Continuing breach and limitation: failure to furnish ST-1 forms allowed recovery of sales tax paid with interest.

A suit for recovery based on failure to furnish ST-1 forms was held to be governed by Article 55 of the Limitation Act, 1963, because the default was treated as a continuing breach that ended only when the plaintiff paid the sales tax in 2001. On the facts, the defendant's admissions, the invoices, and the absence of any proof that the forms were supplied established that the plaintiff's tax payment resulted from the defendant's default. The court therefore found the suit within limitation and upheld the plaintiff's right to recover the sales tax paid, together with interest, so the decree in its favour was sustained.

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Issues: (i) Whether the suit for recovery was barred by limitation in view of the alleged delay in filing the recovery action. (ii) Whether the plaintiff was entitled to recover the sales tax amount paid by it because of the defendant's failure to furnish the ST-1 forms.

Issue (i): Whether the suit for recovery was barred by limitation in view of the alleged delay in filing the recovery action.

Analysis: The claim was governed by Article 55 of the Limitation Act, 1963, as one for compensation for breach of contract. The failure to furnish the ST-1 forms was treated as a continuing breach, and the breach was held to have ceased only when the plaintiff discharged the statutory liability by depositing the tax with the authorities in 2001.

Conclusion: The suit was within limitation and was not barred.

Issue (ii): Whether the plaintiff was entitled to recover the sales tax amount paid by it because of the defendant's failure to furnish the ST-1 forms.

Analysis: The defendant's admissions in pleadings and cross-examination showed that the goods were received, payments were made, and the ST-1 forms were not supplied. The invoices also reflected that the goods were sold against sales tax forms. No evidence was produced to show that the required forms had been furnished. On these facts, the plaintiff's payment of sales tax was occasioned by the defendant's default.

Conclusion: The plaintiff was entitled to recover the amount paid towards sales tax, with interest.

Final Conclusion: The decree in favour of the plaintiff was sustained and the appeal failed on merits.

Ratio Decidendi: Where a party breaches a contractual or statutory obligation to furnish sales tax forms and that default continues until the other party is compelled to pay the tax, limitation under Article 55 runs from the cessation of the continuing breach, and the paying party may recover the amount so paid.

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