2007 (3) TMI 697 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Refund of excess tax deposited.
2. Applicability of Section 29A of the U.P. Trade Tax Act to the Central Sales Tax Act.
3. Procedural vs. substantive provisions in tax law.

Issue-wise Detailed Analysis:

1. Refund of Excess Tax Deposited:
The applicant sought a refund for the excess tax deposited for the assessment years 1994-95 and 1995-96, amounting to Rs. 1,85,264.50 and Rs. 3,73,453, respectively. The assessing authority denied the refund under Section 29A of the U.P. Trade Tax Act, arguing that the applicant had collected this amount from customers, making it refundable to the customers, not the applicant. This view was upheld by the first appeals and the Tribunal.

2. Applicability of Section 29A of the U.P. Trade Tax Act to the Central Sales Tax Act:
The applicant contended that Section 29A of the U.P. Trade Tax Act does not apply to the Central Sales Tax Act. They cited decisions from the apex court in Khemka & Co. (Agencies) Pvt Ltd. v. State of Maharashtra [1975] 35 STC 571, India Carbon Ltd. v. State of Assam [1997] 106 STC 460, and the Bombay High Court in Commissioner of Sales Tax v. Ramkrishna Kulvantrai [1976] 37 STC 564 to support their argument that no tax can be levied without the authority of law as per Article 265 of the Constitution of India.

The Standing Counsel argued that the refund provisions are procedural and have been adopted by Section 9(2) of the Central Sales Tax Act. The inclusion of "refund" by Act No. 61 of 1972, effective from April 1, 1973, makes the refund provisions of the U.P. Trade Tax Act applicable to the Central Act.

3. Procedural vs. Substantive Provisions in Tax Law:
The court examined the provisions of Section 9(2) and 9A of the Central Sales Tax Act, both before and after the Finance Act, 2000. It was noted that the procedural provisions of the State law, including refunds, have been made applicable to the Central Act. The court distinguished between procedural provisions (like refunds) and substantive provisions (like interest and penalties).

The court referenced the apex court's decisions in Khemka & Co. (Agencies) Pvt Ltd. v. State of Maharashtra and India Carbon Ltd. v. State of Assam, which held that procedural parts of State provisions apply for enforcing the substantive law of the Central Act. However, the court noted that refunds are procedural and do not require a substantive provision. Thus, Section 29A(2) and 29A(3) of the U.P. Trade Tax Act, being procedural, apply to the Central Act.

The court also cited the apex court's validation of Section 29A of the U.P. Trade Tax Act in Kasturi Lal Harlal v. State of U.P. and Kheria Brothers, Lalitpur v. Assistant Commissioner (Judicial), Sales Tax, Jhansi.

Conclusion:
The court concluded that the revisions lacked merit and dismissed both the revisions. The provisions of Section 29A of the U.P. Trade Tax Act were deemed applicable to the Central Sales Tax Act, and the procedural nature of refund provisions justified their application under Section 9(2) of the Central Act.