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Judgment
J.K. Ranka, J.—These two sales tax revision petitions are directed against the order dated August 18, 2009 passed by the Rajasthan Tax Board (in short, "the Tax Board") in Appeal Nos. 2017/2008 and 2020/2008 for the assessment years 1989-90 and 1991-92, respectively, by which the Tax Board dismissed the appeals filed by the petitioners seeking refund of amount deposited as pre-requisite condition for enabling the petitioners to file appeal before the appellate authority, the Deputy Commissioner (Appeals) (in short, "the DC (A)"). Interesting issue emerges in the instant case as to whether the amount having been deposited by the assessee as pre-condition of filing appeals before the appellate authority under section 84(3) of the Rajasthan Sales Tax Act, 1994 can be refunded or not.
The brief facts stated in STR No. 234 of 2009 which relates to the assessment year 1991-92 are that the assessment order came to be passed on September 22, 2006 by which an amount of Rs. 28,43,027 was demanded as tax. The original assessment order was passed in this case on February 2, 2004. It was noticed by the assessing officer that the condition of clause 4(e)(i) of the Sales Tax Incentive Scheme, 1987 has been violated. To assail the order of assessing officer before the DC (A), the assessee deposited an amount of Rs. 2,90,000 as a pre-condition to prefer appeals before the DC (A) on October 20, 2006.
Subsequent to deposit of the said amount which the assessee claims that it was not at all leviable/chargeable, nevertheless to prefer appeal under section 84(3), the said amount was deposited as aforesaid.
The State Government issued a Notification No. F. 12(12)FD-Tax Div-07-18 dated April 11, 2007 by which the existing condition (i) of sub-clause (e) was deleted with retrospective effect from May 23, 1987. It was claimed by the petitioner-assessee that consequent to the said notification, benefits were granted to the assessee and it was claimed that the amount paid by the assessee at Rs. 2,90,000 was not legally payable or irrecoverable from the assessee in the light of the said notification which came into effect with retrospective effect. The claim was made that such amount was not payable and thus refundable as no tax was payable when clause 4(e)(i) stood deleted. Prior to that the Additional Commissioner vide his order dated November 24, 2005 also passed an order withdrawing the incentive in the light of violation of clause 4(e)(i) of the said Act, 2003 which was challenged before the Rajasthan Tax Board. The Tax Board in the light of the said notification dated April 11, 2007 allowed the appeals of the assessee and quashed the order passed by the Additional Commissioner, the said order has become final and has attained finality as the Revenue did not challenge the same before this court.
Mr. Anuroop Singhi, learned counsel for the assessee, contends that the assessee was not at all liable to make any deposit or payment in the light of the said notification which came to be introduced with retrospective effect. Whatever amount was deposited was not legally payable but had to be deposited or though was not payable thus is illegally retained and is thus refundable. He contends that denial of refund of such amount of Rs. 2,90,000 by all the three authorities is unjustified and is thus illegal. He further contends that the order of the Tax Board in original proceedings in the light of the said notification attained finality and therefore in the light of the said notification the assessee certainly becomes entitled to refund. He further contended that what should be "payable" has been observed by the honourable apex court in the case of New Delhi Municipal Committee Vs. Kalu Ram and Another, AIR 1976 SC 1637 : (1976) 3 SCC 407 : (1976) SCR 87 Supp : (1976) 8 UJ 525 . He contends that no amount was payable, therefore whatever amount was deposited as a precondition to avail of the filing of appeal which now ought to have been refunded to the assessee in the light of notification.
Per contra learned counsel for the revenue Mr. R.B. Mathur contends that the clause (f) of the said notification clearly observes that, if any amount has been deposited then it will not be refundable and thus he contends that once assessee deposited the said amount it could not be refunded. He further contends that tax demand was created on September 22, 2006 and certainly to avail of benefit of appeal under section 84(3) of the said Act the assessee deposited the said amount, therefore it cannot be said that the nature of deposit would change in the light of clear cut notification which clarifies that no refund of any amount of deposit can be made, all the three authorities have rightly concluded against the assessee and thus there is no force in the revision petition.
I have considered the submissions advanced by the learned counsel for the parties and have perused the impugned order of the Tax Board dated June 26, 2007 as also order of lower authorities by which the refund has been denied to the assessee.
At the outset, it would be proper to quote the relevant notification passed by the State Government dated April 11, 2007:
"In exercise of the powers conferred by sub-section (3) of section 8 of the Rajasthan Value Added Tax Act, 2003 (Rajasthan Act No. 4 of 2003), and all other powers enabling it in this behalf, the State Government being of the opinion that it is expedient in the public interest so to do, hereby makes the following amendments in this Department''s Notification No. F. 4(35)FD(Gr.IV/87 dated May 23, 1987 (as amended from time to time), namely:--
In the said notification, in clause 4:
(i) the existing condition (i) of sub-clause (e) shall be deleted with effect from May 23, 1987.
(ii) after the existing sub-clause (e), following new sub-clause (f) shall be inserted, namely:--
''(f) If a manufacturer deposited any amount, which is payable by him due to breach of condition (i) of sub-clause (e), deleted vide notification No. F. 12(12) FD/Tax/07-18 dated April 11, 2007, shall not be refunded''."
