1970 (3) TMI 157 - HC - VAT and Sales Tax

Issues Involved:
1. Refund of sales tax paid under a mistake of law.
2. Jurisdiction of the High Court under Article 226 of the Constitution for refund claims.
3. Applicability of Section 72 of the Indian Contract Act.
4. Delay in invoking the jurisdiction of the High Court.
5. Estoppel, waiver, and limitation in the context of refund claims.
6. Impact of final and unchallenged assessment orders.
7. Discretionary relief under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Refund of Sales Tax Paid Under a Mistake of Law:
The petitioners claimed refunds for sales tax paid on "green ginger" and "garlic" under the Andhra Pradesh General Sales Tax Act, asserting they were exempt as "vegetables" under G.O. Ms. No. 1091, Revenue, dated 10th June, 1957. The Commercial Tax Officer assessed these items to tax for various years, and the petitioners did not initially appeal. However, the Sales Tax Appellate Tribunal later ruled "green ginger" as a "vegetable" and exempt from tax, leading the petitioners to seek refunds.

2. Jurisdiction of the High Court Under Article 226 of the Constitution for Refund Claims:
The respondents argued that since the assessment orders were final and unchallenged, the collection of tax was not illegal or without jurisdiction. They contended that the petitioners, having let the alternative remedies lapse, were precluded from invoking the High Court's jurisdiction. The court agreed, emphasizing that the extraordinary jurisdiction under Article 226 is discretionary and should not be exercised to grant refunds when there is an unreasonable delay or when the petitioner has not exhausted alternative remedies.

3. Applicability of Section 72 of the Indian Contract Act:
The petitioners based their claim on Section 72 of the Indian Contract Act, which allows recovery of money paid under a mistake of law. The court acknowledged that payments made under mutual mistake qualify for refunds under Section 72. However, it stressed that this right is subject to estoppel, waiver, limitation, and other considerations.

4. Delay in Invoking the Jurisdiction of the High Court:
The court highlighted that petitions under Article 226 should be filed within a reasonable time, typically within six months, unless satisfactorily explained. The petitioners filed their writ petitions in 1967, well beyond the reasonable period and even beyond three years from the alleged discovery of the mistake in December 1965. This delay was deemed unreasonable, and the court found no satisfactory explanation for it.

5. Estoppel, Waiver, and Limitation in the Context of Refund Claims:
The court emphasized that the right to refund is not absolute and is subject to estoppel, waiver, and limitation. It referred to precedents where the Supreme Court held that claims for refunds should be filed within three years of discovering the mistake. The court also noted that the petitioners' delay in filing the writ petitions beyond three years was unreasonable and precluded them from claiming refunds.

6. Impact of Final and Unchallenged Assessment Orders:
The court stressed that the petitioners allowed the assessment orders to become final by not appealing them. These orders, though potentially erroneous, were not void and thus could not be ignored. The court held that without quashing these final assessment orders, it could not order refunds. The petitioners' failure to challenge the orders through the provided statutory remedies further weakened their case.

7. Discretionary Relief Under Article 226 of the Constitution:
The court reiterated that the relief under Article 226 is discretionary and should be exercised for public good, not to facilitate private gains at the expense of the public and the State. It noted that granting refunds would result in the petitioners retaining tax collected from the public, which is unjust. The court concluded that the petitioners were not entitled to the discretionary relief of refund under Article 226.

Conclusion:
The court dismissed the writ petitions, holding that the petitioners were not entitled to refunds due to unreasonable delay, failure to challenge the assessment orders, and the discretionary nature of relief under Article 226. The court emphasized that its jurisdiction should advance justice and not serve individual gains at the public's expense. The petitions were dismissed with costs.

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