Ashish Kumar Dey And Ors vs State Of Tripura And Ors

Akil Kureshi, CJ

[1] These petitions arise in common background; they have been heard together and would be disposed of by this common order.

[2] Facts being similar we may notice them from WP(C) No.540/2020.

[3] Petitioner is a goods carriage contractor. The petitioner had responded to a tender notice dated 21st January, 2014 for transportation of fertilizers, food grains etc. at various places for and on behalf of the State of Tripura. The petitioner was awarded the contract for the period of 2014-2015 and executed the work under the directions of the State Government. While making payment for the charges for transportation, Tripura Value Added Tax department („VAT department" for short) collected tax at source @ 6% on the bill amount. All the payments were made after such deduction. The total deduction so made for the period in question came to Rs.2,36,569/-. Petitioner has produced at Annexure A/3 collectively the payment vouchers which reflect the amount of tax collected at source by the VAT department.

[4] According to the petitioner, he had merely transported the goods such as fertilisers, seeds, food grains etc. for the State of Tripura. In the process, there was no sale or transfer of the right to use the goods or execution of work order and that therefore; this transaction did not invite Value Added Tax ("VAT" for short).

[5] The petitioner would point out that identical situation was considered by this Court in WP(C) No.127/2013 and connected petitions in case of Sri Dipak Bhattacharjee Vs. State of Tripura & others. The Division Bench by a judgment dated 7th January, 2014 held that even the expansion of the term "transfer of property in goods", would not cover the present situation. It was held that when a person transports goods on behalf of the consigner or the consignee, there is no transferring the property of goods either directly or by inference. A contract to transport goods from one place to another is not a works contract. Accordingly, the Division Bench directed the State-authorities to refund the tax deducted with statutory interest. The petitioner would also point out that in another group of petitions being WP(C) No.177/2015 and connected petitions, on an identical issue, filed by the present petitioner for refund of such tax illegally collected came to be allowed by a Division Bench in case of Shri Ashish Kumar Dey Vs. State of Tripura by a judgment dated 3rd September, 2015 relying on the earlier decision in case of Shri Dipak Bhattacharjee (supra).

[6] In such background, the petitioner had previously filed an application under Right to Information Act(RTI) for collecting information regarding deduction of tax for the work done by the petitioner for the financial years 2013-2014 to 2017-2018. Once such information was available, the petitioner had approached the State-authorities for refund of the tax collected under an application dated 24th June, 2020. Since there was no response from the said authorities, the petitioner has filed the petition. The prayer of the petitioner, therefore, is for refund of the tax deducted while making the payment of the petitioner's bills for transportation of the goods during the said period of the financial year 2014-2015. Facts of the other two petitions are identical where we are concerned with the refund of the tax collected during the financial years 2013-2014 and 2015-2016.

[7] Learned counsel for the petitioner submitted that the tax was illegally collected by the VAT-authorities though the same was not payable. Since the transaction in question was not taxable at all, any such collection was without the authority of law and that, therefore, the same should be refunded. He submitted that the issues involved are squarely covered by a judgment of Division Bench of this Court in case of Shri Dipak Bhattacharjee (supra).

[8] To our query regarding inordinate delay in filing the petitions, counsel had filed an additional affidavit in which the factum of filing application for information under RTI has been brought on record. Counsel submitted that the petitioner had not maintained full records of the tax collected at the relevant time. After obtaining information under the RTI, he approached the authorities. When the authorities did not respond to the petitioner's request for refund of tax, he filed these petitions. He submitted that when the levy and collection of tax itself was without authority of law, the petitions for refund of such tax so collected, cannot be rejected only on the ground of delay and laches. In this context, counsel relied on following decisions :

(i) M/s Dheri Rohtas Light Railway Company Ltd. Vs. District Board, Bhojpur & Ors. reported in (1992) 2 SCC 598,

(ii) U.P. Pollution Control Board & Ors. Vs. Kanoria Industrial Ltd. and Another reported in (2001) 2 SCC 549,

(iii) Salonah Tea Company Ltd. Vs. Superintendent of Taxes, Nowgong & Ors. reported in (1988) 69 STC 290.

[9] Counsel submitted that the decision of the Supreme Court in case of Mafatlal Industries Ltd. & Ors. Vs. Union of India & Ors. reported in (1997) 5 SCC 536 was rendered in the background of the provisions of the Customs and Central Excise Acts where statutory provisions governed the question of refund of tax. The ratio laid down therein therefore, cannot be applied in the present case since the Tripura Value Added Tax Act, 2004 ("T-VAT" for short) does not contain any mechanism for refund of tax collected at source.

[10] It is true that in the past this Court has held that in the instances where a transporter is assigned the sole task of transporting the goods from one place to another, such transaction would neither amount to transfer of right to use the goods nor execution of work contract and in such a situation, VAT is not payable. However, in the present group of cases we are concerned about entertaining a writ petition after several years of arising of the cause of action. Though, exercise of writ jurisdiction under Article 226 of the Constitution of India is not governed by any statutory provision of limitation, the Courts proceed on the basis that such discretionary exercise of power would not be done in favour of a person who is not vigilant in pursuing his rights and remedies. The Court would not favour a litigant who is tardy, has approached the Court after gross delay that too without any explanation for inordinately long time consumed. In this context, thus, the Courts while exercising writ jurisdiction, invoke the principle of delay and laches, though not limitation.

