the other head, thus absolving the assessee from payment of interest on the short fall of tax in the latter head.

2. At the outset, the learned State Counsel had objected to the writ petition pointing out that there is an appellate remedy available before this Court itself under the Bihar Value Added Tax Act, 2005 (hereinafter referred to as ‘the Bihar VAT Act’). The learned counsel for the petitioner vigorously prayed for consideration of the writ petition, especially pointing out that there is an element of equity involved in the present case which cannot be urged in an appeal.

3. On facts, the petitioner is a Company incorporated under the Companies Act, 1956 and is one dealing in commercial electronic durables. The petitioner for the financial year 2011-12 paid an amount of Rs.2,74,87,667/- towards its entry tax liability, out of which Rs.1,50,00,000/- was deposited as advance entry tax on 20.03.2012, pursuant to payment notice dated 09.02.2012 issued under Section 3(7) of the Bihar VAT Act. At the same time, the petitioner also is said to have deposited Rs.1,25,00,000/- as advance tax towards discharge of VAT liability. The challans for such remittance are produced as Annexure-1 series. The annual returns for the financial year was filed separately disclosing particulars pertaining to VAT in RT Form 3 and Entry Tax in Form ET-05. The actual amount of entry tax payable was Rs.1,33,14,851.56 paise and there was an excess payment of Rs.1,41,72,815/-. The total output tax payable as disclosed in the VAT returns was Rs.29,71,95,126.32 paise. There was shortfall in payment of VAT. The entire amount of entry tax paid, i.e.

Rs.2,74,87,667/- was adjusted by way of set off to the VAT liability. The returns showing such adjustment are produced as Annexure-2 series.

4. On completion of assessment under the two separate enactments, the excess payment of entry tax amounting to Rs.1,41,17,815/- was recorded under the entry tax assessment dated 31.07.2014 and the shortfall of tax under the VAT returns was demanded by notice dated 31.07.2014. In the assessment under the Bihar VAT Act, entry tax amounting to Rs.1,33,14,851.56 paise alone was given set off and short payment of Rs.1,35,02,919/- was demanded under the VAT Act, interest of Rs.55,69,954/- for such short payment was also demanded with a penalty of Rs.5,000/-. The said demand is produced as Annexure-

3.

5. The petitioner then moved CWJC No.16670 of 2014 before this Court challenging the demand notices which was disposed of by judgment dated 26.09.2014. Therein, this Court directed that excess amounts found in the entry tax assessment shall be refunded to the petitioner and the petitioner shall also pay the tax demanded, which payment shall be subject to any challenge to the tax liability, made by the petitioner. The directions in the judgment were complied with and the refund was made on

28.10.20214 pursuant to which short fall VAT was also paid on 31.10.2014 which is evidenced by Annexure-5 series. The petitioner challenged the legality of the demand, on the ground of there being excess payment made under the Entry Tax Act, before the first appellate authority in which was passed Annexure-6 order. The first appellate authority on the premise that if the petitioner had received refund of the excess payment of entry tax earlier, then there would have been no shortfall of VAT payment, found the levy of interest not correct and remanded the matter for consideration whether the penalty was proper or not. The order is produced as Annexure-7. Here it is pertinent to observe that the reservation made in CWJC No.16670 of 2014 was only with respect to the liability to tax under the VAT Act as is clear from the last paragraph of the decision:-

“We also make it clear that the payment, which would be made by the petit