Torrent Power LTD. vs. State Of Gujarat

Held

The Court held that the respondent authorities were withholding the amount paid under protest by the petitioners for the year 2006-2007 without any assessment, reassessment, or revision order being passed. The Court found that the retention of this amount was not backed by any authority of law, violating Article 265 of the Constitution. The Court noted that the time limit for passing revision/reassessment orders under the GVAT Act had expired. It was also undisputed that the petitioners had paid the amount under protest and had not passed the incidence of such tax to any other person. The Court concluded that the petitioners had no other efficacious remedy as the refund claim could not be adjudicated under the GVAT Act and the authorities had no jurisdiction to grant such refund. Therefore, the Court allowed the petition, directing the respondents to refund the amount of Rs. 46,43,174 with simple interest at 6% per annum from 11.11.2015, with the exercise to be completed by 31.7.2019.

Facts

Torrent Power Ltd. (Petitioner No. 1) generated fly ash as a byproduct of electricity generation. As per a Ministry of Environment and Forest notification, fly ash was to be made available for at least 10 years without consideration for manufacturing ash-based products. A Memorandum of Understanding (MOU) with cement/brick manufacturers stipulated that fly ash was free of cost, but customers had to pay administrative expenses. The Petitioner did not pay GVAT on these administrative charges, believing they were not "sale price." An audit assessment for 2006-2007 by the Assistant Commissioner of Commercial Tax did not impose tax on these charges. However, in 2013, VAT authorities indicated a tax liability. Under protest, the Petitioner deposited Rs. 46,43,174 for the year 2006-2007, despite no adverse order being passed. The time limits for revision and reassessment under the GVAT Act expired. The Petitioner repeatedly requested a refund, but no action was taken, leading to the present writ petition.

Key Issues

1. Whether the administrative charges collected by the petitioner for making fly ash available constitute "sale price" under the Gujarat Value Added Tax (GVAT) Act, 2003, making them exigible to tax? (Section 2(28) of the GVAT Act). The Petitioner argued that since the fly ash itself was supplied free of cost as per a government notification, the administrative charges were not part of the sale price and thus not taxable under the GVAT Act. The Petitioner contended that the initial assessment order for 2006-2007 did not impose any tax liability on these charges. The Revenue contended that the administrative charges were indeed part of the consideration for the supply of fly ash and therefore taxable. The Petitioner also argued that the retention of the amount deposited under protest was without authority of law, violating Article 265 of the Constitution, as no assessment, reassessment, or revision order had been passed, and the statutory time limits for such actions had expired.