1983 (4) TMI 237 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of including excise duty in taxable turnover.
2. Validity of the assessment orders and appellate orders.
3. Applicability of the Supreme Court's judgment in McDowell & Co. Ltd. v. Commercial Tax Officer.
4. Power of the High Court under Article 226 of the Constitution of India to quash assessment orders and grant refunds.
5. Laches and reasonable time for filing writ petitions.

Detailed Analysis:

1. Legality of Including Excise Duty in Taxable Turnover:
The primary issue in these writ petitions is whether the excise duty paid directly into the treasury by M/s. Ananda Rao & Company should be included in the taxable turnover of the petitioner. The assessing officer had included this excise duty in the taxable turnover, which was upheld by the Assistant Commissioner (CT) (Appeals) based on the judgment in Shaw Wallace & Co. Ltd. v. State of Andhra Pradesh [1976] 37 STC 448.

2. Validity of the Assessment Orders and Appellate Orders:
The petitioner contended that the assessment orders and the appellate orders should be quashed due to an error apparent on the face of the record. The petitioner did not appeal further initially due to a mistaken belief that the inclusion of excise duty was correct. However, this belief changed after the Supreme Court's ruling in McDowell & Co. Ltd. v. Commercial Tax Officer [1977] 39 STC 151 (SC), which overruled the earlier judgment and held that excise duty should not be included in the taxable turnover.

3. Applicability of the Supreme Court's Judgment in McDowell & Co. Ltd. v. Commercial Tax Officer:
The Supreme Court in McDowell & Co. Ltd. v. Commercial Tax Officer [1977] 39 STC 151 (SC) ruled that excise duty should not be included in the taxable turnover if it was not included in the sale bills. This judgment was reported on 15th February 1977, and the petitioner filed the writ petitions on 8th September 1977. The High Court found that the petitioner was entitled to the benefit of this judgment and that the assessment orders and appellate orders were liable to be quashed.

4. Power of the High Court under Article 226 of the Constitution of India to Quash Assessment Orders and Grant Refunds:
The High Court examined several precedents where tax paid under a mistake of law was held to be refundable. The Court cited cases such as Sales Tax Officer v. Kanhaiya Lal [1958] 9 STC 747 (SC) and State of Madhya Pradesh v. Bhailal Bhai [1964] 15 STC 450 (SC), affirming that the High Courts have the power to order refunds under Article 226 of the Constitution of India. The Court also referred to the principle that no estoppel arises when both parties are under a mistake of law.

5. Laches and Reasonable Time for Filing Writ Petitions:
The Court considered whether the writ petitions were filed within a reasonable time. The judgment in V.S. Rao's case 1957 ALT 785 was referenced, which suggested a reasonable period of six months from the date of discovery of the mistake. The petitioner filed the writ petitions 23 days beyond this period but provided a satisfactory explanation for the delay, including the time taken to obtain certified copies of the necessary documents. The Court found the explanation reasonable and did not consider the delay significant enough to bar relief.

Conclusion:
The High Court concluded that the petitioners were entitled to the benefit of the Supreme Court's judgment in McDowell & Co. Ltd. v. Commercial Tax Officer [1977] 39 STC 151 (SC). The impugned assessment orders and appellate orders were quashed due to an error apparent on the face of the record, and there was no unreasonable delay in invoking Article 226 of the Constitution of India. The writ petitions were allowed with no order as to costs, and an advocate's fee of Rs. 200 each was awarded.

← Previous Next →