Carew Phipson Limited vs Commercial Tax Officer, Company Circle, Secunderabad

Syed Shah Mohammed Quadri, J.—The petitioner is a company registered under the Indian Companies Act. It seeks a writ of mandamus directing the respondent to refund a sum of Rs. 15,70,117 being the amount refundable for the assessment years 1984-85 and 1989-90 pursuant to the order of the respondent dated March 3, 1990 and August 16, 1991 respectively with interest, u/s 33-E of the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act").

The petitioner is a dealer under the APGST Act. It is stated that for the year 1984-85, a sum of Rs. 14,46,251 became refundable to the petitioner by virtue of the order of assessment dated March 3, 1990 and for the year 1989-90, a sum of Rs. 2,41,705 became refundable in view of the order of assessment dated August 16, 1991. In so far as the assessment year 1984-85 is concerned, the petitioner filed an application on March 21, 1990, for refund of the amount due to it. It is stated by the respondent that the amount due for the years 1985-86 and 1988-89 amounting to Rs. 75,437 was adjusted. The petitioner says that by virtue of the order of the Appellate Deputy Commissioner for the year 1981-82, the petitioner has to pay a further sum of Rs. 42,402. Thus, the refundable amount comes to Rs. 13,28,412. For the said two years, the amount refundable, according to the petitioner, is Rs. 15,70,117.

The respondent filed a counter-affidavit stating, inter alia, that the assessment for the year 1981-82 was revised on August 25, 1992, pursuant to which a sum of Rs. 3,47,750 has become due by the petitioner. It is further stated that the assessment for the year 1990-91 is pending and the assessment for the years 1982-83, 1983-84 and 1984-85 have to be revised as per the orders of the Appellate Deputy Commissioner and that the business was closed with effect from October, 1992. It is added that the Deputy Commissioner (Commercial Taxes), Secunderabad Division by his proceedings No. R2/1600/88 dated August 29, 1992, approved withholding of the refund of the said amount u/s 33-C of the Act and it is prayed that the writ petition may be dismissed.

Sri P. Srinivasa Reddy, the learned counsel for the petitioner, submits that, the respondent has not refunded the amount due to the petitioner inspite of filing of application as well as sending of notice through advocate in June, 1992. He, therefore, prays that the amount refundable to the petitioner may be directed to be refunded by the respondent.

The learned Government Pleader for Commercial Taxes, on the other hand, contends that the writ petition for refund of the amount is not maintainable, therefore, the writ petition is liable to be dismissed. He further submits that the amount now claimed as refund, if agreed to, would result in unjust enrichment of the petitioner. The learned Government Pleader prays that the writ petition may be dismissed.

The short question that falls for consideration is, whether the petitioner is entitled to claim refund of the amount, which is the subject-matter of the writ petition.

Before we proceed to answer this question, it would be useful to refer to the decision relied upon by the learned Government Pleader in Suganmal Vs. State of Madhya Pradesh and Others, . In that case, the appellant paid certain tax under the Indore Industrial Tax Act, 1927, though that amount was not payable by the appellant. On appeal, the petitioner/appellant succeeded. The assessing authority granted refund of tax for the period subsequent to January 26, 1950 but declined to refund the amount, which had been realised up to January 26, 1950. The petitioner moved the High Court for refund of that amount. On the ground that the amount was illegally collected by the State. The writ petition was dismissed by the High Court of Madhya Pradesh. On appeal, the Supreme Court held that the petition under article 226 of the Constitution solely for issue of a writ of mandamus directing the State to refund the money alleged to have been illegally collected by the State as tax was not ordinarily maintainable because a claim for such a refund could always be made in a suit against the authority which had illegally collected the money as tax. Their Lordships of the Supreme Court further held that in the absence of statutory provision whereby the tax realised had to be refunded when the appellate authority set aside the assessments, no duty was cast on the State to refund the amount it had realised, Which was subsequently found by the appellate authority to be not in accordance with law. It was further observed that the question whether the State was bound u/s 72 of the Contract Act to return the amount on the ground that it was paid under a mistake was a matter for decision in a regular suit and not in proceedings under article 226 of the Constitution of India.

From a perusal of the above decision, it is clear that where there is a statutory provision for refund of the tax and the petitioner is seeking to enforce the obligation cast on the State under the provisions of the Act for grant of refund, the writ petition is not covered by the above decision Suganmal Vs. State of Madhya Pradesh and Others, . So also, in view of the provisions of section 36 of the Act, which bars civil suit either to challenge the validity of the order of assessment or any decision made by any officer or authority under the Act or any rules made thereunder or in respect of any matter falling within its scope, the writ petition would not be barred.

