TMI Blog2015 (4) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... le 226 of the Constitution of India would come to the aid of an aggrieved party, even where the assessment order has not been challenged by appeal or revision, to undo a collection of tax made without authority of law. As held by the Supreme Court [1996 (8) TMI 113 - SUPREME COURT OF INDIA], no State has the right to receive or retain taxes or monies realised from citizens without authority of law. To hold otherwise would, in our considered opinion, perpetuate an un-constitutional levy, an unconstitutional collection of a tax, and an unconstitutional retention of monies. The mere fact that orders have been passed levying and collecting tax would not confer legitimacy, on the acts of the State of Haryana in seeking to retain the amount of tax collected and retained, without authority of law. The State of Haryana would have been justified in raising such a plea if the judgment in Bharat Sanchar Nigam Limited (2006 (3) TMI 1 - Supreme court) 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 havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cannot be refunded. Counsel for the petitioner further submits that the Supreme Court having held that activation of SIM card is not a sale, the question before the authorities was not whether the petitioner did or did not challenge its liability to pay VAT or did or did not file an appeal but whether the State of Haryana could continue to retain the amount collected as VAT after the Supreme Court had held that the petitioner is not liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 Supreme Court has clarified that the gross total amount received by the operator, from the subscriber, for activation of SIM card, is exigible to service tax. The petitioner is obliged to deposit service tax and whether the assessee has paid VAT to the State of Haryana, for this period, is irrelevant. Counsel for the Union of India further submits that the amount paid by the petitioner to the Haryana VAT Department may not be construed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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? A bare perusal of Section 20 of the Haryana Value Added Tax Act, 2003, reveals that it does not provide for refund of tax in the scenario, obtaining in the present case. Thus, the question that remains is whether after having held that the State of Haryana is not statutorily empowered to collect and levy VAT on the activation of SIM cards and the VAT Act does not permit refund in a situation as obtaining in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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, defences which cannot, in most cases be appropriately raised and considered in the exercise of writ jurisdiction. This judgment cannot be read as laying down the law that no writ petition at all can be entertained where claim is made for only refund of money consequent upon declaration of law that levy and collection of tax / cess as unconstitutional or without the authority of law. It is one thing to say that the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 held as follows:- 10. The writ petition was not a run-of-the-mill case. It was a case where the respondent-State had not acted as this Court had expected a high constitutional authority to act, in furtherance of the order of this Court. That is something that this Court cannot accept. The respondent-State was obliged by this Courts order to refund to the writ petitioners, including the appellants, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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 parties who are before the Court and not others in respect of whom appeal had not been filed. To do so is to ignore the binding nature of a judgment of this Court under article 141 of the Constitution. To Civil Writ Petition No. 28512 of 2013 -15- contend that the conclusion reached in such a case as to the validity of a levy would apply only to the parties before the court is to destroy the efficacy an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ullity 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 dated 22.2.2006, 26.3.2008 and 22.2.2006 (Annexures P-3A, P-3B and P-3C) are a nullity; (b) the State of Haryana shall transfer the amount of VAT collected from the petitioner to the Service Tax Department of the Union of India; (c) the amount of VAT transferred by the State of Haryana to the Service Tax Department of Union of India shall not be deemed to be a full and final discharge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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