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REFUND OF TAX COLLECTED WITHOUT AUTHORITY OF LAW

Value Added Tax - VAT and CST - By: - Mr. M. GOVINDARAJAN - Dated:- 10-6-2016 - As postulated by Article 265 of the Constitution of India, a tax shall not be levied, except with the authority of law. A tax shall be valid only if it is relatable to statutory power emanating from a statute. Where the levy and collection of tax is without authority of law, Article 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 .....

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the right to receive or retain taxes or monies realized from citizens without the authority of law. In U.P. Pollution Control Board and others V. Kanoria Industrial Limited and others - 2001 (1) TMI 83 - SUPREME Court the respondents were required to pay water cess under Water (Prevention and Control of Pollution) Cess Act, 1977. The respondents raised a protest since sugar industries and distilleries are not industries covered by Entry 15 of Schedule I of the Act, they are not liable to file an .....

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. The State Government rejected the refund claim. Therefore they filed a writ petition before the High Court. The State Government contested that the respondents are not entitled to refund as the amounts paid have already been deposited with the Government of India. The High Court directed to refund the amount stated to have been paid by them. The UP Pollution Control Board filed a special leave petition before the Supreme Court. The Supreme Court held that where levy and collection of tax/cess .....

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to deny a relief of refund to the citizens in such cases on the principles of public interest and equity. However it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow and it is not automatic consequence. It may be refused on several grounds depending on facts and circumstances of the given case. In Idea Cellular Limited V. Union of India - 2015 (4) TMI 286 - PUNJAB & HARYANA HIGH COU .....

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3 - SUPREME COURT OF INDIA held that the activation of SIM 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 a writ petition which was disposed of directing the respondents to decide the petitioner s representation for refund. The representation was rejected by the Authority on the ground that the petitioner did not challenge its liability before the Assessing Authority and the petitioner did .....

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in the amount of VAT collected after the Supreme Court had held that the petitioner is not liable to pay VAT; The VAT paid by the petitioner and retained by the State of Haryana is not relatable to any statutory provision and therefore must be refunded to the petitioner; If the State of Haryana refund the VAT amount, the petitioner would be doubly taxed as the Service Tax Department has raised a demand for deposit of service tax for the period which the petitioner has deposited VAT; The State Go .....

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petitioner deposited VAT in accordance with the interpretation of the law prevalent on the time of assessment about its eligibility to tax, cannot seek quashing of assessment orders or refund; The Haryana VAT Act does not contain any provision that allows the respondents to refund the amounts deposited by the petitioner; 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. The Union of India, i.e., s .....

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