State Authorities Cannot Retain Excess Amount: Bombay HC Directs Refund Of ₹10.69 Crore To A Company
The Bombay High Court directed sales tax authorities to refund tax amount of ₹ 10.69 Cr which they adjusted against a demand that was not in existence after the same was settled as per the provisions of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty, or Late Fee Act, 2019.
The Court was hearing a Writ Petition by which the Petitioner seeks a refund of tax for the year 2011-2012 amounting to Rs.10.69 Cr with further interest.
The bench of Justice K.R. Shriram and Justice Jitendra Jain perused Section 11 of the Maharashtra Settlement of Arrears of Tax, Interest, Penalty, or Late Fee Act, 2019 and observed, “the defect notice is issued when there is a shortfall in making the payment and not when an applicant has paid the correct amount.”
Senior Advocate Rafiq A. Dada appeared for the Appellant and Addl. GP S.D. Vyas appeared for the Respondent.
Brief Facts-
The petitioner, a vehicle trader registered with the Tax Authority, challenged an assessment order for 2010-2011 demanding Rs.17.76Cr. The Appellate Authority later reduced this amount. For 2011-2012, an assessment order demanded Rs.9.67 Cr, but an appeal resulted in a refund of Rs.10.69 Cr. Under the Maharashtra Settlement of Arrears of Tax, Interest, Penalty, or Late Fee Act, 2019, the petitioner applied for settlement for 2010-2011 requesting that the refund from 2011-2012 not be adjusted against the amount needed for settlement. However, the Tax Authority issued a defect notice stating the settlement amount was adjusted against the refund. A refund adjustment order followed, leading to the petitioner's challenge in the Writ Petition. The Court remanded the matter, but the Tax Authority rejected the refund application, maintaining the adjustment. The petitioner in the present Writ Petition seeks a refund of Rs.10.69 for 2011-2012.
The Court noted that the said amount for the year 2010-2011 as per the Settlement Scheme was paid by Petitioner therefore, there was no outstanding due for the year 2010-2011 against which Respondents could have adjusted. Therefore, according to the Court, the refund adjustment itself was illegal and consequently, Petitioner is entitled to the refund of Rs.10.69 Cr.
The Court noted that in the present case, the amount paid was in excess of the requisite amount therefore, the defect notice was in violation of the settlement scheme.
The Court noted that the respondents without any authority of law, adjusted the refund for the year 2011-2012 against the demand for the year 2010-2011 which did not exist. The Court observed, “the claim of Petitioner for refund is justified since it is a settled position that the State authorities cannot retain the excess amount which is not in accordance with law and the same would be violative of Article 265 of the Constitution of India.”
Accordingly, the Court directed the respondents to refund the Petitioner a sum of Rs.10.69 Cr along with interest at 6% per annum as per Section 52 read with Rule 88 of the MVAT Rules.
Cause Title: M/s. TML Business Services Ltd. v. The Deputy Commissioner of Salex Tax (Neutral Citation: 2024:BHC-AS:27687-DB)
Appearance:
Appellant: Sr. Adv. Rafiq A. Dada, Adv. Z. R. Dada, Adv. H. N. Vakil and Adv. Samkit Shah
Respondent: Addl. G.P. S. D. Vyas, AGP P. N. Diwan and Adv. S. L. Babar