Section 33 of the Act reads as follows :

"The assessing authority or the licensing authority, as the case may be, shall refund the tax or the licence fees, if any, paid, provisionally by an assessee or licensee for any particular period, if it is found to be in excess of the tax or the licence fees payable by him for the said period, or at the option of the assessee or licensee, adjust such excess towards any tax or licence fees due in respect of any other period :

Provided that the assessing or licensing authority, as the case may be, may first apply the excess paid in respect of any period towards the recovery of any amount, in respect of which a notice of demand may have been issued, and shall then refund the balance, if any."

Section 33 of the Act provides that the assessing authority or the licensing authority, as the case may be, shall refund the tax or the licence fees, if any, paid, provisionally by an assessee or licensee for any particular period if it is found to be in excess of the tax or the licence fees payable by him for the said period, or at the option of the assessee or licensee, adjust such excess towards any tax or licence fees due in respect of any other period. This obligation is subject to one proviso, viz., that the assessing authority has discretion either to first apply the excess paid in respect of any period towards the recovery of any amount, in respect of which a notice of demand has been issued and is obliged to refund only the balance amount. It would be appropriate to note rule 35 of the Rules under the Act. Rule 35 of the Rules framed under the Act, reads as follows :

"The order passed on appeal or revision shall be given effect to by the assessing authority who shall refund within two months from the date of the communication of the order any excess tax and surcharge or fee found to have been collected and shall also have power to collect any additional tax and surcharge or fee which is found to be due, in the manner as if it were a tax and surcharge assessed by himself."

This rule obliges the assessing authority to give effect to the order passed on appeal or revision within two months from the date of communication of the order and to refund any excess amount or fee found to have been collected from the assessee. There is, however, one provision, which entitles the assessing authority to withhold the refund of the amount. That power is contained in section 33-C of the Act, which reads thus :

"Where an order giving rise to a refund to an assessee or licensee is the subject-matter of an appeal or further proceeding, or where any other proceeding under this Act is pending, and the assessing or the licensing authority is of the opinion that the grant of the refund is likely to adversely affect the revenue, the assessing or the licensing authority may, with the previous approval of the Deputy Commissioner, withhold the refund till such time as the Deputy Commissioner may determine."

This provision indicates that where an order giving rise to a refund to an assessee or licensee is the subject-matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the assessing or the licensing authority is of the opinion that the grant of refund is likely to adversely affect the revenue, he may, with the previous approval of the Deputy Commissioner, withhold the refund till such time as the Deputy Commissioner may determine.

As noted above, in the instant case, the Deputy Commissioner by proceedings No. R2/1600/88, dated August 29, 1992, approved withholding of the refund u/s 33-C of the Act. As the copy of the said order was not enclosed to the counter-affidavit and was not produced before us at the hearing, we adjourned this case twice to enable the learned Government Pleader to produce the file relating to these proceedings. The learned Government Pleader produced the file. We have perused the file. The said proceedings permitted withholding of refund of tax till the finalisation of the case pending before the assessing authority relating to M/s. Phipson & Co. Ltd. including the consequential proceedings in the case of an appeal then pending (as on August 29, 1992) before the Appellate Deputy Commissioner (CT), Secunderabad Division, relating to the assessment year 1984-85.

By virtue of the said proceedings, the respondent is justified in withholding the refund till the pendency of the appeal before the Appellate Deputy Commissioner relating to the assessment year 1984-85 and other consequential proceedings relating to the case of M/s. Phipson & Co. Ltd.

We may observe that as the learned Government Pleader filed an additional counter-affidavit, without seeking the permission of this Court, at the stage of pronouncement of the judgment, we decline to receive the same.

In the result, the respondent is directed to refund the amount payable to the petitioner after giving effect to the order of the Deputy Commissioner in his proceedings No. R2/1600/88 dated August 29, 1992. The exercise should be done within three months from the date of receipt of copy of this order. If any amount, by way of refund is found to be payable and the same has not been paid within six months from the date it became payable, the respondent is directed to grant interest on that amount u/s 33-E of the Act.

The writ petition is accordingly allowed, but in the circumstances of the case, there shall be no order as to costs.

Writ petition allowed.