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TMI Blog1965 (3) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... r every assessment. The petitioner made several such payments in respect of the dues for the year 1949-50, so also for the accounting year 1950-51 in respect of the sales of materials by the petitioner to persons outside the State of Bihar. The payment was made in the bona fide belief that such sales were subject to tax under the Bihar Sales Tax Act in due course. But having come to know of the real legal position, the petitioner filed an application under Articles 226 and 227 of the Constitution of India in this Court registered as M. J. C. No. 156 of 1957 for refund of the amount paid as tax on inter-State trade for the year 1949-50. 2.. On the 16th of January, 1958, M. J. C. No. 156 of 1957 was allowed by this Court and it was held that the sales effected between the 26th of January, 1950, and the 31st of March, 1950, by the petitioner to persons outside Bihar, if such materials were consumed there, would not be liable to any sales tax and any amount paid as such was refundable. The petitioner was dissatisfied with the order and made an application for leave to appeal to the Supreme Court; and leave having been refused, the Supreme Court was moved for grant of special leave and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law. In pursuance of the judgment of this Court, the excess amount was refunded to the petitioner. Since, however, a review application made by the Commissioner of Commercial Taxes to the Superintendent of Sales Tax, Jamshedpur, was pending, the petitioner was not able to pay the amount to the various customers who were entitled to it and the latter were making repeated requests for payment of the amounts. The petitioner then filed another application in this Court under Articles 226 and 227 which was numbered as W.C. No. 166 of 1960 for quashing the review proceeding. So fat as the review petition referred to above was concerned, the petitioner had raised a preliminary objection against the maintainability of that application on the ground of jurisdiction, but the petitioner's objection was overruled and it was directed to produce evidence without delay; and in the event of failure, the petitioner was to be assessed on best judgment basis. The petitioner again moved this Court against the above order which was numbered as M.J.C. No. 1180 of 1960. M. J. C. Nos. 169 and 1180 of 1960 were dismissed by this Court on the 12th April, 1961. The petitioner preferred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, the Bihar Sales Tax Act, 1947, was passed and received the assent of the Governor-General on the 1st of June, 1947, and it was published in the Bihar Gazette (Extraordinary) on the 21st of June, 1947. "Sale" was defined under clause (g) of section 2, "sale-price" in clause (h) and "turnover" in clause (i). In section 4 of the Act, the incidence of taxation was imposed on all sales which took place in and outside Bihar with the restrictions mentioned in that section. That Act, however, came to be amended by Bihar Act 6 of 1949 wherein there was some amendment of section 4 of Act 19 of 1947, but the principle was maintained that sales tax was leviable on sales as such. Under section 14A, which was incorporated by this amendment in the Act of 1947, it was provided"No dealer who is not a registered dealer shall realise any amount by way of tax on sale of goods from purchasers, nor shall any registered dealer make any collection of such tax except in accordance with such restrictions and conditions as may be prescribed." The Act of 1947, however, was completely recast and gave place to Bihar Sales Tax Act of 1959, being Act 19 of 1959. Clause (k) of section 2 which is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after giving the dealer or his authorised representative a reasonable opportunity of being heard and examining such accounts and other evidence as may be produced by or on behalf of the dealer and making such further enquiry as it may deem necessary, order that the dealer shall deposit forthwith into the Government treasury, the amount found to have been so collected by the dealer and not refunded prior to the receipt of the notice aforesaid to the person from whom it had been collected. (4) Where any amount so collected by the dealer and deposited by him into the Government treasury has already been refunded to the dealer in pursuance of or as a result of any judgment, decree or order of any Tribunal, Court or authority, but the dealer has not refunded the amount to the person from whom he had collected it, the prescribed authority shall, notwithstanding such refund to the dealer, proceed to take action in accordance with the provisions of sub-section (3) for securing deposit of such amount. (5) Where any such amount has not been refunded to the dealer before the commencement of this Act but a refund has been directed by a Court, Tribunal or authority, the amount shall, notwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eview has been filed in respect of such order, the period of limitation aforesaid shall run from the date of the order passed on such appeal, application for revision, reference or review or from the date of the order passed in pursuance or as a result of such order, whichever is later." Mr. B. C. Ghose has urged that section 20A of Bihar Act 20 of 1962 is ultra vires Articles (19)(1)(f), 20 and 31 of the Constitution of India so far as it provides for the deposit of sales tax having been realised by the dealers from-customers which sales tax in law was not payable by them in respect of inter-State trade. Mr. Ghose has urged that in view of the basis of the levy of sales tax which was sale itself under the Act of 1947, and which was the liability of the dealer under the subsequent Act, the amount realised by the dealers as sales tax would remain in the custody of the dealers themselves; and the customers who paid them under mistake would be entitled to claim a refund of these amounts from the dealers. Such money remained the property of the customer or, for the matter of that, of the dealers who realised the money, and the State would not by any legislation deprive the dealers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T.C. 403. That was a case relating to the validity of section 11(2) of the Hyderabad General Sales Tax Act, 1950, which provided that any amount collected by way of tax by any person otherwise than in accordance with the provisions of the Act must be paid over to the Government and in default of such payment, the said amount would be recovered from such person as if it were arrears of land revenue. The Supreme Court held that such a legislation was not