Shri Ashish Kumar Dey vs Food Corporation of India

At the outset, we are constrained to observe that the law of pleadings with regard to writ petition is and should be a concise statement of relevant facts and of law. Apparently, unmindful of this salutary principle, the petitioners in both the writ petitions have chosen to plead many unnecessary facts and at the same time have left out the vital points so much so that it becomes imperative on our part to imagine by ourselves as to what they really want from this Court. We at first thought of releasing the cases from CAV and asked the petitioners to furnish better and further particulars. However, thanks to the counter-affidavit filed by the State-respondents, the important facts missing in the cases of the petitioners have now been brought to our notice. This, therefore, obviates the necessity to re-hear the cases.

Following the decisions of this Court as affirmed by the Apex Court holding that the contract for transportation of foodgrains executed for and on behalf of the FCI did not involve transfer of right to use goods within the meaning of Article 366(29A)(b) of the Constitution, the amounts deducted from the bills of the petitioners became refundable to them. The FCI admittedly neither deposited the entire amount with the State-respondents during the statutory period nor refunded the same to the petitioners when legitimately due to them. The common question of law involved in both the writ petitions is whether the Food Corporation of India (FCI) is liable to pay interest on the amount deducted by it from the bills of the petitioners which they failed to deposit with the State-respondents during the period stipulated by sub-Rule (3) of Rule 7 of the Tripura Value Added Tax rules, 2005 ("the Rules" for short)? Before proceeding further, it may not be out of place to reproduce below the provisions relating to the TDS from the bills of a contractor and the manner in which the amount so deducted is to be dealt with. They are provided for in Rule 7 of the Rules, which read thus: "7. (2) Every person responsible for making payment to any person for discharge of any liability on account of valuable consideration payable for any transfer of the right to use any goods other than the goods in exempted list of the Act for any purpose (whether or not for a specified period) for cash or in any manner, shall at the time of making such payment deduct an amount at the rate as notified by the Government from time to time of the payment on account of such transfer of right : provided that till the Government notify the rate, the prevailing rate shall continue :

Provided no such deduction shall be made from the bill (s) or invoice (s) of the transferer where the amounts received as penalty for defaults in payment or as damages for any loss or damage caused to the goods by the person to whom such transfer was made, and

(3) The amount deducted under Sub-rules (l) and (2) shall be deposited into the Government Treasury by challan in Form XVIII by the person making such deduction within 7 day of the month following that in which the deduction is made.

(4) The person making such deduction under sub-rule (l) and (2) shall, at the time of payment or discharge, furnish to the person from whose bill(s) and invoice(s) such deduction is made, a certificate in Form XI specifying the amount deducted and the rate(s) at which it has been deducted.

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(10) If any person as is referred to in sub-rule (1) and (2) of this Rule fails to make deduction or after deducting, fails to deposit the amount so deducted as required by sub-rule (3) the Superintendent of Taxes may after giving such person opportunity of being heard, by order in writing, direct that such person shall pay, by way of penalty a sum not exceeding one and a half times the amount not so deducted and/or deposited into the Government Treasury.

(11) Without prejudice to the provisions of sub-rule(10), if any such person fails to make the deduction or, after deducting fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rates contained in section 44 (45?) of the Act, on the amount so deducted, and/or deposited from the date on which such amount was deductible to the date on which the amount is actually deposited."

Plainly stated, a combined reading of sub-Rules (2) and (3) of Rule 7 of the Rules so extracted plainly shows that the person responsible for making payment (FCI in this case) to any person (the petitioner in this case) is required to deduct from the bills of the petitioner any sum payable for the transfer of the right to use any goods other than goods in the exempted list of the Tripura Value Added Tax Act, 2004 ("the Act" for short) and that the amount so deducted shall be deposited into the Government Treasury by the person making such deduction within 7 days of the month following that in which the deduction is made. Sub-Rule 11 mandates that if such person fails to make the deduction or, after making the deduction fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rates contained in Section 44 (it should be read as "Section 45") of the Act on the amount so deducted.

In terms of the direction of this Court vide its order dated 18-2-2014 passed in WP(C) No. 16 of 2014, the State-respondents in WP(C) No. 1356 of 2016 had already refunded a sum of Rs. 29,86,302, which was deposited with them by the FCI, with interest amounting to Rs. 28,65,841/-. At the sub-paras of para 10 of the counter-affidavit dated 18-9-2017, the State-respondents aver as follows: "....... I also state that FCI had deducted tax amounting to Rs. 64,26,328/- and deposited Rs. 29,86,302/- and withheld the tax amount of Rs. 34,40,026/- coming out of calculation as (Rs. 64,26,328-Rs. 29,86,302) upto 09-03-2014.

In view of the above observation, it is clear and transparent that the State Government (Respondent 4 & 5) had already refunded/paid the deducted tax corresponding to the amount credited to the Government exchequer along with interest thereof. It is pertinent to mention here that the Respondent Nos. 1, 2 & 3 i.e. Food Corporation of India are obviously liable to pay the interest and deducted amount of tax if any to the petitioner corresponding to the amount withheld by the respondent 1, 2 & 3 so far retained with them without crediting the amount into the state Government exchequer with Head of Account 0040."

In the counter-affidavit filed by the State-respondents in WP(C) No. 1356 of 2016, it is revealed by the State-respondents that "[T]ax Organization (Respondent Nos. 4 & 5) had already refunded the amount to the petitioner of Rs. 63,94,020/- (Tax amounting in Rs. 32,64,886/- together with interest Rs. 31,29,134/-) in compliance of the order of the Hon?ble High Court dated 18-02-2014. It is evident that Food Corporation of India deducted tax at source more than Rs. 32,64,886/- which was not deposited to the State Government exchequer at 0040 Head of Account.

