1968 (10) TMI 99 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sales tax paid on imported machinery by the petitioners is exempt from tax following the decision in Khosla & Co. v. Deputy Commissioner of Commercial Taxes.
2. Can a purchaser, who paid the tax to the seller under the contract, maintain a petition for certiorari against the tax assessment?

Analysis:

1. The judgment addresses the issue of whether the sales tax paid on imported machinery by the petitioners is exempt from tax based on the decision in Khosla & Co. v. Deputy Commissioner of Commercial Taxes. The petitioners, including Asea Electric (India) Private Limited, paid tax on the turnover of machinery imported from Sweden and sold to Bharat Heavy Electricals Limited. The sellers and purchasers jointly filed petitions seeking to quash the tax assessment related to these transactions. The court established that if the transactions were in line with the principles of Khosla & Co. case, the sales would be exempt from tax. The petitioners were entitled to seek a refund of the tax paid due to a mistake of law, as established in previous legal precedents like Sales Tax Officer v. Kanhaiya Lal Makund Lal Saraf and State of Kerala v. Aluminium Industries Ltd.

2. The judgment also delves into whether a purchaser, who paid the tax to the seller under the contract, can maintain a petition for certiorari against the tax assessment. The court considered the legal position that a party aggrieved need not have been a party to the original proceedings to challenge an order. However, the question of whether a purchaser can be regarded as an aggrieved person for the purpose of maintaining a certiorari petition depended on the specific circumstances. While the Madras Sales Tax Act allows the seller to pass on the tax liability to the purchaser, the court doubted whether the purchaser could be considered aggrieved solely based on being indirectly affected by the seller's tax assessment. Ultimately, the court found that since the assessee itself was a petitioner in the case, the question of whether the purchaser could maintain the petition was not conclusively decided.

In conclusion, the court allowed the petitions, quashed the part of the tax assessment charging tax on import sales, and directed the assessing authority to investigate the nature of the transactions in light of the Khosla & Co. case. If the transactions were found to be covered by the exemption, the tax would have to be refunded to the assessees. No costs were awarded in these petitions.