P. M. ALAVI Vs. SALES TAX OFFICER

JUDGEMENT

(1.) These writ petitions are filed by different assessees under the Kerala General Sales Tax Act, 1963. The petitioners are Public Works Department contractors engaged in works contract. They have opted to pay tax at compounded rate at the rate of two per cent as provided under Section 7(7) of the Kerala General Sales Tax Act. By virtue of subsection (7B) the awarder is bound to deduct tax at source at the time of payment of the bill at the rate of two per cent. Since in these cases the tax liability is at compounded rate and the tax deducted at source being at the same percentage, no further liability on the part of the contractors to pay any amount of tax arose, since the entire amount of tax payable by them at such compounded rate has been deducted at source. Assessments were completed and it was found that the deduction at source made by the awarder and paid over to the department is in excess of the actual tax due and payable by the assessee. Now I may proceed to consider the case in O.P. No. 7190 of 2000. The assessment orders produced in O.P. No. 7190 of 2000 are exhibits P1 to P5 for the years 1994-95, 1995-96, 1996-97, 1997-98 and 1998-99. In exhibit P1 order it was found that the excess amount paid is Rs. 1,17,765. But the payment was confirmed under Section 7(12) of the KG ST Act thereby in effect the excess amount was forfeited and no refund of the excess amount paid was given nor adjusted against the surcharge payable by the assessee. Similar is the case in the subsequent assessment orders, except the difference in the quantum of the excess amount paid. The petitioner, after completion of the assessment, demanded that whatever excess amount he has paid over the tax liability, may be adjusted towards surcharge payable and to refund the balance amount due to him. Exhibits P6 to P9 are the applications submitted before the Sales Tax Officer. But the Sales Tax Officer by a one line order, exhibit P11 dated February 8, 2000, informed the petitioner that the assessment orders have been passed strictly in accordance with law and no modification is required. No reasons are stated. Curiously enough for non-payment of surcharge, the petitioner is also levied interest payable thereon.

(2.) In the other original petitions, though applications were made, no orders as such are passed by the Sales Tax Officer. But the fact remains that there were assessments in those cases also and applying Section 7(12) of the Act excess payment has been confirmed. Aggrieved by such circumstances, the petitioner has approached this Court and placed reliance on the unreported decision of this Court in O.P. No. 32270 of 2001 dated March 3, 2006 wherein the learned single judge of this Court drew the distinction between the excess tax collected and excess tax remitted and held that Section 46A(1) of the KGST Act provides for forfeiture of excess tax collected. That provision has no application towards the excess tax remitted. To add, I may say even when the assessee contests the matter and because of the fact that he has not obtained a stay, he might have paid the tax. So however, if it is found that the tax liability is either reduced or found to be nil, he is certainly entitled for refund of the excess tax paid. Unless it is a case where he has already collected tax, of course in which case the specific provision contained in Section 46 of the Act will govern. This court in such circumstances, held that the provisions contained in Section 46A(1) of the Act has no application in a matter where the tax remitted is in excess. Therefore, based on Section 46A(1), as rightly held by this Court in the aforesaid decision, there cannot be any forfeiture of the excess tax remitted by the petitioner. So however, the learned Government Pleader appearing on behalf of the State would contend that by virtue of Section 7(12) of the KGST Act, the assessee will not be entitled for refund, as evidenced by the order of assessment produced in the case. According to him, this Court in the earlier decision had no occasion to refer to the provisions contained in Section 7(12) of the Act. Therefore, whether by virtue of Section 7(12) of the Act, confirmation of the excess tax paid without refunding the same or adjusting the same against the surcharge payable arises for consideration. Section 7(12) of the KGST Act reads as follows:

(3.) On a plain reading of the above section it can be seen that if any tax on purchases is found to be in excess of the tax payable under the compounded rates, then certainly no refund of such tax paid shall be made. Therefore, what is paid in excess should be the tax on purchases. Sub-section (7A) of the Act, which specifically refers to the tax on purchases, reads as follows: