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2019 DIGILAW 77 (JK)

Sapco India v. State of J&K

2019-02-22

GITA MITTAL, TASHI RABSTAN

body2019
Judgment (Oral) 1. With the consent of the parties, this writ petition is taken up for consideration. 2. We have heard Mr. Subash C. Dutta, learned counsel for the petitioner and Mr. K.D.S Kotwal, learned Dy. AG on behalf of the respondents on this writ petition seeking the following prayer:— “(i) Allow this writ petition of the petitioner; ii) Issue writ in the nature of mandamus commanding the Respondent No.2 to issue the refund along with interest @ 18% P.A.” 3. The facts giving rise to the present writ petition within narrow compass are that the writ petitioner is a partnership concern engaged in the purchase and sale of cement and other iron goods and material in Jammu. For this business, the petitioner was registered as a dealer with the Assessing Authority Sales Tax Circle J, Jammu. It appears that with regard to GST returns of the petitioner for the accounting period 1993-94, the assessment was effected under Section 7(8) of the J&K General Sales Tax Act, 1962 (hereinafter referred to as “J&K GST Act”) on 28th of August, 1995. Subsequently, a reassessment order came to be made under Section 7(11) of the J&K GST Act against the petitioner. 4. On an appeal being preferred assailing the same, the appellate authority set aside the order and remanded the case for fresh assessment. 5. During the pendency of the appeal, the petitioner had deposited the impugned demanded tax of Rs. 1,40,000/-. We are informed by learned counsel for the petitioner that that aforesaid amount was deposited by the petitioner on five different dates in following installments:— Date Amount in Rs. 14.09.2001 30,000-00 15.10.2001 10,000-00 20.11.2001 30,000-00 24.12.2001 20,000-00 31.01.2002 50,000-00 Total 1,40,000-00 6. The Assessing Authority reconsidered the matter and by an order dated 30th of June, 2003 passed under Section 7(15) of the J&K GST Act, reaccepted the return of the petitioner. The Assessing Authority, however, failed to make an order regarding refund of the amount which was deposited by the petitioner. 7. In this regard, the petitioner addressed the communication dated 13th of November, 2003 to the Assessing Authority requesting issuance of the refund along with interest due thereon after passing the necessary orders. A reminder in this regard from the petitioner was received by the respondents on 15th of November, 2003 also evoked no response at all from them. 8. 7. In this regard, the petitioner addressed the communication dated 13th of November, 2003 to the Assessing Authority requesting issuance of the refund along with interest due thereon after passing the necessary orders. A reminder in this regard from the petitioner was received by the respondents on 15th of November, 2003 also evoked no response at all from them. 8. The petitioner states that thereafter he was called upon by the Assessing Authority to submit an affidavit to the effect that he had not claimed the adjustment of said deposited amount for any accounting year. The petitioner was also required to depose that he had not received any refund till date. Such affidavit dated 7th of January, 2007 was furnished by the petitioner. Yet again, it did not receive any favourable response. 9. The petitioner thereafter appears to have sought legal assistance and caused a request for refund of the amount with interest to be issued on 7th of February, 2007 this time through his counsel. Only thereafter, the Commercial Tax Officer, Circle J, Jammu addressed the communication dated 24th of March, 2017 offering the following explanation for the reasons for failures to effect the refund:— “Whereas, re-assessment order under sections 7(15) of J&K GST act 1962 was passed on 30-06-2003 by then CTO circle “J” with nil demand. Whereas, papers were forwarded to Commissioner Commercial Taxes for re-fund in said case after seven years gap on 27-07-2010. Whereas, Additional Commissioner Commercial Taxes writes letter for explaining reason for delay of seven years on behalf of assessing authority in forwarding the said re-fund case on 9-10-2010. Whereas, in reply to Additional Commissioner Commercial Taxes the then CTO replies that the seven years delay had been due to fault of the dealer himself as the payment made by the dealer were not found entered in the daily collection register maintained in this office and the same were submitted by the dealer on 23-07-2010. Whereas, Deputy Commissioner Commercial Taxes (Judicial) writes letter to then CTO Circle “J” on 26-11-2010 that no approval was required from Commissioner Commercial Taxes in the said case as order was passed under section 11 of GST Act 1962 by the appellant authority there by asking the delay caused for finalize the case. The same has been answered already. Whereas, Deputy Commissioner Commercial Taxes (Judicial) writes letter to then CTO Circle “J” on 26-11-2010 that no approval was required from Commissioner Commercial Taxes in the said case as order was passed under section 11 