In a major relief to Tata Steel, the Calcutta High Court has allowed a plea seeking to grant of refund of excess CST paid as a purchasing dealer.
The petitioner, M/s Tata Steel is a registered dealer under Section 7 of the Central Sales Tax Act, 1956 (The CST Act), in the State of Jharkhand and is engaged in the business of manufacturing and mining. On October 11, 2017, the State of Jharkhand issued a circular stating that Form “C” declaration will no longer be issued to dealers if the final products manufactured by them do not fall within the amended definition of “goods” in Section 2(d) of the CST Act.
The petitioners filed a representation dated December 29, 2020, to the appropriate authority to refund the excess amount of CST collected by the State of West Bengal for the period from 01.04.2017 to 31.03.2018 through IOCL who had sold the goods against Form “C” declaration to the writ petitioner which can only be at the concessional rate of tax as against the full rate of tax wrongly collected. After not getting a proper response from the department, the petitioner approached the High Court for relief.
The single bench of the High Court set aside the assessment order to the extent of refusal of acceptance of relevant “C” Forms submitted before him impugned assessment proceedings by the HSD oil purchasing dealers/petitioners through the oil selling dealers/HSD relating to the relevant disputed period which was issued by the purchasing respective State Government, in favor of Tata Steel on inter-State sales in question and it shall accept the aforesaid relevant “C” Forms and allow the concessional rate of tax to the petitioners on the basis of the said relevant “C” Forms subject to formal verification of the same.
Justice T.S. Sivagnanam and Justice Supratim Bhattacharya observed that the lower rate of tax granted is under a Central Legislation and the State of West Bengal is only an agent of the Central Government to collect the correct rate of tax in accordance with the provisions of the CST Act.
Noting that the writ petitioner/purchasing dealer has locus standi to maintain the claim for refund of the excess tax collected directly to them, the Court held that “to be entitled to concessional rate of tax filing of Form “C” declaration is mandatory. However, the time limit prescribed for filing such declarations is a directory and not mandatory and in the case on hand, the assessing officer has accepted the Form “C” declarations and considered the same, it is deemed that the assessing officer of IOCL was satisfied that there was the sufficient cause which prevented the dealer from filing Form “C” declaration within the time stipulated under the Act and the rules framed thereunder.”
Having held that the rejection of the Form “C” declarations was erroneous, unsustainable, and illegal the assessment order dated 30.06.2020 to the said extent is set aside, the Court further held that “the writ petitioner is entitled to the concession rate of tax as they have fulfilled the conditions in Section 8 of the Central Sales Tax Act, 1956 and the Form “C” declarations having been verified and found to be in order by the concerned authority of the State of West Bengal. For the reasons set out above, it is held that the writ petitioners are entitled to claim a refund of tax directly from the State of West Bengal and they are not required to make the claim through the selling dealer, IOCL.”
Concluding the order, the Court further noted that the “refund cannot be denied to the writ petitioners by the State of West Bengal disregarding the fact that excess tax was paid under compelling circumstances namely non-issuance of form “C” declarations. For the reasons set out above, it is held that the writ petitioner can claim a refund directly from the appellants/State of West Bengal having borne the burden of tax which has been collected from the writ petitioner and deposited by IOCL with the Exchequer of the State of West Bengal. The State of West Bengal/ appellants are unjustified in refusing to refund the excess tax as it had been allowing the concessional rate to the writ petitioners before and after the disputed period.”
“The circular issued by the Union of India dated 01.11.2018 is binding on the appellants/State of West Bengal as they being the agent of the Central Government for levy and collection of Central Sales Tax and non-refunding of the excess tax collected is contrary to the instruction dated 01.11.2018,” the Court added.
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