CHENNAI, APR 27, 2015: THE appellant, a wing of the Government of Tamil Nadu, engaged in the manufacture of steel metal products, supplying their entire goods to the Tamil Nadu Civil Supplies Corporation, another undertaking of the State, claimed refund of duty paid on the ground that the goods supplied to the Tamil Nadu Civil Supplies Corporation are exempt from payment of duty under Notification 111/88-CE. The Department, rejected the said claim on the ground of unjust enrichment and held that the decision in Mafatlal Industries Ltd. - Vs - Union of India & Ors. - 2002-TIOL-54-SC-CX-CBdoes not in any way come to the rescue of the appellant and also further held that the appellant is not a "State" as envisaged under Article 12 of the Constitution of India and, therefore, is not liable to claim refund.
The appellant was unsuccessful before the Commissioner (Appeals) and also the Tribunal. The present appeal is directed against the order of the Tribunal.
After hearing the appellant, (there was no appearance from department side) and going though the record, the High Court held:
The meaning of "State" has been enlarged by the Supreme Court in very many decisions, more particularly by the Constitution Bench of the Supreme Court in the case of Pradeep Kumar Biswas - Vs - Indian Institute of Chemical Biology (2002 (5) SCC 111) and The Supreme Court, in Zee Telefilms Ltd. - Vs - Union of India - 2005-TIOL-184-SC-MISC-LB.
Keeping in mind the enunciated principles laid down by the Supreme Court, a cursory reading of the order passed by the Tribunal, reveals that the Department itself has accepted that the appellant is a State funded, State controlled and State monitored organisation supplying goods to Civil Supplies Corporation, which is another organ of the State. The order further reveals that the goods supplied by the appellant to the Tamil Nadu Civil Supplies Corporation are used in relation to Public Distribution System. In such a backdrop, this Court is unable to understand as to the basis on which Tribunal has held that there is nothing in the nature of activity of the appellant that is relatable to "State" for the benefit of the people and, thereby, the scope of unjustly enriching themselves gets squarely attracted and that the appellant falls outside the said purview. It would not be out of context here to state that Public Distribution System is a primary concern of the State and the appellant is supplying goods to the Tamil Nadu Civil Supplies Corporation and that both the entities are State funded, State controlled and State monitored organisations and are discharging duties for the welfare of the people of the country.
If the finding as recorded by the Tribunal is accepted that the appellant cannot be held to be a "State" as defined under Article 12 of the Constitution, then the said finding is in direct conflict with the stand of the Department that the appellant is a State funded, State controlled and State monitored organisation. Further, as accepted by the Department, the appellant organisation is a State funded, State controlled and State monitored organisation, more particularly instituted by the Tamil Nadu Small Industries Corporation Ltd., an undertaking of the State Government, the principles as enunciated by the Supreme Court in Pradeep Kumar Biswas case (supra) as followed in Zee Telefilms case (supra) is squarely attracted to the facts of the present case and the appellant will well fall within the definition of "State".
In the light of the reasons stated above, this Court has no hesitation to hold that the appellant falls squarely within the definition of "State" as propounded by the Supreme Court. Accordingly, the 1st substantial question of law is answered in favour of the appellant and against the Revenue.
Regards
Prarthana Jalan
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