1972 (8) TMI 116 - HC - VAT and Sales Tax

Issues Involved:
1. Refund of Central sales tax collected under a mistaken impression.
2. Barred by limitation.
3. Jurisdiction of the trial court.
4. Maintainability of the suits in light of the Central Sales Tax (Amendment) Act, 1969.

Detailed Analysis:

1. Refund of Central Sales Tax Collected Under a Mistaken Impression:
The plaintiffs filed suits to recover amounts collected as Central sales tax on inter-State sales of arecanuts by the defendants, who were dealers in Mysore State. The tax was initially remitted to the Mysore sales tax authorities but was later refunded following a Supreme Court decision in State of Mysore v. Y.L. Setty & Sons, which held that no tax was exigible under the Mysore Sales Tax Act for the transactions in question. The plaintiffs claimed that the tax was paid under a mistaken impression and sought recovery upon learning of the refund.

2. Barred by Limitation:
The defendants argued that the suits were barred by limitation, as they were filed more than three years after the payment of the tax. The court considered whether Article 24 of the Limitation Act, 1963, which provides a three-year period from the date when the money is received, applied. The court cited several precedents, including Royal Bank of Canada v. R. and A.V. Subba Rao v. State of Andhra Pradesh, concluding that the refund of tax by the sales tax authorities to the defendants was indeed for the plaintiffs' use. Since the suits were filed within three years from the date of the refund in 1967, they were deemed to be within the limitation period.

3. Jurisdiction of the Trial Court:
The defendants contended that only the court at Shimoga in Mysore State had jurisdiction, based on a printed clause in the invoices. The court examined the facts and found that the goods were delivered at Tiruvarur and part of the cause of action arose there. The court referenced H.K. Dada (India) Ltd. v. M.P. Sugar Mills Co. Limited and M/s. Patel Brothers v. M/s. Vadilal Kashidas Ltd., determining that the printed clause in the invoices did not constitute a binding term of the contract, as there was no evidence that the plaintiffs were aware of or agreed to this clause. Consequently, the trial court at Tiruvarur was held to have jurisdiction.

4. Maintainability of the Suits in Light of the Central Sales Tax (Amendment) Act, 1969:
The defendants argued that the suits were not maintainable due to the Central Sales Tax (Amendment) Act, 1969, which validated all levies and provided that no proceedings for refund of tax paid could be maintained. The court clarified that the amendment applied to suits against the State for refund of tax and did not preclude suits where one party claims amounts wrongly collected from another. The court also noted that unless the sales tax authorities reassessed the turnover and recalled the refund, the defendants could not resist the suits based on the amending Act.

In cases where reassessments had been made and refunds recalled, the matters were remanded to the trial court for further examination. For other cases, where no reassessment materials were produced, the trial court's judgment was upheld.

Conclusion:
The court ordered that C.R.P. Nos. 1749, 1823, 1824, 1825, and 1826 of 1970 be remanded to the trial court for fresh disposal, considering the reassessment materials. Other civil revision petitions were dismissed, with no order as to costs. The decision did not prejudice the defendants' right to reclaim amounts decreed if they were reassessed and forced to pay the sales tax on the transactions involved in any of the suits.

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