M/S WESTERN INDIA CASHEW COMPANY (P) LTD v. ASST. COMMISSIONER (ASSESSMENT), COMMERCIAL TAXES SPECIAL CIRCLE-II, ERNAKULAM; STATE OF KERALA

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE GOPINATH P.`** ``` MONDAY, THE 1[ST] DAY OF APRIL 2024 / 12TH CHAITHRA, 1946 WP(C) NO. 33161 OF 2016 ``` ## **`PETITIONER:`** ``` M/S.WESTERN INDIA CASHEW COMPANY (P) LTD, 7/520B, THRIKKAKARA P.O., KAKKANAD, ERNAKULAM, REPRESENTED BY ITS DIRECTOR, R.VINOD KUMAR ``` ## **`BY ADV. MEERA V.MENON`** ## **`RESPONDENTS:`** - **`1 THE ASST. COMMISSIONER (ASSESSMENT), COMMERCIAL TAXES SPECIAL CIRCLE-II, ERNAKULAM-682 013.`** - **`2 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM – 695 001.`** ## **`SRI. ARUN AJAY SHANKAR (GP)`** ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` W.P.(C) No.33161/2016 ## **-:2:-** ## **J U D G M E N T** The petitioner is a private limited company engaged in the processing of raw cashew nuts and other allied products. The assessment of the petitioner under the provisions of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the ‘KGST Act’) for the assessment years 2002-2003, 2003-2004 and 2004-2005 was completed and certain penalties were also imposed on the petitioner. The petitioner had approached this Court earlier by filing WP(C)No.11605 of 2009 claiming the benefit of G.O(MS) No.136/2008/TD dated 07-07-2008 as also the provisions of Circular No.35/2008 dated 24-07-2008, which was issued following the stipulations in the Government Order dated 07-07-2008. According to the petitioner, the provisions of the Government Order dated 07-07-2008 and the circular dated 24-07-2008 indicate that the petitioner was liable only to pay tax at the rate of 4% in respect of interstate transactions and all penalty, interest W.P.(C) No.33161/2016 ## **-:3:-** and tax in excess of 4% collected from the petitioner are illegal. This contention of the petitioner found favour with this Court and by Ext.P3 judgment dated 11-11-2014 this Court allowed the writ petition and directed as follows: “Resultantly, I quash Ext.P12 series of assessment orders and Ext.P13 series of penalty orders to the extent they do not consider the claim of the petitioner for the benefit of Ext.P4 Notification issued by the Government. The 1[st] respondent shall pass fresh orders of assessments for the assessment years 2002-2003, 2003- 2004 and 2004-2005 under the CST Act by extending the benefit of Ext.P4 Notification to the petitioner. The 1[st] respondent shall thereafter consider whether or not it is necessary to proceed against the petitioner for imposition of any penalty. The 1[st] respondent shall pass fresh orders as directed within a period of three months from the date of receipt of a copy of this judgment after affording the petitioner an opportunity of being heard. The writ petition is allowed as above.” Following the directions contained in Ext.P3 judgment, Ext.P4 series of orders were passed, finding the petitioner entitled to certain amounts as refund. It is not disputed before me that the amounts were refunded to the petitioner by a series of orders issued on 13-07-2015 and by a further ## W.P.(C) No.33161/2016 ## **-:4:-** order dated 19-10-2015. The petitioner thereafter approached this Court by filing WP(C)No.4210 of 2016 being aggrieved by the fact that the claim of the petitioner for interest was not being considered by the 1[st] respondent. This Court by Ext.P6 judgment disposed of WP(C)No.4210 of 2016 directing that the representation filed by the petitioner, claiming interest on the amounts refunded, be considered after affording an opportunity of hearing to the petitioner. Orders have been issued on 02-06-2016 rejecting the request for interest on the ground that, since refund was granted within the time specified under Section 44 of the KGST Act, the petitioner is not entitled to any interest on the refund. 2. The learned counsel appearing for the petitioner vehemently submits that the case of the petitioner could not have been considered as one covered under the provisions of Section 44 of the KGST Act. It is submitted with reference to the findings of this Court in Ext.P3 judgment that this Court had clearly found that the authorities had denied the benefits of the Government Order ## W.P.