"In this paragraph, the petitioner stated that gross amount of Rs. 82,83,154/- out of this the Tax Organization had already refunded interest amounting to Rs. 31,29,134/- and hence the Respondent Nos. 1, 2 and 3 (FCI) shall have to refund interest of Rs. 51,54,020/- (coming out of calculation as Rs. 82,83,154-Rs. 31,29,134/-). Further an amount of Rs. 1,88,558/- was paid to the petitioner vide cheque No. 552480 dated 16.12.2016 as interest @12% against the amount of Rs. 15,57,570/- during the period from 08.05.2015 to 09.05.2016 as per memo No. F.V-2(3)/TAX/2016-17(P-VI)/9638-42 dt. 17.11.2016 of the Commissioner of Taxes, Government of Tripura."

At this stage, it may also be noted that the FCI in the meantime have refunded to the petitioner a sum of Rs. 31,29,134/- deducted by them from the bills of the petitioner. Though the FCI had earlier expressed their reservation about the accuracy of the amount deducted by them, no such dispute can be raised by now in view of the above categorical averments made by the State-respondents with respect to the amount so withheld by the FCI, which, in turn, were apparently the outcome of the observations of this Court in its order dated 18-2-2014 that "[W]e are sure that the department maintains records assessee-wise also as to how taxes have been deposited and if the department looks into its own records, it can easily find out what is the amount of tax deducted by the FCI and deposited into the accounts of the petitioner. The respondents are just trying to shift the burden to the FCI and to the petitioner and not shouldering their own responsibility."

It is interesting to note that the FCI never bothered to file subsequent affidavits to deny the above categorical averments of the State-respondents with respect to exact amounts deducted from the bills of the petitioners in both the cases and which ought to have been deposited by them within the period stipulated by sub-Rule (3) of Rule 7 of the Rules. In the light of the unequivocal statements made by the State-respondents in both the counter-affidavits and without rebuttal by the FCI, we have no hesitation to hold that the FCI never complied with sub-Rule (3) of Rule 7 of the Rules requiring them to deposit all the deducted amounts into the Government Treasury by Challans in Form XVIII within 7 days of the month following the date on which the deductions were so made from the bills of the petitioners in both the cases. The belated deposits made by them cannot now save them from paying the statutory interest to the petitioners. The FCI has entered into the shoes of the State-respondents for any liability to pay statutory interest to the petitioners with respect to the deducted amount not deposited by them the State-respondents within the statutory period. On account of such omissions, deliberate or otherwise, the provision of sub-Rule (11) of Rule 7 of the Rules shall enure to the benefit of the petitioners in both the cases. The petitioners in both the cases are, therefore, entitled to the statutory interest.

For what has been stated in the foregoing, both the writ petitions succeed. Let a writ of mandamus issue calling upon the FCI-respondents to pay to the petitioners in WP(C) No. 1356/16 and WP(C) No. 1357/16 the statutory interest at the rate of 6% per annum on deducted amounts of up to 25-5-2008, i.e. three months after the judgment of the Apex Court and thereafter, pay interest @12% per annum and complete the payments on or before 17-1-2018, failing which the Managing Director, FCI, New Delhi (respondent No. 1), Senior Regional Manager, FCI (respondent No. 2) and the District Manager, FCI (respondent No. 3) shall personally appear before this Court on that day at 10-30 AM.

Before we close the writ petitions, we cannot but express our grave concern over the conduct of the FCI, which is a public authority, firstly, in not depositing the tax deducted by them to the account of the State Government, which was meant for them, within the period stipulated by law and, secondly, in not refunding the amounts so deducted but not deposited by them with the State-respondents, to the petitioner promptly and then, when calling upon them to refund it, like a petty trader, coming up with all kinds of excuses for not doing so. Had they deposited the amount so collected with the State-respondents within the statutory period, it should have been their liability to pay the statutory interest if no refund could be made by them in time; in that case, no liability to pay the interest could have been fastened upon them FCI). Having withheld the money belonging to the petitioners inordinately without reasonable cause, they could not now complain that they are not liable to pay the interest and any such liability should be satisfied by the State-respondents, who indisputably never received the deducted amount in question from them (FCI). In our opinion, the conduct of the FCI in withholding the amount legitimately due to the petitioners in both the cases is not only reprehensible and smacks of colorable exercise or abuse of power but could also prompt this Court to impose exemplary costs and/or equitable interest upon them. However, we refrain from doing so with the hope and trust that they do not repeat it in future. This callousness, insensitivity and lethargy/arrogance of power in dealing with office-goers shall have to be stopped forthwith if this country is really going to progress. It is high time that officials of the Government, both Central and State, act as facilitators to the office-goers and not their tormentors. We only hope that the reason for not depositing the amount so deducted with the State-respondents within the statutory period in the first place and thence for withholding the same inordinately even after knowing that the same was to be refunded to the petitioners was not for their wrongful gain at the expense of the State and/or the petitioners. The policy of the Central Government, we are afraid, to bring about transparency, liberalization and business-friendly regime in this country has not percolated down to many of its officials. The time has now come for the Central Government authorities to review and closely monitor the functioning of its officials at every level if its policy is to succeed. Citizens should not be compelled to come to the Court for avoidable litigation at huge costs, which is undoubtedly contrary to the National Litigation Policy.

A copy of this order shall be supplied to the learned counsel for the FCI for communication to the respondent Nos. 1, 2 and 3.