of GST Act 1962 by the appellant authority there by asking the delay caused for finalize the case. The same has been answered already. In respect of the events which have taken place the assessing authority on the present date has come to the following conclusions that the case of re-fund which amounts to Rs. 10,000.00 and above need prior approval from Commissioner Commercial Taxes according to the GST Act rules 1962. Hence, a letter has already been forwarded to the Commissioner Commercial Taxes under rules on 27-07-2010, reply of which is still awaited.” (Emphasis by us) 10. Thus, the respondents were once again admitting their liability to effect the refund of Rs. 1,40,000/- but avoiding making the refund under the shield of the excuse that approval had not been received from the Commissioner Commercial Taxes. Finally, after unsuccessfully issuing yet another reminder dated 23rd of June, 2017, to the Assessing Authority, the Commercial Taxes Officer, Circle “J” Jammu, the petitioner has filed the present writ petition seeking the above reliefs. 11. Given the admissions made by the respondents, it is evident that the respondents can have possibly no objection to the refund of the amount which has been deposited by the petitioner during the pendency of his appeal. In this background, when the writ petition came up for consideration, this Court passed an order dated 16th of November, 2017 directing the respondent No. 2 who was present in the Court in person, to process the refund and to bring the cheque to the Court on the next date of hearing. 12. On the 20th of November, 2017, the counsel for the petitioner was directed by this Court to provide the account no. of the petitioner to which the refund as calculated by the respondents shall be credited. 13. The record of the case shows that on 27th of November, 2017, counsel for the petitioner has informed this Court that the refund stood credited to the petitioner”s account in terms of the orders of the Court, however, the interest component was yet to be received. 14. 13. The record of the case shows that on 27th of November, 2017, counsel for the petitioner has informed this Court that the refund stood credited to the petitioner”s account in terms of the orders of the Court, however, the interest component was yet to be received. 14. In this background, the matter has remained pending in this Court only awaiting payment of the interest by the respondents. 15. Opposing the grant of interest, it is submitted by Mr. K.D.S.Kotwal, learned Dy. AG that the respondents cannot be faulted for the delay in effecting the refund for the reason that the petitioner had failed to make the request for the same. This argument has to be noted only for the sake of rejection. The above narration of facts amply illustrates the repeated requests of the petitioner which commenced from 13th of November, 2003. This was the first request made by the petitioner within months of the passing of the order dated 13th June, 2003 by the Assessing Authority. 16. Even this order was passed after the petitioner was constrained to file an appeal wherein the original assessment was set aside and the matter remanded for reassessment. 17. While accepting the pleas of the petitioner, it is unfortunate that the Assessing Authority reconsidering the matter, failed to pass the formal order regarding refund of the amount which the respondents have admitted, was payable to the petitioner. 18. The request through the petitioner’s counsel on the 7th of February, 2007 and even the reminder thereafter on 23rd of June, 2017 failed to persuade the respondents to act fairly and effect the refund. 19. The warbled explanation furnished by the Commercial Taxes Officer in his letter dated 24th of March, 2017, to say the least is again most unfortunate. It was not the concern of the petitioner as to the manner in which the respondents would process the refund. The respondents ought to have ensured completion of the necessary formalities so as to effect the refund, that too at the earliest. 20. Mr. Subash C. Dutta, learned counsel for the petitioner has, in this regard, drawn our attention to the provisions of the statutes of the J&K GST Act which hold the field. The responsibility to effect the refund is statutorily recognized. 20. Mr. Subash C. Dutta, learned counsel for the petitioner has, in this regard, drawn our attention to the provisions of the statutes of the J&K GST Act which hold the field. The responsibility to effect the refund is statutorily recognized. In this regard, we may usefully extract the provisions of Section 10 of the Act which govern “refunds” which reads thus:— “10. Refunds.—The Assessing Authority shall, refund in the prescribed manner, any sum paid in excess of the amount of tax or penalty due under this Act;] [Provided that if excess amount of tax paid has been realized by the dealer from any other person, it shall be refundable only to that person.] [10-A. Power to withhold refund in certain cases.