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Judgment
P. Venkatarama Reddi, J.—This writ petition is filed seeking a declaration that the action of the respondents in not refunding the amount of Rs. 85,735 with interest is illegal and arbitary and to issue a writ of mandamus directing the respondents to refund the said amount with interest in view of the order passed by the Sales Tax Appellate Tribunal in T.A. No. 104 of 1993 on March 1, 1994.
The relevant facts of the case are as follows :
Aggrieved by the order of assessment made in the year 1987-88 which was confirmed in appeal by the Appellate Deputy Commissioner of Commercial Taxes, the petitioner preferred a further appeal to the Sales Tax Appellate Tribunal. The Tribunal allowed the appeal by an order dated March 1, 1994, holding that the purchases effected by the petitioner were in the course of export and, therefore, the same were not liable to tax u/s 38 of the Andhra Pradesh General Sales Tax Act read with section 5(3) of the Central Sales Tax Act. It is not in dispute that as a result of the petitioner succeeding in the appeal, a sum of Rs. 85,735 collected towards tax is refundable. The petitioner made an application for the refund of amount on April 6, 1994, followed by reminders on April 13, 1994 and November 10, 1994, though under the relevant provision, which we would refer to hereafter, no application need be made. By a communication, dated November 30, 1994, the Commercial Tax Officer, Kakinada, informed the petitioner that he did not receive the records from the office of State Representative of Sales Tax Appellate Tribunal and that the revised assessment orders will be passed soon after the receipt of the files. As there was no response, the petitioner again submitted a representation on January 30, 1995, to which the Commercial Tax Officer sent a communication, dated February 22, 1995, which reads as follows :
"With reference to the letter cited M/s. Coromandel Fisheries Private Ltd., Kakinada are hereby informed, that I am of the opinion that the grant of refund is likely to adversely affect the Revenue.
I, therefore, withhold the refund till the Deputy Commissioner of Commercial Taxes, Kakinada who was pleased to permit me in this direction, revokes the direction."
In reply to a further letter addressed by the petitioner, the Commercial Tax Officer again reiterated that the records have not been received from the State Representative and when the State Representative was addressed for the return of records, he informed the Commercial Tax Officer that a T.R.C. was being filed against the order of the Tribunal and therefore, till the disposal of the case in the High Court, records cannot be returned. He further stated that for examining the issue in detail, the Deputy Commissioner (C.T.), Kakinada, directed him (Commercial Tax Officer, Kakinada, who is the assessing authority) to withhold the refund till such time as the Deputy Commissioner gave clearance inasmuch as the grant of refund is likely to adversely affect the Revenue.
Thereafter, the present writ petition is filed.
Section 33-B of the A.P. General Sales Tax Act, 1957, casts a duty on the assessing authority to refund any amount that becomes due to the assessee as a result of any order passed in appeal or other proceeding under the Act without his having to make any claim in that behalf or adjust or apply such amount as provided in section 33. Section 33-BB provides that where a levy and collection of tax is held invalid by any judgment or order of a court or Tribunal, it shall not be necessary to refund any such tax to the dealer unless it is proved by the dealer to the satisfaction of the assessing authority that the tax has not been collected from the purchaser. Section 33-C empowers the assessing authority to withhold the refund in certain cases. It is on this provision, the respondents seek shelter. It is, therefore, necessary to consider whether the requirements of section 33-C of the Act are satisfied in the instant case. Section 33-C of the Andhra Pradesh General Sales Tax Act (for short, "the Act") reads as follows :
"Power to withhold refund in certain cases. - 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."
There are three ingredients in section 33-C which are to be satisfied before the claim for refund is rescinded by the department :
(1) that the order giving rise to refund is the subject-matter of an appeal or further proceeding or any other proceeding under the Act is pending;
(2) the assessing authority must form an opinion that the grant of refund is likely to adversely affect the revenue; and
(3) the previous approval of the Deputy Commissioner is required to be taken by the assessing authority for withholding the refund.
These conditions are cumulative. The first and foremost requirement is the pendency of an appeal or further proceeding in relation to the order giving rise to refund or the pendency of any other proceeding under the Act in relation to the said order. We are unable to say that this requirement is satisfied in the instant case so as to justify the denial of refund u/s 33-C of the Act.
