1990 (1) TMI 271 - HC - VAT and Sales Tax

Summary

Issues:
Adjustment of erroneously paid tax amount towards purchase tax liability.

Analysis:

1. The petitioner, a dealer in cashewnuts, sought a direction to adjust the amount paid as "sales tax" to the Assistant Soil Conservation Officers towards the purchase tax payable by him on the cashewnuts purchased during the financial year. The Sales Tax Officer assessed the petitioner to purchase tax and demanded a sum towards it. The petitioner claimed the amount paid as sales tax to be adjusted towards the tax assessed. The petitioner contended that he had already paid a sum and, along with the amount deposited by the Assistant Soil Conservation Officers, had no further liability.

2. The High Court issued notice to the State of Orissa, the Sales Tax Officer, and the Sales Tax Tribunal for a final disposal of the case at the admission stage. The appearance of the Sales Tax Tribunal was deemed formal. The court rejected a request for adjournment to file a counter-affidavit, as the issue was primarily a question of law, and the payments had been certified to be deposited in the Government Treasury.

3. The Court referred to previous decisions and held that adjustment of amounts paid erroneously as tax with the tax levied under the statute must be allowed. Citing the doctrine of unjust enrichment, the Court emphasized that the State should only receive what is legally due. The Court highlighted the importance of social justice and equity in granting relief under Article 226, emphasizing the discretionary nature of the remedy.

4. The Court noted that the amounts paid by the petitioner had already been deposited in the Government Treasury and that denying adjustment would be unjust. The Court dismissed the argument that the amount paid was included in the turnover of the Assistant Soil Conservation Officers, reiterating that the adjustment should be permitted. The Court also rejected the notion of an alternate remedy, emphasizing the importance of upholding the rule of law.

5. Consequently, the Court allowed the writ petition, quashed the order of the Sales Tax Tribunal, and directed the Sales Tax Officer to adjust the amount paid as sales tax towards the tax assessed on the petitioner. The Court clarified that no refund would be permissible to the Assistant Soil Conservation Officers following the adjustment. No costs were awarded in the matter.