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TMI Blog1962 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Supreme Court of India in the United Motors case(1), and as a result of Central Act VII of 1956 (the Sales Tax Laws Validation Act), and section 22 of the Madras General Sales Tax Act, the inter-State sales effected by the petitioners in this State, in which the deliveries of goods sold were made for purposes of consumption, came within the ambit and purview of the Madras General Sales Tax Act. The petitioners were, therefore, called upon to submit returns of their turnover for the years 1st April, 1953, to 6th September, 1955. It must be mentioned that the petitioners collected amounts from their purchasers in this State, not purporting to be sales tax due and payable to the State of Madras, but alleged to be by way of "deposits", possibly by way of abundant caution to save themselves from pecuniary liability in the event of this State taxing them. Having regard to the uncertain legal position regarding the "State" jurisdiction to levy sales tax on purchases and sales relating to inter-State transactions, and in order to save dealers from paying tax, which they failed to collect from their purchasers in the bona fide belief that the transactions were immune from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners to the Sales Tax Appellate Tribunal, Madras. The main contentions urged by the petitioners before the Tribunal were: (1) The transactions of sales were not liable to be taxed; and (2) even if they can be taxed, no amount by way of tax can be collected from them in view of the provisions of the G.O. referred to above. The G.O. undoubtedly gives relief to the assessees in respect of inter-State sales, if they prove to the satisfaction of the taxing authorities that they had not collected any tax from their constituents. In regard to the years 1954-55 and 1955-56, there was a demand against the petitioners for payment of Rs. 56-9-7 and Rs. 3-10-9 respectively under section 8-B(2) of the Act. These demands were presumably based on the ground that the petitioners had collected excess amounts from their constituents, over and above the amount of tax lawfully payable by them to the State. The contention of the petitioners has all along been that they never collected any sales tax from their purchasers, that they merely obtained some amounts from them by way of "deposits", that these deposits were refundable to them, and that they were, therefore, entitled to the benefit of the G.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was, whether, in fact, the petitioners had collected tax or not. If they had collected the tax, undoubtedly the G.O. cannot come to their rescue; but, if they had not collected the tax, it is equally clear that the department, which is certainly bound by the G.O., cannot make any demand by way of tax from the petitioners. After the disposal of the appeals by the Tribunal in the aforesaid manner, the petitioners applied to the Board of Revenue on 28th January, 1959, for directions not to collect any sales tax from them for all the three assessment years. The Board of Revenue, by its communication dated 26th February, 1959, declined to grant any relief. The Board observed thus: "The Board has examined the contentions of the petitioners. It sees no reason to interfere on their behalf. The petitions are, therefore, rejected." Thereafter, the Deputy Commercial Tax Officer, Special Circle, called upon the petitioners, by his communication dated 8th May, 1959, to pay the sums of Rs. 734-15 for 1953-54 and Rs. 401-23 for 1954-55. These amounts were claimed to be arrears of tax due by the petitioners arising out of the assessment orders already passed. The petitioners submit that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not by way of tax. The following headnote of the case sets out the ratio of the decision: "Where the assessee, a registered dealer, received certain amounts from its constituents merely by way of deposits on the express understanding or undertaking that the moneys would be refunded to the constituents if the assessee was held not liable to include the relevant sales in its taxable turnover, the assessee held the moneys as a mere custodian, and on the fulfilment of the condition became a trustee for the depositors. When once the tax authorities determined that the proceeds of the sales were not within the taxable turnover of the assessee, the beneficial ownership became vested in the depositors and the assessee ceased to have any right to continue to hold the moneys. The fact that the physical control of the moneys passed from the 'depositors' to the assessee did not render the receipt a 'collection' by way of tax of any amount under section 11(2) of the Mysore Sales Tax Act, 1948." The conclusion of the Tribunal striking down section 8-B(2) demand is, therefore, perfectly correct. The order of the Tribunal has to be read and understood in a fair, reasonable and sensible ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of the rejection of his claim on that ground. This Court is not powerless to mould and issue appropriate writ suitable to the occasion. The form of the writ to be issued is only of secondary importance. The primary things to be considered are, broadly, as follows: (1) Whether the applicant is a person aggrieved having an interest or legal right in the subject-matter; (2) Whether there has been an infraction or violation of such right or interest; (3) Whether the matter is justiciable. The denial of relief to a suitor, because of his error of judgment in selecting the proper writ, will defeat the very purpose of writs. The petitioners pray for the issue of a writ of prohibition. Prohibition is intended to check excess of jurisdiction or threatened usurpation of jurisdiction where there is none. It also lies to correct any departure by an inferior tribunal from the rules of natural justice. The petitioners have already been assessed to tax and the demand for tax is only the inevitable consequence of an order of assessment, which has become indefeasibly final. It is not possible to hold that the Deputy Commercial Tax Officer is exceeding his jurisdiction or is suffering fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Additional Government Pleader is well-founded in his contention that violation of an administrative G.O. cannot attract the applicability of Article 226 of the Constitution, in our opinion, the present petition cannot fail as it cannot be said that the petitioners really feel aggrieved by any contravention of the G.O. It is common ground that the G.O. has no statutory force and that it is a mere administrative direction or executive instruction. As we have already stated, the department has applied the G.O. to the petitioners and has therefore confined the tax demand only to the alleged amount of tax said to have been collected by the petitioners. The real grievance of the petitioners is that the department has failed to give effect to the findings of the Tribunal holding that the petitioners have not collected any amount by way of tax. The department was bound by the Tribunal's decision in the matter. The finding of the Tribunal that the "deposits" received by the petitioners were not taxes collected cannot be ignored or brushed aside in view of the fact that the Tribunal eventually dismissed the appeals subject to the modification cancelling the demand under section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory in character. The petitioners have a legal right to claim that the G.O. applies to them as well as it does not apply to others similarly placed. On the finding of the Tribunal that they had not collected tax on their interState sales, they obtained the benefit of the G.O. This adjudication of the Tribunal, undoubtedly, conferred a legal right on the petitioners, securing them from being adversely affected contrary to such adjudication. There is certainly a public duty on the part of the Deputy Commercial Tax Officer to conform himself and to give effect to, and implement, the findings of the Appellate Tribunal. The G.O. restrains him from collecting any amount from the petitioners, if it were to be found that they had not collected any tax. The Tribunal has found that the petitioners receive only "deposits" and not collect tax. The officer cannot fail to give effect to the findings of the Tribunal and thus proceed against the petitioners making a demand against them. The combined effect of the decision of the Tribunal and the administering of the G.O. can only result in freeing the petitioners from the present tax-liability. The learned Additional Government Pleader urg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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