The circumstances under which the order withholding the refund came to be passed on February 22, 1995, are explained in para 3 of the counter-affidavit as follows :
"While matters stood thus, the Sales Tax Appellate Tribunal had disposed of the main appeal allowing the case on March 1, 1994. The orders of the Sales Tax Appellate Tribunal have not been received by this respondent so far. Pursuant to these orders of the Sales Tax Appellate Tribunal, the petitioner made an application for refund of the 1/4th amount paid pursuant to the orders of the Joint Commissioner (C.T.), Legal during the pendency of the second appeal. It is submitted that since the orders of the Sales Tax Appellate Tribunal and other connected records are not received from the office of the State Representative before the Sales Tax Appellate Tribunal and that the Commissioner (C.T.) had ordered for filing a T.R.C. against the orders of the Sales Tax Appellate Tribunal, the 1/4th amount paid by the petitioner is withheld following the procedure laid down u/s 33-C of the Andhra Pradesh General Sales Tax Act, 1957. The order of withholding the amount was also communicated to the petitioner through letters dated February 22, 1995 and May 20, 1995. It is against these withholding orders, the present writ petition is filed."
In the context of the above plea taken in the counter-affidavit the question arises whether the first ingredient of section 33-C of the Act is satisfied. In order to answer this question we enquired from the learned Government Pleader whether a tax revision case has been filed by the department against the order of the Sales Tax Appellate Tribunal. We gave sufficient time to the learned Government Pleader to ascertain this fact from the concerned officials. The Government Pleader is not in a position to tell us whether a tax revision case has in fact been filed. Although it is stated in the counter-affidavit sworn to by the Commercial Tax Officer on August 28, 1995, the order of the Tribunal had not been received, we are not in a position to assume that even now the order remains uncommunicated. On the other hand, the very averment in the counter-affidavit that the Commissioner has decided to file a tax revision case indicates that the order must have been received by the State Representative, who represented the departmental authorities before the Tribunal. It is evident from the communication of the Commercial Tax Officer dated May 20, 1995 that he did not receive the records from the State Representative because, according to the information furnished by the State Representative, steps were being taken to file tax revision case. Thus, even assuming that the copy of the order has not been received by the Commercial Tax Officer, the receipt of the order by the State Representative is as good as receipt of the order by the assessing authority. Moreover, if the order of the Tribunal had not been received by the assessing authority and if he is unaware of the said order, it is ununderstandable as to how he could pass an order withholding refund on the ground that it would adversely affect the interests of the Revenue even without going through the appellate order of the Tribunal. It only shows that there was non-application of mind on the part of the assessing authority. On this ground alone, the order dated February 22, 1995, is liable to be quashed.
Another formidable obstacle in sustaining the action of the assessing authority in withholding the refund in purported exercise of power u/s 33-C of the Act is that there is no proof to the effect that the appellate order of the Tribunal is the subject-matter of any further proceeding, such as revision petition filed in the High Court. The inter-departmental correspondence on the question whether revision is to be filed or the alleged decision taken by the Commissioner cannot be said to be a proceeding under the Act much less can it be said that by taking such a decision, the appellate order of the Tribunal is subjected to a further proceeding under the Act.
A Division Bench of this Court consisting of K. M. Agarwal and one of us (P. Venkatarama Reddi, J.) while dealing with a more or less similar contention taken by the State in Ganesh Traders v. Deputy Commercial Tax Officer [1995] 96 STC 127 observed as follows :
"A careful reading of the said provision would reveal that the power of withholding the refund could be exercised only in such cases where an order giving rise to a refund to an assessee is the subject-matter of a pending appeal or any further proceeding under the Act. In the present case, it cannot be disputed that the appellate order giving rise to a refund to the assessee is not a subject-matter of any appeal or further proceeding under the Act. The recommendation made by the Deputy Commissioner to the Commissioner of Commercial Taxes or any other authority to exercise suo motu power of revision u/s 20 of the Act cannot be said to be any such proceeding as is contemplated u/s 33-C of the Act."
The dicta laid down by the Division Bench in the above case applies with equal force to the present case.
