1972 (1) TMI 97 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Excessive assessment under the Central Sales Tax Act due to non-production of 'C' forms.
2. Discrimination and violation of Article 14 of the Constitution.
3. Interpretation of the term "handmade matches" in the context of concessional tax rates.
4. The applicability of a writ of mandamus for tax refund.

Detailed Analysis:

1. Excessive Assessment under the Central Sales Tax Act:
The petitioners, manufacturers, and dealers in fireworks, were assessed at a higher rate of tax for the years 1963-64 to 1967-68 due to their inability to produce 'C' forms at the time of assessment. They accepted the assessments but contended that the higher rate of tax should not have been collected for the non-production of 'C' forms. They relied on the decision in Sitalakshmi Mills Ltd. v. Deputy Commercial Tax Officer, seeking a writ of mandamus for a refund of the excess tax collected.

2. Discrimination and Violation of Article 14:
In additional affidavits, the petitioners argued that the orders of assessment levying more than 2% tax without 'C' forms were discriminatory and violated Article 14 of the Constitution. They claimed that in similar cases, the government directed a 2% tax rate, and the legislative entry relating to tax on sales did not empower Parliament to impose arbitrary rates. However, the applications for additional affidavits and grounds were dismissed as they were irrelevant to the main issue and the orders of assessment were never challenged legally.

3. Interpretation of "Handmade Matches":
The petitioners argued that under a notification (G.O. 3234, Revenue, dated 16th August 1962), they should be entitled to a reduced tax rate of 2% for handmade matches. The respondent countered that the notification did not cover coloured matches, which were distinct from ordinary safety matches. The court found no ambiguity in the term "handmade matches" and clarified that it referred to ordinary safety matches, not coloured or star matches. The government's intention was to exempt only ordinary matches, as evidenced by a clarificatory amendment to a similar notification under the Madras General Sales Tax Act.

4. Applicability of Writ of Mandamus for Tax Refund:
The court held that a writ of mandamus could not be issued for the refund of excess tax collected because the petitioners had an adequate alternative remedy through civil suits. Additionally, the main request for a writ of mandamus without challenging the assessment orders was not legally permissible. The court emphasized that the differentiation between ordinary and coloured matches was based on a reasonable classification, and the concession aimed to make ordinary matches affordable for the common man. The petitioners failed to provide sufficient evidence to prove discrimination or violation of Article 14.

Judgment:
The writ petitions were dismissed, with the court concluding that the petitioners' claims lacked merit and that the appropriate remedy was through civil suits. There was no order as to costs.