Case Law Details

Case Name : State of Gujarat Vs Advanced Systek Private Limited (Gujarat High Court)
Appeal Number : R/Tax Appeal No. 652 of 2017
Date of Judgement/Order : 24/07/2020
Related Assessment Year :
Courts : All High Courts (5981) Gujarat High Court (597)

State of Gujarat Vs Advanced Systek Private Limited (Gujarat High Court)

It appears that when the assessee has sold the goods on the price, which is inclusive of tax, the turnover is to be calculated as  per the formula provided in Section 8A of the CST. In the facts of the case the rate of CST applicable for the goods supplied by the respondent-assessee is 4%. Therefore, 4% tax is required to be applied on the turnover as calculated under Section 8A of  the CST Act. As observed above, the respondent-assessee deposited the CST at  the rate of 10%/12.5% by making reverse working of the turnover under Section 8A of  the CST Act. The correct amount of tax payable would be therefore, much less than what the respondent-assessee has deposited.

This has resulted into the excess amount of tax deposited by the respondent-assessee amounting to Rs. Rs.1,81,49,641/-.

Moreover, on perusal of the facts on record and as per the findings of fact given by the Tribunal, it cannot be said that that the respondent-assessee has collected the excess amount of CST from its buyer/receiver of the goods. As per the terms of the contract the respondent- assessee was issuing running bills at a  fixed price but prepared the commercial invoices for the purpose of payment of  excise duty and the CST, but ultimately has received the fixed price only.

In the facts of the present case, the respondent-assessee cannot be said to have collected the CST at the rate of 10% or 12% from its buyers/receiver of the goods in view of the contract of fixed price, there is no question of passing over the same to its buyer in view of the aforesaid decisions of the Apex Court in the case of Mafatlal Industries (supra). Even otherwise the provisions of the CST Act do not contemplate any power to  forfeiture of refund by the Revenue.

In such circumstances as held by the decision of the Supreme Court in the case of Khemka & Co (supra), the provisions of Section 31 of the VAT Act enabling the Assessing Officer to forfeit the excess amount of tax deposited by the assessee cannot be applied to the provision of the CST Act.

Reliance placed on the decisions by the Revenue are also not applicable in the  facts of the case in as much as such the same are based on the decision of the Apex  Court in the case of Mafatlal Industries (supra) and in view of the facts of the case as observed herein above, in the absence of any power with the Revenue to forfeit such excess tax, the respondent assessee is entitled to refund of the same.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. The petitioner is a limited Company incorporated under the provisions of the Companies Act, 1956.

2. The petitioner has filed Special Civil Application No.8391 of 2019 through its director with a prayer for directing the respondents to comply with the order dated 17.04.2017 passed by the Gujarat Value Added Tax, Tribunal at Ahmedabad (for short the “Tribunal”) in Second Appeal No. 339 and 340 of 2017 as the respondents are not paying the refund of Rs. 1,82,71,928 to the petitioner on the ground that the Tax Appeal No.652 of 2017 arising out of the order passed by the Tribunal in Second Appeal No.339 and 340 of 2016, which is admitted by this Court and is pending for hearing.

3. The Co-ordinate Bench of this Court on 12.06.2019 passed the following order :

“ The draft amendment is allowed. The same shall be carried out at the earliest.

Let Notice be issued to the respondents, returnable on 19th June 2019. Direct service is permitted.”

Thereafter, fresh Notice was issued to the respondents, returnable on 4th July 2019 by order dated 20.06.2019.

passed the following order on 09.01.2020:-

“ Having regard to the nature of this litigation, more particularly, the reliefs prayed for in this writ application, we are of the view that we should take up Tax Appeal No.652 of 2017 for hearing at the earliest.

Let Tax Appeal No.652 of 2017 be notified along with this petition on 16th January, 2020.”

4. In view of the aforesaid order, both the Special Civil Application No.8391 of 2019 and Tax Appeal No. 652 of 2017 are notified together and were heard analogously and are being disposed of by this common judgment.

5. Tax Appeal No.652 of 2017 is admitted for consideration of the substantial questions of law vide order dated 15.09.2017 by the Co-ordinate Bench of this Court, which reads thus :

“The Appeal is admitted for consideration of following substantial questions of law:

“1. Whether under the facts and circumstances, the learned Tribunal has not erred in coming to a conclusion that the respondent was eligible for refund of excess collection of tax?

2. Whether under the facts and circumstances, the learned Tribunal has not erred in deleting the confirmation of forfeiture of excess collection of tax by the respondent?”

6. In view of the above facts, issue Rule returnable forthwith in Special Civil Application No.8391 of 2019.Mr. Chintan Dave, the learned Assistant Government Pleader waives service of notice of rule for and on behalf of the respondents.

7. Since the Special Civil Application 8391 of 2019 is filed for issuance of directions to the respondents to pay the amount of refund arising out of the order dated 17.04.2017 passed in Second Appeal Nos.339 and 340 of 2016 passed by the Tribunal, it would therefore, be necessary to first consider the aforesaid substantial questions of law framed by this Court in Tax Appeal No.652 of 2017 filed by the Revenue under Section 78 of the Gujarat Value Tax Act, 2003 (hereinafter referred to as the “GVAT Act, 2003”) against the judgment and order dated 17.04.2017 passed by the Tribunal in Second Appeal Nos.339 and 340 of 2016.

8. The short facts giving rise to the tax appeal are as under :

(i)The petitioner is engaged in the business of sale of machineries to public sector companies in oil and gas sector. The petitioner received purchase orders from the Companies who had invited bids for the installation of the machinery and after receiving global tenders and subsequent negotiations from said leading refineries, a price i.e. all inclusive Ex-delivery at their plant was to be fixed. Accordingly, the petitioner was supposed to deliver goods at a fixed price irrespective of the tax payable or any other expenses which were to be incurred by the petitioner.

(ii) It is the case of the petitioner that in such circumstances, the petitioner was not supposed to reflect separately, the component of tax on the invoice raised by it and the petitioner was required to pay appropriate tax if payable in accordance with law.

(iii) On the other hand the recipient of the goods was also not concerned as to whether what would be the amount of tax or rate of tax payable on the invoice raised by the petitioner. The recipient of the goods/machineries did not issue Form ‘C’ as required under the provisions of the Central Sales Tax Act, 1956 (for short the “CST Act”) since a fixed price towards consideration of the goods supplied was to be paid in spite of there being an inter- state transaction.  The  petitioner  therefore, had paid tax at the rate of 10% or 12.5% instead of paying the same at the rate of 4% in absence of Form ‘C’ under the CST Act by making a reverse working in accordance with Section 8A of the CST Act.

(iv) According to petitioner such mistake on the part of the petitioner resulted into excess deposit of tax amounting to Rs.1,81,49,641/-. It is the case of the petitioner that the authorities from the Central Sales Tax Department were supposed to refund the said amount to the petitioner as the petitioner would be liable to pay only 4% tax and not 10 0r 12.5% tax on the invoice price of the goods/machineries sold by it.

(v) It appears that the petitioner was assessed by the Assistant Commissioner of Commercial Tax, Ghatak-4, respondent No.2 under Section 34 of the CST Act on 31.03.2013 for the year 2007-08 raising a demand of Rs.35,85,464/- and impounded the refund amount of Rs. 1,81,49,641/- under Section 9(2) of the CST Act read with Section 13(3) of the VAT Act.

(vi) The petitioner being aggrieved by the order dated 31.03.2013 passed by the respondent No.2 preferred First Appeal before the Dy. Commissioner of Commercial Tax (Appeal)-V, Vadodara to dismiss the First Appeal vide order dated 04.03.2016.

(vii) The petitioner  being  dissatisfied, preferred Second Appeal No. E/340/2016 before the Tribunal. The Tribunal allowed the Second Appeal Nos.339 and 340 of 2016 by order dated 17.04.2017.

(viii) The Revenue i.e. respondent No.1-State of Gujarat through the Commissioner of Commercial Tax, being aggrieved by the order passed by the Tribunal, preferred Tax Appeal No. 652 of 2017 before this Court, which is admitted as stated hereinabove.

(ix) So far as the Tax Appeal No.339 of 2016 is concerned, the same is filed by the petitioner under the VAT Act, whereas the Second Appeal No. 340 of 2016 is filed under the CST Act. The Tribunal after considering the provisions of the CST Act and VAT Act has held as under :

“(17) We have considered rival submissions and facts of the case. We have also gone through the orders passed by the authorities below and the documents as well as case laws produced before this Tribunal.

