The Supreme Court has admitted a petition filed by IT firm Wipro Limited Infotech Group,a part of $ 5- billion Wipro Ltd,seeking refund of excess amounts paid towards sales tax in Karnataka.
A Bench headed by Justice DK Jain has admitted Wipros plea contending that the state was duty bound to refund and not forfeit excess sales tax paid by it under the Central Sales Tax Act 1956 (CST) and the Karnataka Sales Tax Act 1957 (KST).
The Karnataka High Court had held against the company as its returns indicated the amount as tax component of the sale price. The assessee submitted that any provision of forfeiture of excess amount of tax collected under a taxing statute premised on the equitable concept of unjust richment.
Stating that it had not retained money or benefits which in justice,equality and good conscience belongs to someone else, the petition said Wipro had apportioned the collected amount from consumers under the contract into basic price as well as the sales tax and paid the tax.
It said that its customers had contractually agreed to a fixed rate which was an all inclusive price and was not in any way concerned with the rate of sales tax which was to be levied.
An error in the invoice indicating a higher rate of tax than the applicable rate cannot,therefore,be taken to conclude that the tax was charged to the customer at a higher amount, the IT company said.
The assessee in its return had indicated certain amount collected by way of tax in respect of merchandise sold at a particular rate. Subsequently,it had remitted the tax component along with the returns after it found that for the relevant period,the particular product sold by it was either exempt from levy of tax or less tax was chargeable. Wipros explanation that it had never paid any tax out of the sale price and had not collected a part of the amount,though shown as tax collected in its return,did not find favour with the department,which concluded that the firm had contravened provisions of both the KST and CST Act and,thus liable to forfeiture of excess tax amount collected to the tune of more than Rs 1.23 crore.