1984 (1) TMI 298 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Levy and collection of surcharge on sales of cement.
2. Jurisdiction and powers of the Tribunal.
3. Entitlement to refund of surcharge paid without authority of law.
4. Applicability of limitation and delay in seeking relief.
5. Alternative remedy and jurisdiction under Article 226 of the Constitution.

Summary:

1. Levy and Collection of Surcharge on Sales of Cement:
The company, a registered dealer under the Tamil Nadu General Sales Tax Act and the Central Sales Tax Act, sold cement from its factory in Madukkarai. The Tamil Nadu Sales Tax (Surcharge) Act, 1971, empowered the Government to levy a surcharge on sales tax within certain municipal limits. However, Madukkarai was not notified as a suburban area for the purposes of the Act. Despite this, the Joint Commercial Tax Officer levied a surcharge on the company from 1971-72, which the company paid under a mistaken belief. The company later realized, through legal consultation, that the surcharge was not leviable.

2. Jurisdiction and Powers of the Tribunal:
The Tribunal dismissed the company's appeals on the grounds that the freight had been properly included in the turnover and that the subject matter of the appeal was not agitated before the first appellate authority. However, the Full Bench of the High Court in State of Tamil Nadu v. Arulmurugan and Co. [1982] 51 STC 381 clarified that the appellate authority under the taxing enactments is committed to the assessment process and can entertain additional grounds not raised earlier. The Tribunal's view was thus erroneous.

3. Entitlement to Refund of Surcharge Paid Without Authority of Law:
The Court held that the company is entitled to a refund of the surcharge levied and paid without the authority of law. The Commercial Taxes Department's letter dated 15th March, 1979, confirmed that the sales of cement at Madukkarai were not liable to surcharge prior to 1st April, 1979. The levy was therefore illegal and the company is entitled to a refund.

4. Applicability of Limitation and Delay in Seeking Relief:
The company discovered the mistake on 6th August, 1977, and took steps to secure legal opinion and clarification from the Commercial Taxes Department. The writ petitions were filed in July 1979, within a reasonable time from the discovery of the mistake. The Court found no unreasonable delay or laches on the part of the company and held that the claim for refund was not barred by limitation.

5. Alternative Remedy and Jurisdiction under Article 226 of the Constitution:
The Court held that Article 226 empowers the High Court to order repayment of money realized without the authority of law. The Court found no justification for turning down the prayer for the issue of a writ on the negative plea of alternative remedy, especially when the assessment orders were a nullity. The company was entitled to a refund of the surcharge collected illegally.

Conclusion:
A writ of certiorarified mandamus was issued quashing the assessment orders for the years 1971-72 to 1975-76 in so far as they relate to the levy of surcharge and directing the respondents to refund a sum of Rs. 5,69,716.00 to the company. The writ petitions were allowed, and the tax revision cases were dismissed as the company had already been granted the relief prayed for in the writ proceedings. No order as to costs was made.