(18) So far as the issue no.(i) and (ii) under the GVAT Act and issue no. (ii) under the CST Act mentioned in Para (2) above, are concerned, they are, in absence of any contrary submission from the State, allowed on the basis of submissions made by the appellant in the rectification application.

(19) So far as issue no.(i) under the CST Act is concerned, we are of the view that the appellant has collected excess tax to the tune of Rs.1,81,49,641/-under the provisions of the CST Act, however, since there is no express provision in the CST Act for the forfeiture of such excess collection, the first appellate authority is not justified in confirming the forfeiture of Rs.1,81,49,641/- by the assessing authority under section 31(3) of the GVAT Act.

(20) It is frustrating to note that though the appellant’s main submission (Page No.31 and 32 of the Paper book of Second Appeal No.340 of 2016) before the first appellate authority was that the assessing authority had erred in applying section 31 of the GVAT Act to the excess collection under the CST Act though there is no enabling provision in the CST Act, the first appellate authority, a quasi-judicial authority, has all along been silent on this issue.

(21) The appellant has submitted that it has, by mistake, made this excess payment to the tune of Rs.1,81,49,641/- and that it was the mistake of his late tax consultant. We cannot buy this argument simply because the prices charged in the running bill issued in 2007-08 were inclusive of tax, and the tenders, subsequent quotations, etc for this contract had happened long back, perhaps in the year 2005-06 or 2006-07 (Tender no. date, quotation no., date, etc are not provided by any of the parties) when there was even no talk of the amendment likely to be made in Section 8(2) of the CST Act from 01-04- Thus, during pre amendment period, when the tender was published and quotation was submitted, nobody knew that the rate of tax for the inter-State transaction without the support of Form C would be going to be 4% with effect from 01-04-2007 as against the rate of tax of 10% / 12.5 % prevalent during pre-amendment period. This means when  the price inclusive of taxes was finalised, the tax constituent must have been considered at the rate of 10% or 12.5% as the case may be, only. And therefore, the appellant must have had, while making reverse calculation to find out the amount on which excise duty was to be calculated, taken into consideration the rate of 10% or 12.5% while preparing excise invoice as is seen from the sample invoices produced  by the Government Representative today.

Thus, the appellant’s submission that excess payment to the tune of Rs.1,81,49,641/- is a mistake made by the late tax consultant is not acceptable. We are supported in this view by our decision in Essar Services Limited (supra) wherein, in Para 13, it is observed that …..’ Though the appellant has denied that the appellant has made claim on the basis of decision of the Hon’ble Apex Court in the case of 20th Century Finance Corporation  (supra), the facts still remain that the appellant has paid the tax as per the returns and only at the assessment stage, the appellant has put forward its case with regard to the refund of the amount paid on the basis of the decision of the Hon’ble Apex Court in the case of 20th Century Finance Corporation (supra). The appellant is therefore, not permitted to lodge its claim of refund on the basis of the decision of the Hon’ble Apex Court in the case of 20th Century Finance Corporation (supra) and on that basis it cannot be said that the appellant has discovered the mistake of law under which it has paid the tax nor the appellant can put forward its claim at the assessment stage on the basis of alleged discovery of mistake of law.” Though, this decision is given under the provisions of the local Act, facts of both the cases and applicable principle of law is identical.

(22) However, we are also of the view that the provisions of the GVAT Act and the CST Act as to the forfeiture of excess collection are very clear and interpretation is, therefore, simple. The assessing authority, under the CST Act, has no power to forfeit any amount collected in contravention of the provisions of Section 9A of the CST Act or to impose any penalty in respect thereof in view of the fact that no express provisions in that behalf have been made in the CST Act and that the provisions of the State Sales Tax Act providing for such power of forfeiture or levy of penalty are not attracted to such a case. We are supported in this view by another decision of this Tribunal in the case of Asian Paints Industrial Coatings Limited (supra) wherein, relying on the Bombay High Court judgment in the case of Ramkrishna Kulvantrai (supra) and the Apex Court judgment in the case of Khemka & Co (supra), it is decided that in such a situation, it was not open to the department either to forfeit the amount which according to the department was collected by way of sales tax or to levy a penalty on the appellant in respect thereof. It was only open to the State to prosecute the appellant, if at all; any case is made out under section 10(f) of the CST Act.

(23) Section 9A of the CST Act, prohibiting collection of tax save under the provisions of the CST Act, reads as under:

“9A. Collection of tax to be only by registered dealers. 

No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of inter-State trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the rules made there under.”

(24) There are two sections providing for penalties under the CST Act. Section 10 and Section 10A.

(25) Though the heading of Section 10 is ‘Penalties’, in fact it is a list of ‘the Central Act – specific’ offences for which the assessee can be punished with simple imprisonment which may extend to six months, or with fine or with both; and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues. Section 10 reads as under:

“10. Penalties.

If any person –

(a) furnishes a declaration under sub-section (2) of section 6 or subsection (1) of section 6A or subsection (4) or sub-section (8) of section 8, which he knows, or has  reason to believe, to be false; or (aa) fails to get himself registered as required by section 7, or fails to comply with an order under subsection (3A) or with the requirements of sub-section (3C) or sub-section (3E), of that section; or

 (b) being a registered dealer, falsely represents when purchasing  any class of goods that goods of such class are covered by his certificate of registration; or 

(c) not being a registered dealer, falsely represents when purchasing goods in the course of inter-State trade or commerce that he is a registered dealer; or 

(d) after purchasing any goods for any of the purposes specified in clause (b) or clause (c) or clause (d) of sub-section (3) or subsection (6) of section 8 fails, without reasonable excuse, to make use of the goods for any such  purpose; or

(e) has in his possession any form prescribed for the purpose of subsection (4) or sub-section (8) of  section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; or

(f) collects any amount by way of tax in contravention of the provisions contained in section 9A, he shall be punishable with simple imprisonment which may extend to six months, or with fine or with both; 

and when the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.”

(26) The penalty provisions are in fact made in Section 10A, which reads as under: 

“10A. Imposition of penalty in lieu of prosecution. 

(1) If any person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of section 10, the authority who granted to him a certificate of  registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times the tax which would have been levied under sub-section (2) of section 8 in respect of the sale to him of the goods, if the sale had been a sale falling within that sub-section; Provided that no prosecution for an offence under section 10 shall be instituted in respect of the same facts on which a penalty has been imposed under this section.

(2) The penalty imposed upon any dealer under sub-section (1) shall be collected by the Government of India in the manner provided in subsection (2) of section 9 – (a) in the case of an offence falling under clause (b) or clause (d) of section 10, in the State in which the person purchasing the goods obtained the form prescribed for the purposes of sub-section (4) of section 8 in connection with the purchase of such goods; (b) in the case of an offence falling under clause (c) of section 10, in the State in which the person purchasing the goods should have registered himself if the offence had not been committed.”

It is to be noted that, though penalty under section 10A can be imposed for the offences under section 10(b),(c) and (d), it cannot be imposed for the offence under section 10(f). For the offence under section 10(f), the only course available to the department is to proceed for prosecution under section 10. Unlike the GVAT Act, the CST Act does not have provisions for forfeiture of the excess tax collected in contravention of the provisions under the CST Act.

(27) Section 9 of the CST Act provides for levy and collection of tax and penalties. Section 9(2) provides that the State authorities empowered to assess, reassess, collect and enforce payment of tax under the general sales tax law of their State, shall on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any interest or penalty payable by a dealer under the CST Act as if the tax or interest or penalty payable by such a dealer under the CST Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose  provisions relating to, inter alia, penalties are applicable accordingly. 

(28) The Apex Court, in Khemka & Co (supra) followed by the Bombay High Court in Ramkrishna Kulvantrai (supra) followed by this Tribunal in Asian  Paints Industrial Coatings Limited (supra), has interpreted section 9(2) of the CST Act in following terms:

“ Per Ray, C.J., and Khanna, J. – 

Penalty is not merely sanction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to  tax and is a liability under the Act. Penalty is within assessment proceedings just as tax is within  assessment proceedings when the relevant Act by substantive charging provision levies tax as well as penalty. The Central Act contains  specific provisions for penalty. These are the only provisions for penalty available against the dealers under the Central Act. The Central Act is a self-contained  code which by the charging section creates liability for tax and which by other sections creates liability for penalty and imposes penalty. Section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, reassessment, collection and enforcement of tax and penalty payable by a dealer under the Central Act. The mere fact that there is machinery for assessment, reassessment, collection and enforcement of tax and penalty in the State Act does not mean that the  provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be  enlarged by the provisions of machinery of the State Act incorporated for working out the Central Act. Per Beg, J. – Whatever may be the objects of levying a penalty, its imposition gives rise to a substantive liability which can be viewed either as an additional tax or as a fine for the infringement of the law. The machinery or procedure for its realization comes into operation after its imposition. In any case, it is an imposition of a pecuniary liability which is comparable to a punishment for the commission of an offence. It is a well-settled canon of construction of neither statutes that neither a pecuniary liability can be imposed nor an offence created by mere implication. It may be debatable whether a particular procedural provision creates a substantive right or liability. But the imposition of a pecuniary liability, which takes the form of a penalty or fine for a breach of a legal obligation, cannot be relegated to the region of mere procedure and machinery for the realization of the tax. It is more than that. Such liabilities must be created by clear, unambiguous and express enactment. The language used should leave no serious doubts about its effect so that the persons who are to be subjected to such a liability for the infringement of law are not left in a state of uncertainty as to what their duties or liabilities are. This is an essential requirement of a good government of laws. It is implied in the constitutional mandate found in article 265 of the Constitution.

