1960 (10) TMI 81 - HC - VAT and Sales Tax

Summary

Issues:
- Dismissal of suit for refund of sales tax amounts by trial court
- Applicability of Limitation Act to the case
- Interpretation of Articles 16, 96, and 120 of the Limitation Act
- Statutory obligation of the Commissioner to refund excess tax paid
- Claim for interest on the refund amount

Analysis:
The plaintiff, a dealer in Satna, filed an appeal against the assessment order for sales tax and was entitled to a refund of certain amounts. The State Government did not dispute the refund claim but argued the suit was barred by time. The main issue was the question of limitation, with conflicting interpretations of the Limitation Act. The trial court held the suit was barred by time under Article 16, but the High Court disagreed.

The High Court examined the provisions of the Sales Tax Act and Rules governing refunds, emphasizing the statutory obligation of the Commissioner to refund excess tax paid. The trial court applied Article 16 of the Limitation Act, which deals with deposits made under protest, but the High Court found this inapplicable to the present case. The State argued for the application of Article 96, relating to suits for relief on the ground of mistake, but the High Court rejected this interpretation.

The High Court determined that Article 120 of the Limitation Act, a residuary article, applied to the case. Citing precedents, the court held that Article 120 covers cases where an officer of the government is bound by statute to make a payment. Therefore, the suit for refund was within time as it was brought within six years from the date of the cause of action. The court also addressed the claim for interest on the refund amount, allowing interest from the date of the suit until realization at 3% per annum.

In conclusion, the High Court allowed the appeal, setting aside the trial court's decree and decreeing the plaintiff's claim for the refund amount. The court ordered the refund amount to carry interest at 3% per annum until realization and directed the respondent to pay the costs of the appellant throughout.