within the competence of the State Legislature under Entry 54 of List 11 of Schedule VII of the Constitution. It could also not be protected under Entry 26 of List II, because there was no element of regulation of trade and commerce in it. Wanchoo, J., who delivered the judgment of the Court, laid down the proposition upon which considerable reliance has been placed by Mr. Ghose. He observed: "If a dealer has collected anything from a purchaser which is not authorised by the taxing law, that is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14-A, in the principal Act, which provided that refund could be claimed only by a person from whom the dealer had actually realised the amount as tax. That provision was challenged in this Court but was upheld on the ground that it came within the incidental power arising out of Entry 54 of List 11. That matter dealt with a question of refund and it cannot be doubted that refund of the tax collected is always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. We are not dealing with a case of refund in the present case. What section 11(2) provides is that something collected by way of tax, though it is not really due as a tax under the law enacted under Entry 54 of List II must be paid to the Government. This situation in our opinion is entirely different from the situation in the Orient Paper Mills Limited's case[1961] 12 S.T.C. 357; [1962] 1 S.C.R. 549." If, therefore, section 14-A of the Orissa Act can be taken to be on all fours with section 20-A of the Bihar Sales Tax Act, 1959, then it is obvious that the position is covered by the authority of the Supreme Court in the Orient Paper Mills Limited's case[1961] 12 S.T.C. 357; [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax is levied on transactions of sale as such and not as a purchase tax. In the Orissa Act, moneys lying in deposit alone can be retained by the State for payment to the customers through its own agency and not to be refunded to the customers through the dealers who realise such amounts. Reference is made in this connection to section 2 of the Orissa Sales Tax Act.* Lastly, it is said that under the Orissa Act authority to realise the tax is given under the Act itself, whereas in the Bihar Act there is no similar provision. In my opinion, however, there is no substance in any of these contentions urged on behalf of the petitioner. The history of the Orissa Sales Tax Act referring to the enactment of section 14-A, mentioned above, is parallel to the incorporation of section 20-A by the amending Act 20 of 1962, in the Bihar Sales Tax Act, 1959. The occasion for inserting section 14-A in the Orissa Sales Tax Act arose on account of the decision of the Supreme Court in the case of State of Bombay v. United Motors (India) Ltd. [1953] 4 S.T.C. 133; [1953] S.C.R. 1069. relating to the amounts paid in respect of goods despatched for consumption outside the State which were held not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch may arise on account of this difference in the nomenclature. That is not relevant for the present purpose. The further argument of Mr. Ghose that in regard to the Orissa enactment it was held by the Supreme Court that it related to the amounts already deposited by the dealers and it did not cover the case of a direction to the dealers to deposit the amounts in the State treasury, that too is hardly a distinction of any substance. Section 14-A in general terms prohibits the dealers from making the payment of such unauthorised realisation of sales tax direct to the customers, but that such refund could be claimed only from the State by the payers of the tax. There is no provision in section 14-A that this section would be applicable only to the amounts of unauthorised collection which was already deposited in the State treasury, but it was in general terms so that its consequences would affect the dealers who would have to deposit the amount of such collections in the State treasury for payment to the customers in the same way as is the position under section 20A of the Bihar Act, 1959. The distinction, if any, is only in the terminology but not so far as the substance of the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to levy any tax on such sales and, therefore, as a necessary corollary, it could not deal with the amounts so collected even as tax; (c) What was collected was not sales tax according to law and there is no authority in the State of Bihar to levy that nor is it competent for the State of Bihar to refund or forfeit that amount; (d) The penal clause contained in the Act ran counter to Article 21 of the Constitution. It appears to me unnecessary to go over these contentions in detail because they are answered in the judgment of the Supreme Court; nor is it necessary for me to refer to the cases in detail cited by Mr. LaInarain Sinha for the State of Bihar to the effect (a) that power to legislate about a tax must also include the power to legislate about the refund of the tax; (b) that the State had the competence not only to tax but also to legislate on ancillary matters, such matters relating to the realisation of the tax, and (c) that a person who has utilised the machinery of law, and gained an advantage by doing so, cannot repudiate the application of that Act by pleading that the subject-matter was outside the scope of that Act or that the Act was ultra vires, The last propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.C. 1320. In that case an identical question arose in regard to the provision in section 14 of the Orissa Sales Tax Act, 1947. In that section also there was a provision for refund of the excess tax unlawfully collected from a dealer and with regard to limitation it was laid down: "Provided that no claim to refund of any tax paid under this Act shall be allowed unless it is made within twenty-four months from the date on which the order of assessment was passed or within twelve months of the final order passed on appeal, revision, review or reference in respect of the order of assessment, whichever period is later." On the argument with regard to limitation the Supreme Court ruled as follows: "The High Court normally does not entertain a petition under Article 226 of the-Constitution to enforce a civil liability arising out of a breach of contract or a tort to pay an amount of money due to the claimant and leaves it to the aggrieved party to agitate the question in a civil suit filed for that purpose. But an order for payment of money may sometimes be made in a petition under Article 226 of the Constitution against the State or against an officer of the State to enforce a stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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