TaxTMI 
TaxTMI 
1980 (7) TMI 240
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....he High Court, as detailed below, questioning the levy. Defendants in Writ Petitions Nos. Years for which tax was levied O.S. No. 28 of 1976 2602 to 2610 of 1967 1957-58 to 1965-66 O.S. No. 29 of 1976 2798 to 2801 of 1967 1962-63 to 1965-66 O.S. No. 31 of 1976 2641 to 2649 of 1967 1957-58 to 1965-66 O.S. No. 39 of 1976 2712 to 2716 of 1967 1961-62 to 1965-66 O.S. No. 37 of 1976 2707 to 2711 of 1967 1961-62 to 1965-66 O.S. No. 34 of 1976 2736 to 2739 of 1967 1962-63 to 1965-66 O.S. No. 30 of 1976 2621 to 2624 of 1967 1962-63 to 1965-66 O.S. No. 27 of 1976 2626 to 2628 of 1967 1962-63 to 1965-66 O.S. No. 32 of 1976 2612 to 2630 of 1967 1957-58 to 1965-66 O.S. No. 33 of 1976 2637 to 2640 of 1967 1961-62 to 1965-66 O.S. No. 35 of 1976 2765 to 2768 of 1967 1962-63 to 1965-66 O.S. No. 41 of 1976 2769 to 2775 of 1967 1958-59 to 1965-66 The High Court allowed the writ petitions following an earlier decision in Larsen and Toubro Limited v. Joint Commercial Tax Officer, Madras[1967] 20 S.T.C. 150., against which the plaintiff in these suits had already filed an appeal in the Supreme Court. The Supreme Court reversed this Court....
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....h May, 1971. The entire tax, including the portion of the tax levied on the excise duty portion of the turnover, was refunded to the defendants in O.S. No. 31 of 1976. The defendants in O.S. No. 41 of 1976 filed W.M.P. Nos. 458 and 459 of 1970 for punishing the Deputy Commercial Tax Officer for contempt for not obeying the High Court's order for refund of the tax levied in the years 1963-64 and 1964-65. The High Court ordered even in those writ miscellaneous petitions on 24th April, 1971, to refund the amount within 15 days. The Deputy Commercial Tax Officer thereafter refunded a sum of Rs. 17,230.94 to the defendants in the suit on 6th May, 1971. In all, a sum of Rs. 99,628.67 has been refunded to the defendants in O.S. No. 41 of 1976 as indicated above. Subsequently, the Government of India promulgated Ordinance No. 4 of 1969 validating the levy of sales tax already made, including the levy on the excise duty portion of the turnover, and replaced the Ordinance by Central Act No' 28 of 1969. Section 9(1) of that Act, which came into force on 30th August, 1969, lays down that: "Notwithstanding anything contained in any judgment, decree or order of any court or other authority....
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.... High Court striking down subsections (2) and (2A) of section 8 of the Central Sales Tax Act, 1956. This position has been made clear by the High Court's orders in Writ Petitions Nos. 2602 to 2610, 2648, 2649 and 2641 to 2647 of 1967, and the Supreme Court's orders in S.L.P. Nos. 2012 to 2023 of 1973 made subsequent to the date of promulgation of Ordinance No. 4 of 1969. In view of the Supreme Court's judgment, these suits have to be dismissed in limine. The Deputy Commercial Tax Officer, Kovilpatti, revised the assessments after the decision of the High Court in the said writ petitions, holding that sub-sections (2) and (2A) of section 8 of the Central Sales Tax Act, 1956, were ultra vires and the levy of sales tax on the excise duty portion of the turnover was invalid in law. Thereafter, the original orders of assessment are no longer in force. The Deputy Commercial Tax Officer, who has the power to rectify the mistakes in assessment, has not exercised the power, and has not reassessed the turnover. He has no power to make a reassessment after the expiry of five years from the end of each of the assessment years. The Supreme Court's decision in State of Madras v. Nataraja Muda....
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....1), where it has been held that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act (74 of 1956) offended articles 301 and 303(1) of the Constitution of India and are unconstitutional and void, and that while under the Tamil Nadu General Sales Tax Act the excise duty is deductible from the turnover, no such provision has been made for deduction of the excise duty from the turnover of inter-State sales or purchases under the Central Sales Tax Act, 1956, with the result that unequal burden will fall on differences in the quantum of turnover because of allowance in one case and disallowance in another, of deduction of excise duty, and that will impede the freedom of inter-State trade, commerce and intercourse under article 301 of the Constitution of India and is not saved by article 303. The State filed an appeal against the decision in only one of the writ petitions disposed of in that batch of cases in 20 S.T.C. 150 namely W.P. No. 836 of 1966, which had been filed by one Nataraja Mudaliar with certificate granted by this Court. It was held by the Supreme Court in that case (22 S.T.C. 376) that sub-sections (2), (2A), and (5) of section 8 of the Central Sales Ta....
