1999 (3) TMI 619 - AT - VAT and Sales Tax

Summary

Issues:
1. Company's application for refund of tax amounts collected by the respondents.
2. Dispute regarding dealer's statutory liability to pay tax despite assessment invalidity.
3. Entitlement to refund of tax already paid in case of assessment invalidity due to limitation.

Analysis:
1. The company, through two applications, sought a refund of tax amounts paid for the quarters ending in September 1984 and 1985. The assessment for these periods was challenged on the grounds of being beyond the limitation period. Despite previous Tribunal orders and dropped certificate cases, the company's refund request was rejected by the Commercial Tax Officer, leading to the current applications before the Tribunal.

2. The respondents disputed the company's claim, arguing that a dealer's tax liability is independent of assessment legality. They contended that a dealer's obligation to pay tax arises from their own return and that an assessment, even if invalid, does not negate this statutory liability.

3. The key issue addressed was whether an assessment's invalidity due to limitation allows a dealer to demand a refund of tax already paid under Section 10(3) of the Bengal Finance (Sales Tax) Act, 1941. The Tribunal clarified that the liability to pay tax arises from the sale of taxable goods, not the assessment process. Even if an assessment is time-barred, the dealer's obligation to pay tax remains, and the Revenue cannot enforce such assessments but can collect tax due based on the dealer's transactions.

4. The Tribunal emphasized that the completion of an assessment beyond the limitation period does not nullify the dealer's tax liability. The dealer's payment of tax based on their return is considered a valid discharge of their tax liability, irrespective of subsequent assessment outcomes. Therefore, even if an assessment is later deemed invalid, the tax paid by the dealer remains a valid collection by the Revenue.

5. Consequently, the Tribunal dismissed the company's applications for refund, stating that the tax paid by the company in discharge of its admitted liability, in accordance with its return, was a valid tender and collection. The Tribunal highlighted that subsequent assessments being barred by limitation did not entitle the company to a refund of the tax already paid.

In conclusion, the Tribunal dismissed the applications, emphasizing that the dealer's tax liability remains valid even if assessments are invalidated due to limitation, and the tax paid by the dealer based on their return is considered a valid discharge of their tax obligation.