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TMI Blog1960 (9) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer, Bangalore, while in Civil appeals 355 and 356 of 1957 the Commissioner of Sales Tax in Mysore, Bangalore, is the appellant. Both the sets of appeals have been filed on certificates granted by the High Court of Mysore under Article 133(1)(c) of the Constitution. The question of law involved in all these appeals is as regards the proper construction of section 11 of the Mysore Sales Tax Act, 1948 (hereinafter referred to as the Act). Civil Appeals 75 and 76 of 1957 arise out of a common judgment and order of the High Court of Mysore dated September 27, 1955, in Writ Petition No. 39 of 1954 and Civil Petition No. 111 of 1954 relating to the Mysore Spinning and Manufacturing Co., Ltd., Bangalore, and the Minerva Mills Ltd., Bangalore, respectively and these are the respondents in the respective appeals before us. The two companies are under common management. The Minerva Mills Ltd.-the appellants in Civil Appeal No. 76 of 1957-deal inter alia in cotton yarn and cotton cloth. For the quarter ending December 31, 1951, the Sales Tax Officer, II Circle, Bangalore, assessed the company for sales tax on their turn- over. There was no dispute about the turnover or the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition in the circumstances set out therein attracts the provisions of section 11 of the Mysore Sales Tax Act and therefore the petitioner company was liable to pay the said amount to the Government. If not whether the petitioner company is entitled to refund of the said amount of Rs. 130-15-5 already paid by it under protest." Before this reference came on for hearing, the Mysore Spinning and Manufacturing Co., which is the respondent in Civil Appeal No. 75 of 1957, filed Writ Petition No. 39 of 1954 in the High Court for the issue of an appropriate writ or direction under Article 226 of the Constitution preventing the respondents-the State of Mysore and the Sales Tax Officer, Bangalore-from collecting from them a sum of Rs. 12,775-13-2 as amounts payable to Government under section 11(2) of the Act. The matters set out in the affidavit in support of this petition were not controverted. They were that all the sales in respect of which the sums totalling Rs. 12,775-13-2 were collected were in the course of inter-State trade, which had been effected during 1952-53, that various interpretation had been put by several Governments and sales tax departments on the scope of Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Private Ltd., is the appellant in both the appeals, which arise out of a common order of the High Court of Mysore in two connected references under section 16 of the Mysore Sales Tax Act. Civil Appeal 356 of 1957 is against the order in Civil Petition 223 of 1953, the facts giving rise to it being as follows: During the year 1948-49, the company acted as agents for the sale of cement manufactured by the Mysore Iron and Steel Works, Bhadravati. The sales were effected to purchasers outside the State of Mysore. The total turnover of these sales for the year came to Rs. 4,28,005-5-10. It was common ground that in respect of this turnover the company was not liable to sales tax, as the sales took place outside the State. The company, however, being in doubt as to whether or not it would be liable to pay sales tax on these transactions had collected by way of deposit from their purchasers a total sum of Rs. 13,703-4-6 on the specific understanding and undertaking that the sums deposited would be refunded to the constituents if it was ultimately held that no sales tax was payable under the Mysore Sales Tax Act in respect of the turnover of the assessee-company in rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision that the sales of 'Nilgiri brand cement' by the petitioner during the period 1st April, 1950, to 31st March, 1951, are not liable to sales tax under the Mysore Sales Tax Act, 1948, the petitioners were nevertheless liable to pay to the Government a sum of Rs. 6,585-2-0 collected by them from their constituents conditionally and on the express undertaking that such amounts would be refunded to their constituents in the event of Sales Tax Authorities holding that the sales were not liable to the tax, and (2) Whether they are not entitled to a refund of the said sum of money deposited by them". These two references were heard together and the High Court by its judgment and order dated November 10, 1956, held that on the construction of section 11(2) of the Act and the relevant rules, the sum could not be claimed by the Government and answered the reference in favour of the assessee-company, following their previous decision in the case of the Mysore Spinning and Manufacturing Co. and another. Certificates under Article 133(1)(c) having been granted, Civil Appeals 355 and 356 have been filed. All these four appeals have been heard together before us as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority is satisfied that any amount or amounts collected by the dealer by way of tax or taxes have not been paid by him to the Government in any year as required by condition (ii) in sub-rule (7), the assessing authority shall issue a notice to the dealer in Form IX-2 specifying therein the total sum so withheld by the dealer and the dealer shall pay such sum at the time and in the manner specified therein." The construction which the High Court adopted of the section and of the rules may be thus expressed: Section 11(1), though couched in the negative, in effect, authorises a registered dealer to collect amounts "by way of tax" in accordance with such conditions and restrictions as may be prescribed, and the conditions prescribed are to be found in sub-rules (7) to (9) of rule 11. What he is authorized to collect under the Act "by way of tax" would be sums payable on sale-transactions which are within the charging section, the proceeds of which sales would have to be included in the turnover of the dealer. Therefore the expression "by way of tax under this Act" in section 11(1), could only mean amounts lawfully leviable and levied under the Act. In other wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment.............". The appeal originally came on before a Division Bench of this Court when the arguments just now summarised were urged and it was then submitted on behalf of the respondents, that if section 11(2) were construed in the manner contended by the learned counsel for the appellants, the direction to pay over to the Government, money belonging to the dealer which could not lawfully be and was not in fact charged to tax under the Act would violate the fundamental rights guaranteed by Articles 19(1)(f) and 31 of the Constitution. By reason of this contention being raised the appeals were directed to be posted before a Constitution Bench and that is how these appeals come to be heared by us. After arguments as regards the proper interpretation of the words "by way of tax under this Act" occurring in sub-sections (1) and (2) of section 11 had been advanced by the learned counsel on either side on the lines above indicated, it was realised that on the facts of all these cases, there was no "collection" at all, whether "by way of tax" or otherwise, so as to bring the amounts received and held by the respondents within the scope of section 11. We have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould in law make a claim for refund and enforce that right in appropriate proceedings. But such a case is far removed from the onus before us, where the payment by the purchaser was conditional and made on an express contract that the sum would be refunded in the contingency of the dealer being held not to be assessable in respect of the relevant turnover. On the facts of these appeals we are unable to hold that there has been any "collection" by way of tax of any amount under section 11(2) of the Mysore Sales Tax Act, 1948. So far we have been dealing with the facts of the cases in which "references" were made to the Court. In Civil Appeal 75 of 1957 which is against the order of the High Court in Writ Petition No. 39 of 1954 there was no "reference". Facts exactly similar to those in the other cases and the circumstances under which deposits were obtained and retained by the company were set out in the affidavit in support of the petition. The State filed no counter-affidavit challenging the correct- ness of the assertions made in the petition and the High Court proceeded on the basis that there was no difference on the facts between the cases covered in the references an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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