Bhasin Associates vs State of Haryana and Others

Ashok Bhan, J.—Petitioner who is a Contractor and doing its business at Faridabad. Petitioner is a registered dealer under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as the State Act) as also under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act) having R.C. No. 1209987 and is carrying business of partnership in the name and style of M/s Bhasin Associates, Ballabgarh.

For the assessment year 1993-94 petitioner filed quarterly returns and the assessment was finalised by Excise and Taxation Officer-cum-Assessing Authority, Faridabad (East) on 7.11.1996. During the course of assessment, petitioner produced bills which indicated that these goods were purchased after payment of tax. The total amount of purchases, where goods had suffered taxes were found to be for the value of Rs. 70,79,541/-. Rebate was allowed on the claim in this regard. There was tax deduction at the source which amount was adjusted and the petitioner became entitled to a refund of Rs. 1,89,056/- as per the assessment order dated 7.11.1996 Annexure P1 passed by the Assessing Authority. Refund voucher has to be sent alongwith the assessment order. The same was not sent. Petitioner filed several representations but as they remained unheeded to; petitioner has filed the present petition for issuance of a writ of mandamus directing the respondents to refund Rs. 1,89, 056/- for the assessment year 1993-94 alongwith interest.

Written statement has been filed. Stand taken by the respondents is that when the case was sent to be Deputy Excise and Taxation Commissioner, Faridabad (East) for giving permission for allowing refund to the petitioner, he formed an opinion that the assessment order suffered from various illegalities. He sent the case to the Joint Excise and Taxation Commissioner (Appeals) Faridabad, who also had the powers of Commissioner u/s 40 of the State Act for taking suo moto action u/s 40 of the State Act. The Joint Excise and Taxation Commissioner (Appeals), Faridabad, after examining the file issued a show cause notice dated 11.3.1997 to the petitioner as to why suo moto action be not initiated against it. Petitioner was directed to appear before him on 26.3.1997. In the show cause notice, the Joint Excise and Taxation Commissioner, (Appeals) Faridabad directed the petitioner to send its reply to the following illegalities;-

"(i) You have been assessed to tax under the provisions of Section 28 of the Act but whereas you were not registered under the Act for the period from 31.8.1993 to 28.2.1994, as the registration certificate issued to you with date of validity w.e.f. 1.3.1994 indicates and as such, you were liable to be assessed to tax as unregistered dealer for the period from 31.8.1993 to 28.2.1994 u/s 29 of the Act and were also prima facie liable to imposition of penalty provided under the said provisions of the Act.''

(ii) You have been allowed deduction in respect of purchase of goods made allegedly after payment of tax without obtaining certificates in Form ST-14 covering the said purchase as was mandatory in terms of clause (i) of Rule 24 of the rules made under the Act, and as such, the deduction of Rs. 70,79,541/- could not have been allowed to you.''

It has further been averred that since the assessment order Annexure P1 has been taken for suo moto proceedings u/s 40 of the State Act, no refund could be given to the petitioner till the decision of the case by the Joint Excise and Taxation Commissioner (Appeals) Faridabad. It has been denied that the refund has been intentionally withheld by the respondents.

The relevant provisions regarding refund of excess amount of tax to dealer are Rule 35(l)(a) of the Haryana General Sales Tax Rules, 1975 and Sections 43 and 44 of the State Act. Rule 35(1)(a) of the Haryana General Sales Tax Rules, 1975 reads as under:-

"While framing the assessment of a dealer, the assessing authority shall, after such scrutiny of its record and after making such enquiries as it considers necessary, determine the amount paid by him, in excess, if any, and thereafter direct the refund of such amount as may remain after deducting any amount due from him. The assessing authority shall then issue to the dealer at his option a refund payment order in form S.T. 34 prescribed under the Punjab Subsidiary Treasury Rules or refund adjustment order in form S.T. 34 and send along with the assessment order.

Sections 43 and 44 of the State Act are reproduced below: -

"43. Refunds : (1) The assessing authority or a person appointed to assist the Commissioner under sub section (1) of Section 3, as the case may be shall, in the prescribed manner, refund to a dealer or to any other person the amount of tax or penalty or interest paid by him in excess of the amount due from him under this Act, either by a refund voucher or, at the option of the dealer by adjustment of the amount so paid against the amount due from him in respect of any other period.

Providing that the assessing authority or a person appointed to assist the Commissioner under sub section (1) of Section 3, as the case may be, shall first adjust the amount to be refunded towards the recovery of any amount due, on the date of adjustment from the dealer and shall then refund the balance, if any.

(2) Where an amount required to be refunded by the assessing authority to any person by virtue of an order issued under this Act is not so refunded to him within the period as may be prescribed, the dealer shall be entitled to interest at such rates and on such terms and conditions as may be prescribed."

"44. Power to withhold refund: (1) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act are pending, and assessing authority or person appointed to assist the Commissioner under sub section (1) of Section 3, as the case may be, is of the opinion that the grant of the refund is likely to adversely affect the recovery, he may withhold the refund and refer the case to the Commissioner for order. The order passed by the Commissioner shall be final.

(2) The period during which the refund remains so withheld shall be excluded for the purpose of calculation of interest u/s 43."

From the perusal of Section 43 ibid, it is clear that the assessing authority shall refund to the dealer in the prescribed manner the amount of tax or penalty or interest paid by him under the State Act, either by a refund voucher or, at the option of the dealer by adjustment of the amount so paid against the amount due from him in respect of any other period. The assessing authority has however, been empowered to first adjust the amount to be refunded towards the recovery of any amount due from the dealer on the date of adjustment and then refund the balance. The prescribed rate of interest is to be paid on the terms and conditions prescribed in the rules.

Section 44 of the State Act provides that refund can be withheld if the order giving rise to the refund is the subject matter of the appeal or for the proceedings or any other proceedings under the Act are pending and the assessing authority or a person appointed to assist the Commissioner under sub section (1) of Section 3 as the case may be, is of the opinion that grant of refund is likely to adversely affect the recovery. He may withhold the refund and refer the case to the Commissioner for order. The orders passed by the Commissioner are final.

In the present case, no order u/s 44 has been passed. Simply issuance of notice u/s 40 taking suo moto action to revise an order of assessment would not entitle the respondent-authorities to withhold the amount of refund. Assessing authority has an obligation to refund the amount of tax or penalty or interest paid in excess to the dealer u/s 43 of the State Act. The amount of refund can only be withheld if assessing authority is of the opinion that during the pendency of any proceedings under the Act, the refund of amount is likely to adversely affect the recovery. As no order u/s 44 of the State Act has been passed, the amount of refund could not be withheld by the respondents.

While framing the assessment of a dealer the assessing authority after scrutiny of the record has to determine the amount paid by the dealer in excess, if any, and thereafter direct the refund of such amount as may remain after deducting any amount due from him. Under Rule 35(1)(a) ibid, refund voucher has to be sent along with the assessment order to the dealer. The same has not been done in the present case. In spite of repeated requests made by the petitioner, the amount has not been refunded. An obligation is cast on the assessing authority to send the amount of refund along with the assessment order. Authorities under the State Act are obliged to follow Act and the Rules faithfully and failure to do so, results in unnecessary litigation and harassment to the citizen of the country.

For the reasons stated above, we accept this writ petition. Respondents are directed to refund the amount/adjust the same against any other outstanding demand against the petitioner within one month from today along with any statutory interest if payable under the State Act and the Rules. No costs.