Section 64A reimbursement of later-imposed sales tax from buyer despite completed performance, with no separate compensation

Where sales tax is lawfully imposed after a sale contract has been made, Section 64A of the Sale of Goods Act, 1930 permits the seller to recover the tax from the buyer unless the contract shows a different intention. The document notes that a revised assessment made after a later Supreme Court ruling was treated as within jurisdiction, and that the buyer could not avoid reimbursement merely because the contract had already been worked out or declaration forms had been furnished without prejudice. It also notes that separate interest or compensation on the tax amount was declined where genuine disputes existed, although reimbursement of the tax actually paid was allowed.

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Issues: (i) Whether the sales made by the plaintiff to the defendant were exigible to sales tax and whether the assessment could be revised in light of the later Supreme Court ruling; (ii) whether the buyer remained liable to reimburse the seller for sales tax under Section 64A of the Sale of Goods Act, 1930 after the contract had been worked out and irrespective of the buyer's objection to the revisional order; (iii) whether the plaintiff was entitled to interest or compensation on the amount paid towards sales tax.

Issue (i): Whether the sales made by the plaintiff to the defendant were exigible to sales tax and whether the assessment could be revised in light of the later Supreme Court ruling.

Analysis: The transactions were initially treated as exempt under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941, but the assessment was later reopened after the Supreme Court decision on similar State Trading Corporation transactions. The revisional authority acted within jurisdiction, and the revised assessment imposing sales tax was not shown to be illegal. The plaintiff's conduct in accepting the revisional process and paying the tax did not indicate any mala fide attempt to fasten an unlawful liability on the defendant.

Conclusion: The issue was decided in favour of the plaintiff.

Issue (ii): Whether the buyer remained liable to reimburse the seller for sales tax under Section 64A of the Sale of Goods Act, 1930 after the contract had been worked out and irrespective of the buyer's objection to the revisional order.

Analysis: Section 64A was treated as creating a statutory right in the seller to recover tax imposed after the contract, unless the contract showed a different intention. The Court rejected the restricted reading that the buyer's liability ended once the contract was substantially performed. The later imposition of sales tax formed part of the contractual burden, and the buyer could not avoid reimbursement merely because declaration forms had been furnished without prejudice.

Conclusion: The issue was decided in favour of the plaintiff.

Issue (iii): Whether the plaintiff was entitled to interest or compensation on the amount paid towards sales tax.

Analysis: Although the tax amount was recoverable from the defendant, the defendant had raised genuine disputes and the Court had to adjudicate the liability before reimbursement could be ordered. In those circumstances, no separate award for interest or compensation on the tax amount was justified.

Conclusion: The issue was decided against the plaintiff.

Final Conclusion: The suit succeeded only to the extent of reimbursement of the sales tax actually paid, with proportionate costs and interest at 6% per annum on the decretal amount, but the claim for additional compensation was refused.

Ratio Decidendi: Where tax is lawfully imposed after a sale contract has been made, Section 64A of the Sale of Goods Act, 1930 entitles the seller to recover that tax from the buyer unless the contract provides otherwise, and the buyer's reimbursement obligation is not confined to the period before completion of performance.

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