KORES INDIA LTD Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) Heard learned counsel for the petitioner and also the learned Standing Counsel. In view of the facts and circumstances of the case as also in accordance with the rules of court the present writ petition is being disposed of finally at the stage of admission. The petitioner seeks direction to respondent No. 2 prohibiting him from withdrawing the refund/adjustment already made in pursuance of the refund (adjustment) voucher No. 44 dated November 8, 1988. The short facts of the case are that during the assessment year 1980-81 the petitioner deposited the tax on carbon papers and stencil papers at the rate of 8 per cent on the sale of goods amounting to Rs. 43,13,739. 67. The said rate of tax was realised by the petitioner from the customers which, in fact, was in excess of 2 per cent on the said goods which works out to an amount of Rs. 86,274. The said excess amount along with total tax at 8 per cent, which is not in dispute, was actually deposited with the respondents. The assessing authority imposed a tax on turnover of carbon papers and stencil papers at the rate of 6 per cent. The appeal of the petitioner was allowed on July 11, 1988. The short question which arises for consideration in this case is whether the petitioner is entitled for the aforesaid relief on account of excess realisation from the customers for which earlier refund voucher was issued to the petitioner. It is relevant to mention section 29-A of the U. P. Sales Tax Act : " 29-A. Procedure for disbursement of amount wrongly realised by dealer as tax.- (1) Where any amount is realised from any person by any dealer, purporting to do so by way of realisation of tax on the sale or purchase of any goods, in contravention of the provisions of sub-section (2) of section 8-Al such dealer shall deposit the entire amount so realised in such manner and within such period as may be prescribed. (2) Any amount deposited by any dealer under sub-section (1) shall, to the extent it is not due as tax, be held by the State Government in trust for the person from whom it was realised by the dealer, or for his legal representatives, and the deposit shall discharge such dealer of the liability in respect thereof to the extent of the deposit. (3) Where any amount is deposited by any dealer under sub-section (1), such amount or any part thereof shall, on a claim being made in that behalf in such form as may be prescribed, he refunded, in the manner prescribed, to the person from whom such dealer, had actually realised such amount or part, or to his legal representatives, and to no other person : Provided that no such claim shall be entertained after the expiry of three years from the date of the order of assessment or one year from the date of the final order on appeal, revision or reference, if any, in respect thereof, whichever is later. " By virtue of sub-section (1) if any amount is realised from any person by a dealer towards sales tax or purchase tax which is in contravention of section 8-A (2) then such dealer shall deposit the entire amount so realised with the respondents. In the present case the petitioner has deposited the amount in terms of this sub-section with the respondents which is not in dispute. Sub-section (2) provides that such amount deposited by any dealer the extent it is not due as tax is held by the State in trust for the person from whom it was realised. Sub-section (3) provides where any amount is deposited under sub-section (1), then on a claim being made in that behalf, that is to say by the customers, in such form as may be prescribed, is to be refunded in the manner prescribed to such person from whom the dealer actually realised the said amount. The argument on behalf of the State is that once the amount having been realised and deposited with the respondents, it is only the respondents, who in accordance with sub-section (3) will refund and not the petitioner which is the fact in the present case. The argument is that when the Legislature has prescribed a procedure it has to be returned in the same manner as prescribed and not by the petitioner himself. The petitioner's case is that for the assessment year 1980-81 he realised 8 per cent as tax bona fade believing it to be sales tax leviable on sale of carbon and stencil papers as unclassified item. From the averments in the writ petition it is revealed that there seems to be some dispute whether this goods is liable to tax as unclassified item and tax leviable at 8 per cent or 6 per cent. The Commissioner, Sales Tax, under section 35 held that carbon and stencil papers are taxable at the rate of 6 per cent under the entry "paper of all kinds". This decision came on July 6, 1982. The contention of the petitioner is that till this decision the petitioner bona fide believing it to fall under unclassified item realised the amount and also deposited with the department. So far as the procedure prescribed under section 29-A, it is true that when a procedure is prescribed under any provision of statute, the things should be done in the manner as prescribed therein. However, in the present case the procedure under sub-section (3) of section 29-A was to be prescribed for refund of the amount deposited with the respondents to the customers. On behalf of the respondents it is conceded till rules are framed in 1993 there is no procedure prescribed for the refund of the said excess amount deposited. Hence there was no procedure under which the said amount was to be refunded. So far the petitioner, after coming to know that he has realised excess tax on 2 per cent and knowing his customers, has refunded all such excess amount to such dealers, and submitted with the assessing authority the details of the same. It is not in dispute between the parties that any excess amount realised by a dealer is to be refunded to the customers from whom it is realised. It is only the procedure under sub-section (3) and the manner in which it has to be returned. We find, in the absence of any procedure and the manner for refund, if in fact the amount deposited had been refunded, which of course has to be subject to the satisfaction and verification of the respondent authority, it cannot be said that the petitioner, if on its own, refunds the amount which is deposited with the respondent, which he was not entitled to realise, then he committed an illegality in doing so on which the amounts stand forfeited with the respondents. On behalf of the learned Standing Counsel reliance was placed on the case of R. S. Joshi, Sales Tax Officer v. Ajit Mills Limited reported in [1977] 40 STC 497. If the provisions as contained in Gujarat Act was also in U. P. as in the Gujarat Act, there was section 37 where the respondent, namely, the State has right to forfeit this amount, then the position would have been different. If any amount deposited with the State was liable to be forfeited, then the argument raised by the petitioner was not available but we do not find any such forfeiture clause under the U. P. Sales Tax Act. Thus the question of the said amount stands forfeited with the State does not arise. Even the State has to return this amount to the person from whom it was realised. It is significant to refer to proviso to section 29-A. According to this no such claim is entertained after the expiry of three years from the date of order of assessment or one year from the date of final order in appeal, revision or reference. In the present case the appeal itself was decided on July 11, 1988 and even after years there was no procedure prescribed by the State. If the argument of the respondent is to be accepted, then merely by not providing the procedure the amount stands forfeited and will be with the State. Such a conception cannot be accepted. It is always to be kept in mind that procedure prescribed under law is towards giving substantial justice to a party. The procedure is not an obstacle for providing justice. In case where two possible interpretations are there, one which contributes towards justice and the other towards injustice, the latter should be rejected. In the present case the petitioner has given the details to whom the said amount has been refunded which is said to he the persons from whom the excess tax was realised. The argument on behalf of the respondent is that the petitioner has only stated the names which may not be sufficient for verification. On the other hand it has been averred and urged by the petitioner that every detail, including names, addresses and credit note number by which the amount has been paid, has been given to the assessing authority. It is for the assessing authority to ascertain the veracity of such statement. Accordingly we allow the writ petition with costs and direct the respondents not to withdraw the refund/adjustment voucher No. 44 dated November 8, 1988 and will verify within a period of three months the veracity of which has been filed before the said authority after giving opportunity to the person concerned regarding the said payment having been made and only in case any amount is not verified, that amount will be adjusted towards the amount already deposited by the petitioner which is to the tune of Rs. 92,837. 56 and then pass consequential order of refunding the amount if any amount found remaining with the respondents to the petitioner accordingly. Writ petition allowed. .