(C) No.33161/2016 ## **-:5:-** dated 07-07-2008 and the circular dated 24-07-2008 to the petitioner and also that when the authorities were aware of the terms of the Government Order dated 07-07-2008 and the circular dated 24-07-2008, the benefits should have been extended to the petitioner automatically. It is submitted that the claim for refund arose out of the grant of the benefit under the Government Order dated 07-07-2008 and the circular dated 24-07-2008 and on account of the directions issued by this Court in Ext.P3 judgment. It is submitted with reference to the table attached to Ext.P5 application that the amounts were paid between 4[th] February 2009 and 11[th] May 2009 and refunds were made only after about six years by a series of orders issued on 13-07-2015 and by a further order dated 19-10-2015. It is submitted that since there is a clear finding in Ext.P3 that the demands raised on the petitioner were illegal and the petitioner was entitled to the benefits of the Government Order dated 07-07-2008 and the circular dated 24-07-2008, the authorities ought to have allowed interest to the petitioner especially considering the fact that the petitioner ## W.P.(C) No.33161/2016 ## **-:6:-** was forced to pay the illegal demands as early as in the year 2009. The learned counsel places considerable reliance on the judgment of the Supreme Court in **Union of India v. Tata Chemicals Ltd;** (2014) 6 SCC 335, to contend that when either tax, penalty or interest has been illegally collected, the petitioner is entitled to a refund along with applicable interest. Specific reference is made to paragraph Nos.37, 38 and 39 of the aforesaid judgment in support of the aforesaid contention. It is submitted that the rejection of the claim for interest is therefore illegal and is liable to be set aside. 4. The learned Government Pleader vehemently opposes the grant of any relief to the petitioner. It is submitted with reference to the provisions of Section 44 of the KGST Act that it is only when the amounts are not paid within three months from the date on which a final order of assessment is issued that interest is payable in terms of the provisions. It is submitted that, while it may be true, in the facts of the present case, the earlier orders of assessment ## W.P.(C) No.33161/2016 ## **-:7:-** were set aside by this Court through Ext.P3 judgment. This Court, in Ext.P3 judgment, directed the passing of fresh orders of assessment. It is submitted that for the purposes of Section 44 of the KGST Act, the relevant date must be the date on which orders of assessment were issued following the directions issued by this Court in Ext.P3 judgment and it is only when refund is not made within 90 days of those orders that the petitioner can claim interest in terms of the provisions contained in sub-section (4) of Section 44 of the KGST Act. It is submitted that the decision of the Supreme Court in **Tata Chemicals Ltd (Supra)** did not consider a provision similar to Section 44 of the KGST Act and the general principles regarding the payment of interest on refunds may therefore not apply. 5. Having heard the learned counsel for the petitioner and the learned Government Pleader, I am of the view that the petitioner is not entitled to relief. While the argument of the learned counsel for the petitioner appears to be attractive at first blush, it must fail on deeper ## W.P.(C) No.33161/2016 ## **-:8:-** scrutiny. It is true that the earlier orders of assessment were set aside by this Court on the finding that benefits of the Government Order dated 07-07-2008 and the circular dated 24-07-2008 had not been extended to the petitioner. It is also true that this Court specifically finds that the authorities ought to have extended the benefit of the Government Order dated 07-07-2008 and the circular dated 24-07-2008 to the petitioner. However, one cannot lose sight of the fact that this Court while disposing of the writ petition filed by the petitioner through Ext.P3 judgment specifically directed the passing of fresh orders of assessment. Section 44 of the KGST Act reads as follows: **“44. Refund** : - (1) When a assessing authority finds, at the time of final assessment, that the dealer has paid tax in excess of what is due from him, it shall refund the excess to the dealer. (2) When the assessing authority receives an order from any appellate or revisional authority to make refund of tax or penalty paid by a dealer it shall effect the refund. (3) Notwithstanding anything contained in subsection (1) and (2), the assessing authority shall have power to adjust the amount due to be refunded under W.P.