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....sum of Rs. 1,37,040.88 to the defendants in O.S. No. 31 of 1976 on 6th May, 1971. This sum of Rs. 1,37,040.88 is stated to be the entire tax levied under the Central Sales Tax Act, 1956, inclusive of the portion of the tax levied on the excise duty portion of the turnover. The defendants in O.S. No. 41 of 1976, out of which A.S. No. 623 of 1978 has arisen, also filed W.M.P. Nos. 458 and 459 of 1970 for punishing the Deputy Commercial Tax Officer for contempt for not obeying the High Court's order made in W.P. Nos. 2769 to 2775 of 1967, and those petitions had been dismissed on 23rd April, 1971, after the refund of a total sum of Rs. 99,628.67 in August, September and October, 1968. During the course of the arguments, the learned counsel for the respondent submitted that the defendants in the other suits also filed contempt petitions before this Court and that they were also dismissed on 23rd April, 1971, as detailed below: Defendants in Appellants in W.M.P. Nos. O.S. No. 28 of 1976 A.S. No. 612 of 1978 8233 to 8241 of 1970 O.S. No. 29 of 1976 A.S. No. 613 of 1978 96 to 99 of 1970 O.S. No. 34 of 1976 A.S. No. 615 of 1978 119 to 122 of 1970 O.S. No. 37 of 1976 A.S. No.....
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....as invalid in law. The plaintiff did not file any appeal against that decision so far as these defendants are concerned, and consequently the judgments in the writ petitions have become final and cannot be questioned by the plaintiff in these suits and the suits should have been dismissed. Ordinance No. 4 of 1969, which was replaced by Central Act No. 28 of 1969, validated the levy of sales tax on the excise duty portion of the turnover; but the Ordinance and the Act have nothing to do with the decision of the High Court striking down sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act. Therefore, the suits are barred by res judicata and should have been dismissed. (3) The Deputy Commercial Tax Officer, Kovilpatti, revised the assessments after the decision of the High Court in the writ petition, holding that subsections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, are ultra vires and the levy of sales tax on the excise duty portion of the turnover is invalid in law, and thereafter the original orders of assessment are no longer in force and the Deputy Commercial Tax Officer, who has power to rectify the mistakes in assessment, has not ....
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.... "Though on inter-State sales of declared goods falling within section 8(2), the rate of tax to be imposed on that cannot exceed two per cent in view of section 15(1), nevertheless, there can be varying rates in different States, but all below two per cent. Likewise inter-State sales of goods other than declared goods are chargeable at the rate of ten per cent or at the rate prevailing in the taxing State, whichever is higher. If, however, under the law of the taxing State, local sales of any goods by a dealer are exempt from tax generally or subject to tax at lower than two per cent such exemption or lower rate of tax will apply to turnover of inter-State sales of such goods. This is what is provided in sub-section (2A) of section 8. The explanation to the sub-section limits the scope of applicability of local exemptions in certain circumstances to inter-State sales. Sub-section (5) of section 8 confers power upon the State Government to allow by notification exemption or lower rate of tax on inter-State sales of any class or classes of specified goods, notwithstanding the fact that under the State law there is no exemption or a different rate of tax obtains. The effect of such....
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....he object to discriminate between one State and another ..... The Central Sales Tax Act is enacted under the authority of the Union Parliament, but the tax is collected through the agency of the States and is levied ultimately for the benefit of the States and is statutorily assigned to the States ..... The Central sales tax though levied for and collected in the name of the Central Government is a part of the sales tax levy imposed for the benefit of the States. By leaving it to the States to levy sales tax in respect of a commodity on intra-State transactions no discrimination is practised: and by authorising the State from which the movement of goods commences to levy on transactions of sale Central sales tax, at rates prevailing in the State, subject to the limitation already set out, in our judgment, no discrimination can be deemed to be practised. .........The view expressed by the High Court that sections 8(2), 8(2A) and 8(5) infringe article 301 and article 303(1) cannot be sustained." Regarding the validity of sales tax on the excise duty portion, the learned Judges have observed at page 393 of the Reports: "If under the Madras General Sales Tax Act in computing t....
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....udicata', it is observed in Corpus Juris, 'is a rule of universal law pervading every well regulated system of jurisprudence, and is put upon two grounds, embodied in various maxims of the common law; the one, public policy and necessity, which makes it to the interest of the State that there should be an end to litigation-interest republicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for the same cause-nemo debet bis vexari pro eaden causa'. In this sense the recognised basis of the rule of res judicata is different from that of technical estoppel. 'Estoppel rests on equitable principles and res judicata rests on maxims which are taken from the Roman Law.' Therefore, the argument that res judicata is a technical rule and as such is irrelevant in dealing with petitions under article 32 cannot be accepted. The same question can be considered from another point of view. If a judgment has been pronounced by a court of competent jurisdiction it is binding between the parties unless it is reversed or modified by appeal, revision or other procedure prescribed by law. Therefore, if a judgment has been pronounced by the High Court in a w....
