Case Brief: M/s Saraf Trading Corp. v State of Kerala

FACTS:
The appellants were exporters of tea, who purchased tea from the tea planters directly in open auction and thereafter exported the same to foreign countries. The appellant being the exporter of the aforesaid consignment claimed for exemption on the ground that purchase was exempted under Section 5(3) of the Central Sales Tax Act. The said claim for exemption was found to be genuine by the Assessing Authority, and was allowed in full. The appellant also made a claim for refund of tax collected from them by the seller at the time of purchase of tea. The said claim was rejected by the Assessing authority and it was held that they cannot claim for refund under Section 44 of the Kerala General Sales Tax Act since they have not paid the tax to the Department but it was the sellers who have paid the tax.
Being aggrieved by the aforesaid order, the appellant filed an appeal before the Deputy Commissioner (Appeals), who held that there is no question of refund in the present case to the appellant as they are not entitled to any such refund under the provisions of Section 44 of the KGST Act.
The appeal was filed therefrom to the Kerala Sales Tax Appellate Tribunal which held that there is no question of refund of tax in the case of the appellant since no tax had been demanded from the appellant for all the four years and therefore in those circumstances, there could be no question of refund under Section 44 of the KGST Act to the appellant. A Revision Petition was then filed by the appellant before the Kerala High Court which was also dismissed under the impugned judgment and order as against which the present appeals were filed.
ISSUE(S) FOR CONSIDERATION:
Whether the appellant/assessee would be entitled for refund of the tax which was paid by him to the seller, in view of the provisions of Section 44 of the KGST Act, 1963 and whether the appellant would at all be entitled to claim exemption under Section 5(3) of the CST Act, 1956, as at the time of sale, the appellant could not allegedly show any evidence that it was the penultimate sale.
ARGUMENTS BY THE APPELLANT:
It was submitted by the learned counsel that the appellant had admittedly paid the tax to the dealer at the time of occasion of sale made to it by the dealer namely the tea planters. It was also argued that department has received the tax paid in excess by the appellant and that there is a prohibition on the State to retain the excess tax in lieu of the provisions of Article 265 and 286 of the Constitution of India.
ARGUMENTS BY THE RESPONDENT:
The learned counsel appearing for the State refuted the aforesaid submissions and also stated that since there is a specific provision in the State Act for giving refund of the excess amount of tax, if any, paid only to the dealer and not to any other person, there cannot be a pro-active consideration in the facts and circumstances of the present case. The learned counsel for the State went a step further and submitted that the appellant is not entitled to claim any exemption under Section 5(3) of the CST Act in view of the fact that assessee could not produce any agreement at the time of purchase of the tea in the auction sale indicating that the purchase is made in relation to export.
HELD:
The Hon’ble Court held that the decision does not call for any interference. Further, the principles laid down in the case of Mafatlal would also not be applicable to the facts of the present case in view of the provisions of Section 44 of the KGST Act, which clearly refers to claim for refund. The said principle is not applicable in view of the fact that the statute involved specifically states that such refund could be made only to a dealer and not to any other person claiming for such refund. On the other hand, the decision of Mafatlal was rendered in the context of Section 11B of the Central Excise and Salt Act, 1944 where the expression is “any person”. Therefore, ratio of the decision of Mafatlal would not be applicable to the facts in hand.
Considering the facts and circumstances of the present case, the Court found no merit in these appeals.