1967 (11) TMI 104 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the writ petition under Article 226 read with Article 227 of the Constitution of India deserves to be allowed for quashing the assessment orders of sales tax.
2. Whether the principle of res judicata applies in this case.
3. Whether the petitioners were required to exhaust their remedy by filing appeals under section 20 and revision under section 21 of the Punjab General Sales Tax Act.

Analysis:
The judgment involves a writ petition seeking the quashing of assessment orders of sales tax for various assessment years. The petitioners sought the issuance of a writ of certiorari and mandamus to challenge the orders of assessment dated 9th October, 1958, 11th February, 1960, 4th October, 1962, and 25th June, 1964, for different assessment years. The petitioners contended that no sales tax was payable under the East Punjab General Sales Tax Act and the Central Sales Tax Act for sales of medicinal and toilet preparations. The writ petition was based on arguments previously accepted by the court in a similar case. The State did not contest the merits of the writ petition but raised two preliminary objections. Firstly, the State argued that the principle of res judicata applied as a previous writ petition on the same subject matter had been dismissed. However, the court found that the previous decision did not dispose of the petition on merits, allowing the current petition to proceed.

Regarding the second preliminary objection, the State contended that the petitioners should have exhausted their remedy by filing appeals and revisions under the Punjab General Sales Tax Act. The court noted that appeals were competent but not filed, as departmental instructions indicated no exemption could be granted to the assessee. Referring to relevant instructions, the court found that contrary to specific departmental instructions, pursuing appeals or revisions would have been futile. Citing precedents, the court emphasized that where the stand on a matter is predetermined by departmental instructions, pursuing appeal or revision serves no purpose. The court distinguished a Supreme Court decision where the failure to deposit sales tax was not considered a valid ground to bypass statutory remedies, unlike the circumstances in the present case.

Ultimately, the court allowed the writ petition, quashing the assessment orders and directing the refund of sales tax collected for the respective years. The court held that the sales tax collected was in contravention of the law and ordered the refund to the petitioners, who were also entitled to costs. The judgment highlights the importance of departmental instructions and the futility of pursuing statutory remedies when the outcome is predetermined by such instructions.