By this notification, the existing condition (i) in sub-clause (e) in clause 4 was deleted with effect from May 23, 1987 therefore once this clause was deleted with retrospective effect from May 23, 1987, certainly the benefits accrued to the assessee since beginning from May 23, 1987 from which date amendment was made retrospectively. Once amendment was made effective from May 23, 1987 then no amount was payable by the assessee since May 23, 1987. It is true that to avail of benefit to prefer an appeal as a pre-condition, assessee deposited certain amount under section 84(3) of the said Act and it certainly cannot be said that the said amount is due against the assessee or payable by the assessee particularly in view of the deletion of existing condition 4(e)(i) with effect from May 23, 1987. In my view it relates back to the position as on May 23, 1987, if one considers then the section 4(e)(i) was not there in statute from May 23, 1987 and it has to be treated to be effaced and thus the assessing officer was not legally justified to pass order and to create any tax demand and by virtue of the aforesaid notification the tax paid/collected/deposited was legally not payable. Once amendment conferring benefits were granted retrospectively then in my view the assessee was not liable to pay any amount. What is "payable" came to be considered by the honourable apex court in the case of New Delhi Municipal Committee Vs. Kalu Ram and Another, AIR 1976 SC 1637 : (1976) 3 SCC 407 : (1976) SCR 87 Supp : (1976) 8 UJ 525 and it is appropriate to quote relevant portion of the said judgment which reads ad infra:
"The word ''payable'' is somewhat indefinite in import and its meaning must he gathered from the context in which it occurs. ''Payable'' generally means that which should be paid. If the person in arrears raises a dispute as to the amount, the estate officer in determining the amount payable cannot ignore the existing laws. If the recovery of any amount is barred by the law of limitation, it is difficult to hold that the estate officer could still insist that the said amount was payable. When a duty is cast on an authority to determine the arrears of rent, the determination must be in accordance with law. Section 7 only provides a special procedure for the realisation of rent in arrears and does not constitute a source or foundation of a right to claim a debt otherwise time-barred. Construing the expression ''any money due'' in section 186 of the Indian Companies Act, 1913 the Privy Council held in Hansraj Gupta and Others vs. Official Liquidators of The DehraAIR 1933 63 (Privy Council) that this meant moneys due and recoverable in suit by the company, and observed:
''it is a section which creates a special procedure for obtaining payment of moneys; it is not a section which purports to create a foundation upon which to base a claim for payment. It creates no new rights.'' We are clear that the word ''payable'' in section 7, in the context in which it occurs, means ''legally recoverable''. Admittedly a suit to recover the arrears instituted on the day the order under section 7 was made would have been barred by limitation. The amount in question was therefore irrecoverable. This being the position, the appeal fails and is dismissed with costs."
The honourable apex court in the case of State of Rajasthan and Others Vs. Ghasilal, AIR 1965 SC 1454 : (1965) 2 SCR 805 : (1965) 16 STC 318 , though on different proposition, considering the case under the Rajasthan Sales Tax Act and the Rajasthan Sales Tax Rules which were published in the Rajasthan Gazette and came into force with effect from April 1,1955. A challenge was made in the High Court about making of assessments on the turnover of the respondent for the year 1955-56 on the ground that the said Rules were invalid. Thereafter an Ordinance (No. 5 of 1959) was promulgated on November 6, 1959, validating the Rules. The assessee withdrew the writ petition. Thereafter the assessing officer (Revenue) directed the assessee to deposit the tax. Accordingly the assessee deposited the due tax but penalty was also imposed on the assessee. This court allowed the petition by deleting the penalty and the honourable apex court in the said backdrop observed as under ( page 322 in 16 STC):
"In our opinion, there has been no breach of section 16(1)(b) of the Act, and consequently, the orders imposing the penalties cannot be sustained. According to the terms of section 16(1)(b), there must be a tax due and there must be a failure to pay the tax due within the time allowed. There was some discussion before us as to the meaning of the words ''time allowed'', but we need not decide in this case whether the words ''time allowed'' connote time allowed by an assessing authority or time allowed by a provision in the Rules or the Act, or all these things, as we are of the view that no tax was due within the terms of section 16(1)(b) of the Act. Section 3, the charging section, read with section 5, makes tax payable, i.e., creates a liability to pay the tax. That is the normal function of a charging section in a taxing statute. But till the tax payable is ascertained by the assessing authority under section 10, or by the assessee under section 7(2), no tax can be said to be due within section 16(1)(b) of the Act, for till then there is only a liability to be assessed to tax."
In my view, analogy can be drawn is that in the present case though the assessment order was made, liability was created but when by a retrospective amendment, the entire liability was held to be bad in the light of deletion of section 4(e)(i) with retrospective effect from May 23, 1987, therefore, in my view, it would relate back to May 23, 1987 when the amendment was made retrospectively and on that particular date in view of the amendment, no tax was payable and though the assessment has been made it was not recoverable.
After considering the said amendment and on reading of clause (f) quoted hereinabove, though it states that any amount deposited will not be refundable but in my view, when no amount was legally payable on the basis of retrospective amendment then no amount was "payable" and if amount paid than in terms of the aforesaid notification the amount cannot be retained and thus has to be refunded. In my view when condition (i) of sub-clause (e) in clause 4 was deleted with effect from May 23, 1987 that date is relevant and is required to be seen and on that particular date nothing was payable by the assessee, therefore, in my view the Tax Board was unjustified in coming to the conclusion that section (f) comes into the way of non-refunding of the said amount.
In the light of the above, the revision petitions succeed and the order passed by the Rajasthan Tax Board is set aside. The assessee is liable to refund of the said amount deposited by it as pre-condition to file appeal before the DC (A). Consequently the revision petitions are allowed with no order as to costs.