After considering the provisions of the Central Act as well as the State Acts relating to penalties, one is irresistibly driven to the conclusion that provisions relating to penalties are special and specific provisions in each Act. They are not part of the ‘general sales tax law’ of either State or of the Union. Therefore, the reference to penalties in the concluding portion of section 9(2), preceding the proviso, must be interpreted to relate only to the special provisions relating to penalties provided for specifically in the Central Act.

The intention to impose a charge upon the subject must be shown by clear and unambiguous language. If the language leaves room for coming to the conclusion that only penalties specified in the Central Act are enforceable by the machinery for enforcement of liability under the general sales tax law of a State, the legislative intent could safely be presumed to be to confine penalties    mentioned  in  the concluding part of section 9(2) to only those mentioned specifically in the Central Act. ”

In short, the combined reading of section 9(2), 10, 10(f) and the decision of the Apex Court in Khemka & Company (Agencies) Private Limited (supra) and the decision of this Tribunal in Asian Paints Industrial Coatings Limited (supra) makes it abundantly clear that even if the appellant has made excess collection of tax in respect of sales made in the course of inter-State trade and commerce, it cannot be forfeited under the provisions of the CST Act.

(29) The State has relied on the Kerala High Court judgment in the case of Leo Engineering (India) (supra). In this case, the question was whether excess tax collected under the CST Act can be forfeited under section 46A of the Kerala General Sales Tax Act, 1963. Hon’ble High Court has, relying on the special provisions in section 46A of the Kerala General Sales Tax Act read with rule 31D of Kerala General Sales Tax Rules, 1963 for reimbursement of excess tax collected by the dealer, decided that the provisions of local Act can be applied for forfeiture of tax under the CST Act. There is also no discussion by the Kerala High Court of the decision on the subject of the Hon’ble Apex Court in Khemka 15 & Company (supra). Therefore, Leo Engineering (India) (supra) is not applicable to the facts of the appellant’s case.

(30) In view of the above discussion, we conclude that the appellant has collected excess tax to the tune of Rs.1,81,49,641/-     contravening the  provisions of the Central Sales Tax Act, 1956, however, since, unlike the GVAT Act, the CST Act does not provide for forfeiture of such excess tax, the order of the first appellate authority, confirming the forfeiture of tax by the assessing authority, is required to be set aside. We also allow the appellant’s plea under the GVAT Act for rectification of TDS amount of Rs.22,287/- in absence of any adverse evidence produced by the department. We, therefore, pass the following order:

ORDER  

Second Appeal Nos. 339 and 340 of 2016 are hereby allowed. Appellant’s plea for grant of credit of TDS amount of Rs.22,287/- in Second Appeal No.339 of 2016 is allowed in the absence of any adverse evidence produced by the department. The impugned order of the first appellate authority confirming the forfeiture of excess collection of tax under the CST Act contested in Second Appeal No.340 of 2016 is also set aside. The first appellate authority shall pass consequential orders in accordance with law under the GVAT Act and the CST Act preferably within three months from the date of receipt of the record of this appeal in his office.

There is no order as to cost.

Pronounced in open court on this 17th day of April, 2017.”

9. Therefore, questions of law which arise for consideration are (i) whether the excess tax collected from the petitioner under the CST Act can be forfeited by the respondent authorities or the same is required to be refunded and the respondent-assessee is eligible for refund of central sales tax paid by it contrary to the provisions of Section 9A of the CST Act or whether the appellant-Revenue was entitled to forfeiture of the excess central sales tax deposited by the respondent-assessee.

10. In that view of the matter, the substantial questions of law are to be re-framed as under :

(i) Whether in the facts and circumstances of the case, the Tribunal has erred in holding that the respondent was eligible for refund of excess amount of Central Sales Tax deposited over and  above, the amount of Central Sales Tax payable under Section 9A of the Central Sales Tax Act, 1956.

 (ii) Whether in the facts and circumstances of the case, the Tribunal erred in holding that the excess amount of Central Sales Tax deposited by the respondent-assessee cannot be forfeited under Section 9(2) of the Central Sales Tax Act, 1956. 

11.The facts are not in dispute that as the assessee- company has received purchase orders from the companies who had invited bids for instalments of machinery and as these Companies did not agree to issue Form “C” under the Central Sales Tax Act, these sales made by the assessee-company were liable to be taxed under Section 8(2) of the Central Sales Tax Act. The terms of the contract included issue of funding bills showing price inclusive of all taxes, to be raised at different stages of completion of order. The respondent-assessee with a view to facilitate payment of excise duty and central sales tax had also prepared excise invoices showing sale value of materials, excise duty and central sales tax separately by making reverse working from the total “inclusive of tax” price. The assessee without considering the amendment in the provisions under Section 8(2) of the Central Sales Tax Act w.e.f. 1st April 2007 in respect of the applicable rate of tax, mistakenly considered the applicable rate of tax at 10%/12.5% instead of correct rate of 4% while making reverse working in its sales invoices. The respondent-assessee therefore, deposited excess central sales tax of Rs.1,81,49,641/- along with returns.

12. Mr. Chintan Dave, the learned AGP submitted that Assessing Officer, during the course of assessment proceedings for the year 2007-08 has rightly forfeited the alleged excess amount of Central Sales Tax deposited by the respondent-assessee under Section 9(2) of the Central Sales Tax Act read with Section 31 of the GVAT Act, on the ground that in the commercial invoices prepared by the respondent- assessee, the tax amount is shown separately and therefore, such tax would be part of the inclusive amount of sale price and would amount to the tax collected by the respondent-assessee. It was therefore, submitted by applying the provisions of Section 31 of the GVAT Act, if the refund is granted to the assessee, it would amount to unjust enrichment.

12.1  The learned AGP also placed reliance upon the following decisions in support of his contention, which were applied by the Appellate Authority to reject the appeal of the respondent-assessee :

(i) State of Gujarat v. Ilac Limited, [1982] 50 STC 24 (Guj.),

(ii) T. Stens and Co. Ltd. v. The State of Tamilnadu, [2005] 141 STC 21 (Mad),

(iii) T. Stens and Co. Ltd. v The State of Tamilnadu, [2005] 141 STC 227 (SC),

(iv)State of Tamilnadu vs. Kiran India Traders, (100 STC 131)(Mad)

12.2. Relying upon the aforesaid decisions, it was submitted that the Assessing Authority had rightly forfeited the excess amount of central sales tax deposited by the respondent-assessee.

12.3. It was therefore, submitted that the Tribunal has misinterpreted the provisions of the Central Sales Tax Act by holding that the Assessing Officer has no power to forfeit any amount collected in contravention of the provisions of Section 9A of the Central Sales Tax Act in view of the fact that no express provision in that behalf has been made in the Central Sale Tax Act, the Provision of State Sales Tax Act providing for such power of forfeiture or levy of penalty cannot be attracted to such a case.

12.4. Reliance was also placed on the decision of the Kerala High Court in the case of Leo Engineering (India) vs State of Kerala reported in [2006] 146 STC 393 (Ker), wherein the High Court confirmed the forfeiture of excess tax collected under the Central Sales Tax Act.

12.5. Relying upon the decision of the Apex Court in the case of Mafatlal Industries Ltd. and Others vs. Union of India and Ors reported in (1998) 111 STC 467 (SC), wherein the Supreme Court has upheld Sections 12B, 12C and 12D of the Central Excise Act, 1944, which provides for the refund of duty only if it is proved that the manufacturer has not passed on the same along with the price to the buyer and in absence of any proof providing for transfer of such excise duty to the Customer Welfare Fund, or in other words forfeited to the Government, it was submitted that the Central Sales Tax deposited by the assessee cannot be refunded as the assessee would not be in position to pass the same and hence it is rightly forfeited.

