In a significant legal development, the Supreme Court of India has issued a pivotal decision in the case concerning tax refunds on coal and coke purchases. The case involved a dispute between parties over the reimbursement of sales tax paid in inter-state transactions. The judgement is poised to have far-reaching implications in tax law. Stay tuned for more insights on this consequential ruling.
Facts
- The respondent-writ petitioner purchased coal within the State of Jharkhand.
- An application for refund of Sales Tax paid on the inter-state purchase of coal was filed under Section 15(b) of the Central Sales Tax Act, 1956.
- Excess demand notice was not sent as per the Bihar Sales Tax Rule, 1983 along with the refund application.
- Sales Tax paid amounted to Rs.63,80,573/- with a NIL demand raised as the amount was already paid.
- Central Sales Tax of Rs.63,80,573/- was levied and paid on the inter-state transaction.
- Despite requests, no steps were taken to process the application for refund and issue the Refund Payment Order.
- An amount of Rs.12,32,496 was determined to be refundable to the respondent with interest of 9% from a specific date.
- The High Court directed the appellants to reimburse the State Sales Tax paid by the respondent-writ petitioner towards the purchase of coal with statutory interest.
- The High Court rejected the contentions presented by the parties.
- The court provided reasons for rejecting the contentions.
- The rejection was based on specific legal points and arguments.
- The court’s decision was detailed and thorough.
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Arguments
- The contention raised by the learned counsel for the petitioner that Central Sales Tax has to be paid at 4% on the sale of coke due to it being declared goods of special importance under Section 14 of the CST Act.
- The argument made by the respondent-writ petitioner that the question of whether Coal and Coke are the same goods was not raised before the High Court.
- The disputed amount paid by the petitioner under State Sales Tax for the purchase of coal as an intra-state sale amounted to Rs. 17,89,412/-.
- The court did not accept the contention that the excess demand notice was not annexed with the refund application as per the relevant rules.
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Analysis
- Section 15 of the Central Sales Tax (Amendment) Act, 1972 highlights the special importance of certain goods in inter-State trade or commerce.
- These goods include coal and coke, with the exclusion of charcoal.
- Sales tax laws of a State imposing tax on declared goods are subject to restrictions and conditions.
- The appellant argues that the respondent purchased coal through intra-state sales, not inter-state sales of coke, hence, not eligible for tax reimbursement under Section 15(b).
- Article 286 of the Constitution of India (1949) imposes restrictions on State laws regarding taxes on specified goods.
- Parliament enacted the Act to regulate tax levies on declared goods under Article 286(3)(b) of the Constitution.
- The Act sets conditions and restrictions for levying tax on declared goods and specifies certain goods as declared goods.
- Section 14(ia) treats certain goods as a single commodity for tax levy purposes.
- The words ‘but excluding charcoal’ in Section 14(ia) were omitted.
- The respondent filed a writ petition seeking reimbursement of tax paid on intra-State transactions.
- The respondent contended that the amount of tax paid under the State Law on Coal should be refunded.
- The Assistant Commissioner of Commercial Taxes determined the refundable amount to be Rs.26,97,266.34 under Section 15(b) of the Act.
- The appellants raised the issue of refund eligibility based on separate orders being passed, as per Memo dated 10.12.2016.
- The appellants insisted on the submission of statutory FORM XXIII for the refund process.
- The appellants did not raise the issue that coal purchased by the respondents was not the same good as coke manufactured out of coal.
- No mention or denial regarding the entitlement of the respondent to get a tax refund on the intra-state purchase of coal.
- The writ petition by the respondent was based on the determination of the refund under Section 15(b) of the Act.
- The appellant-state’s raised question was not raised earlier, hence no relief can be granted.
- The High Court considered the petition based on the pleadings and the order passed was in accordance.
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Decision
- The appeals have been dismissed
- The specific part of the judgement concerning RPC was upheld
- Original names were preferred over generic labels like Respondent No 1 or Petitioner No 1
Case Title: THE STATE OF JHARKHAND Vs. M/S. AKASH COKE INDUSTRIES PVT. LTD.
Case Number: C.A. No.-004949-004949 / 2019
