1967 (2) TMI 94 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of turnover under the Central Sales Tax Act.
2. Rectification of assessment orders under Rule 38 of the Mysore Sales Tax Rules.
3. Delay in filing writ petitions and its impact on seeking relief under Article 226 of the Constitution.
4. Applicability of Supreme Court decisions to rectification and quashing of assessment orders.

Detailed Analysis:

1. Taxability of Turnover under the Central Sales Tax Act:
The principal contention was that the turnover subjected to tax under the Central Sales Tax Act could not have been rightly so subjected. The petitioners argued this based on precedents set by the Mysore High Court and the Supreme Court in cases such as Yaddalam Lakshminarasimhiah Setty & Sons v. State of Mysore, Mysore Silk House v. State of Mysore, and Karnatak Coffee Company v. Commercial Tax Officer, Davangere. The turnover in question pertained to articles like raw wool, cardamom, sikai, coffee, and areca, which were subjected to a single point levy of sales tax under the State Act at the purchase point, except for coffee, which was at the sale point. Consequently, the petitioners argued that they were not liable for tax under the Central Act either.

2. Rectification of Assessment Orders under Rule 38 of the Mysore Sales Tax Rules:
The petitioners, except those in Writ Petitions Nos. 1607 to 1614 of 1965, had moved the assessing authority to rectify the assessment orders under Rule 38 of the Mysore Sales Tax Rules in light of the aforementioned decisions. All applications for rectification were rejected. In cases where the rectification applications were filed within the five-year limitation period, the Court held that the assessing authority was bound to rectify the orders, resulting in quashing the assessment orders and directing refunds.

3. Delay in Filing Writ Petitions and Its Impact on Seeking Relief under Article 226 of the Constitution:
The Court examined whether the petitioners were guilty of inordinate delay in approaching the Court under Article 226. The petitioners argued that the delay was not unreasonable based on the principles stated by the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai and The State of Kerala v. Aluminium Industries Ltd. The Court noted that the delay could not be ignored in deciding the merits of the prayer for writs to quash the assessment orders. However, in cases where the petitioners had approached the Court within five years from the date of the assessment orders, the delay was not considered culpable.

4. Applicability of Supreme Court Decisions to Rectification and Quashing of Assessment Orders:
The petitioners argued that the Supreme Court's decisions in the aforementioned cases justified rectification of the assessment orders under Rule 38. The Court agreed, noting that where no further investigation of facts was required and the principle of law declared by the Supreme Court could be straightaway applied, it constituted a mistake apparent on the face of the record, amenable to rectification. The Court rejected the department's argument that subsequent decisions do not reopen concluded matters, emphasizing that the law declared by the Supreme Court under Article 141 of the Constitution is binding on all courts.

Specific Cases:
- Writ Petitions Nos. 1256, 1257, 1258, 2121 to 2127 of 1966: The Court quashed the assessment orders and directed refunds as the rectification applications were filed within the limitation period.
- Writ Petitions Nos. 1607, 1611, and 1614 of 1965: These petitions were dismissed as more than five years had elapsed from the date of the assessment orders, and no rectification applications were made.
- Writ Petitions Nos. 1608, 1609, 1612, and 1613 of 1965: The Court quashed the assessment orders and directed refunds, despite no rectification applications being made, as the petitions were filed within five years.
- Writ Petitions Nos. 2724 and 2727 of 1966: These petitions were rejected as more than five years had elapsed from the date of the assessment orders.
- Writ Petitions Nos. 2728, 2729, and 2730 of 1966: The petitions were admitted for further consideration as the exact date of the assessment orders was unclear.
- Writ Petitions Nos. 2731, 2732, and 2733 of 1966: These petitions were admitted as the rectification applications were within the limitation period.

Adjourned Cases:
- Writ Petitions Nos. 1606 and 1610 of 1965 and 1417 and 1418 of 1966: These were not dealt with as they involved other points and were adjourned to a later date.

Conclusion:
The Court's judgment primarily focused on the applicability of Supreme Court decisions to rectify and quash assessment orders under the Central Sales Tax Act, the impact of delay in filing writ petitions, and the conditions under which rectification applications could be considered valid. The Court provided relief to petitioners who had filed within the prescribed limitation period and adhered to the principles established by the Supreme Court.