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2023 (8) TMI 932 - HC - VAT and Sales TaxRefund of Pre-deposit alongwith interest - Adjustment of pre-deposit with pending demand - pre-deposit made for the purposes of pursuing an appeal under the Act can be treated as duty or not? - HELD THAT:- MRF LIMITED VERSUS COMMISSIONER OF TRADE AND TAXES [2015 (5) TMI 462 - DELHI HIGH COURT] has unequivocally held that a deposit made in terms of a provision connected with the preferment of an appeal cannot be treated to be tax or duty. In fact that is the position which has been consistently held by various courts as would be evident from the discussion which follows. It thus remains undisputed that a pre-deposit cannot partake the character of a tax or duty. This since, it would clearly be connected only with the right of the assessee to pursue an appeal. As is manifest from a clear reading of sub-section (1) of section 30, the said provision relates to a claim made by a person for refund of an amount of tax paid by him. The express language as employed in Section 30(1) itself takes the case of refund of pre-deposit out from the rigors of the procedural formalities which are contemplated therein. We further note that as in the present case, claims for refund which may arise as a consequence of an order passed by the Appellate Authority or a Court would be governed by Section 30(4) of the Act - The same position would also appear to flow from a reading of Rule 29 and which contemplates Form ST- 21 and Form ST-22 being moved by an assessee when claiming refund. Rule 29 (2) speaks of an application for refund of any tax or penalty imposed under Section 30(1) or reimbursement of tax under Section 30(8). Neither sub-section (1) nor sub-section (8) of Section 30 deal with the subject of refund of pre-deposit. Thus, a pre-deposit would become refundable the moment an Appellate Authority comes to hold in favour of the assessee and demands come to be annulled. This principally since pre-deposit is not tax or duty and the refund of which alone is regulated by Section 30(1) of the Act - the decision of the Bombay High Court in SUVIDHE LTD. VERSUS UNION OF INDIA [1996 (2) TMI 136 - BOMBAY HIGH COURT] was assailed before the Supreme Court. While dismissing the appeal of the Union, the Supreme Court in Union of India Vs. Suvidhe Limited. [1996 (8) TMI 521 - SC ORDER] held as A deposit under Section 35-F is not a payment of duty but only a pre-deposit for availing the right of appeal. Such amount is bound to be refunded when the appeal is allowed with consequential relief. There are no justification to accord a judicial imprimatur to such an interpretation since it would go against the very grain of a pre-deposit - Whether the respondents would be entitled to adjust a pre-deposit against an outstanding demand in case the assessee were to lose in the appeal is a question which, in any case, does not arise in the present proceedings. The respondent is hereby directed to refund a sum of Rs.50,76,485/- along with interest in terms of Section 30(4) with effect from 04 December 2017 till the date of actual payment - Petition allowed.
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