1980 (7) TMI 240 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction of civil court to entertain suits for recovery of refunded tax.
2. Finality of High Court's judgment regarding the invalidity of certain provisions of the Central Sales Tax Act.
3. Validity of reassessment and recovery of refunded tax following the enactment of the Central Sales Tax (Amendment) Act, 1969.
4. Applicability of res judicata to the High Court's previous decisions.
5. Requirement of reassessment before recovery of refunded tax.
6. Liability to pay interest on the refunded tax amounts.
7. Validity of the refund and the subsequent demand for repayment.

Issue-wise Detailed Analysis:

1. Jurisdiction of Civil Court to Entertain Suits for Recovery of Refunded Tax:
The defendants contended that the Tamil Nadu General Sales Tax Act, 1959, and the Central Sales Tax Act, 1956, are complete codes with provisions for assessment, levy, collection, refund, etc., and that the civil court has no jurisdiction to entertain the suits. The court held that the civil court has jurisdiction to decide the question of recovery of the excise duty portion of the sales tax levied under the Central Sales Tax Act, 1956, refunded to the defendants. The court relied on various precedents, including *Kamala Mills Ltd. v. State of Bombay* and *State of Kerala v. N. Ramaswami Iyer & Sons*, which discussed the jurisdiction of civil courts in matters of tax refund and recovery.

2. Finality of High Court's Judgment Regarding the Invalidity of Certain Provisions of the Central Sales Tax Act:
The defendants argued that the High Court's judgment invalidating sub-sections (2), (2A), and (5) of section 8 of the Central Sales Tax Act, 1956, had become final as no appeal was filed against it. The court acknowledged that the decision in the writ petitions filed by the defendants had become final and constituted res judicata, barring the present suits to the extent of the tax excluding the excise duty portion.

3. Validity of Reassessment and Recovery of Refunded Tax Following the Enactment of the Central Sales Tax (Amendment) Act, 1969:
The court discussed the retrospective validation of the levy of sales tax on the excise duty portion of the turnover by the Central Sales Tax (Amendment) Act, 1969. Section 9(1) of the Act validated the levy of sales tax on the excise duty portion of the turnover, notwithstanding any judgment, decree, or order to the contrary. The court held that the refund of the excise duty portion of the tax made by the sales tax authorities to the defendants was unlawful under the changed circumstances, and the retention of that portion of the tax by the defendants was also unlawful.

4. Applicability of Res Judicata to the High Court's Previous Decisions:
The court held that the decision of the High Court in the writ petitions filed by the defendants constituted res judicata, barring the present suits regarding the portion of the tax excluding the excise duty portion. The court relied on various precedents, including *Daryao v. State of U.P.* and *State of West Bengal v. Hemant Kumar*, which discussed the binding nature of judgments and the doctrine of res judicata.

5. Requirement of Reassessment Before Recovery of Refunded Tax:
The defendants contended that reassessment was necessary before recovering the refunded tax. The court held that no reassessment was necessary for the recovery of the excise duty portion of the tax refunded to the defendants, as the original assessment was deemed to have been made in accordance with law following the retrospective validation by the Central Sales Tax (Amendment) Act, 1969. The court relied on various precedents, including *Harakchand Rugchand v. State of Mysore* and *Gill and Co. (P.) Limited v. Commercial Tax Officer*, which discussed the impact of validating statutes on reassessment and recovery.

6. Liability to Pay Interest on the Refunded Tax Amounts:
The court held that the defendants were liable to pay interest at 6% per annum on the portion of the tax refunded to them from 2nd February, 1974, as the retention of the tax was unlawful after the communication demanding payment. The court did not find any serious dispute regarding the liability to pay interest.

7. Validity of the Refund and the Subsequent Demand for Repayment:
The court held that the refund of the excise duty portion of the tax made by the sales tax authorities to the defendants was unlawful under the changed circumstances following the retrospective validation by the Central Sales Tax (Amendment) Act, 1969. The court held that the plaintiff was entitled to recover the excise duty portion of the tax refunded to the defendants, along with interest at 6% per annum from 2nd February, 1974.

Conclusion:
The court decreed the suits in favor of the plaintiff for the recovery of the excise duty portion of the tax refunded to the defendants, along with interest at 6% per annum from 2nd February, 1974. The suits regarding the balance were dismissed, but without costs. The appeals were allowed in part, and the court directed the parties to file memos of calculation for the excise duty portion of the tax refunded in O.S. Nos. 31 and 41 of 1976.

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