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TMI Blog2015 (4) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... oner provides cellular services and for the said purpose, activates SIM cards. The State of Haryana collected VAT from the petitioner, pursuant to assessment orders dated 22.02.2006, 26.03.2008 and 22.02.2006 (Annexures P-3A, P-3B and P-3C) on the premise that activation of SIM cards is a sale. The Supreme Court having held in Bharat Sanchar Nigam Limited and another vs Union of India and others, (2006) 145 SCT 91 and in the case of the petitioner in Idea Mobile Communication Ltd. v. C.C.E. & C., Cochin, 2011(43) VST 1 (SC) that activation of SIM card is a service and not a sale, the petitioner approached the State of Haryana for refund of the amount of VAT but as no action was taken in the matter, filed CWP No. 25638 of 2012, which was disposed of directing the respondents to decide the petitioner's representation for refund. The representation was illegally dismissed, on 15.10.2013 (Annexure P-9) on entirely irrelevant considerations, namely, that the petitioner did not challenge its liability before the Assessing Authority, the petitioner did not file any appeal against the assessment orders and as the petitioner has charged value added tax from its customers, the amount can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the State of Haryana relies upon a judgment of the Supreme Court in Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal and others, (2007) 8 SCC 418. Counsel for the State of Haryana also submits that Section 20 of the VAT Act, which confers the power of refund does not apply to the present case and as the Haryana VAT Act does not contain any provision that allows the respondents to refund the amounts deposited by the petitioner, the writ petition may be dismissed. Counsel for the State of Haryana further submits that the judgment in Bharat Sanchar Nigam Limited (supra) clearly indicates a prospective overruling of the Supreme Court's opinion in the State of Uttar Pradesh v. Union of India (supra) and, therefore, cannot enure to the benefit of the petitioner. It is also contended that in case the State of Haryana is directed to refund the amount to the petitioner, it would be a case of unjust enrichment, a course prohibited by law. Counsel for the State of Haryana relies upon a judgment in M/s Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 in support of this argument. Counsel for the Union of India submits that in Bharat Sanchar Nigam Limited (supra), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner or remit it to the Union of India. The first question that requires an answer is whether the State of Haryana has collected Value Added Tax on activation of SIM cards, without authority of law. The State of Haryana does not deny that in Bharat Sanchar Nigam Limited (supra), the Supreme Court has held that activation of SIM cards is a service and not a sale. The State of Haryana also does not deny that the collection of VAT on activation of SIM cards is not relatable to any statutory provision. As postulated by Article 265 of the Constitution of India a tax shall not be levied except by authority of law i.e., a tax shall be valid only if it is relatable to statutory power emanating from a statute. The collection of VAT on the sale of SIM cards, not being relatable to any statutory provision, must be held to be without authority of law and as a consequence non-est. We have crossed the first hurdle, namely, that the State of Haryana has no statutory authority to levy VAT on the activation of SIM cards, with ease and now proceed to answer the second question, namely, whether the Haryana Value Added Tax Act contains any provision that empowers the State to refund the tax? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was contested on the ground that the respondents are not entitled to refund, as the amounts paid have already been deposited with the Government of India. After considering the rival submissions, a writ was issued , directing the Board to refund the sums realised from the respondents, subject to verification of the amount stated to have been paid by them. The U.P. Pollution Control Board filed a special leave petition. After considering whether a writ can be issued to direct refund of a tax/cess collected without authority of law, the Supreme court held that where levy and collection of tax/cess is unconstitutional or without authority of law, a writ seeking refund of the tax/cess collected without authority of law is maintainable. A relevant extract from the judgment reads as follows:- 17. Again in AIR para 9, the Court held: "We, therefore, hold that normally petitions Civil Writ Petition No. 28512 of 2013 -9- solely praying for the refund of money against the State by a writ of mandamus are not to be entertained. The aggrieved party has the right of going to the civil court for claiming the amount and it is open to the State to raise all possible defences to the claim, defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be imposed as early as 1963, when the Act in question was declared ultra vires as mentioned hereinbefore. Thereafter the taxes were paid in 1968. Therefore the claim in November, 1973 was belated. We are unable to agree with this conclusion. As mentioned hereinbefore the question that arises in this case is whether the Court should direct refund of the amount in question. Courts have made a distinction between those cases where a claimant approaches a High Court seeking relief of obtaining refund only and those where refund is sought as a consequential relief after striking down of the order of assessment etc. Normally speaking in a society governed by rule of law taxes should be paid by citizens as soon as they are due in accordance with law. Equally, as a corollary of the said statement of law it follows that taxes collected without the authority of law as in this case from a citizen should be refunded because no State has the right to receive or to retain taxes or monies realised from citizens without the authority of law." (emphasis supplied) A reference was also made to a judgment in Shree Baidyanath Ayurved Bhawan (P) Ltd. v. State of Bihar, (1996) 6 SCC, 86, wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the questions considered in that case was whether the declaration of law made by the Supreme court in a later decision can be made basis for reopening the orders which have become final. While answering the question in the affirmative, their Lordships of the Supreme court observed as under:- "Another reason to defeat the claim for refund put forth is that the respondents have filed writ petitions challenging unsuccessfully the validity of levy in question and those orders have become final inasmuch as no appeal against the same has been filed. The contention is put forth either on the basis of resjudicata or estoppel. It is no doubt true that these principles would be applicable when a decision of a Court has become final. But in matters arising under public law when the validity of a particular provision of levy is under challenge, this Court has explained the legal position in Shenoy and Co. v. Commercial Tax Officer, Circle II, Bangalore (1985) 60 STC 70 (SC); (1985) 2 SCC 512 that when the Supreme Court declares a law and holds either a particular levy as valid or invalid it is idle to contend that the law laid down by this Court in that judgment would bind only those parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) had been held to be prospective. A perusal of the aforesaid judgment reveals that the declaration of law is not prospective and like all general declarations of law, would be deemed to apply from the inception of the statute. The judgment having clearly held that VAT cannot be collected on activation of SIM cards, the assessment orders levying and collecting VAT, are from their inception a nullity and, therefore, the levy and collection of VAT is without authority of law and violative of Article 265 of the Constitution of India. The argument that refund of this amount would amount to unjust enrichment of the petitioner is without foundation in fact or in law. The Union of India has raised a demand for service tax for the period for which the State of Haryana has levied and collected VAT. If the petitioner is called upon to pay VAT and service tax, it would be the case of double taxation. Even otherwise all that we propose to do is to direct the State of Haryana to forward this amount to the Union of India. Having held as above and taking into consideration that the transaction is subject to service tax, we allow the writ petition by holding that:- (a) the assessment orders da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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