13. On the other hand, the learned advocate Mr. D.K. Trivedi appearing for the assessee submitted that the assessee was not supposed to reflect separately the tax component in the invoices raised by it as price fixed was inclusive of tax and assessee was liable to pay only appropriate tax payable in accordance with law as the receiver Company was not concerned with regard to amount of tax to be paid by the assessee as the price was fixed irrespective of the amount of tax payable or irrespective of any other expenses, which were to be incurred by the assessee.

13.1 It was further submitted that considering fixed price payable for the goods supplied was arrived at and the recipient of goods never issued Form “C” for the goods received by them despite there being inter­state transactions and were eligible to issue such tax concession forms and in such situation Section 8A of the Central Sales Tax Act provides for determining the tax liability of the vendor that the price is fixed at inclusive of tax and it is for the vendor like assessee to identify tax payable and thereafter pay the same. It was therefore, submitted that the assessee was not supposed to collect tax separately from the recipient of the goods and assessee was supposed to determine the turnover and identify the tax in accordance with the formula contemplated in Section 8A of the CST Act and the assessee was therefore, required to calculate the CST payable on the basis of the reverse working. However, it was submitted that the respondent-assessee calculated the CST payable by reverse working by applying the rate of 10%/12.5% instead of correct rate of tax at 4%, which came into effect from 01.04.2007 , which resulted into excess deposit of CST.

13.2 It was submitted that the Tribunal applying the correct interpretation of Sections, 8A, 9,9A, 10, 10A of the CST Act has allowed the appeal filed by the respondent-assessee.

13.3 The learned advocate for the respondent-assessee relied upon the following decisions in support of his submissions:

(i) In the case of M/s. Swadeshi Polytex Limited vs. Commissioner of Income Tax, U.P., Lucknow rendered by the Allahabad High   Court     reported    in    (2012)  50VST426(All).

(ii) Decision of the Supreme Court in the case of Swadeshi Polytex Limited dismissing the Special Leave Petition vide order dated 04.07.2012 filed against judgment of the Allahabad High Court.

(iii) Decision of the Supreme Court in the case of Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra reported in [1975] SC 1549,

(iv) Decision of the Supreme Court in the case of India Carbon Limited. Vs. State of Assam reported in AIR 1997 SC 3054.

(v) Decision of the Bombay High Court in the case of in the case of Commissioner of Sales Tax v. Ramkrishna Kulvantrai reported in [1976] 37 STC 564 (Bom).

(vi) Decision of Gujarat Value Added Tax Tribunal in the case of Asian Paints Industrial Coatings Limited, dated 11.03.2016.

13.4.Relying upon the ratio of the aforesaid decisions, it was submitted that there is no provision of forfeiture of tax deposited in the CST Act like Central Excise Act. It was submitted that if any, excise duty is passed on to the buyer of goods and subsequently if the excise duty paid by the assessee is revised resulting in excess payment then the refund to be allowed would be credited to the Consumer Welfare Fund i.e. in other words refund would be forfeited because the duty collected by the assessee would not be passed on to the consumer and therefore, if any, refund would be paid, the assessee would be unjustly enriched. However, as against that as far as CST is concerned, there is no provision pertaining to forfeiture of refund resulting into unjust enrichment.

13.5 It was also submitted upon the global tender and subsequent negotiations, the assessee entered into a contract, whereby it was supposed to supply the goods to the buyer/receiver at specific price which would not be affected by tax paid/payable by the assessee and by applying the provision of Section 8A of the CST Act, the assessee arrived at tax payable on reverse working of the price charged to calculate the tax component imbedded therein. It was therefore, submitted that the amount of tax calculated by the respondent-assessee cannot be said to have been collected by it over and above the actual amount of tax payable by the assessee and the excess amount of CST deposited was due to the difference in the rate of the CST which has come into effect from 01.04.2007.

13.6 It was therefore, submitted that the Tribunal has rightly held that the respondent-assessee is entitled to refund of the excess amount of the CST and as such the appeal is without any merit and is liable to be dismissed and the assessee/petitioner is entitled to the refund as prayed by it in Special Civil Application 8391 of 2019.

14. Having heard the learned advocates for the respective parties and having gone through the materials on record and on perusal of the judgment of the Tribunal in order to appreciate the controversy raised in this appeal, it would be germane to refer to the relevant provisions of the Central Sales Tax Act:

“8. Rates of tax on sales in the course of inter-State trade or commerce.—

(1) Every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be three percent, of his turnover or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower:

Provided that the Central Government may, by notification in the Official Gazette, reduce the rate of tax under this sub-section.

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within subsection (1), shall be at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State. Explanation— For the purposes of this sub-section, a dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.];

(2A) [***]

(3)The goods referred to in sub-section

(1)

(a) [***]

(b) [***] are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or Lin the tele-communications network or] in mining or in the generation  or  distribution of  electricity or any other form of power;

(c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale;

(d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in L***] clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause (c). (4)The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority:

(4) Provided that the declaration is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit.]

(5) Notwithstanding anything contained in this section, the State Government may 2 Lon the fulfillment of the requirements laid down in sub- section (4) by the dealer] if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette and subject to such conditions as may be specified therein direct,—

(a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, 3 [to a registered dealer 4 [***]] from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in sub- section (1)    [***] as may be mentioned
in the notification;

(b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made, in the course of inter-State trade or commerce 6 [to a registered dealer [***]] by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in subsection (1) [***] as may be mentioned in the notification.]

(6) Notwithstanding anything contained in this section, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the course of inter-State trade or commerce to a registered dealer for the purpose of setting up, operation, maintenance, manufacture, trading,production,processing, assembling, repairing, reconditioning, reengineering, packaging or for use as packing material or packing accessories in a unit located in any special economic zone or for development, operation and maintenance of special economic zone by the developer of the special economic zone, if such registered dealer has been authorised to establish such unit or to develop, operate and maintain such special economic zone by the authority specified by the Central Government in this behalf.]

(7) The goods referred to in sub-section 

(6) shall be the goods of such class or classes of goods as specified in the certificate of registration of the registered dealer referred to in that sub-section. 

(8) The provisions of sub-sections (6) and (7) shall not apply to any sale of goods made in the course of inter-State trade or commerce unless the dealer selling such goods furnishes to the 10[prescribed authority referred to in  sub section (4) a declaration in the  prescribed manner on the prescribed form obtained from the authority specified by the Central Government under sub-Explanation— For the purposes of subsection (6), the expression “special economic zone” has the meaning assigned to it in clause (iii) to Explanation 2 to the proviso to section 3 of the Central Excise Act, 1944 (1 of 1944).]

(8A) Determination of turnover.—

(1) In determining the turnover of a dealer for the purpose of this Act, the following deductions shall be made from the aggregate of the sale prices, namely:—

(a) the amount arrived at by applying the following formula— 

rate of tax x aggregate of sale Prices
100 + rate of tax

Provided that no deduction on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer, in accordance with the provisions of this Act, has been otherwise deducted from the aggregate of sale prices.

Explanation— Where the turnover of a dealer is taxable at different rates, the aforesaid formula shall be applied separately in respect of each part of the turnover liable to a different rate of tax;

(b) the sale price of all goods returned to the dealer by the purchasers of such goods,— 

(i) within a period of three months from the date of delivery of the goods, in the case of goods returned before the 14th day of May, 1966; 

(ii) within a period of six months from the date of delivery of the goods, in the case of goods returned on or after  the 14th day of May, 1966:  Provided that satisfactory evidence of such return of goods and of refund or adjustment in accounts of the sale price thereof is produced before the authority competent to assess or, as the case may be, reassess the tax payable by the dealer under this Act; and

 (c) such other deductions as the Central Government may, having regard to the prevalent market conditions, facility of  trade and interests of consumers, prescribe. 

(2) Save as otherwise provided in subsection (1), in determining the turnover  of a dealer for the purposes of this Act, no deduction shall be made from the aggregate of the sale prices.]

9. Levy and collection of tax and penalties.—

(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provision of sub-section (2), in the State from which the movement of  the goods commenced:

  Provided that, in the case of a sale of goods during their movement from one  State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section

(2) of section 6, the tax shall be levied and collected—

(a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer  obtained or, as the case may be, could have obtained, the form prescribed for the purposes of sub-section (4) of section 8 in connection with the purchase of such goods; and

(b) where such subsequent sale has been effected by an unregistered dealer in the State from which such subsequent sale has been effected. 

