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2023 DIGILAW 12 (ALL)

Vinay Rai v. State of U. P.

2023-01-02

J.J.MUNIR, RAJESH BINDAL

body2023
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. 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 petitioner would be entitled to refund of the amount deposited by him in terms of the direction issued by this Court for hearing of the appeal on merits. 8. 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 petitioner would be entitled to refund of the amount deposited by him in terms of the direction issued by this Court for hearing of the appeal on merits. 8. Though after hearing learned counsel for the respondents, we could have disposed of the writ petition simply with a direction to the respondents to refund the amount deposited by the petitioner as a precondition for hearing of the appeal in terms of the direction issued by this Court but, certain facts need to be noticed, which clearly establish high-handedness on the part of the officers of the Trade Tax Department in dealing with the assessees/persons, who are treated to be in default for payment of any amount due to the department. 9. The facts as have been noticed briefly above, certain amount of tax due from three companies namely, M/s. Shristi Agencies (Pvt.) Limited, M/s. Rudder Steels (Pvt.) Ltd. and M/s. Shivalik Ispat and Fabricators Private Ltd., was sought to be recovered from M/s. Usha India Ltd. and M/s. Malvika Steel Pvt. Ltd. in which the petitioner alongwith his brothers Anil Rai were the shareholders and directors. M/s. Usha India Ltd. and M/s. Malvika Steel Pvt. Ltd. are said to be debtors of the companies, from whom amount of tax is due. The amount was sought to be recovered from them in their individual capacity. The order was challenged by them by filing writ petitions before this Court. They were relegated to avail of their remedy of appeal before the Tribunal, which was to be heard on merits, subject to deposit of Rs. one crore by both the brothers. Undisputedly, the petitioner deposited Rs. one crore. Both the appeals preferred by the petitioner and his brother were allowed by the Tribunal vide order dated June 9, 2016 and demand against them was quashed with liberty to the Department to deal with the recovery from the companies. An application for refund was filed by the petitioner on August 25, 2017, which remained pending. one crore. Both the appeals preferred by the petitioner and his brother were allowed by the Tribunal vide order dated June 9, 2016 and demand against them was quashed with liberty to the Department to deal with the recovery from the companies. An application for refund was filed by the petitioner on August 25, 2017, which remained pending. A reminder was sent on July 23, 2020 on which the order dated September 17, 2020 was passed, rejecting the claim for refund on the flimsy ground that the Tribunal while accepting the appeal had not directed for refund of the amount. 10. We are not required to deal with that order on merits for the reason that learned counsel for the State has fairly submitted that after the order of demand was set aside by the Tribunal, the petitioner will be entitled to refund of the amount deposited as pre-condition for hearing of appeal on merits. Still further, what is required to be noticed is that the order of the Tribunal dated September 17, 2020 was not challenged by the Department immediately when the same was passed. But, when the petitioner filed the present writ petition in this Court, impugning the order rejecting his prayer for refund, Sales/Trade Tax Revision Defective No. 28 of 2021 was filed, after a delay of 1766 days. The same was dismissed on September 2, 2021 as the delay could not be satisfactorily explained. 11. More than a year has elapsed thereafter, but the refund has still not been given to the petitioner. Still further, a counter-affidavit has been filed by respondent Nos. 3 and 4 in this Court on September 19, 2021, which is silent on the fact regarding challenge to the order passed by the Tribunal. 12. There is a specific averment made in paragraph No. 19 of the writ petition by the petitioner that the order passed by the Tribunal on June 9, 2016 was not challenged by the respondents and the same attained finality. To this, in the counter-affidavit filed, there is no response, except a bald statement that the contents are not admitted. It is not mentioned that the aforesaid order was challenged before this Court by filing Sales/Trade Tax Revision Defective No. 28 of 2021, which already stood dismissed vide order dated September 2, 2021 before filing of the counter-affidavit dated September 19, 2021. It is not mentioned that the aforesaid order was challenged before this Court by filing Sales/Trade Tax Revision Defective No. 28 of 2021, which already stood dismissed vide order dated September 2, 2021 before filing of the counter-affidavit dated September 19, 2021. To that extent, there is concealment of facts in the counter-affidavit filed by the respondents. From the facts of the present case, what is established is that retention of the amount deposited by the petitioner as a precondition for hearing of appeal on merits would be a direct violation of Article 265 of the Constitution of India, as the State has no authority to retain the amount after the demand raised was set aside by the Tribunal and the revision against the same was dismissed by this Court. 13. Let the amount of refund due to the petitioner be now paid within a period of four weeks alongwith interest due in terms of Section 29(2) of the Act of 1948. The interest shall be calculated from January, 2018 onwards at the rates specified in Section 29(2) of the Act of 1948. 14. As apparently in the case in hand the delay in grant of refund to the petitioner is patently illegal in view of the order passed by respondent No. 3, the State shall be at liberty to recover the amount of interest to be paid to the petitioner from the officer(s) concerned, as public exchequer should not be burdened on account of illegal action by the officer(s) of the Department. 15. The writ petition is allowed with costs of Rs. 10,000/- to be paid alongwith the amount of refund.