MURUGAN AGENCIES Vs. STATE OF KERALA AND ORS.

JUDGEMENT

(1.) This appeal is preferred by the unsuccessful writ petitioner/assessee against the judgment of the learned single Judge dismissing W.P.(C). No. 17385 of 2008. The writ petition was filed challenging Exhibits P13 and P15 orders issued by the Commercial Tax Officer refusing refund of the tax already paid under the Kerala Tax on Luxuries Act, 1976 (for short, the Act, 1976'). The appellant is a firm which is a registered dealer in tobacco products. It had preferred O.P. No. 2190 of 1995 challenging the liability for payment of luxury tax. An interim order was issued in that case on 10.2.1995 refusing to stay the operation of Sec. 4A of the Act, 1976, but directing the petitioner to file returns. So far as the payment of tax contemplated under Sec. 5(3) of the Act, 1976 is concerned, the petitioner was directed to furnish bank guarantee to the satisfaction of the assessing authority on or before 15th of every month in relation to the tax payable for the preceding month. Thereafter, by judgment dated 4.8.1977, the writ petition was allowed following the judgment in O.P. No. 5478 of 1994. By the said judgment, Sec. 4A of the Act, 1976 and the schedule thereto as amended by the Finance Bill, 1994 were declared unconstitutional, invalid and inoperative and the said provisions were set aside. It was urged in the writ petition that the appellant had been furnishing returns as provided in the interim order till the provision was declared unconstitutional. However, in the matter of furnishing of bank guarantee, it is submitted that by Exhibits P1 to P5, the commercial tax authorities had requested the appellant to make payment of at least a portion of the total luxury tax in cash in lieu of the bank guarantee already furnished. It was specifically held out that "if the case is decided in your favour, you can claim refund of the tax remitted". It is submitted that the appellant had made payments in lieu of the bank guarantee believing the specific written undertaking by the authorities that the amounts would be refunded in case it succeeds in the writ petition. According to the appellant, a total amount of Rs. 11,24,92,135/ - was paid by the appellant for the period from January, 1995 to May, 2001 as cash payment in lieu of the bank guarantee. As stated earlier, O.P. No. 2190 of 1995 was allowed by judgment dated 4.8.2001. The writ appeal filed by the State was dismissed. The matter was taken up before the Apex Court and by Exhibit P9 judgment, the Apex Court dismissed the civil appeal relying on the decision reported in Godfrey Philip India Limited v/s. U.P., : (2005) 2 SCC 515. The appellant thereupon approached the respondents seeking refund of the amounts paid in lieu of the bank guarantee as directed by this Court. It was the specific case of the appellant that the amounts collected by the respondents in lieu of the bank guarantee as ordered by the Court, were in the nature of a loan advanced by the appellant and it was on the basis of the specific undertaking that such amounts would be refunded in case of his success in the pending litigation that such amounts happened to be paid. However, the Commercial Tax Officer, by Exhibit P13, relying on the decision of the Supreme Court in Godfrey's case (supra), rejected the request made by the appellant and stated that the tax paid shall not be refunded. It was the contention of the Revenue that the Supreme Court had in the Godfrey's case (supra) relying on an earlier judgment in Somaiya Organics (India) Ltd. v/s. State of UP, : (2001) 5 SCC 519 held that even in cases where levy of tax or duty was found to be invalid prospectively, tax already collected would not be refundable. It was also held in Godfrey's case (supra) that if the assessees have collected any amount towards luxury tax from consumers/customers after obtaining interim orders, they are liable to pay the said amounts to the respective State Governments.

(2.) The appellant preferred Exhibit P14 reply pointing out that the finding regarding non refund of the duty already collected was entered in the Somaiya Organics' case (supra) only in view of the fact that the Supreme Court had exercised its jurisdiction under Article 142 of the Constitution of India to strike down the offending provision only with prospective effect and therefore, there was no question of applying that principle to the instant case. It was pointed out that in view of the interim orders rendered in O.P. 2190 of 1955, the appellant need have only furnished a bank guarantee and that amounts had been paid only on the assurance of refund by the respondents. This was again rejected by Exhibit P15 order dated 21.1.2008, which prompted the filing of the writ petition.

(3.) The Revenue had filed a detailed counter affidavit admitting that an amount of Rs. 11,24,92,135/ - had been paid by the appellant towards luxury tax during the period from 1995 to 2001. However, it is stated that the Honourable Supreme Court in Godfrey's case (supra) had, relying on an earlier decision in Somaiya Organics' case (supra), held that while striking down the impugned Acts, it is not appropriate to allow any refund of tax already paid under the impugned Acts. It was further held that bank guarantees, if any, furnished by the assessee will stand discharged. It is further stated that while striking down the impugned Acts, the Apex Court did not think it appropriate to pass orders directing refund of taxes already paid under the Act. It is further contended that the appellant had continued to collect amounts towards luxury tax from consumers/customers even after obtaining interim orders from this Court. It is therefore urged that the amount paid by the appellant was the amount collected from the consumer and therefore no prejudice was caused to the appellant by the refusal to refund the said amount. The learned single Judge accepted the said contention raised by the Revenue and held that the appellant was not entitled to refund of tax already paid. Aggrieved, the appellant has come up in this appeal.