(2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under general sales tax law of the appropriate State shall, on behalf of the Government  of India, assess re-assess, collect and enforce payment of tax, including any 5  [interest or penalty,] payable by a dealer under this Act as if the tax or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the  general sales tax law of the State; and the provisions of such law, including provisions relating to returns,  provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties,  charging or payment of interest,]compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government  may, be rules made in this behalf make necessary provision for all or any of the matter specified in this subsection. 

(2A) All the provisions relating to offences, interest and penalties  (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties  or punishment for an offence but excluding the provisions relating to matters provided for in section 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law. 

(2B) If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of interest for delayed payment of tax, of the general sales tax law of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed  payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law. 

(3) The proceeds in any financial year of any tax, 4 [including any interest or penalty] levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government  of India shall be assigned to the State and shall be retained by it; and the proceeds attributable to Union  territories shall form part of the Consolidated Fund of India.] 

9A. Collection of tax to be only by registered dealers.— 

No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of interState trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the rules made thereunder.]

10. Penalties.

If any person—

(a) furnishes [***] a certificate or declaration under sub-section (2) of section 6 or sub-section (1) of section 6A or sub-section (4) or sub-section 

(8) of section 8, which he knows, or has reason to believe, to be false; or

(aa) fails to get himself registered as required by section 7 or fails to comply with an order under subsection (3A) or with the requirements of sub-section  3(C) or sub-section (3E) of that section;] 

(b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are  covered by his certificate of registration; or

(c) not being a registered dealer, falsely represents when purchasing goods  in the course of inter State trade or commerce that he is a registered dealer; or

(d) after purchasing any goods for any  of the purposes specified in 1 [clause (b) or clause (c) or clause (d)] of subsection (3) 2 [or sub section (6)] of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose; 

(e) has in his possession any form  prescribed for the purpose of sub section (4) 3 [or sub-section (8)] of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder;

 (f) collects any amount by way of tax in contravention of the provisions  contained in section 9A; he shall be punishable with simple imprisonment which may extend to six months, or with fine or with both; and when the offence  is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.

10A. Imposition of penalty in lieu of prosecution—

(1)] If any person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of section 10, the authority who granted to him or, as the case may be, is competent to grant  to him a certificate of registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times 7 [the tax which would  have been levied under sub-section (2) of section 8 in respect of the sale to him of the goods, if the sale had been a sale falling within that subsection:  

Provided that no prosecution for an offence under section 10 shall be instituted in respect of the same facts on which a  penalty has been imposed  under this section.

(2) The penalty imposed upon any dealer under sub-section (1) shall be collected  by the Government of India in the manner  provided in sub-section (2) of section 9— (a) in the case of an offence falling under clause (b) or clause (d) of  section 10, in the State in which the person purchasing the goods obtained the form prescribed for the purposes of 9 [sub-section (4) of section 8] in connection with the purchase of such goods;

 (b) in the case of an offence falling under clause (c) of section 10, in the  State in which the person purchasing the goods should have registered himself if the offence had not been committed.” 

14.1 On perusal of the above provisions, it appears that when the assessee has sold the goods on the price, which is inclusive of tax, the turnover is to be calculated as  per the formula provided in Section 8A of the CST. In the facts of the case the rate of CST applicable for the goods supplied by the respondent-assessee is 4%. Therefore, 4% tax is required to be applied on the turnover as calculated under Section 8A of  the CST Act. As observed above, the respondent-assessee deposited the CST at  the rate of 10%/12.5% by making reverse working of the turnover under Section 8A of  the CST Act. The correct amount of tax payable would be therefore, much less than what the respondent-assessee has deposited.

This has resulted into the excess amount of tax deposited by the respondent-assessee amounting to Rs. Rs.1,81,49,641/-.

14.2 Moreover, on perusal of the facts on record and as per the findings of fact given by the Tribunal, it cannot be said that that the respondent-assessee has collected the excess amount of CST from its buyer/receiver of the goods. As per the terms of the contract the respondent- assessee was issuing running bills at a  fixed price but prepared the commercial invoices for the purpose of payment of  excise duty and the CST, but ultimately has received the fixed price only.

14.3 The Apex Court while upholding the Constitutional validity of Section 9(2A) of the CST Act has held as under in the case of Shiv Dutt Rai Fateh Chand etc. vs.   Union of India and another reported in AIR 1984 Supreme Court 1194 held as under:

“17. The first contention urged on behalf of the petitioners is that the lacuna in the Act which was pointed out by this Court in Khemaka’s case (supra) namely that there was no specific  provision levying penalties in the Act as it stood before its amendment in 1976 remains unfilled up even now and hence no penalties can be recovered by  utilising the provisions of the general sales tax laws of the respective States. This argument is based upon the language of subsection (2A) of section 9 of the Act which is extracted above. It is  contended that the words “(A) 11 the provisions relating to offences and penalties.. of the general sales tax law of each State shall with necessary modifications apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any tax required to be collected under this  Act . …” are insufficient to make the  provisions relating to penalties in the State laws applicable to the assessees  under the Act as the word ‘penalties’ is not found alongwith the words assessment, reassessment, collection and the enforcement of payment of any tax’. The argument is misconceived. The  principal object of the Act is not the levying of penalties. Its object is assessment, reassessment, collection and the enforcement of payment of central sales tax. The assessment incur the liability to pay penalties on account of certain acts or omissions committed by them at the various stages specified above, namely, assessment, reassessment, collection and the enforcement of  payment of tax. The inclusion of the word ‘penalties’ alongwith these four stages would have, therefore, been redundant apart from being inappropriate. Sub-section (2-A) of section 9 of the Act expressly makes all the provisions relating to offences and penalties which are committed or incurred, as the case may be, under the general sales tax laws of the respective States, applicable to persons who commit corresponding acts and omissions at the above mentioned stages under the Act. To illustrate, if a person is liable to pay any penalty for not filing a return  required to be filed by him under the general sales tax law of a State, a person who is similarly required to file a return under the Act incurs the  penalty for not filing a return and the measure of penalty is the same as under  the State law. If a person is liable to pay penalty at a particular rate in  addition to the tax for not paying any part of the tax due under a State law within the specified time, a person  liable to pay tax under the Act becomes liable to pay the penalty at the same rate if he commits default in paying the tax due under the Act. We do not, therefore, find any lacuna in the language of sub- section (2-A) of section 9 of the Act which makes the provisions relating to penalties under  the general sales tax laws of the respective States inapplicable even now to the proceedings under the Act. While sub-section (2-A) of section 9 of the  Act makes the provisions relating to both offences and penalties in the general sales tax laws of States applicable to the proceedings under the Act prospectively, section 9 of the Amending Act makes all the provisions relating to penalties only in the general sales tax laws of the States applicable to the proceeding under the Act retrospectively by adopting the same language appearing in subsection (2-A) of section 9 of the Act. This pattern of legislation had to be adopted perhaps because Parliament wished rightly not to give retrospective effect to the provisions relating to offences also which are referred to in sub-section (2-A) of section 9. Having thus given retrospective effect to section 2- A of section 9 with effect from January  5, 1957 in so far as penalties were concerned by enacting sub-section (1) of section 9 of the Amending Act, Parliament removed the deficiency pointed out in Kheamaka’s case (supra) in the Act. In view of the retrospective amendment, the basis of the judgment in Kheamka’s case (supra) was also removed. Consequently the judgment delivered in that case could not stand in the way of realisation of penalties in accordance with the validating provisions of section 9 (2) of the Amending Act We are of the view that sub-section (2-A) of section 9 of the Act and section 9 of the Amending Act are adequate enough to assess and realise penalties with effect from January 5, 1957 as contemplated  therein. We, therefore, hold that there  is no substance in this contention of the petitioners.