[11] One of the guiding principles that may persuade the Court to exercise or not to exercise writ jurisdiction is, what is the period of limitation prescribed for filing the suit, if the petitioner had to file such a civil proceeding. If the petitioner has missed the limitation for filing a suit, the Court would be reluctant to exercise the writ jurisdiction, unless of course either there is a valid explanation for delay or there are some special or extraordinary reasons for entertaining petition at such a late stage. This preamble was necessary because in the present cases the taxes were collected during the period between the financial year 2013-2014 to 2015-2016. Present petitions came to be filed on or around 21st August, 2020. There is, thus, minimum delay of only five years in raising the demands. All that the petitioner has offered by way of explanation for such delay is that the petitioner first approached the authorities under RTI Act for collecting information and then made a request for refund of the taxes. We may recall, the RTI application was made in January, 2020 and the request for refund was made in June, 2020. Thus, right from the year 2013-2014 up to January, 2020 the petitioner was totally silent about his contention that though no tax was payable, it was deducted. In our opinion, the petitions are hopelessly delayed. There is no explanation for long and inordinate delay in filing these petitions. Laches on part of the petitioner become more obvious and glaring when one considers that for other financial years the petitioner himself had approached the High Court in WP(C) No.177/2015 and other petitions and which petitions were allowed by the High Court by a judgment dated 3rd September, 2015. Even before that the Division Bench in Case of Shri Dipak Bhattacharjee (supra) had rendered a judgment on 7th January, 2014 on which the petitioner is heavily relying. The law laid down by the Division Bench of this Court was thus clear as far back as in January, 2014 of which the petitioner himself had taken advantage in the year 2015. For some inexplicable reason the petitioner never took up the case of deduction of tax in these years which he has now raised in these petitions. At the time of making payments to the petitioner, VAT was deducted which according to the petitioner was not payable and which is also the view of this Court. In plain terms, in a dispute whether a transaction invites VAT or not, the High Court has sided with the assessee. If the petitioner wanted refund of such wrongly collected tax he had to raise a demand and challenge the same in reasonable time.

[12] The decision of Supreme Court in the case of Mafatlal Industries(supra) was rendered by a nine-Judge Bench. Various issues of tax collection and refund of tax illegally collected came up for consideration. One of the principles laid down in the said judgment was that every assessee must fight his own battle and take up the issue of challenging levy and seek refund of tax, if he had any dispute about the recovery thereof, before the appropriate authority or Court. No assessee can wait for the outcome of a litigation initiated by some other person, on a similar issue and thereafter approach the Court years later, relying on the decision of the High Court or the Supreme Court in a similar case. In the process, the Court overruled the decision in case of The Sales Tax Officer, Banaras & Ors. Vs. Kanhaiya Lal Makund Lal Saraf reported in AIR 1959 SC 135 and the decision in case of M/s Tilokchand and Motichand & Ors. Vs. H. B. Munishi & Anr. reported in (1969) 1 SCC 110 was approved. The propositions laid down by the majority in the said decision were recorded in para 108 of the judgment, relevant portion of which reads as under:

"(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.

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(viii) The decision of this Court in STO v. Kanhaiya Lal Mukundlal Saraf [1959] SCR 1350 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 to 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."

[13] We are conscious that the entire focus in the said decision was on Customs and Central Excise duties under the respective Acts which have specific provisions for refund of erroneously collected tax. However, the above noted legal propositions would apply in other cases also. In other words, the petitioner cannot approach a Writ Court several years after collection of tax, without any explanation for delay caused in filing the petition and argue that without any regard being had to the delay and laches the refund must be granted.

[14] We may now refer to the decisions cited by the counsel for the petitioner. In case of Salonah Tea Company (supra), the Court held that when tax is collected without authority of law Court can direct refund. It was the case in which the High Court while setting aside the assessment order, refused to grant refund. It was in this context that above decision was rendered. However, it was noted that there was nothing on the record to suggest that there was any delay or laches on part of the petitioner in claiming the refund.

[15] In case of M/s Dehri Rohtas Light Railway Company(supra), while granting refund of tax wrongly collected, the opposition, on the ground of delay and laches, was overruled by making following observations:

"12. The question thus for consideration is whether the appellant should be deprived of the relief on account of the laches and delay. It is true that the appellant could have even when instituting the suit agitated the question of legality of the demands and claimed relief in respect of the earlier years while challenging the demand for the subsequent years in the writ petition. But the failure to do so by itself in the circumstances of the case, in our opinion, does not disentitle the appellant from the remedies open under the law. The demand is per se not based on the net profits of the immovable property, but on the income of the business and is, therefore, without authority. The appellant has offered explanation for not raising the question of legality in the earlier proceedings. It appears that the authorities proceeded under a mistake of law as to the nature of the claim. The appellant did not include the earlier demand in the writ petition because the suit to enforce the agreement limiting the liability was pending in appeal but the appellant did attempt to raise the question in the appeal itself. However, the Court declined to entertain the additional ground as it was beyond the scope of the suit. Thereafter, the present writ petition was filed explaining all the circumstances. The High Court considered the delay as inordinate. In our view, the High Court failed to appreciate all material facts particularly the fact that the demand is illegal as already declared by it in the earlier case."

It would be incorrect to read the said judgment as laying down that in every case third party rights have not arisen, delay, howsoever long and unexplained, should be ignored.

[16] In case of U.P. Pollution Control Board(supra) it was held that the High Court has the power to issue a writ directing refund of money illegally collected by the State. However, such power should be exercised sparingly. The decision in case of Mafatlal Industries(supra) was distinguished on the ground that the said case arose in the backdrop of the Customs Act and Central Excise and Salt Act. The question of delay and laches was not involved in the said petition.

[17] These decisions cited by the counsel for the petitioner are thus clearly on different aspects. In the result, petitions are dismissed. Pending application(s), if any, also stands disposed of.