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....f the writs, orders or directions which the High Court can issue in appropriate cases under article 226 is concurrent with the scope of similar writs, orders or directions which may be issued by this court under article 32. The cause of action for the two applications would be the same. It is the assertion of the existence of a fundamental right and its illegal contravention in both cases and the relief claimed in both the cases is also of the same character. Article 226 confers jurisdiction on the High Court to entertain a suitable writ petition, whereas article 32 provides for moving this court for a similar writ petition for the same purpose. Therefore, the argument that a petition under article 32 cannot be entertained by a High Court under article 226 is without any substance; and so the plea that the judgment of the High Court cannot be treated as res judicata on the ground that it cannot entertain a petition under article 32 must be rejected. .....we hold that if a writ petition filed by a party under article 226 is considered on the merits as a contested matter and is dismissed the decision thus pronounced would continue to bind the parties unless it is otherwise modifie....
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....-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, in view of the Supreme Court's decision in State of Madras v. Nataraja Mudaliar[1968] 22 S.T.C. 376 (S.C.). However, since that wrong decision has not been superseded by any appeal or other procedure like review, which the law provides, it would be binding on the parties to that extent. In Devilal Modi v. Sales Tax Officer[1965] 16 S.T.C. 303 (S.C.); [1965] 1 S.C.R. 686. the appellant, who had been assessed to sales tax, challenged the order of assessment by a writ petition in the High Court. On the dismissal of the petition by the High Court, he appealed to the Supreme Court. At the hearing of the appeal, he sought to raise some additional contentions. But the appeal was dismissed as the additional contentions were not permitted to be raised. Thereupon another writ petition was filed raising those additional contentions and challenging the order of assessment for the same year. The High Court dismissed the petition on merits. The Supreme Court has held on appeal that the appeal should be dismissed as the principle of constructive res judicata is applicable in the circumstances of the case. This decisio....
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.... issue of law was wrongly interpreted in ignorance of a binding precedent, or if in a subsequent binding precedent the law had been interpreted otherwise, the earlier decision on the question of law, which has attained finality, will operate as res judicata between the parties in a subsequent suit or proceeding. ......Article 141 of the Constitution enacts that the law declared by the Supreme Court 'shall be binding on all courts' within the territory of India. This means that when the Supreme Court expresses its view on any particular point of law, such expression of view shall be considered as overriding a contrary view expressed on the point in an earlier decision of any court. Even obiter dicta of the Supreme Court if deliberately made upon a question with the intention of settling the law, are binding on all courts. However, article 141 does not confer on the Supreme Court any legislative function. The Supreme Court only interprets the law as it stands, but does not amend the law. Their Lordships' decision declared the existing law but did not purport to enact any fresh law." This decision is in accord with the earlier decision of the Supreme Court in State of West Benga....
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...., and the assessing officer adopted the turnover as disclosed in the accounts and determined the total turnover and taxable turnover on 5th October, 1962, and 29th October, 1963, respectively. But in July, 1964, there was a surprise inspection of the residence of one Pitchaimuthu which resulted in the discovery of 29 slips of which 8 were held to refer to the assessees. In another surprise inspection of the records of two individuals under whom Pitchaimuthu was working, 27 more slips were recovered out of which 25 were said to relate to the assessees. On the basis of the slips relating to the assessees, the assessing officer issued a notice under section 16 of the Tamil Nadu General Sales Tax Act, 1959, requiring them to show cause why the turnover for each of these two years should not be determined as having escaped assessment. After following the prescribed procedure, by an order dated 15th December, 1964, the assessing authority by best of judgment determined the escaped turnover for the two years, at higher amounts. The assessees preferred two writ petitions against those orders alleging that section 16 of the Tamil Nadu General Sales Tax Act authorised only the assessment of ....
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....ent order and, in case where by a writ of certiorari, the order has been quashed and removed from the record, the validating provision could not be applied. The matter is not res integra. Number of cases have considered similar arguments. Discussing about the validating statutes in general, the Supreme Court in Shri P.C. Mills v. Broach Municipality[1971] 79 I.T.R. 136 (S.C.); A.I.R. 1970 S.C. 192. made the following oft-quoted observations: 'When a legislature sets out to validate a tax declared by a court to be illegally collected under ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is b....
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.... 136 (S.C.); A.I.R. 1970 S.C. 192. Section 9(1) of Central Act No. 28 of 1969 has validated the levy, collection, action taken or thing done under the principal Act, as amended by that Act, by saying that notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the 9th day of June, 1969, shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly, all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been done or taken in accordance with law. In Chhotalal Keshavram v. Additional Assistant Commissioner of Sales Tax, Raipu....
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....ts already decided. But this rule does not hold good when the legislature alters the law retrospectively. Retrospective alteration has the necessary consequence that the law which was construed by the court before its amendment ceases to exist. In such a situation, the declaration of the law made by the court loses its value and efficacy and such a declaration cannot operate as res judicata between the parties after the law itself has been amended. The learned judges have observed in that decision that: "No judgment of a court can take away the power of the legislature to make law with retrospective effect. If there is any conflict between the declaration of law made by a court and the exercise of legislative power, the declaration of law made by the court will yield to the legislative enactment." We hold that the Parliament was competent to enact section 9(1) of Central Act No. 28 of 1969 with retrospective effect and that it has taken away the effect of the decision of this Court in the writ petitions filed by the defendants in these suits in so far as it relates to the levy of tax on the excise duty portion of the turnover. But, having regard to the decisions referred to a....