18. The second point urged on behalf of the petitioners is that sub-section (2- A) of section 9 of the Act suffers from the vice of excessive delegation of  legislative power. It is argued that Parliament by adopting the provisions relating to offences and penalties referred to in the various general sales tax laws of the States has abdicated its essential legislative function. The question whether there has been excessive delegation or abdication of legislative power has to be decided on the meaning of the words in the statute and the policy behind it. In the instant case, Parliament has not authorised the State Legislatures to make laws in respect of offences and penalties that may be leviable under the Act. What is done by Parliament by enacting subsection (2-A) of’ section 9 is that whatever provisions relating to offences and penalties were there in the general sales tax laws of the States would be applicable with appropriate modification to assessment, reassessment, collection and enforcement or the provisions of the Act. Legislation by incorporation of provisions of another statute ever. though passed by a different legislature is a well known method of legislation which does not affect the validity of the legislation particularly when the  scheme of the other statute is similar and such incorporation is relevant and necessary for the purpose of advancing the objects and purposes of the legislation. In the instant case we should bear in mind the history of the central sales tax legislation and its object and purpose. The central sales  tax levied on inter-State sales is assigned under Article 269 of the Constitution to the States who are the true beneficiaries. The assessees under the Act who are spread over various States are accustomed to the general pattern of sale tax law in their respective States and the various duties  and responsibilities of an assessee who is liable to pay sales tax. The officers who assess and collect the tax under the Act are the officers who discharge similar functions under the State laws. In this situation if Parliament has, with the knowledge of the various provisions relating to offences and penalties in the general sales tax laws of the various States, adopted them for purposes of assessment, reassessment,  collection and enforcement of the provisions of the Act it cannot be said that it has abdicated its legislative functions. In this connection it is necessary to refer to the decision of this Court in State of Madras v. N. K. Nataraja Mudaliar(1). In that case one of the contentions raised by the assessee related to the validity of section 8 of the Act as amended by Central Act 31 of 1958. By sub- section (1) of section 8 every dealer who in the course of inter-State trade or commerce sold to the Government any goods or to a registered dealer, other than the Government, goods of the description referred to in sub-section (3) of section 8 was liable to pay tax under the Act at the rate of one per cent of his turnover. Under sub-section (2) of section 8 the tax payable on the  turnover relating to inter- State sales not falling under sub-section (1) of section 8 was (a) in the case of  declared goods, to be computed at the rate applicable to the sale or purchase of such goods inside the appropriate State and (b) in the case of goods other than declared goods at the rate of seven per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State whichever was higher. Sub-section (2-A) Of section 8 of the Act provided that notwithstanding anything contained in subsection (1) or sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer was exempt from tax generally or subject to tax generally at a rate which was lower than one per cent (whether called a tax, a fee or by any other name) the tax payable under the Act on his turnover in so far as the turnover or any part thereof related to the sale of such goods should be nil or as the  case might be, should be calculated at the lower rate. The Explanation to sub- section 2-A of section 8 provided that for the purpose of that sub-section, a sale or purchase of goods should not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that it was exempt only in specified circumstances or under specified conditions or in relation to which the tax was levied at specified stages or otherwise than with reference to the turnover of goods. Justifying the varying rates of tax under subsection (2) and (2-A) of section 8 depending upon the rates of tax levied in different States, Shah, J. Observed at pages 844-846 thus: 

“The rates of tax in force at the date when the Central Sales Tax Act was enacted have again not become crystalised The rate which the State Legislature determines, subject to the maximum prescribed for goods referred to in s 8 (1) and (2) are the operative rates for those transactions: in respect of transactions falling within s 8 (2) (b) the rate is determined by the State rate except where the State rate is between the range of two and seven per cent. The rate which a State legislature imposes in respect  of inter-State transactions in a particular commodity must depend upon a variety of factors. A State  may be led to impose a high rate of tax on a commodity either when it is not consumed at all within the State, or if it feels that the burden which is falling on consumers within the State will be more than offset by the gain in revenue ultimately derived from outside consumers. The imposition of rates of sales tax is normally influenced by factors political and economic. If the rate is so high as to drive away prospective traders from purchasing a commodity and to resort to other sources of supply, in its own interest the State will adjust the rate to attract purchasers …Again, in a democratic constitution political forces would operate against the levy of an unduly high rate of tax. The rate of tax on sales of a commodity may not ordinarily be based on arbitrary considerations but in the light of the facility of trade in a particular commodity, the market conditions internal and external-and the likelihood of-consumers not being scared away by the  price which includes a high rate of tax. Attention must also be directed to sub-s. (S) of s. 8 which authorises the State Government,  notwithstanding anything contained  in s. 8 in the public interest to waive tax or impose tax on sales at a lower rate on inter-State trade or commerce. It is clear that the legislature has contemplated that elasticity of rates consistent with economic forces may be maintained. Prevalence of differential rates of tax on sales of the same commodity cannot be regarded in isolation as determinative of the object to discriminate between one State and another. Under the Constitution as originally framed, revenue from sales tax was reserved to the States. But since the power of taxation could be exercised in a manner prejudicial to the larger public interests by the States it was found necessary to restrict the power of taxation in respect of transactions which had an interState content. Amendment of Art. 286 and the enactment of the Sales Tax Validation Act 1956, and the Central Sales Tax Act, 1956, were all intended to serve a dual purpose: to maintain the source of revenue from sales tax to the States and at the same time to prevent the States from subjecting transactions in the course of inter-State trade so as to obstruct the free flow of trade by making commodities unduly expensive. The effect of the Constitutional provisions achieved in a somewhat devious manner is still clear, viz. to reserve sales tax as a source of revenue for the States. The Central Sales Tax Act is enacted under the authority of the Union Parliament, but the tax is collected through the agency of the State and is levied ultimately for the benefit of the States and is statutorily assigned to the States. That ii clear from the amendments made by the Constitution (Sixth Amendment) Act, 1956, in Art. 269, and the enactment of cls. (1) & (4) of s. 9 of the Central Sales Tax Act. The Central sales-tax though levied for and collected in the name of the Central Government is a part of the sales-tax levy imposed for the benefit of the States. By  leaving it to the States to levy sales-tax in respect of a commodity on intra-State transactions no discrimination is practised: and by authorising the State from which the movement of goods commences to levy on transactions of sale Central  sales-tax, at rates prevailing In the State, subject to the limitation already set out, in our judgment, no discrimination can be deemed to be practised.”

14.4 The Apex Court in the case of M/s. Khemka and Co.(Agencies) Pvt. Ltd (supra) has held as under:-

“For the foregoing reasons we are of opinion that the provision in the State Act imposing penalty for non-payment of income-tax within the prescribed time is not attracted to impose penalty on dealers under the Central Act in respect of tax and penalty payable under the Central Act. There is no lack of sanction for payment of tax. Any dealer who would not comply with the provisions for payment of tax, would be subjected to recovery proceedings under the Public Demands Recovery Act. A penalty is a statutory liability. The Central Act contains specific provisions for penalty. Those are the only provisions for penalty available against the dealers under the Central Act. Each State Sales Tax Act contains provisions for penalties. These provisions in some cases are also for failure to submit return or failure to register. It is  rightly said that those provisions cannot apply to dealers under  the Central Act because the Central Act makes similar provisions. The Central Act is a self contained code which by charging section creates liability for tax and which by other  sections creates a liability for penaltyand impose penalty. Section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, reassessment, collection and  enforcement of tax and penalty by a dealer under the Act.” 

14.5 The Allahabad High Court in the case of Swadeshi Polytex Limited (supra) has held as under:

“7. I find substance in the argument of learned counsel for the applicant. Section 8-A (1) of the Central Act provides determination of the turnover for the purpose of the Act. By permitting a deduction from the aggregate of the sale price as per formula given therein. It appears that intent of this formula is that in case if sale consideration includes the amount of tax, the same may be excluded while arriving to the net turnover for the levy of tax so that there should not be a tax on tax. According to the applicant the tax has been paid @ 2.5% on the net turnover arrived on the basis  of the said formula. The proviso  to section 8-A (1) of the Central Act is not applicable in the present case as there is no evidence that any tax by way of any amount has been deposited by the registered dealer in accordance to the provisions of this Act. There is no evidence on record that the tax has been realised by the applicant in the bills from the customers. The report has been sought in this regard by the first appellate authority from the assessing authority. The assessing authority after examination of the bills has categorically reported that no amount has been charged to tax in the bills separately. According to the applicant only 2% tax has been taken as a rate of tax for the determination of net turnover under the formula as provided under Section 8-A (1) of the Central Act. Therefore, if presumption may be drawn that any tax has been reliased, the same can be liable 2% and not 4% by any stretch of imagination. Though such  presumption may be doubtful in the facts and circumstances of the case.

8. Section 29-A of the Act provides that the amount realised in contravention of the provisions of sub-section (2) of section 8-A of the Act shall not be refunded except as povided for under sub-section (3) of section 29-A of the Act. Section 8-A (2) of the Act provides that dealer may recover an amount   equivalent to the amount of trade tax on sale of goods payable from the person to whom the goods are sold by him. Clause II of sub-section (4) of Section 8-A of the Act further provides that where a registered dealer realises trade tax on sale of goods from the purchasers the cash memos or the bills shall separately show the price of goods sold and the amount realised as tax.

9. From the perusal of the aforesaid  provisions of Section 29-A of the Act read  with Section 8-A of the Act, it appears that the amount realised as trade tax and  shown separately in the cash memos or bills in excess of tax payable, shall be retained by the State and not refunded to the person who had realized it.

10. In the present case the applicant has not realised any tax in the bills of cash memos.

11. Therefore, neither the provisions of Section 8-A (2) of the Act applies nor there is any contravention of the said provisions and, therefore, Section 29-A of the Act has no application.