The learned Government Pleader has relied upon a Division Bench judgment of this Court in Sarvaraya Textiles Ltd. v. C.T.O., Kakinada [1991] 82 STC 367; (1990) 11 APSTJ 251. That was a case in which the Tribunal set aside the assessment and remanded the matter to the assessing authority for passing a fresh order. Thus, it could be said, though the learned Judges have not said so in so many terms, that a further proceeding in respect of the order passed by the Tribunal was pending by reason of remand directed by the Tribunal itself. When the Tribunal itself had given an opportunity to pass a fresh order and the proceeding for reassessment was pending pursuant to such order of remand, it could very well be said that the first ingredient of section 33-C of the Act is satisfied. Moreover, the tax involved in that case was quite heavy (more than Rs. 30 lakhs) and if the Commercial Tax Officer withheld the refund pending finalisation of fresh assessment proceedings on the ground that the proposed refund would adversely affect the interest of the Revenue, such action cannot be faulted. We are, therefore, of the view that the decision in Sarvaraya Textiles Ltd. Vs. Commercial Tax Officer, Kakinada, is distinguishable.
In the light of the above discussion, we quash the order dated February 22, 1995, passed by the Commercial Tax Officer Kakinada, withholding the refund and his further communication dated May 20, 1995, informing the petitioner that the refund was withheld pursuant to the directive given by the Deputy Commissioner.
But, this is not the end of the matter. The mere fact that we have quashed the order withholding the refund does not per se entitle the petitioner to get the refund. The petitioner''s entitlement to refund depends upon the satisfaction of the requirements of section 33-BB of the Act, which lays down as follows :
"33-BB. Non-refund of tax in certain cases. - Where a levy and collection of tax is held invalid by any judgment or order of a court or Tribunal, it shall not be necessary to refund any such tax to the dealer unless it is proved by the dealer to the satisfaction of the assessing authority that the tax has not been collected from the purchaser."
Obviously, this is a provision enacted with a view to prevent unjust enrichment and to ensure that the indirect tax legislation will not become an instrument of profit-making to the detriment of the ultimate consumer and the State. It is no doubt true, as contended by the learned counsel for the petitioner, there is no allegation to the effect that the petitioner passed on the incidence of tax to the purchaser but there is no averment either, in the affidavit filed in the writ petition that no tax was collected from de purchaser or the tax burden was borne by the petitioner himself. Thus, the absence of pleading in the counter-affidavit does not by itself lead to the inference that section 33-BB of the Act has no application. It is the duty of the court before granting any direction for refund of the tax illegally collected to ensure that the refund is granted within the frame-work of the law and any restrictions on the grant of refund conceived in large public interest are not subverted by taking shelter under a technicality such as the absence of pleading. That the High Court while exercising the jurisdiction under article 226 of the Constitution of India has such a duty to take note of the statutory provisions placing restrictions on the right to get refund was reiterated by the Supreme Court in the case of Union of India and others Vs. Jain Spinners Ltd. and another, . The Supreme Court having thought it fit to send a word of caution to the courts while passing the interlocutory orders or while giving directions for refund, pointed out that the High Court was bound to follow the provisions of law including the amended provisions of section 11B of Central Excise Act and would not be able to order withdrawal or refund of the duty to the assessee unless the assessee discharges the burden cast on him by the statute. The same is the position here.
The learned counsel for the petitioner has vehemently contended that in the case of purchase and sale to an exporter of the goods taxable at purchase point, the question of collecting or passing on the burden of tax borne by the assessee does not arise and section 33-BB of the Act does not govern such cases. We are not inclined to go into the merits of the issue and decide whether actually the tax burden was passed on by the petitioner to its buyer - may be the actual exporter or foreign buyer. As the question involved u/s 33-BB of the Act is essentially a question of fact or at least a mixed question of law and fact, it is not appropriate for us to decide that question especially in the absence of any material placed before us pro or contra.
We, therefore, feel that the proper course would be to direct the assessing authority to make an enquiry in terms of section 33-BB of the Act and to determine whether the dealer has adduced satisfactory proof to the effect that the tax had not been passed on to the purchaser.
In the result, we declare that the action of the Commercial Tax Officer in withholding the refund in purported exercise of power u/s 33-C of the Act is arbitrary and illegal by quashing the proceedings of the 2nd respondent dated February 22, 1995 and May 20, 1995. At the same time, we direct the Commercial Tax Officer to hold an enquiry in terms of section 33-BB of the Act as directed in the preceding para. Such enquiry shall be completed within a period of two months from the date of receipt of this judgment.
The writ petition is allowed to the extent indicated above. No costs.
Writ petition allowed.