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....a, as seen from Kishen Sahai v. Bakhtawar Singh[1898] I.L.R. 20 All. 237; [1898] 18 A.W.N. 24. Regarding the contention that there was total failure of consideration, the learned Chief Justice observed that there was not a total failure of consideration, and an action for money had and received does not lie if the consideration fails only in part and that it was not disputed that the defendant was in possession of the land in question at the time of the notification and there can be no question that the Government succeeded in recovering possession of the land and in getting rid of whatever claim the defendant had to the land, by means of these proceedings and by means of the payment, and therefore it is impossible to say that there was no consideration for the payment. Broomfield, J., who agreed with Beaumont, C.J., in the view that it could not be stated that there was failure of consideration even if the defendant is not really the owner of the land, has observed regarding the other question that to all intents and purposes the money was paid under compulsion of legal process and that being so, the plaintiff has no ground of action under section 72, Contract Act, even if ther....
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....the petitioners became final, because one of the petitioners did not appeal against the assessment and had paid a portion of the assessed tax and the appeal preferred by the other petitioner was dismissed as time-barred. The department demanded payment of the tax from the petitioners on the ground that once the assessments had become final, the amounts charged thereunder remained payable and the State was entitled to collect it. The petitioners had filed writ petitions for prohibiting the officers from recovering the amounts. The learned Judges have observed: "It appears to us that the words 'levy' and 'collection' are used in article 265 of the Constitution in a comprehensive manner and that they are intended to include and envelop the entire process of taxation......And, what article 265 enjoins is that every stage in this entire process must be authorised by the law. ......The petitioners are not objecting to any mode of collection. Their objection is more fundamental. They object to the collection itself. The answer given on behalf of the State to this objection of theirs is that the assessment has become final. Now, to say that an assessment has become final is not equivale....
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....o demand payment of that portion of the Central sales tax levied on the excise duty portion of the turnover in these cases. In State of Madhya Pradesh v. Bhailal Bhai[1964] 15 S.T.C. 450 (S.C.). the tax provisions under which the taxes have been assessed and paid were declared void in Mohammad Siddiq v. State of Madhya BharatA.I.R. 1956 M.B. 214. A portion of the tax had already been paid by the assessees. The Supreme Court observed: "It cannot now be disputed that this payment was made under a mistake within section 72 of the Indian Contract Act and so the Government to whom the payment has been made by mistake must in law repay it. The question is: whether the relief of repayment has to be sought by the taxpayer by an action in a civil court or whether such an order can be made by the High Court in exercise of its jurisdiction under article 226 of the Constitution. The jurisdiction conferred by article 226 is in very wide terms. This article empowers the High Court to give relief by way of enforcement of fundamental rights and other rights by issuing directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiora....
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....against the contention of the defendants that the plaintiff in these suits is not entitled to recover the portion of the sales tax levied under the Central Sales Tax Act, 1956, on the excise duty portion of the turnover. In Deputy Commercial Tax Officer v. Rayalaseema Constructions[1966] 17 S.T.C. 505 (S.C.)., their Lordships of the Supreme Court have observed: "In State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.[1958] 9 S.T.C. 353 (S.C.). this court held, agreeing with the Madras High Court, that the provisions introduced by the Madras General Sales Tax (Amendment) Act, 1947, were ultra vires the powers of the Provincial Legislature. After considering the relevant constitutional provisions, this court came to the definite conclusion that the State Legislature had no competence to impose a tax on 'indivisible building contracts'. There is therefore no doubt that the relevant provisions of the Madras General Sales Tax Act in so far as they deal with 'indivisible building contracts' are ultra vires the powers of the State Legislature and therefore void. It follows that in the instant case, the sales tax authorities have acted outside the Act in making an assessment on th....
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....due by contract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same. ......The Privy Council decision in Shiba Prasad Singh v. Srish Chandra Nandi(3) has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it. No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of section 72 of the Indian Contract Act, even though such a distinction has been made in America-vide the passage from Willoughby on the Constitution of the United States, Vol. I, p. 12 op. cit. To hold that tax paid by mistake of law cannot be recovered under section 72 will be not to interpret the law but to make a law by adding some such words as 'otherwise than by way of taxes' after the word 'paid'. If this is the true position, the....
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....tling the party to recover the money back are that the monies must have been paid by mistake or under coercion. If mistake either of law or of fact is established, lie is entitled to recover the moneys and the party receiving the same is bound to repay or return them irrespective of any consideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like. If once that circumstance is established the party is entitled to the relief claimed. If, on the other hand, neither mistake of law nor of fact is established, the party may rely upon the fact of the monies having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion. ...No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is not more to blame than the other. Estoppel arises only when the plaintiff by his acts or conduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to ....
