Punjab-Haryana High Court
Solvex Oil And Fertilisers vs State Of Haryana Through The Secretary, ... on 12 January, 1994
Equivalent citations: (1994)106PLR706
ORDER Jawahar Lal Gupta, J.
1. Is the petitioner's prayer for refund of tax deposited by it liable to be declined in view of the provisions of the Haryana General Sales Tax (Second Amendment) Act, 1988 notified on September 8, 1988? This is the short question that arises for consideration in this case.
2. The factual matrix of this case lies within a narrow compass. In pursuance to the order dated May 15, 1981 passed by the Joint Excise and Taxation Commissioner, the assessment Proceedings against the petitioner in respect of payment of purchase tax were reopened under Section 40 of the Haryana General Sales Tax Act, 1978 (hereinafter referred to as 'the Act'). The Assessing Authority vide its order dated October 30, 1981 held the petitioner liable to pay tax on the purchase of rice bran @ 7% in respect of the assessment year 1977-1978. The petitioner's appeal having been dismissed, it approached the Sales Tax Tribunal. Vide order dated April 15, 1987, a copy of which has been produced as Annexure P. 3. with the writ petition, the Tribunal found that rice bran used by the petitioner for extraction of oil" would be classified as fodder......under entry No. 34 of Schedule B appended to the State Act and would not be liable to tax even if these goods were not used as fodder.' Accordingly, the petitioner's appeal was accepted and the levy of purchase tax was quashed. The Assessing Authority filed a review petition which was dismissed by the Tribunal vide order dated March 16,1988, a copy of which has been produced as Annexure P. 4 with the writ petition. The Legislature then promulgated the Haryana General Sales Tax (Second Amendment) Act, 1988 (hereinafter referred to as the Amendment Act') on September 8, 1988. By this Amending Act, an explanation was inter-alia added to entry 34 to provide that fodder (dry or green) shall not include rice bran. This was made operative w.e.f. May 5, 1973. In pursuance to the provisions of the Amending Act, the petitioner's prayer for the refund to tax deposited by it was declined. A copy of the order dated July 17, 1989, passed in this behalf is at Annexure P. 6. Aggrieved by this action, the petitioner has approached this Court through the present writ petition. This amendment has been challenged on a number of grounds.
3. In the written statement filed on behalf of the respondents, it has been inter-alia averred that the Legislature was fully competent to enact the Amendment Act and that the writ petition is wholly lacking in merit and deserves to be dismissed.
4. Learned counsel for the parties have been heard. Mr. Anil Khetarpal, learned counsel for the petitioner, has contended that the action of the State of Haryana in levying the purchase tax retrospectively is unreasonable and that the order of the Tribunal having attained finality, the amount paid by the petitioner deserves to be refunded. On the other hand, Mr. S.S. Khetarpal, learned counsel for the respondents, has contended that the Act being within the legislative competence of the Legislature, the petitioner is not entitled to the relief claimed by it.
5. In this case, it is the admitted position that the petitioner is extracting oil from rice bran. It purchases the material from different dealers. It is also the admitted position that in view of the existing provisions in the Statute, it did not pay the purchase tax and consequently it must have worked out its cost of production keeping in view the price actually paid by it. That having happened, the Assessing Authority had initially held vide order dated February 18, 1980, that no tax was leviable on the purchase of rice bran. However, when the assessment was reopened in pursuance to the orders of the Joint Excise and Taxation Commissioner, the Assessing Authority by its order dated October 30, 1981 held the petitioner to be liable to pay an amount of Rs. 72,409/- in respect of the assessment year 1977-1978. Aggrieved by this order, the petitioner had appealed upto the Tribunal, which, as already noticed, accepted is contention and held that no purchase tax was leviable on the purchase of rice bran. The department did not seek a reference under Section 42 of the Act. On the contrary, the State of Haryana clamped the provisions of the Amending Act so as to deprive the petitioner of the refund of the amount to which it was rightfully entitled. In fact, it appears that liability was sought to be imposed in respect of three assessment years viz. 1977-78, 1978-1979 and 1979-1980. But for the Amending Act the petitioner would have been entitled to the refund of the amounts paid by it. Could this be done?
6. It is undoubtedly correct that the Legislature in the excercise of is plenary powers can legislate retrospectively. However, in a case where such a legislation imposes an unreasonable or an unforeseen liability, the Courts have restricted the retrospective operation of the legislation. This is so because in a case where liability is created without affording an opportunity to the citizen to pass on the incidence of tax, the legislation partakes the character of a confiscatory provision and imposes an unreasonable burden on the assessee. Consequently, in a case where a dealer collects the tax but succeeds in avoiding its payment on account of some lacuna in the Statute and the Legislature makes the amendment retrospectively, the Courts uphold the provision because no unreasonable or unforeseen liability is created. Such a legislation avoids undue enrichment. However, in a case where a totally unforeseen burden is sought to be imposed, the courts intervene.
7. In the present case, it is clear that the liability which was sought to be imposed on the petitioner, was wholly unforeseen. It was unreasonable when the petitioner's appeal was accepted by the Tribunal and it became entitled to the refund of the tax paid by it, the impugned legislative measure was brought on the Statute Book. This provision in so far as it operated retrospectively against the petitioner was wholly of a confiscatory character. It cannot be invoked to deny the petitioner what is legitimately due to it. Consequently, it is held that the provisions of the Amending Act to the extent of retrospectively are not applicable to the petitioner. The question posed at the outset is answered accordingly.
8. As a result, the action of the respondents in refusing to refund the amount of tax paid by the petitioner is set aside. They are directed to refund it along with interest in accordance with the provisions of Section 43 of the Act. The writ petition is allowed in these terms. In the circumstances of the case, there will be no order as to costs.