—Where an order giving rise to refund is the subject matter of revision or other proceeding, or any other proceeding under this Act is pending and the assessing authority is of the opinion that the grant of refund is likely to adversely affect revenue, he may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine. 10-B. Interest on refunds.—(1) Where the refund is due to the dealer or any other person on account of tax or penalty found to have been paid in excess in pursuance of an order under Sections 11, 11-A or Section 121, the Government shall pay to such a dealer/person simple interest at [18%] per annum on the amount of such refund from the date such amount was paid to the date on which refund is granted: Provided that where the amount found to be in excess was paid in instalments, such interest shall be payable on the amount of such instalment which was in excess, from the date on which such instalment was paid to the date on which the refund is granted: Provided further that interest for the period commencing from the date of the order under [Section 11, Section 11-A] or Section 12 giving rise to the refund shall be paid at the rate of 24% per annum. (2) Where the refund is withheld under the provisions of section 10-A, the Government shall pay simple interest at the rate of 12% per annum on the amount of refund ultimately determined to be due as a result of appeal of further proceeding: Provided that interest for the period commencing from the date on which the time determined by the Commissioner under section 10-A expires shall be paid at the rate of 24% per annum. [Explanation I.—Interest for a part of the month shall be allowed proportionately.] Explanation II.—In case the payment of tax has been made by a cheque or draft or in any other mode otherwise than in cash, the date of payment will be the date on which such cheque, draft, etc. was actually encashed.” (Emphasis by us) 21. Our attention stands invited also to Section 8 of the J&K GST Act which reads thus:— “8. Payment and recovery of tax:—(1) The tax assessed or any other amount demanded under this Act shall be paid in such manner and within such time not being less than fifteen days from the date of the notice of demand as may be specified in the notice .In default of such payment the whole of the amount then remaining due shall become recoverable in accordance with 3[sections 16 and 16-A. Provided that the Commissioner or any other officer not below the rank of assessing authority, authorized in writing by the Commissioner, may on an application in the prescribed form extend, the date of payment specified in the notice of demand or allow him to pay demand in instalments subject to such conditions including the payment of interest under sub section (2) and furnishing of a security, as the officer may consider necessary. (2) If the tax or any other amount due under this Act 7[excluding interest is not paid by the dealer or any other person, by whom it is payable within the period 7[allowed], the dealer or such other person shall be liable to pay interest on the tax or other amount from the date it was payable to the date of actual payment 8[at the rate of 2 per cent per month. Provided that where as a result of an order under sections 11,11-A, 12, 24 or an order of the court the amount of tax or other sum on which interest was payable under this sub section has been reduced the interest shall be reduced accordingly and excess interest paid, if any, shall be refunded. (3) Quarterly tax shall be paid before furnishing a quarterly return but not later than the date prescribed under sub section (2) of section 7. (4) Notwithstanding anything contained in sub section (3) if the Assessing Authority extends the date for furnishing quarterly return under sub section (5) of section 7, an amount equal to the amount of quarterly tax payable or paid for the immediately preceding quarter shall be paid before the prescribed date in lieu of quarterly tax; Provided that a dealer who was not previously liable to pay any quarterly tax shall make an estimate of the tax payable for the quarter and deposit the same before the prescribed date. (5) Where any dealer fails to furnish any quarterly return and fails to pay the tax in accordance with sub section (4) an amount equal to the amount of tax payable or paid for the immediately preceding quarter shall become payable towards the tax payable for the said quarter. (6) The tax paid under sub section (4) and (5) shall be treated to be quarterly tax payable under sub section (3) and shall be adjusted towards the tax payable for the quarter in respect of which it is paid; Provided that the difference between the tax payable on the basis of quarterly return and the tax paid under the aforesaid sub sections shall be paid before the date to which the period of furnishing the return has been extended or date of furnishing the return, whichever is earlier. Provided further if the amount already paid is in excess of the quarterly tax payable, the excess thereof shall be refunded, and if the assessee so desires, the said amount of refund shall be treated to have been paid towards the tax payable for the next following quarter and the assessee shall be