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....of it can be said to constitute a collateral activity not specifically and expressly included in the jurisdiction of the appropriate authority as such. The finding of the appropriate authority that a particular transaction is taxable tinder the charging section of the Act, is not a finding on a collateral fact. This is equally true of the appropriate authorities functioning under other similar Sales Tax Acts and the Income-tax Act. The expression "assessment made" in section 20 of the Bombay Sales Tax Act, 1946, cannot mean only an assessment properly or correctly made. It takes in all assessments made or purported to have been made under the Act. An order of assessment, though erroneous and though based on an incorrect finding of fact, is nevertheless an order of assessment within the meaning of the section; and section 20 in terms provides that it will not be called in question in any civil court. An assessment based on an erroneous finding about the character of the transaction is not an assessment made without jurisdiction and is not outside the purview of section 20. The words used in section 20 are so wide that even erroneous orders of assessment made would be entitled to cla....
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....ms to us plain that the words used in this section are so wide that even erroneous orders of assessment made would be entitled to claim its protection against the institution of a civil suit...... In the present case, the appellant wants relief of refund of tax which is alleged to have been illegally recovered from it by the respondent, and the ground on which the said relief is claimed is that at the time when the tax was recovered, the appellant was under a mistake of fact and law. According to the appellant, even the respondent might have been labouring under the same mistake of fact and law, because the true constitutional and legal position in regard to the jurisdiction and authority of different States to recover sales tax in respect of outside sales was not correctly appreciated until this court pronounced its decision in the Bengal Immunity Co.'s case[1955] 6 S.T.C. 446 (S.C.); [1955] 2 S.C.R. 603. That being so, can it be said that the Act provides an appropriate remedy for recovering a tax alleged to have been illegally levied and collected, where the party asking for the said relief pleads a mistake of fact and law?...... Section 13 of the Act expressly provides fo....
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....ngly refunded to the assessee. The assessee is not entitled to retain that money. The money can be got back by moving the civil court. In State of Kerala v. N. Ramaswami Iyer & Sons [1966] 18 S.T.C. 1 (S.C.); 61 I.T.R. 187 (S.C.). the respondents were assessed to sales tax under the Travancore-Cochin General Sales Tax Act, 1950, for the period 16th August, 1950, to 31st March, 1951, on a turnover which included tax collected from their constituents on their sales transactions. After having paid the tax, the respondents instituted a suit in the court of the District Judge for the recovery of the sum of Rs. 7,500 odd claiming that it was in excess of the tax lawfully due from them under the Act. It has been held that section 23A of the Act was incorporated in the Act after the suit was instituted and it did not exclude the jurisdiction of the civil court to try the suit which was properly instituted before it was enacted, that the jurisdiction of the civil court may be excluded expressly or by clear implication arising from the scheme of the Act, and where the legislature sets up a special tribunal to determine questions relating to rights or liabilities which are the creation of ....
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....les Tax Act (5 of 1946), it is true, contained section 20 which in terms enacted that an assessment shall not be called in question in any civil court, but the court in Kamala Mills' case[1964] 15 S.T.C. 144 (S.C.). held that the jurisdiction of the civil court to entertain a suit for tax assessed under the Act was excluded expressly, and by the clear implication of the Act as well... In Basappa's case(3), the taxpayer sought in an action for refund of tax paid a decree on the plea that the transactions in respect of which tax was levied were 'outside sales', and it was held that in the absence of express exclusion of the jurisdiction of the civil court, the action for refund of tax was maintainable. But the nature of the transactions taxed in the Kamala Mills' case[1965] 16 S.T.C. 613 (S.C.); 57 I.T.R. 643 (S.C.). was not different. In the judgment in Kamala Mills' case(2), it was pointed out that the jurisdiction of the civil court to entertain a suit for refund of tax paid in compliance with an order of assessment may be excluded either expressly or by necessary implication, and as the scheme of the Bombay Sales Tax Act, 1946, indicated that a complete machinery was set up by co....
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.... The High Court, however, upheld the order of the Tribunal. Subsequently the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954, which in effect provided that sales tax collected by a dealer would form part of the turnover of the dealer and which also nullified the effect of an order of the court or tribunal to the contrary, was passed. The officer then issued to the petitioners notices in form B under rule 12 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, calling upon them to remit the amount refunded to them. The petitioners challenged the demand in proceedings under article 226 of the Constitution. Referring to the decision of Rajagopala Ayyangar, J., in M.M. Muthukaruppan Chettiar v. Deputy Commercial Tax Officer(5) the learned Judges observed that: (1) [1964] 15 S.T.C. 144 (S.C.). (4) [1960] 11 S.T.C. 443. (2) [1965] 16 S.T.C. 613 (S.C.); 57 I.T.R. 643 (S.C.). (5) [1960] 11 S.T.C. 220. (3) [1968] 22 S.T.C. 376 (S.C.). "The learned Judge held that, if the tax had remained uncollected, the provisions of section 17 would enable a levy or collection at the enhanced rate, but those provisions would not ena....
