DALMIYA BROTHERS Vs. COMMISSIONER OF TRADE TAX

JUDGEMENT

(1.) THE petitioner is a registered dealer engaged in the business of job works of fixing PVC flooring in various government departments, semi government departments and corporations. According to the petitioner, contracts were executed, and on the basis of the job works done by him, bills were presented and payments were made after deduction of tax at source (T.D.S.). According to the petitioner, for the assessment year 1987 -88 to 1998 -99, the petitioner was not exigible to payment of trade tax and, accordingly, applied for refund during the assessment proceedings. It has been stated that the stand of the petitioner was accepted in the assessment proceedings and the petitioner was not found to be exigible to sales tax (now trade tax) for the job works done by him. The assessing authority in the assessment order directed the office to verify the T.D.S. certificate and, if the same was found to be correct, the amount deducted was directed to be paid to the petitioner.

(2.) ACCORDING to the petitioner, certain amount was refunded in certain assessment years either in full or in part but balance amount, as per the T.D.S. Certificates, remained unpaid for one reason or the other. The petitioner, accordingly, made various applications to the Assessing Officer praying for the refund of the T.D.S. amount. Separate orders were passed by the Assessing Officer on the applications of the petitioner directing the office to refund the amount after due verification. In spite of these orders, the office of the Assessing Officer failed to refund the amount. Accordingly, an application dated 13.09.2005 was filed praying for refund of the T.D.S. amount along with interest. According to the petitioner, between the period 1987 -88 to 1998 -99, a total amount of Rs.4,62,368.00 was deducted as tax at source, out of which an amount of Rs. 1,92,969.74 was refunded and the balance amount of Rs. 2,88,081.00 remained unpaid. The petitioner, accordingly, prayed that the said amount along with interest should be refunded. It transpires that this request of refunding the amount along with interest infuriated the department and, instead of refunding the balance amount, the respondents, as a counter blast, issued a notice dated 06.02.2006 alleging that the petitioner was not entitled for any refund of the T.D.S. amount as prima facie it was found to be a case of unjust enrichment. The department directed the petitioner to file copies of the agreement with regard to the job works for the purpose of finding out as to whether tax was realised by the petitioner from the contractee or not. The petitioner submitted a reply indicating that it was not a case of unjust enrichment and the petitioner, in the course of execution of job works, had also purchased certain materials from the local market, which was tax paid and had not realised such tax from the contractee. On the other hand, the T.D.S. was deducted by the contractee as per the mandatory provision of Section 8 -D of the U.P. Trade Tax Act, 1948 (hereinafter referred as the Act). In spite of this reply, the respondents issued further notices dated 18.03.2006, 03.05.2006 and 02.06.2006 against which the petitioner submitted the same reply as given earlier. Eventually, the respondents passed the order dated 11.08.2006 under Section 29 -A (2) of the Act disallowing the petitioner's claim for refund of the T.D.S. amount on the ground of unjust enrichment. The authority held that the burden of proof was upon the petitioner to show that the goods purchased were tax paid and that the burden was upon the assessee to show that no tax was realised from the contractee. The claim for refund was rejected by the Assessing Officer by relying upon the decision of the Constitution Bench of the Supreme Court in the case of Mafat Lal Industries Ltd. Vs. Union of India and others 1998 (111) STC 467.

(3.) THE principle of unjust enrichment as evolved by Supreme Court in the case of Mafat Lal Industries's (Supra) is a just and salutary doctrine, namely, that no person can seek to collect the tax or duty from both ends. In other words, no person can collect the duty from the purchaser at one end and collect the same from the State on the ground that it had been collected from him contrary to law. In that light, the doctrine of unjust enrichment was evolved contending that the power of the Court was not meant for unjustly enriching a person. In this regard the Supreme Court held that in a case where any claim for refund, whether on the ground of mis -interpretation or mis -application of the statute and/or the rules thereunder or on the ground of unconstitutionality, could succeed only if the petitioner alleged and established that he had not passed on the burden of duty or tax to another person and only in that situation his claim would be allowed.