1987 (12) TMI 314 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether Article 226 is the proper remedy for the facts and circumstances of the case.
2. Whether the order of respondent No. 1 is ultra vires section 57 of the Bombay Sales Tax Act.
3. Whether the order of forfeiture and penalty is illegal.

Issue-wise Detailed Analysis:

1. Whether Article 226 is the proper remedy for the facts and circumstances of the case:
The petitioners contended that the existence of a statutory remedy does not bar them from invoking Article 226, particularly when the impugned order is outside the scope of sections 57 and 37 read with section 46 of the BST Act. They argued that pursuing the statutory remedy was conditional upon a sizeable deposit and was time-consuming. However, the court noted that the petitioners had not exhausted the available remedies under the Act, such as appealing against the condition of deposit. The court emphasized that writ jurisdiction should not be exercised where disputed questions of fact arise, as was the case here. The factual dispute about whether the surcharge was a recoupment for the price paid to vendors or an illegal collection of sales tax could not be resolved within the limits of a writ proceeding.

2. Whether the order of respondent No. 1 is ultra vires section 57 of the Bombay Sales Tax Act:
The petitioners argued that respondent No. 1 exceeded his revisional powers under section 57 since respondent No. 2 had not addressed the alleged violation of section 37. The court referred to the Supreme Court's interpretation of revisional powers, emphasizing that the revising authority should not encroach upon powers reserved for other authorities but could correct omissions. Section 57 allows the Commissioner to examine the record of any order passed by a subordinate officer and pass just and proper orders. The court found that the Commissioner acted within his jurisdiction to correct the omission of respondent No. 2 by exercising his revisional power, as supported by precedents like Commissioner of Sales Tax, M.P. v. Jammatlal Prahaladrai and Commissioner of Sales Tax, Maharashtra State, Bombay v. Indian Tube Company Ltd.

3. Whether the order of forfeiture and penalty is illegal:
The court noted that the true facts needed to be ascertained by the statutory authorities. The petitioners provided affidavits and certificates asserting that the surcharge in lieu of sales tax was a recoupment for the price paid to vendors, not an illegal collection. The court examined the bills and found that the surcharge could be understood as an extra charge to recoup costs, as long as it did not exceed the amount paid by the petitioners to their vendors. The court referred to Mather & Platt Ltd. v. State of Maharashtra, which held that excess amounts collected beyond what was paid to vendors constituted a violation of section 46(2). The court concluded that the petitioners did not contravene the law if the surcharge corresponded to the amount paid to vendors. However, any excess amount collected was liable to forfeiture. The first respondent was directed to re-ascertain the factual position and apply the law accordingly.

Conclusion:
The court quashed the impugned order and remitted the proceedings back to the first respondent for a fresh determination in line with the observations and applicable law. The rule was made absolute, with parties bearing their own costs.