1978 (11) TMI 127 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Respondent's right to recover the suit amount.
2. Jurisdiction of the civil court to entertain the suit.
3. Whether the levy of sales tax for the years 1961-62 to 1965-66 is in order.
4. Whether the respondent is estopped from putting forward the claim.
5. Bar of limitation.
6. Civil court's jurisdiction in light of Section 51 of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. Respondent's Right to Recover the Suit Amount:
The trial court held that the respondent is entitled to recover the amount levied as sales tax for the years 1961-62 to 1965-66. The respondent's business activities were deemed not to involve sales, thus making the tax levied illegal and void. The commercial tax authorities had compulsorily levied sales tax aggregating to Rs. 22,218, which was declared illegal by a Bench of the High Court on 8th March 1967 in W.P. Nos. 2465 to 2468, 2702 to 2708, and 2767 to 2770 of 1966.

2. Jurisdiction of the Civil Court to Entertain the Suit:
The trial court held that the civil court has jurisdiction to entertain the suit as the respondent was not seeking to set aside or modify the assessment orders but was merely requesting a refund of monies collected illegally. However, the appellate court disagreed, stating that the civil court cannot order a refund without implying that the assessment orders were wrong, thus falling within the jurisdiction of the tax authorities.

3. Whether the Levy of Sales Tax for the Years 1961-62 to 1965-66 is in Order:
The trial court found that the respondent's transactions were of an advertising agency and did not involve sales, making the levy of sales tax incorrect. The appellate court noted that the respondent's business was admitted by the tax authorities as not attracting sales tax for subsequent years.

4. Whether the Respondent is Estopped from Putting Forward the Claim:
The trial court held that there is no estoppel against law, allowing the respondent to claim the refund despite not contesting the assessments for certain years.

5. Bar of Limitation:
The trial court held that the suit was not barred by limitation as it was filed within the appropriate period following the High Court's decision in March 1967. The appellate court did not find any grounds of appeal against this decision.

6. Civil Court's Jurisdiction in Light of Section 51 of the Tamil Nadu General Sales Tax Act, 1959:
The appellate court focused on whether the civil court had jurisdiction in light of Section 51 of the Tamil Nadu General Sales Tax Act, 1959, which bars suits to set aside or modify assessments made under the Act. The appellate court concluded that the civil court does not have jurisdiction to entertain the suit as the respondent's claim essentially required a finding that the assessment orders were wrong, which falls under the jurisdiction of the tax tribunals constituted under the Act.

Conclusion:
The appellate court allowed the appeal, set aside the judgment and decree of the learned First Assistant Judge, and dismissed the suit, holding that the civil court has no jurisdiction to entertain the suit due to the provisions of Section 51 of the Tamil Nadu General Sales Tax Act, 1959. The appropriate remedy for the respondent would have been to pursue the matter through the hierarchical tribunals constituted under the Act.