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....tax already paid on the provisional assessment, the assessing authority shall inform the dealer what the final assessment is and that no further amount is due from him towards it.' Rule 12, on its terms, will only apply to the case of an original assessment. If the tax due under the final assessment is found to be lower than the tax paid on the provisional assessment, the officer is directed to issue a notice in form C for refunding the excess tax. If the former is less than the latter, a notice in form B is to be issued, making a demand on the assessee for the amount of the deficit. No question will arise, if the amount paid by way of provisional assessment is equal to that assessed as tax. What the rule contemplates is a mere arithmetical computation after the order of assessment is made. There is no power to alter or correct the amount or to issue notices in form B or C more than once............When an assessment is varied in appeal or revision, rule 12 does not enable an issue of form B or C notice to collect the deficiency in or refund the excess payment of tax. The rule-making authorities have, therefore, provided separate rules for the purpose. Rules 14-A and 15(2) of th....
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..... In Bhailal Bhai v. State of Madhya Pradesh[1960] 11 S.T.C. 511. which came up before a Division Bench of the Madhya Pradesh High Court, by a notification dated 24th October, 1953, issued by the Government under section 5 of the Madhya Bharat Sales Tax Act, 1950, sales tax was chargeable at a certain rate on "leaves of tobacco, manufactured tobacco used for smoking, eating and for snuff, and tobacco chura used for the manufacture of bidis" sold by an importer. Locally grown tobacco was not, however, subject to a similar tax. The writ petitioners before that High Court sold imported as well as locally grown tobacco, and the sales tax authorities assessed them to sales tax on the basis of a taxable turnover determined after deducting from their turnover the sale of "domestic tobacco" and recovered the tax accordingly. The petitioners filed a petition under article 226 of the Constitution of India challenging the validity of the imposition of sales tax on tobacco imported by them on the ground that it contravened the provisions of article 304(a) of the Constitution of India and claimed a refund of the tax already collected from them. The High Court held that the imposition of sale....
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.... as well as of fact and that where it is once established that the payment, even though it be of a tax, has been made by a party labouring under a mistake of law, the party is entitled to recover the same and the party receiving the same is bound to repay or return it. The effect of the decision of the Supreme Court is that payment by the assessee of a tax, which is subsequently declared to be ultra vires, must be regarded as a payment made under mistake and the party receiving the same is bound to return the amount of tax irrespective of any consideration whether the moneys have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like." This decision also shows that a petition under article 226 of the Constitution of India for the issue of a writ of mandamus requiring the Sales Tax Officer to refund the tax illegally collected, could be filed. It would follow that a similar writ could be issued directing return of the tax wrongly refunded to the assessee. Then there can be no doubt that the suit which is in the nature of an alternative remedy would lie. Under these circumstances, we are unable to agree with the learned counsel for the....
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....as a permissible deduction in assessment under the Central Sales Tax Act, and held that in view of section 9(3) of the Central Sales Tax Act read with rule 7(1)(a) of the General Sales Tax Rules, 1950, "all deductions allowed under the State law to be made from the gross turnover in determining the net turnover shall be liable to deduction in determining the taxable turnover under the Central Sales Tax Act, 1956", and accordingly dismissed the tax revision cases. Their Lordships of the Supreme Court observed in their judgment that the legal position has been changed as a result of the issue of the Central Sales Tax (Amendment) Ordinance, 1969 (No. 4 of 1969), which was promulgated on 9th June, 1969. Clause 9 of that Ordinance provides: "Validation of assessments, etc.-(1) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the commencement of this Ordinance, shall be....
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....ts at Shimoga. They have been selling arecanuts to the plaintiffs during the years 1961 to 1964. They have been charging and collecting Central sales tax from the plaintiffs on the sales of arecanuts, on the basis that the transactions were inter-State sales attracting the levy of sales tax under the Central Sales Tax Act, 1956. The tax thus collected has been shown separately in the various invoices issued by the defendants in each of the suits. The sales tax collected by the defendants from the plaintiffs had been originally remitted by the defendants to the Mysore sales tax authorities. Subsequently, the Supreme Court on 10th November, 1964, held in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons[1965] 16 S.T.C. 231 (S.C.). that though section 6 of the Central Sales Tax Act is the charging section, the liability to pay tax is subject to the other provisions of the Act, that section 9(2) provides that tax shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State, that the tax under the Central Act shall be levied in the same manner as the tax on the sale or purchase of goods ....