12. For the foregoing discussion, in  view of the fact that there is no  evidence that any tax has been realized what to say, the tax in excess of the  tax due, any amount deposited cannot be retained and refund cannot be denied under section 29-A of the Act, which is made applicable under the Central Sales Tax Act. On the facts and circumstances, the assessing authority is directed to refund the amount which is in excess of the tax due forthwith within a period of three months from the date of presentation of the certified copy of  this order in accordance to Section 29 of the Act along with the interest in accordance to law.”

14.6 The aforesaid decision of the Allahabad High Court was confirmed by Supreme Court by dismissing the Special Leave Petition vide order dated 04.07.2012.

14.7 The Supreme Court in the case of India Carbon Ltd. and Ors. Vs. State of Assam held has held as under :

“10. The words “charging or payment of interest” in sub- section (2) and subsection (2A) of the Section 9, were introduced with retrospective effect in Section 9(2A) reads thus:

“All the provisions relating to offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the penalties or punishment for an offence but excluding the provisions relating to matters provided for in Section  10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, re- assessment, collection and the  enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the tax under this Act were a  tax under such sales tax law.

11. Section 9(2A) makes applicable to the assessment, re-assessment, collection and enforcement of Central sales tax the provisions relating to offences and penalties contained in the State Acts as if the Central sales tax was a State sales tax. But Section 9(2A) makes no reference to interest. There is no substantive provision in the Central Act requiring the payment of interest on Central sales tax.

12. There is, therefore, no substantive provision in the Central Act which obliges the assessee to pay interest on delayed payments of Central sales tax.

13. Now, the words “charging or payment or interest” in Section 9(2) occur in what may be called the letter part thereof. Section 9(2) authorises the sales tax authorities of a State to assess, reassess, collect and enforce payment of the Central sales tax payable by a dealer as if it was payable under the State Act; this is the first part of Section 9(2). By the second part thereof, these authorities are empowered to  exercise the powers they have under  the State Act and the provisions of the State Act, including provisions relating to  charging and payment of interest, apply accordingly. Having regard to what has  been said in the case of Khemka & Co.,  it must be held that the substantive law that the States’ sales tax authorities must apply is the Central Act. In such application, for procedural purposes  alone, the provisions of the State Act are available. The provision relating to interest in the latter part of Section  9(2) can be employed by the States’ sales tax authorities only if the Central Act makes a substantive provision for the levy and charge of interest on Central sales tax and only to that extent. There being no substantive provision in the Central Act requiring the payment of interest on Central sales tax the States’ sales tax authorities cannot, for the purpose of collecting and  enforcing payment of Central sales tax,charge interest thereon.

14. The requirement of the 1st respondent’s sales tax authorities that the appellants should pay interest at the rate of 24% p.a. on delayed payments of Central sales tax under the provisions of Section 35(A) of the State Act must, therefore, be held to be bad in law.”

14.8 The Bombay High Court in the case of Ramkrishna Kulvantrai (supra), while considering the provisions of Sections 37, 39, 46 and 61 of the Bombay Sales Tax Act, 1959 and Section 9A of the CST Act has held as under :

“4. Under clause (f) of section 10 of the Central Sales Tax Act, 1956, any person collecting any amount by way of tax in contravention of the provisions contained in section 9A of the said Act commits an offence and is liable to simple imprisonment which may extend to six months, or to payment of fine, or both. So far as the power of forfeiture under the Central Sales Tax Act, 1956, is concerned, in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra , the Supreme Court has held that the assessing authorities under the C entral S ales Tax Act , 1956, have no power to forfeit any amount collected in contravention of the provisions of section 9A of the said Act or to impose any  penalty in respect thereof in view of the fact that no express provisions in that behalf have been made in the Central Sales Tax Act, 1956, and the provisions of  a State Sales Tax Act providing for such power of forfeiture or levy of penalty are not attracted to such a case.

5. The four questions which the wanted this court to direct the Tribunal to refer to this court are as follows : 

“(1) Whether, on a true and proper interpretation of section 9(2) of the Central  Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969, the Tribunal is correct in law in coming to the conclusion that the provisions of section 46 and section 37 of the Bombay Sales Tax Act, 1959, could not be invoked for the purpose of the Central Sales Tax Act, 1956 ?

(2) Whether, on the facts and in the circumstances of the case and on a true and correct interpretation of section 9A of the Central Sales Tax Act, 1956, the Tribunal was correct in law in coming of the conclusion that the collection of Central sales tax on the transactions of Rs. 99,640, which were held to be not sales, did not amount to contravention of the said section 9A

(3) Assuming that such collection of Central sales tax on the transactions of Rs. 99,640 did not contravene the provisions of section 9A of the Central Sales Tax Act, 1956, whether the forfeiture of such tax was permissible in law by virtue of section 46 and section 37 of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969 ? 

(4) If it is held that such collection of Central sales tax on the transactions of Rs. 99,640 was in contravention of section 9A of the Central Sales Tax Act, 1956, whether the forfeiture of such tax  was permissible in law by virtue of section 37 of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central  Sales Tax Act, 1956, as amended by the Central Sales Tax (Amendment) Act, 1969 ?” 

6. In view of the judgment of the Supreme Court referred to above, Mr.  Desai on behalf of the petitioner has stated that he does not press before us  questions Nos. (1), (3) and (4) but was confining this application only to question No. (2) set out above. It was not urged before us that this question was wrongly decided, but what was urged was that it was not necessary for the Tribunal to give a finding that the  collection of Central sales tax on the  said transactions of the aggregate value of Rs. 99,640, which were admittedly not  sales, did not amount to contravention of section 9A of the Central Sales Tax Act, 1956, and the Tribunal’s finding on this point was, therefore, unnecessary and academic. It was further submitted on behalf of the petitioner that though in view of the above Supreme Court decision it was not open to the department either to forfeit the amount which according to the department was collected by way of sales tax on these transactions or to levy a penalty on the  respondents in  respect thereof, it was open to the State to prosecute the respondents in  respect thereof and that though they may not in this particular case prosecute  the respondents, they wanted this question to be decided, and decided in favour of the petitioner, to enable the  State to prosecute other dealers as and when they collected amounts in respect  of transactions which are not sales, and which collection according to the  department amounted to collection of sales tax. It is not possible to accept these contentions. On none of the point can the Tribunal’s judgment be said to be academic or on any point not arising  before it. The Tribunal has decided in favour of the respondents on two grounds : The first is that admittedly these transactions of the aggregate value of Rs. 99,640 not being sales, there could be no question of the respondents having collected any sales tax on it and the respondents could, therefore, not be called a dealer so far as these transactions are concerned, and section 9A of the Central Sales Tax Act, 1956, did not at all come into operation. The second ground upon which the Tribunal held in favour of the respondents was that assuming the provisions of the said section 9A were contravened, the Sales Tax Officer had no power to forfeit any amount, which, according to him, was  collected by way of sales tax. Section 9A of the Central Sales Tax Act, 1956, in clear terms talks of the amount by way of tax under the said Act collected by a registered dealer “in respect of any sale by him of goods in the course of inter-State trade or commerce”. It does not talk of any amount collected by way of tax in respect of any purported  sale or any transaction which is a purported sale. If there is no sale by one man to another, the question of collecting any tax on it either rightfully or wrongfully under the said Act does not and cannot arise.

7. We are also unable to see how any reference can now lie in this matter. Mr. Desai, the learned counsel for the petitioner, has frankly conceded that in view of the abovementioned decision of the Supreme Court, the department cannot forfeit the said sum of Rs. 19,928 nor can it levy any penalty on the respondents. Mr. Desai’s contention, however, was that the one remedy still left open to the department is to  prosecute the respondents. Thus, according to Mr. Desai, this order now affects the liability of the respondents to be prosecuted under section 10 of the Central Sales Tax Act, 1956, for having committed an offence defined in clause (f) thereof. Under section 61(1) of the Bombay Sales Tax Act, 1959, which applies by reason of the provisions of section 9(2) of the Central Sales Tax Act, 1956, a reference can only lie in  respect of a question of law arising out of an order of the Tribunal “which  affects the liability of any person to pay tax or penalty, or to forfeiture of any sum of which affects the recovery  from any person of any amount under section 39“. No reference can lie only in order to determine a person’s liability to be prosecuted. Since question No. (2) above in respect of which a reference is now asked for does not fall under any of the three heads provided for by section  61(1) of the Bombay Sales Tax Act, 1959, the application must fail on this ground also.”

