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2009 (11) TMI 867 - AT - VAT and Sales Tax
Issues Involved:
1. Entitlement to refund of excess tax paid. 2. Effect of setting aside the assessment order on the ground of limitation. 3. Legal impact of failure to pass an assessment order within the prescribed period. 4. Applicability of the doctrine of unjust enrichment. Detailed Analysis: 1. Entitlement to refund of excess tax paid: The petitioner, a proprietor, submitted returns for the year 2001-02 and paid the due tax of Rs. 1,533.45. Additionally, Rs. 20,822 was deducted at source (T.D.S.) by contractors and deposited. An assessment order dated June 29, 2004, determined tax dues at Rs. 2,16,762 and interest at Rs. 63,631. The petitioner paid Rs. 25,000 on September 27, 2004, under alleged coercion to obtain C forms. The demand notice was received on November 1, 2005, leading to an appeal that set aside the assessment order on other grounds and remanded the case for fresh hearing. The Tribunal later set aside the assessment order as it was not passed within the prescribed period. The petitioner sought a refund of the excess T.D.S. and the Rs. 25,000 paid. The honourable Judicial Member supported the refund claim, while the honourable Technical Member opposed it, leading to the Full Bench's involvement. 2. Effect of setting aside the assessment order on the ground of limitation: The assessment order was set aside on the ground of limitation, meaning it lost its legal effect. The honourable Judicial Member argued that the assessment order's setting aside did not render it non-existent but only nullified its legal effects. Therefore, the payment made under the assessment order should be considered for refund. However, the honourable Technical Member argued that without an assessment order, the petitioner was not entitled to a refund. 3. Legal impact of failure to pass an assessment order within the prescribed period: The Tribunal emphasized that tax legislation must clearly define the method and manner of tax collection. Under the West Bengal Sales Tax Act, 1994, and Rules, 1995, the tax payable is based on self-assessment in returns unless the Commissioner finds reasons for verification. Section 60 mandates the refund of any excess tax paid. The Tribunal held that failure to pass an assessment order within the prescribed period implies acceptance of the returns as correct, making the tax payable the amount shown in the returns. This view was supported by the Tribunal's decision in Flury's Swiss Confectionery (Pvt.) Ltd. v. State of West Bengal. 4. Applicability of the doctrine of unjust enrichment: The Tribunal clarified that excess tax paid voluntarily, even without an assessment order, should be refunded if claimed in the return, provided there is no unjust enrichment. The Tribunal noted that the petitioner claimed to have paid Rs. 25,000 under coercion, which was not permissible for the State to retain. The Tribunal directed the petitioner to appear before the appropriate authority to demonstrate the absence of unjust enrichment. If satisfied, the authority was to refund the amount. Conclusion: The Tribunal concluded that the petitioner was entitled to a refund of the excess T.D.S. and the Rs. 25,000 paid, provided there was no unjust enrichment. The concerned authorities were instructed to refund the T.D.S. by February 15, 2010, and the Rs. 25,000 by March 31, 2010, subject to verification of unjust enrichment by January 31, 2010. The application was disposed of with no order as to costs. Judgment Agreement: R.K. DUTTA CHAUDHURI (Judicial Member) and DIPAK CHAKRABORTI (Technical Member) agreed with the judgment.
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