The Calcutta High Court has held that Tata Steel is entitled to the concessional rate of tax as they have fulfilled the conditions in Section 8 of the Central Sales Tax Act.
The division bench of Justice T.S. Sivagnanam and Justice Supratim Bhattacharya has observed that Tata Steel, as a purchasing dealer, has the capacity to maintain the claim for refund of the excess tax collected directly from them, and the writ petition is maintainable.
The court ruled that be entitled to the concessional rate of tax filing, a Form "C" declaration is mandatory. However, the time limit prescribed for filing such declarations is only directory and not mandatory. The assessing officer has accepted the Form "C" declarations. It is deemed that the assessing officer of Indian Oil Corporation Limited (IOCL) was satisfied that there was the sufficient cause that prevented the dealer from filing Form C within the time limit.
The court noted that the lower tax rate was granted as a result of central legislation, and the state of West Bengal is only acting as an agent of the central government to collect the correct tax rate in accordance with the provisions of the CST Act. It is not disputed by the State of West Bengal that the conditions prescribed for claiming a lower rate of tax have not been fulfilled by the writ petitioner. The right to be assessed at a lower rate of tax becomes a vested right, and such a vested right accrues in favor of the writ petitioner who has borne the burden of the tax.
The issue raised was whether the petitioner, Tata Steel Limited, was entitled to a refund of the excess central sales tax collected by IOCL and remitted to the State of West Bengal on account of the production of Form "C" declarations, which have not been disputed by the assessing authority of IOCL. If the answer to this question is "yes," then the writ petitioner's claim for a refund would be maintainable.
The petitioner, Tata Steel, challenged the assessment order dated June 30, 2020, passed by the department in the case of the Indian Oil Corporation Limited (IOCL). A single judge's bench allowed the bunch of writ petitions to the extent of submissions of Form "C" declarations by IOCL pertaining to the writ petitioner, which was denied. A single bench directed the State of West Bengal to refund the amount of Rs. 24,61,323, which was the amount of excess differential tax realized from the writ petitioner by IOCL and deposited with the State of West Bengal in respect of the purchase of high-speed diesel (HSD) oil.
The appellant, Commissioner of Commercial Taxes, West Bengal, challenged the order passed by the single-judge bench.
The appellant contended that the liability to pay taxes is on the seller. Consequently, the question of seeking a refund of tax by the writ petitioner, the purchasing dealer, does not arise. Section 8 provides for a concessional rate of tax to be given only to the seller, and there is no right recognized in favor of the buyer. Section 9 provides for the levy and collection of tax only from the seller. Section 60 of the WBST Act and Section 62 of the WBVAT Act both provide for refunds of excess tax to be paid only to the dealer who paid the excess tax under the Act, namely the selling dealer, with no right recognized by the statute for the purchasing dealer to claim a refund.
The appellant contended that it is only the seller who is entitled to claim the concessional rate of tax. In terms of Section 8(4), the buyer merely hands over the filled-up Form "C" declaration to the seller, which would enable the seller to claim the concession; therefore, the buyer has no right against the taxing authorities to claim any concessional rate of tax.
The respondent contended that Form "C" can be produced at any stage in view of the proviso to Section 8(4) of the CST Act read with the proviso to Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957. The writ petitioner fulfilled all the conditions to be entitled to the benefit of a concessional rate of tax, as could be seen from the assessment order and noted by the learned Writ Court. Therefore, the stand of the State of West Bengal and the Assessing Officer is that Form "C" cannot be accepted without IOCL revising its returns.
The respondent contended that the writ petitioners or purchasers have a right to receive the goods at a reduced tax rate. Equally, there is a corresponding obligation on IOCL/seller to sell at a concessional rate of tax on receipt of Form "C," and there is also a corresponding right on IOCL to be assessed at a concessional rate of tax.
The court held that the rejection of the Form "C" declarations was erroneous, unsustainable, and illegal.
According to the court, writ petitioners are entitled to claim tax refunds directly from the State of West Bengal and are not required to do so through the selling dealer, IOCL.
The court directed the State of West Bengal to effect the refund of the excess tax collected directly to the writ petitioner within 45 days, together with interest at the statutory rate as stipulated under the WBST Act, from the day after the date on which the assessment order in the case of IOCL was passed till the date on which the refund is effected.
Case Title: Commissioner of Commercial Tax Versus Tata Steel Limited