INDRAPRASTH UNIFORMS Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) The petitioner has filed the present petition under Article 226 of the Constitution of India being aggrieved by the action of the respondents in denying refund of the excess amount deposited during search proceedings conducted under Sec. 55 of the Madhya Pradesh Value Added Tax Act, 2002 (for short "VAT Act") on the ground that retention of such excess amount is without authority of law and violative of Article 265 of the Constitution of India. The petitioner has, inter alia, prayed for a direction to the respondents to refund the excess amount collected as compounding under Sec. 55A(a) of the VAT Act, along with interest.

(2.) The petitioner is a registered dealer under the Madhya Pradesh Value Added Tax Act, 2002 (hereinafter referred to as the "VAT Act") bearing TIN No. 23044105062 and has been engaged in the business of purchase and sale of cloth, school uniforms and manufacturing of school uniforms. The petitioner was regularly assessed under the VAT Act and Entry Tax Act. A search under Sec. 55 of the VAT Act was conducted at the business premises of the petitioner on 28/5/2016, upon authorisation issued by the Commissioner of Commercial Tax. At the time of search, the petitioner was not personally present in the business premises as his grandmother was critically ill and ultimately she expired on 21/6/2016. The search proceedings were attended by Shri Vaibhav Khandelwal, and his statement was recorded at the conclusion of the said search. According to the petitioner, under exceptional circumstances, Shri Vaibhav Khandelwal accepted the alleged tax evasion of Rs.8,50,000.00. Consequently, an amount of Rs.17,00,000.00 (Rs.8,50,000.00 + Rs.8,50,000.00) was deposited under Sec. 55A(a) towards VAT as compounding amount vide challan Nos. 30 and 36 dtd. 2/6/2016 and Rs.5,00,000.00 was also deposited towards Entry Tax. Apart from the above, two Demand Drafts bearing No. 32345 dtd. 2/6/2016 for Rs.3,22,698.00 (Entry Tax) and No.32347 dtd. 2/6/2016 for Rs.20,22,458.00 (VAT) were handed over to the search party as an advance payment of tax. However, according to the petitioner, the entire amount was treated and deposited by the search party as a compounding deposit under Sec. 55A(a). Thereafter, block assessment proceedings were initiated under Sec. 55A of the VAT Act for the period from 1/4/2010 to 28/5/2016. Upon verification and scrutiny of seized documents, the Assessing Authority finally determined the tax liability of the petitioner at Rs.5,51,537.00 towards VAT and Rs.72,682.00 towards Entry Tax.

(3.) The petitioner is not challenging the determination of liability as assessed in the block assessment. The grievance of the petitioner is confined only to the denial of a refund of the excess amount so deposited by it, which amounts to Rs.29,41,752.00 towards VAT and Rs.3,54,636.00 towards Entry Tax. The respondents, while passing the order dtd. 28/12/2017 under Sec. 55A of the VAT Act, denied refund on the ground that there is no provision under the VAT Act for refund of compounding amount once deposited under Sec. 55A(a). Being aggrieved by the denial of a refund and retention of the alleged excess amount, the petitioner has approached this Court by filing the present writ petition.