entitled to interest on the amount of such refund in accordance with the provisions of sections 10-B of the Act. (7) Where a dealer furnishes a revised return under sub section (4) of section 7 and the tax payable is more than the tax paid on the basis of original return he shall pay the extra tax payable before furnishing the revised returns. Provided that if the tax already paid is in excess of the tax payable, such excess amount shall be treated to have been paid towards the tax payable for the quarter next following the date of furnishing such revised return. (8) Notwithstanding anything contained in this Act, but subject to the provisions of sub section (5) of section 16-C of this Act, if a dealer fails to pay the quarterly tax under this section he shall be liable to pay interest on the tax from the date it was payable to the date of actual payment at the rates prescribed in sub section (2) of this section and the provisions of section 16 and section 16-A shall apply mutatis mutandis to the recovery thereof.” 22. The legislature has carefully mandated the responsibility of effecting the refunds upon the Assessing Authority. In the instant case, there can be no cavil that the Assessing Authority has failed to effect the refund as factually admitted and as mandated by law. The refund has been effected only after the petitioner was constrained to invoke the writ jurisdiction of this Court and a preemptory order regarding payment of the interest was made by this Court. The refund became due and payable in accordance with Section 10 of the J&K GST Act upon passing of the order as back as on 30th of June, 2003. It was paid only in compliance of the order passed by this Court on 20th of November, 2017 and was effected on or about 22nd of November, 2017. 23. Before us, the petitioner has pressed the prayer for award of interest. 24. The petitioner would be entitled to interest even on application of general principles governing delay in making a payment by an authority and depriving a party lawfully entitled of the amount. In the instant case, again the statute has carefully provided the manner in which the liability for payment of interest would be assessed. In this regard, we have extracted the relevant provisions of section 10-B. 25. We are informed by Mr. In the instant case, again the statute has carefully provided the manner in which the liability for payment of interest would be assessed. In this regard, we have extracted the relevant provisions of section 10-B. 25. We are informed by Mr. Subash C. Dutta, learned counsel for the petitioner that in view of the above provisions, the respondents were liable to pay interest @ 18% per annum on the amount of the refund from the date the amount was paid to the authorities till the date on which the refund was granted. 26. In terms of Sections 8(1), 6 and 10-B(1) of J&K GST Act, the respondents are liable to pay simple interest @ 18% per annum on the amount of such refund from the date such amount was deposited to the date on which the refund is ordered which was on 13th of September, 2003. 27. In the present case, it is not in dispute that the amount which had been paid by the petitioner was not payable and consequently was in excess of the quarterly tax payable in terms of second proviso to Section 8(6) of J&K GST Act, such excess amount paid by the petitioner was required to be refunded by the respondents and the assessee-petitioner was entitled to the interest on the amount of such interest in accordance with the provisions of Section 10-B of the Act. 28. In view of the above narration, we have no manner of doubt that the writ petitioner is entitled to interest on the amount effected by it. Inasmuch as legislature has prescribed a simple interest @ 18% per annum and given the fact that the respondents admit their liability to effect the refund, but have deprived the petitioner of the benefit thereof on specious and untenable grounds. We are of the opinion that, to avoid delays and further controversies, interest of justice would be met if the petitioner is paid simple interest @ 18% per annum w.e.f. the various dates on which he had effected the payment of the amounts which have been set out above. 29. In view of the above, this writ petition is allowed with a direction to the respondents to calculate interest @ 18% per annum on the amounts paid by the petitioner w.e.f. the dates noted by us in para 4 above. 29. In view of the above, this writ petition is allowed with a direction to the respondents to calculate interest @ 18% per annum on the amounts paid by the petitioner w.e.f. the dates noted by us in para 4 above. The interest shall be payable up to 22nd of November, 2017 when the refund was paid. The amounts shall be calculated and conveyed to the petitioner and also transferred/deposited by the respondents in to the account, the details whereof are already with the respondents, within a period of four weeks. The writ petition is allowed in the above terms. Let a copy of this order be made available to the counsel for the parties under the seal and signatures of Bench Secretary.