1957 (1) TMI 25 - HC - VAT and Sales Tax

Summary

Issues:
Authority of Sales Tax Officer to grant refund of sales tax paid under an order of assessment based on a certain view of the law subsequently differently interpreted by the Supreme Court.

Detailed Analysis:

The case involved a question regarding the authority of the Sales Tax Officer to grant a refund of sales tax paid under an assessment order when the law was interpreted differently by the Supreme Court later. The assessees, wholesale and retail dealers in grocery, were assessed for sales tax by the Sales Tax Officer in 1952. The assessment order required the assessees to pay a certain amount as sales tax, which they did, with no appeal filed against the order. Subsequently, due to a Supreme Court judgment questioning the State's authority to levy sales tax on inter-State transactions, the assessees sought a refund of the tax paid, but the Sales Tax Officer did not act on their request. The assessees then followed the appeal process, which ultimately led to a reference to the High Court.

The main issue to be determined was whether, after an assessment order has been made, the assessees can apply for a refund based on a plea of error of law in the assessment order. The Court examined the relevant provisions of the Bombay Sales Tax Act, particularly Section 13, which allows for a refund of tax paid in excess of the amount due. The Court clarified that while the Collector has the authority to grant a refund if the tax paid exceeds the amount due under the Act, there is no provision for the Sales Tax Officer to review his own assessment. Therefore, the Collector cannot be asked to refund tax already paid based on a reconsideration of his earlier decision. The Court emphasized that the Collector must decide on a refund application based on the validity of the original assessment order, without the power to review his own assessment.

The Court also addressed the questions raised by the Sales Tax Tribunal, emphasizing that the key issue was whether an application for refund based on an erroneous view of the law in the assessment order can be entertained without the order being set aside through proper appeal or revision proceedings. The Court answered this question in the negative, stating that such applications cannot be entertained without challenging the assessment order through the appropriate legal channels. Ultimately, the Court ruled in favor of the State of Bombay, with the assessees being directed to pay the costs of the hearing.

In conclusion, the judgment clarified the limitations on the authority of the Sales Tax Officer to grant refunds of sales tax paid under assessment orders and highlighted the importance of following proper legal procedures to challenge assessment orders before seeking refunds.