2007 (8) TMI 671 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Refund of excess tax paid by the petitioner.
2. Applicability of Section 37 and Section 60 of the West Bengal Sales Tax Act, 1994.
3. Doctrine of unjust enrichment.

Summary:

1. Refund of Excess Tax Paid by the Petitioner:
M/s. Steel Authority of India Ltd., Durgapur Steel Plant, sold products to various purchasers, collected full taxes, and deposited these with the State Exchequer. The petitioner claimed that due to ad hoc calculations insisted upon by sales tax authorities, they paid excess taxes for the years 1998-99, 1999-2000, and 2000-01. The assessing authority confirmed excess payments of Rs. 16,56,723, Rs. 2,44,18,153, and Rs. 20,67,387.68 for these respective years. The petitioner sought directions for refunding these excess amounts.

2. Applicability of Section 37 and Section 60 of the West Bengal Sales Tax Act, 1994:
The State Representative argued that refunds should be applied for by the customers u/s 37(3) of the West Bengal Sales Tax Act, 1994. However, the petitioner contended that Section 37 was inapplicable as the taxes were collected lawfully at the time of realization, and the situation arose due to subsequent supply of declaration forms and eligibility certificates. The petitioner argued that the refund should be governed by Section 60, which mandates the assessing authority to refund excess tax either by cash payment or adjustment.

3. Doctrine of Unjust Enrichment:
The Tribunal considered whether the doctrine of unjust enrichment could be invoked to deny the refund. The Supreme Court in Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise and Customs explained that unjust enrichment occurs when a person retains money or benefits that belong to someone else. The doctrine is based on equity and applies universally, including to the State. The Tribunal concluded that the doctrine of unjust enrichment is applicable to refunds u/s 60 of the 1994 Act. The assessing authority must ensure that the excess tax was not collected from buyers before issuing a refund to the petitioner.

Directions:
The Tribunal directed the assessing authority to reopen the assessment proceedings to ascertain whether the petitioner paid any part of the excess tax itself and to identify buyers entitled to refunds. The petitioner must submit a statement with buyer details and supporting documents. The assessing authority should then refund the excess tax paid by the petitioner itself and communicate the order to the buyers. Buyers can apply for refunds within four months, and the Commissioner should process these applications promptly. If the petitioner provides written consent from buyers, the refund should be issued to the petitioner.

Conclusion:
The Tribunal emphasized the need for procedural modifications to effectively apply the doctrine of unjust enrichment and ensure prompt refunds. The Tribunal provided a detailed procedure for the assessing authority to follow until appropriate rules are framed.