1973 (5) TMI 75 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of the writ petition under Article 226 of the Constitution for refund.
2. Error in the assessment orders and their validity.
3. Availability and exhaustion of alternative remedies.
4. Delay in filing the writ petition.
5. Payment of tax under a mistake of law.

Detailed Analysis:

1. Maintainability of the Writ Petition under Article 226 of the Constitution for Refund:
The court examined whether a writ petition solely for refund of sales tax paid under an alleged mistake of law is maintainable under Article 226. The court referenced several Supreme Court decisions, including Burmah Construction Co. v. State of Orissa, State of Madhya Pradesh v. Bhailal Bhai, and Suganmal v. State of Madhya Pradesh. It was established that while a writ for refund is not ordinarily maintainable, it can be entertained if it includes a challenge to the assessment order itself. The court concluded that the petition in this case, which sought both quashing of the assessment orders and refund, was maintainable.

2. Error in the Assessment Orders and Their Validity:
The petitioner argued that the assessment orders were erroneous as they imposed sales tax on works contracts, which was not permissible. The court noted that the petitioner had not contested the assessment during the proceedings and had treated itself as a dealer, realizing and depositing the sales tax. The court held that the assessment orders were valid until set aside by appropriate proceedings, and there was no apparent error on the face of the record that could be rectified under section 22 of the Act.

3. Availability and Exhaustion of Alternative Remedies:
The respondents contended that the petitioner should have availed itself of the alternative remedy of filing an appeal against the assessment orders. The court agreed, stating that the proper forum for challenging the validity of the assessment was the appellate authority, and the petitioner's failure to do so disentitled it to relief under Article 226. The court emphasized that the petitioner should have filed appeals and sought condonation of delay, rather than resorting to rectification applications.

4. Delay in Filing the Writ Petition:
The court found that the petitions were filed after a considerable delay, ranging from six to seven years after the assessment orders were passed. The court was not convinced by the petitioner's explanation that it acted promptly after being advised by the Central Government. The court held that resorting to futile and misconceived remedies did not justify the delay. The court also noted that the petitioner should have acted upon the decision of the Allahabad High Court in Kays Construction Company v. The Judge (Appeals) Sales Tax, Allahabad, which had held similar contracts as works contracts not liable to tax.

5. Payment of Tax under a Mistake of Law:
The petitioner claimed that the tax was paid under a mistake of law, based on the Mysore High Court's decision in Hindustan Aeronautics Ltd. v. Commissioner of Commercial Taxes, Mysore. The court, however, noted that the petitioner had knowledge of the Allahabad High Court's decision in Kays Construction Company and should have contested the assessment orders at that time. The court held that the state of mind of the person concerned is the relevant consideration for determining a mistake of law, and the petitioner's failure to contest the assessment at the appropriate time precluded it from claiming a refund based on a mistake of law.

Conclusion:
The court dismissed the petitions, holding that the writ petition was not maintainable solely for refund, the assessment orders were valid, the petitioner failed to exhaust alternative remedies, there was an unjustifiable delay in filing the petitions, and the tax was not paid under a bona fide mistake of law. The court suggested that the petitioner could still file appeals before the sales tax authorities, which would be entertained and disposed of on merits if sufficient cause for delay was shown.