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....0. this Court, while construing a similar validating provision in section 17 of the Madras General Sales Tax (Third Amendment) Act, 1956, had expressed the view that the validating Act will not enable the collection of the refunded amount unless there are clear words to that effect in the amending Act. In that case a hotel proprietor was assessed to sales tax for 1953-54 at the enhanced rate of tax of 4 1/2 pies in the rupee under the proviso to section 3(1)(b) of the Madras General Sales Tax Act, 1939. Later, the said proviso to section 3(1)(b) was held to offend article 14 of the Constitution by the High Court. In view of the said decision, the Tribunal held that the assessee was liable to be taxed only at 3 pies in the rupee. On the basis of the order of the Tribunal which became final, a certain sum was refunded to the assessee in September, 1956. Subsequently, the proviso to section 3(1)(b) was replaced with retrospective effect by another proviso and the earlier assessments were validated. Thereafter the assessing authority issued a notice to the assessee requiring him to repay the sum refunded to him on the ground that by reason of the amendment made retrospectively the refu....
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....tax or not. If the impact of section 10 is ignored, as the High Court has done, then the assessments in question are liable to be reopened whether the assessees had collected the tax or not. The assessees cannot have the benefit of section 10(1) but not the burden of proof placed on them under section 10(2). If the reasoning of the High Court is correct then it is the assessees who will be deprived of the benefit of section 10(1) of the Amendment Act because there could not have been any finding in the original assessment orders that the assessees had not collected tax. The legislative intention is clear and beyond doubt. The law gives a further opportunity to the assessees whose assessments are sought to be reopened to satisfy the assessing authorities that they had not collected tax in respect of the turnovers in question. Rule 38 of the Mysore Sales Tax Rules must be read with section 10 of the Amendment Act. If so read, it is clear that the assessing authorities before reassessing the dealers should afford them reasonable opportunity to satisfy them that they have not collected tax." This decision does not help the defendants in the present case, for, those observations were....
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....tification the original assessment order was no longer in force and that was not the order sought to be rectified ..... Rule 38 itself speaks of 'any order' and there is no doubt that the rectified order is also 'any order' which can be rectified under rule 38." The learned counsel for the respondent relied upon the decisions in Harakchand Rugchand v. State of Mysore[1969] 23 S.T.C. 197., Hira Lal Rattan Lal v. Sales Tax Officer[1973] 31 S.T.C. 178 (S.C.)., Gill and Co. (P.) Limited v. Commercial Tax Officer, II Circle, Gadag[1973] 31 S.T.C. 336 (F.B.)., State of Andhra Pradesh v. Shah Jamnadas Amichand[1975] 35 S.T.C. 281. and State of Uttar Pradesh v. Modi Industries Limited[1977] 40 S.T.C. 73 (S.C.). and contended that no reassessment is necessary. In Harakchand Rugchand v. State of Mysore[1969] 23 S.T.C. 197., in respect of the assessment year 1957-58 the Commercial Tax Officer made an assessment order by which the turnover of the assessee relating to the sale of cloth held by him on 14th December, 1957, was also included in the assessment. But in the order made in the writ petition on 21st August, 1963, that part of the assessment was set aside, in the view that t....
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....the amending Act validated an order of assessment notwithstanding the pronouncement of this court to the contrary. So, on such retrospective validation, it was a good assessment when it was made and, under that assessment, the petitioner was liable to pay the tax, which, however, had been by then refunded to him, under an order of this court. If the order of assessment was, therefore, a good assessment, the tax paid by the petitioner should not have been refunded to him and if it was nevertheless refunded, because this court directed the refund, the Commercial Tax Officer on the validation of the assessment, had the power to call upon the petitioner to repay the amount which had been refunded to him. The liability to pay back that amount was a consequence which plainly flowed from retrospective validation. It is difficult to understand the assertion that the impugned demand was not possible unless there was a rectification of the assessment. The assessment, on validation, no longer suffered from the infirmity of invalidity which constituted the foundation of the judgment of this court in Writ Petition No. 1235 of 1962. As the assessment order now stands after its validation, ....
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.... Officer[1973] 31 S.T.C. 178 at 185 (S.C.). section 3 of the U.P. Sales Tax Act, 1948, provides for the levy of multi-point sales tax. Section 3-D provided for a single point tax at the stage of first purchase by a dealer in respect of foodgrains and certain other goods and enabled the State Government to notify such goods. By notification dated 1st October, 1964, "foodgrains" were specified under section 3-D for single point tax at the stage of first purchase. The sales tax authorities sought to bring to tax, on the basis of section 3-D and the notification, the first purchases of processed or split foodgrains including dal on the ground that they constituted a separate item quite independent of the unprocessed or unsplit foodgrains. The Allahabad High Court in Tilok Chand Prasan Kumar v. Sales Tax Officer, Hathras, District Aligarh[1970] 25 S.T.C. 118., held that such a levy was invalid. Subsequent to that decision, the U.P. Sales Tax (Amendment and Validation) Act, 1970, replacing an Ordinance, was passed and explanation II was added to section 3-D(1) providing that "split or processed foodgrains shall be deemed to be different from unsplit or unprocessed foodgrains" and nothing....
