1969 (2) TMI 165 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the assessment orders under the Central Sales Tax Act, 1956, for inter-State sales of tanned hides and skins were valid.
2. Whether Section 15 of the Central Sales Tax Act mandates the retention of Central tax and refund of local tax.
3. Whether the provisions of the Central Sales Tax Act and the Madras General Sales Tax Act violate Articles 301 and 303 of the Constitution of India.
4. Whether the petitioner is entitled to a refund under Rule 23 of the Madras General Sales Tax Rules.
5. Whether the principle of res judicata applies to the petitioner's case.
6. Whether the delay in filing applications for review of earlier judgments can be excused.

Detailed Analysis:

1. Validity of Assessment Orders:
The petitioner sought to quash the assessment orders made by the respondent under the Central Sales Tax Act, 1956, for the assessment years 1958-59 to 1961-62. The petitioner contended that no tax could be levied under the Central Sales Tax Act on his last sale, relying on the precedent set in State of Mysore v. Lakshminarasimhiah Setty and Sons. However, the court noted that the Supreme Court's interpretation in the said case did not apply to the period after 1st October 1958, when Section 15 of the Central Sales Tax Act came into force. The court held that the provisions of the State law must be looked into to adjudicate whether sales tax is attracted on inter-State transactions.

2. Section 15 of the Central Sales Tax Act:
Section 15(b) of the Central Sales Tax Act postulates the levy of both local and Central tax on inter-State sales but mandates the refund of the local tax if Central tax is collected. The court upheld that the Central Sales Tax Act's scheme necessitates the retention of Central tax and the refund of local tax, as elucidated in Khader & Co. v. State of Madras. The court rejected the petitioner's contention that such a provision offends Articles 301 and 303 of the Constitution, stating that the scheme of single-point taxation is valid and does not impede free flow of inter-State trade and commerce.

3. Violation of Articles 301 and 303:
The petitioner argued that the scheme under Section 15 of the Central Sales Tax Act imposes a higher burden on inter-State sales, violating Articles 301 and 303 of the Constitution. The court dismissed this argument, stating that the mere fact of a larger turnover being exigible to tax does not equate to a restriction on trade and commerce. The court emphasized that hardships in tax burdens do not constitute a violation of Article 301, and no discrimination or restriction as per Article 303 was found.

4. Refund under Rule 23 of the Madras General Sales Tax Rules:
The petitioner sought a refund under Rule 23 and Form A-4 of the Madras General Sales Tax Rules. The court held that the person entitled to the refund is the one who paid the local tax, not the petitioner who paid the Central tax. The court found Rule 23 and Form A-4 to be inoperative and illegal as they contradict the principle of refunds envisaged in Section 15(b) of the Central Sales Tax Act. Consequently, the petitioner was not entitled to a refund under these provisions.

5. Principle of Res Judicata:
The court noted that the decision in W.Ps. Nos. 2465 to 2468 of 1965, reported in Khader & Co. v. State of Madras, operates as res judicata. The petitioner did not pursue an appeal to the Supreme Court, making the judgment final and binding. The court held that the principle of res judicata applies to writ petitions, thus precluding the petitioner from succeeding on this ground.

6. Delay in Filing Review Applications:
The court considered the Civil Miscellaneous Petitions to excuse the delay in filing review applications of earlier judgments. The court found the petitioners guilty of undue and unexplained delay, lacking reasonable diligence and promptitude. The court cited the Supreme Court's judgment in Tilokchand Motichand v. Munshi, emphasizing that utmost expedition is required for such claims. The court dismissed the petitions for excusing the delay, stating that the petitioners failed to provide any reasonable excuse or sufficient cause for the delay.

Conclusion:
The court dismissed the writ petitions and the civil miscellaneous petitions for excusing the delay in filing review applications. The assessment orders under the Central Sales Tax Act were upheld as valid, and the petitioner was not entitled to a refund under Rule 23 of the Madras General Sales Tax Rules. The court found no violation of Articles 301 and 303 of the Constitution and applied the principle of res judicata to the petitioner's case.

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