(C) No.33161/2016 ## **-:9:-** sub-section (1) or subsection (2), towards the recovery of any amount due, on the date of adjustment, from the dealer. (4) In case refund under sub-section (1) or subsection (2) or adjustment under sub-section (3) is not made within ninety days of the date of final assessment or, as the case may be, within ninety days of the date of receipt of the order in appeal or revision or the date of expiry of the time for preferring appeal or revision, the dealer shall be entitled to claim interest at the rate of ten per cent per annum on the amount due to him from the date of expiry of the said period up to the date of payment or adjustment”. A reading of Section 44 of the KGST Act and in particular sub-section (4) thereof indicates that it is only when the refund is not made within 90 days of a final order of assessment that the assessee is entitled to claim interest. The learned Government Pleader is right in contending that the decision of the Supreme Court in **Tata Chemicals Ltd. (Supra)** did not consider a provision similar to Section 44 of the KGST Act. A reading of paragraph Nos.37, 38 and 39 of **Tata Chemicals Ltd (Supra)** indicates that the Supreme Court was dealing with the general principle that ## W.P.(C) No.33161/2016 ## **-:10:-** interest is compensation payable for money wrongfully withheld. In the light of the specific provisions in subsection (4) of Section 44 of the KGST Act, I find it difficult to accept the contention of the petitioner that, in the facts of this case and dehors the provisions of Section 44 of the KGST Act, the petitioner is entitled to payment of interest. There is yet another aspect of the matter. Though the petitioner had approached this Court by filing WP(C)No.11605/2009 with the specific contention that the petitioner was entitled to the benefit of the Government Order dated 07-07-2008 and the circular dated 24-07-2008, the petitioner did not choose to claim that any interest is payable on amounts paid by the petitioner in excess of the amounts stipulated in terms of the Government Order dated 07-07-2008 and the circular dated 24-07-2008. This, in my view, constitutes an omission to sue on principles emanating from the provisions contained in Order II Rule 2 of the Code of Civil Procedure. Though the Code of Civil Procedure is not applicable to proceedings under Article 226 of the Constitution of India, the principles behind those W.P.(C) No.33161/2016 ## **-:11:-** provisions are applicable. Therefore, I find that for more than one reason, the petitioner has not made out a case for a direction that it is entitled to interest on the refunds made to it in the manner indicated above. Writ petition fails and it is accordingly dismissed. ats **Sd/GOPINATH P. JUDGE** W.P.(C) No.33161/2016 ## **-:12:-** ## **`APPENDIX OF WP(C) 33161/2016`** |**`PETITIONER’S EXHIBITS`**|**`PETITIONER’S EXHIBITS`**| |---|---| |**`EXHIBIT P1`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT FOR THE YEAR 2002-03, DATED`**| ||**`31.10.2006.`**| |**`EXHIBIT P1(A)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT FOR THE YEAR 2003-04, DATED`**| ||**`27.11.2006.`**| |**`EXHIBIT P1(B)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT FOR THE YEAR 2004-05, DATED`**| ||**`30.11.2006.`**| |**`EXHIBIT P2`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT FOR THE YEAR 2002-03, DATED`**| ||**`31.12.2008.`**| |**`EXHIBIT P2(A)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT FOR THE YEAR 2003-04, DATED`**| ||**`29.12.2008.`**| |**`EXHIBIT P2(B)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT FOR THE YEAR 2004-05, DATED`**| ||**`29.12.2008.`**| |**`EXHIBIT P3`**|**`COPY OF JUDGMENT IN WPC NO.11605/2009 OF`**| ||**`THIS HON'BLE COURT, DATED 11.11.2014.`**| |**`EXHIBIT P4`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(A)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(B)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(C)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 1.10.2015.`**| ## W.P.(C) No.33161/2016 ## **-:13:-** |**`EXHIBIT P4(D)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| |---|---| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(E)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(F)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(G)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(H)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P4(I)`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 11.6.2015.`**| |**`EXHIBIT P5`**|**`COPY OF APPLICATION FILED BY THE`**| ||**`PETITIONER BEFORE THE 1ST RESPONDENT`**| ||**`DATED 4.11.2015.`**| |**`EXHIBIT P6`**|**`COPY OF JUDGMENT IN WPC NO.4210/16 OF`**| ||**`THIS HON'BLE COURT, DATED 4.2.2016.`**| |**`EXHIBIT P7`**|**`COPY OF NOTICE ISSUED BY THE 1ST`**| ||**`RESPONDENT, DATED 21.4.2016.`**| |**`EXHIBIT P8`**|**`COPY OF REPLY SUBMITTED BY THE`**| ||**`PETITIONER DATED 11.5.2016.`**| |**`EXHIBIT P9`**|**`COPY OF NOTICE ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 18.5.2016.`**| |**`EXHIBIT P10`**|**`COPY OF NOTICE ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 23.5.2016.`**| |**`EXHIBIT P11`**|**`COPY OF LETTER SUBMITTED BY THE`**| ||**`PETITIONER DATED 25.5.2016.`**| |**`EXHIBIT P12`**|**`COPY OF ORDER ISSUED BY THE 1ST`**| ||**`RESPONDENT DATED 2.6.2016.`**|