Tripura High Court: Demand for Refund of Unlawful Tax Deduction to be made Within Reasonable Time

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By Ann Clara Tomy

In the case of Sri Ashish Kumar Dey vs the State of Tripura&Ors., a division bench comprising of Hon’ble Justice Akil Kureshi and Hon’ble Justice S G Chattopadhyay dealt with a petition filed almost 5 years after rising of the cause of action for refund of tax deducted without legal basis.

Brief Facts

Petitioner, a goods carriage contractor, was awarded the contract for transportation of fertilizers, food grains etc. at various places for and on behalf of the State of Tripura. While being paid for the same,  VAT was deducted. According to Petitioner the mere transportation of goods does not invite VAT, therefore filed an RTI to get information about the tax deduction and then approached the State authorities for a refund of such tax amount to which he received no response. Following which the Petitioner has filed the present petition before the High Court.

Arguments Advanced

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Petitioners contended that as merely a transporter for fertilizers, seeds, food grains for the State of Tripura, there was no sale or transfer and therefore such transaction does not come under the purview of VAT. Further pointed out to the case of Sri Dipak Bhattacharjee Vs. State of Tripura & Other, where it was held that when a person transports goods on behalf of the consignor or the consignee, there is no transferring the property of goods either directly or by inference. The tax was therefore collected illegally since the transaction was not taxable and such collection is without the authority of law. On the point of delay in filing petition, Counsel for petitioners submitted that Petitioner hadn’t maintained all the records relevant to substantiate the claim and hence had to wait for the RTI information.

Court’s Observation and Conclusion

The court observed that to the transaction concerned, VAT is not payable however the petition under consideration is one which has been filed several years after the cause of action arose. Though the writ jurisdiction under Art 226 is not subject to statutory provisions of limitation, the discretionary power cannot be used in favour of a litigant who is not vigilant of his or her rights. Therefore, the principle of delay and laches is applicable. The consideration is what would the limitation be if the petitioner had to file a civil suit if such time has passed then unless a valid explanation or extraordinary reason is put forth, a petition cannot be entertained. The taxes concerned pertained to the financial year 2013-14. There is a delay of five years in raising demands. The RTI request was only made in January 2020 and request for a refund only in June 2020. Therefore the Petition is hopelessly delayed without any explanation. Hence even though such tax was not deducted lawfully, demand had to be made in a reasonable time as observed by the Supreme court in the case of Mafatlal Industries Ltd. & Ors. Vs. Union of India & Ors. On the ground of inordinate delay, the petition stood dismissed.


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