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....o have been validly and lawfully done or taken. .........The contention that we should ignore section 7 of the amending Act is a contention difficult of acceptance. .........Consequently the expression 'foodgrains' in the notification will also have to be read in the same manner. This, in our opinion, is the reasonable way of reading the notification in the light of section 3-D, explanation II to that section and section 7 of the Act." In Gill and Co. (P.) Limited v. Commercial Tax Officer, II Circle, Gadag[1973] 31 S.T.C. 336 (F.B.)., after the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.). the petitioner filed writ petitions challenging the validity of the orders of assessment pursuant to which it had already paid the tax on inter-State sales which would not be liable to tax if they had been intrastate sales. The High Court allowed the writ petitions following the decision in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.). and quashed the assessment orders. Pursuant to the orders of the High Court the assessing authority refunded to the petitioner the entire tax paid by it. Subsequently, the Parliame....
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....uth v. State of OrissaA.I.R. 1956 S.C. 432. have observed: "Next comes section 9, validating all assessments made before 9th June, 1969. It opens with a non obstante clause overriding anything contained in any judgment, decree or order of any court or other authority. What this section in effect says is that the assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action taken or any thing done in relation to such assessment, reassessment, levy or collection under the provisions of the Act, shall be deemed to be valid and effective as if they were made under the provisions of the Act which stood amended by the amending Act......... It is indisputable that the introduction of sub-section (1A) of section 6 of the main Act has been given retrospective effect as if it has been in the original Act at the initial enactment itself. Such introduction of the said sub-section, therefore, in the words of the Supreme Court, has so fundamentally altered the conditions on which the decision in Yaddalam's case(2) was rendered that the said decision could not have been given in the altered circumstances. That means that the amendment has rendered the....
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.... in all these suits is unlawful under the changed circumstances, that the retention of that portion of the tax by the defendants is also unlawful and that the demand originally made has become effective and there is no need for any reassessment. In State of Andhra Pradesh v. Shah Jamnadas Amichand[1975] 35 S.T.C. 281., for the assessment year 1964-65 certain inter-State transactions of the petitioner in turmeric were taxed under the Central Sales Tax Act, 1956. But on appeal, following the decision in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.)., it was held that since such transactions were not amenable to local tax if they had taken place inside the State, they were also not liable to tax under the Central Act. Subsequently the Central Sales Tax (Amendment) Act (28 of 1969) was passed and thereupon the Commercial Tax Officer issued notices asking the petitioner to either claim exemption under section 10 of the Amendment Act or otherwise pay the amount as per the assessment validated by section 9 of that Act. The assessee filed a writ petition contending that a combined reading of sections 9 and 10 would mean that the assessments had to be reopened in order to determine the tax ....
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....he rate of sales tax during the course of the assessment year could not be applied to that assessment. The assessee then filed an application under section 11(8) of the Act for a direction for the payment of interest on the amount which had become refundable as a result of that judgment. The High Court held by its order dated 22nd February, 1966, that the assessee was entitled to interest at 2 per cent on the refundable amount. The assessee accordingly made an application to the revising authority to pass an order for refund of a certain sum with interest at 2 per cent. The revising authority, however, dismissed the application by order dated 28th December, 1968, on the ground that section 31 inserted in the Act by the U.P. Bikiri Kar (Sanshodhan) Adhiniyam, 1962, with retrospective effect has provided that notwithstanding the option exercised by the assessee, the tax would have to be computed in the light of the rates prevailing in the assessment year as if they were projected upon the turnover of the previous year. The assessee then filed an application under article 226 of the Constitution and the High Court held that its judgment dated 24th July, 1961 might be said to have beco....
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....upreme Court. The cases relied upon by the learned counsel for the plaintiff relate to assessments which had been validated retrospectively by enactments in which it is stated that notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the Act which was in force prior to the date of the decision holding that the particular provision was invalid in law, shall be deemed to be valid and effective as if such assessment, reassessment, levy or collection had been made, or action or thing taken or done under the provisions of the Act which had been revalidated as amended by the Amendment Act. These enactments also say that all acts, proceedings or things done or taken by any Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be and to have always been done or taken in accor....
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....r annum from 2nd February, 1974, and proportionate costs; and that in O.S. No. 41 of 1976 the plaintiff is entitled to payment of that portion of the tax refunded to the defendants, namely, Rs. 99,628.67, which is attributable to the excise duty portion of the turnover in that case, and to interest thereon at 6 per cent per annum from 2nd February, 1974, and proportionate costs. The suits regarding the balance are dismissed but without costs, having regard to the fact that the liability to pay interest has not been seriously disputed and the claim of the plaintiff for a portion of the amount claimed in O.S. Nos. 31 and 41 of 1976 has been disallowed only on the ground that the decision in the writ petitions filed by the defendants in those suits constitutes res judicata. Therefore, we allow A.S. Nos. 612, 613 and 615 to 622 of 1978 in part, namely, regarding the interest allowed by the trial court on the principal amounts claimed in those suits from the date of refund up to 1st February, 1974, and we allow A.S. Nos. 614 and 623 of 1978 in part except regarding the excise duty portion of the tax refunded to the defendants in those suits and the interest thereon from 2nd February, 19....