Law:

Section:

Sales Tax Act (VII of 1990)--- ----Ss.10 & 7---Refund of input tax---S.R.O. 1071(I)/2003 dated 25-11-2003---S.R.O. 609(I)/2004 dated 16-7-2004---Import---Refund was claimed on the ground that sales tax at import stage was paid at a value of Rs.9,280 per metric ton whereas subsequently the value for assessment of sales tax was reduced from Rs.9,280 to Rs.4,610, the claimant was entitled for refund at the reduced rate of value---Validity---Import was made on 19-5-2004 and 21-8-2004---In the first import value was Rs.9,280 per metric tone and in the second import value was Rs.4,610 as the same was reduced or fixed by the government on 16-7-2004---For purpose of first import, the values fixed on 16-7-2004 had no relevance as the effective date of operation of S.R.O. 609(I)/2004 was 16-7-2004, and the tax charged at a higher rate was refundable as the final product was also taxable---Tax paid at import at a higher value was adjustable within the purview of S.7 of the Sales Tax Act, 1990---S.R.O. 609(I)/2004, dated 16-7-2004 was to operate prospectively and not retrospectively---After 16-7-2004 when value stood reduced, the output tax also stood reduced, but input tax paid by the claimant at a higher value at an earlier date was adjust-able---Refund claimed by the taxpayer was as such very much in order---In VAT type of taxes, input tax was adjustable irrespective of increase or decrease of values, and S.2(46) of the Sales Tax Act, 1990 had nothing to do with such internationally accepted norm of taxation---Issuance of show-cause notice was not only wrong but was also tainted with mala fide intention and required an investigation as to why such a senior officer of department acted illegally and in an arbitrary manner---All notifications or orders take prospective effect and no retrospective effect could be given---In respect of imports made on 19-5-2004, the tax was paid at a value of Rs.9,280 per metric tone and such tax was refundable irrespective of subsequent decrease of value---Rejection order was simply based on mala fide---Under the Constitution all functionaries of the government were expected to work within the permissible norms of law; and where law had…

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