14.9 In view of the above decisions, the question arises whether the decision of the Constitutional bench of the Supreme Court in the case of Mafatlal Industries Ltd. v  Union of India and Ors. reported in (1997) 5 SCC 536 would be applicable to the  provisions of CST Act so as to forfeit the excess amount of CST deposited by the respondent-assessee on the ground of unjust enrichment. The Apex Court in view of the provisions of the Central Excise Act, 1944, has held that the claim for refund would be  classified and fall into three groups or categories:

(i) Unconstitutional levy i.e. where the claim is founded on the ground that the tax was levied under the unconstitutional provision.

(ii) Legal levy where the claim of for refund is based on the ground that there has been misrepresentation / misapplication /erroneous interpretation of the Excise Act / Rules or notification or erroneous finding of fact or in violation of fundamentals principles of judicial procedure.

(iii) Mistake of law where the claim for refund is based on the decision rendered in another case holding levy is not excisable in law or without jurisdiction or illegal or unconstitutional.

14.10 The Apex Court, therefore, decided  the issue of refund in the backdrop of Article 265 of the Constitution of India has held as under:

PART IV

108. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.

(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff  — whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter  — by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by  misinterpreting or misapplying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactments before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 — and of this Court under Article 32 — cannot be circumscribed by the provisions of the said enactments, they will certainly  have due regard to the legislative intent evidenced by the provisions of  the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition  will be considered and disposed of in the light of and in accordance with the provisions of Section 11-B. This is for the reason that the power under Article 226 has to be exercised to effectuate  the rule of law and not for abrogating it.

The said enactments including Section 11-B of the Central Excises and Salt Act  and Section 27 of the Customs Act do constitute “law” within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as  the case may be, under the authority of law. Both the enactments are selfcontained enactments providing for levy,  assessment, recovery and refund of duties imposed thereunder. Section 11-B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to.  Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining  a suit or a writ petition. All refund  claims except those mentioned under  Proposition (ii) below have to be and  must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case  may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal — which is not a departmental organ — but to this Court, which is a civil court.

(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception: Where a person approaches the High Court or the Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is  concerned, the decision has become final  and cannot be reopened on the basis of a decision on another person’s case; this is the ratio of the opinion of Hidayatullah, C.J in Tilokchand Motichand and we respectfully agree with it.

Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying clause (c) of subsection (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises  and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words,  a claim of this nature is not contemplated by the said enactments and is outside their purview. 

(iii) A claim for refund, whether made  under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition 

(ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on  the burden of the duty or to the extent he has not so passed on, as the case may Whether the claim for restitution is treated as a constitutional imperative  or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained  in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is  only that person who can legitimately claim its refund. But where such person does not come forward or where it is not  possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained  by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.

The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been  collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to  the State. State represents the people of the country. No one can speak of the  people being unjustly enriched. 

(iv) It is not open to any person to make a refund claim on the basis of a decision of a court or tribunal rendered in the case of another person. He cannot also claim that the decision of the court/tribunal in another person’s case has led him to discover the mistake of law under which he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged  discovery of mistake of law. A person,whether a manufacturer or importer, must fight his own battle and must succeed or fail in such proceedings. Once the  assessment or levy has become final in his case, he cannot seek to reopen it nor can he claim refund without reopening such assessment/order on the ground of a decision in another person’s case. Any proposition to the contrary not only results in substantial prejudice to public interest but is  offensive to several well-established  principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Act, 1963, has no application to such a claim for refund. (v) Article 265 of the Constitution has to be construed in the light of the goal and the ideals set out in the Preamble to the Constitution and in Articles 38 and 39 thereof. The concept of economic justice demands that in the case of  indirect taxes like Central Excises duties and Customs duties, the tax  collected without the authority of law shall not be refunded to the petitionerplaintiff unless he alleges and establishes that he has not passed on the burden of duty to a third party and  that he has himself borne the burden of the said duty. 

(vi) Section 72 of the Contract Act is based upon and incorporates a rule of  equity. In such a situation, equitable considerations cannot be ruled out while applying the said provision. 

(vii) While examining the claims for refund, the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the  petitioner-plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it  may well result in financial chaos in the administration of the affairs of the State. 

(viii) The decision of this Court in STO v. Kanhaiya Lal Mukundlal Saraf must be held to have been wrongly decided insofar as it lays down or is understood to have laid down propositions contrary to the propositions enunciated in (i) to (vii) above. It must equally be held that the subsequent decisions of this Court following  and applying the said propositions in Kanhaiya Lal have also been wrongly decided to the above extent. This declaration — or the law laid down in Propositions (i) to (vii) above — shall not however entitle the State to recover the taxes/duties  already refunded and in respect whereof no proceedings are pending before any authority/Tribunal or Court as on this date. All pending matters shall, however, be governed by the law declared herein notwithstanding that the tax or duty has been refunded pending those proceedings, whether under the orders of an authority, Tribunal or Court or otherwise. 

(ix) The amendments made and the provisions inserted by the Central Excises and Customs Law (Amendment) Act, 1991 in the Central Excises and Salt Act  and the Customs Act are constitutionally  valid and are unexceptionable.

(x) By virtue of sub-section (3) to Section 11-B of the Central Excises and Salt Act, as amended by the aforesaid Amendment Act, and by virtue of  the provisions contained in sub-section (3) of Section 27 of the Customs Act, 1962, as amended by the said Amendment  Act, all claims for refund (excepting those which arise as a result of declaration of unconstitutionality of a provision whereunder the levy was created) have to be preferred and  adjudicated only under the provisions of the respective enactments. No suit for  refund of duty is maintainable in that behalf. So far as the jurisdiction of the High Courts under Article 226 of the Constitution — or of this Court under Article 32 — is concerned, it remains unaffected by the provisions of the Act. Even so, the Court would, while exercising the jurisdiction under the said articles, have due regard to the legislative intent manifested by the  provisions of the Act. The writ petition would naturally be considered and disposed of in the light of and in accordance with the provisions of  Section 11-B. This is for the reason that the power under Article 226 has to be exercised to effectuate the regime of law and not for abrogating it. Even while acting in exercise of the said  constitutional power, the High Court cannot ignore the law nor can it override it. The power under Article 226  is conceived to serve the ends of law  and not to transgress them.

(xi) Section 11-B applies to all pending  proceedings notwithstanding the fact that the duty may have been refunded to the petitioner/plaintiff pending the proceedings or under the orders of the Court/Tribunal/Authority or otherwise. It must be held that Union of India v.  Jain Spinners and Union of India v. ITC have been correctly decided. It is,of course, obvious that where the refund proceedings have finally terminated — in the sense that the appeal period has also expired — before the commencement of the 1991 (Amendment) Act (19-9- 1991), they cannot be reopened and/or  governed by Section 11-B(3) [as amended by the 1991 (Amendment) Act]. This, however, does not mean that the power of the appellate authorities to condone delay in appropriate cases is affected in any manner by this clarification made  by us.

(xii) Section 11-B does provide for the purchaser making the claim for refund provided he is able to establish that he has not passed on the burden to another person. It, therefore, cannot be said that Section 11-B is a device to retain the illegally collected taxes by the State. This is equally true of Section 27 of the Customs Act, 1962.” 

14.11 However, in the facts of the present case, the respondent-assessee cannot be said to have collected the CST at the rate of 10% or 12% from its buyers/receiver of the goods in view of the contract of fixed price, there is no question of passing over the same to its buyer in view of the aforesaid decisions of the Apex Court in the case of Mafatlal Industries (supra). Even otherwise the provisions of the CST Act do not contemplate any power to  forfeiture of refund by the Revenue.

14.12 In such circumstances as held by the decision of the Supreme Court in the case of Khemka & Co (supra), the provisions of Section 31 of the VAT Act enabling the Assessing Officer to forfeit the excess amount of tax deposited by the assessee cannot be applied to the provision of the CST Act.

14.13 Reliance placed on the decisions by the Revenue are also not applicable in the  facts of the case in as much as such the same are based on the decision of the Apex  Court in the case of Mafatlal Industries (supra) and in view of the facts of the case as observed herein above, in the absence of any power with the Revenue to forfeit such excess tax, the respondent assessee is entitled to refund of the same.

15. For the foregoing reasons, the Appeal deserves to be dismissed and re-framed questions of law are answered in favour of the assessee and against the Revenue. The  appeal fails and is accordingly dismissed.

16. As a consequence, the special civil application filed by the assessee is allowed and respondents are directed to issue refund order in favour of the assessee within three months from the date of receipt of the writ of this order together with simple interest at the rate of 6% p.a. from the date of deposit till the date of realisation. Rule is made absolute accordingly with no order as to costs.

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