TaxTMI 
TaxTMI 
2017 (3) TMI 1690
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....he learned Senior Counsel however would urge that the option for paying tax at the compounded rate having been exercised and the same being deemed to be a concluded contract, necessarily all the trappings of a contract would ensue and in such circumstance, the assessee; under Section 56 of the Indian Contract Act, 1872 (for brevity 'the Contract Act') could be absolved from the liability, flowing from the contract, on the ground of the obligation being impossible of performance. 4. The learned Senior Counsel would rely on Ganga Saran v. Firm Ram Charan Ram Gopal [A.I.R (39) 1952 SC (9)], Satyabrata Ghose v. Mugneeram Bangur & Co. and Another [A.I.R 1954 SC 44] and Naihati Jute Mills Ltd. v. Khyaliram Jagannath [A.I.R 1968 SC 522] to buttress the contention. It is argued that the impossibility of performance by itself extinguishes the obligation or duty and such impossibility would be akin to a discharge by the performance of the original promise, as has been found in M.D, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. [(2004) 9 SCC 619]. Mary v. State of Kerala and Others [(2014) 14 SCC 272] is cited only to indicate a different path trod as far as a sta....
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....nal for Local Self Government Institutions (Tribunal), which passed Exts.P9 and P9(a) orders respectively in the case of the quarry and the crusher. The interim order in fact stayed the decision of the Panchayath and the consequential direction of the Secretary to stop the unit. It is to be immediately noticed that the said interim orders would have had no effect and there could not have been a continuance of the quarry or crushing operation since, the stay of the decision of the Panchayath to decline license would not by itself result in the petitioner being permitted to carry on the operations. D & O license is issued yearly and that issued for the previous year expired. The decision to decline license for the subject year was taken by the Panchayath in a renewal application. 8. The petitioner also filed a writ petition as W.P.(C) No.31093 of 2014, in which an interim order was issued as per Ext.P7; which directed renewal of the quarrying permit. The Panchayath was not a party there and the interim order could not have enabled the continuance of the quarry without the D & O license. The operations of the crusher also could not have been carried out; again for reason of there b....
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....P14, seeking issuance of the D & O license, invoking the deeming provision, for reason of the applications filed, evidenced by Exts.P12 and P13, having not been considered for 30 days. The petitioner then filed an application for compounding for the year 2016-17, even when the petitioner did not have a quarry permit or a D & O license issued by the local authority for the crusher or the quarry. It is stated by the petitioner that a writ petition was filed, numbered as W.P.(C) No.15530 of 2016, seeking such licenses and the petitioner hence nurtured a hope and an expectation that orders would be in his favour and license would also be obtained. 12. It is also argued that, if he had not filed the application for compounding within the specified date of 31.05.2016, he would stand to lose insofar as being obliged to go under the regular assessment, if eventually he obtained license for the quarry and the crusher unit in the said year. Unfortunately, against his expectations, there was no interim order issued and eventually; W.P.(C) No.15530 of 2016 stood dismissed as per Ext.P30. This in fact resulted in his being not able to carry on any business of quarry and crusher and there was....
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....enge in the above writ petition. The inability to obtain a permit and D & O license in the particular year is said to be the subsequent reason for claiming frustration of the contract under Section 56 of the Contract Act. Immediately it would be pertinent that even in the previous assessment years the Panchayath had been consistently rejecting the petitioners applications for license. Further in all the decisions cited by the learned Senior Counsel, the claim raised by one party to the contract, under Section 56 of the Contract Act was declined. The examination of the facts and the law laid down in the said cases would in fact go against the petitioner, insofar as there being no subsequent supervening event, which created an impossibility in discharging the obligations under the contract. 17. Ganga Saran (supra) was a case, in which the respondent undertook to supply certain bales of cloth manufactured by two named Mills. The supply could not be fully made and the respondent claimed that there was no supply effected from the Mill, which was a clear stipulation under the contract enabling the respondent to plead frustration. The High Court read the condition as 'if and when&#....
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....themselves agreed to an implied term which operated to release them from the performance of the contract. The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement. Here there is no question of finding out an implied term agreed to by the parties embodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have any intention regarding it. When such an event or change of circumstance occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end. The court undoubtedly has to examine the contract and the circumstances under which it was made. The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed circumstances destroyed altogether the basis o....
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.... Licensing Authority first for reason of the purchaser having sufficient amount of stock to meet the requirements for some more months and then for reason of their having not purchased Indian jute to the minimum as prescribed. The refusal to grant license was for reason of there being a policy formulated to permit import of Pakistan jute to the absolute minimum and the jute mills were required to satisfy their needs by purchase of Indian jute. Import was permitted only to a small proportion of the total requirement. It was found that the purchaser was aware that the licenses were not issued freely and in the event of the purchaser failing to obtain licenses, there was a stipulation for damages. There was no subsequent impossibility or a ground to find the contract having been frustrated by the intrusion or occurrence of an unexpected event or change of circumstance; which was not in the contemplation of the parties. It was held that: "A contract is not frustrated merely because the circumstances in which it was made are altered. The Courts have no general power to absolve a party from the performance of his part of the contract merely because performance has become onerous on accou....
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....which normally requisition orders for military purposes were passed; it could not be said that the parties did not have such an event in contemplation, when the agreement was entered into. The claim of frustration was rejected on that premise. 25. Herein also, the petitioner did not have a D & O license at the time, when the petitioner approached the Appellate Authority for being permitted to pay tax under the compounding scheme. The petitioner did not even have a permit for quarrying at that point. The compounding was applied for on 31.05.2016, when the petitioner did not have any of the permits or licenses to carry on quarry or the crusher unit. The petitioner merely nurtured a hope that the proceedings taken against the denial of D & O license would materialize in his favour. The said hope was only on account of the pending W.P.(C) No. 15530 of 2106, in which there were no interim orders passed. The writ petition itself was filed on 22.04.2016 and stood rejected on 17.12.2016. 26. The petitioner also did not press for a D & O licence with respect to the quarry, since no such permit could have been issued to the petitioner without an Environmental Clearance. The petitioner&....