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TMI Blog1970 (7) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Officer. Thereafter, on 9th July, 1960, he applied to the Commissioner of Sales Tax for refund of the tax, and the application was forwarded by the Commissioner to the Sales Tax Officer who rejected that application also by his order dated 23rd September, 1960. The Sales Tax Officer took the view that the refund application should have been made within three years from the last day of August, 1954, the month in which the Supreme Court judgment in Messrs. Budh Prakash Jai Prakash(1), was published in the Supreme Court Journal. The period of three years was considered as the period of limitation by reference to section 96 of the First Schedule to the Indian Limitation Act, 1908. The dealer then filed a revision application before the judge (Revisions), Sales Tax, challenging the orders dated 19th May, 1960, and 20th September, 1960, rejecting the refund applications. The revision application was allowed by the Additional Judge (Revisions) by his order dated 13th November, 1962. The Additional judge (Revisions) has held, relying on the decision of the Supreme Court in the Sales Tax Officer, Banaras, and Others v. Kanhaiya Lal Mukund Lal Saraf(1), and on the decision of this cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst question has been framed in the abstract without relevance to the facts of the present case, and, therefore, need not be answered. The second question raises the point whether article 96 of the First Schedule to the Indian Limitation Act can be resorted to for ascertaining the period of limitation for the refund applications on the principle embodied in section 72 of the Indian Contract Act. Now, the U.P. Sales Tax Act contains a number of provisions contemplating the refund of tax to the dealer. There is section 9(5) of the Act providing that if the appellate authority reduces the amount of tax by an appellate order it shall direct the excess amount of tax to be refunded. Section 10(5) of the Act provides that if the amount of tax is reduced by the revising authority by an order disposing of the revision application, it shall direct the excess amount of tax to be refunded. Then, section 11(8) provides that if the amount of tax is reduced as a result of reference decided by the High Court, the excess amount of tax paid shall be refunded with interest. Finally, section 29 requires an assessing authority to refund to a dealer applying in this behalf the amount of tax, fees or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed as a nullity. On this opinion of the Board, the Supreme Court observed in Haji Hasan Dada(2): "The Judicial Committee reversed the order of the High Court and held that the assessments which were duly made by the Income-tax Officer in the proper exercise of his duty were validly made and were effective until they were set aside." The position of law laid down by the Supreme Court is, I think, fully applicable where the assessment order is made under the Act. But in the case before us, the assessment proceeded on the basis of a provision which was ultra vires the powers of the State Legislature. The definition of "sale" contained in section 2(h) of the U.P. Sales Tax Act means any transfer of property in goods for cash or deferred payment or other valuable consideration and includes forward contracts. In Budh Prakash Jai Prakash(3), the Supreme Court held that to the extent the State Legislature had enlarged the definition of "sale" so as to include forward contracts, it was ultra vires. For the same reason, the Supreme Court held explanation III to section 2(h), which provided that forward contracts "shall be deemed to have been completed on the date originally agreed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply the principles propounded there to the position obtaining under the Constitution of India. One of the considerations which prevailed with the Supreme Court was the inherent inability of the authorities constituted by the statute to sit in judgment on the vires of a provision of that statute. Since then, that principle has been elaborated by the Supreme Court in K.S. Venkataraman Co. (P.) Ltd. v. State of Madras[1966] 17 S.T.C. 418 (S.C.); 60 I.T.R. 112 (S.C.). That is a case which bears a close parallel to the one before us. For the assessment years 1948-49 to 1952-53 the dealer was assessed to sales tax under the Madras General Sales Tax Act, 1939, on the basis that certain contracts executed by it were works contracts. On the basis of the decision of the Madras High Court in Gannon Dunkerley v. State of Madras[1951] 5 S.T.C. 216., that the relevant provisions of the Act empowering the State of Madras to assess indivisible building contracts to sales tax were ultra vires, the dealer filed a suit in the City Civil Court for recovery of the amount of tax illegally levied and collected from it. The suit was founded on the ground that the provisions of the Act empowering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land and the sales tax authorities were bound to give effect to that law. Upon that declaration of the law by the Supreme Court, the sales tax authorities were bound to proceed on the basis that those provisions did not exist in the Act. Reverting to the question whether the period of limitation prescribed by article 96 of the First Schedule to the Indian Limitation Act could be taken into consideration by the sales tax authorities in refusing to allow the refund, it is pertinent to note that article 96 prescribes the period of limitation for filing a suit. The provision applies to suits only. It does not apply to proceedings taken under the U.P. Sales Tax Act. My answer to the second question is in the negative. The third question is whether the Additional Judge (Revisions) was justified in holding that the sums deposited by the dealers were refundable. If the matter be viewed from the legal justification of the claim to refund on its merits, there is no doubt that the amount having been paid in respect of forward contract transactions concerning which no sales tax was constitutionally permissible, the claim of the dealer to refund was well-founded. But regard must be had to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10, revise only an order made under the Act. If the order of the Sales Tax Officer refusing refund cannot be ascribed to any jurisdiction vested in him under the Act, the revising authority had no jurisdiction to revise that order. While it may be an order capable of challenge by way of suit, it was not an order open to revision under section 10. In my opinion, the Additional Judge (Revisions) was wrong in directing a refund. Accordingly, I answer the third question in the negative. The fourth question raises the point whether the Additional Judge (Revisions) was justified in entertaining the revision application after the lapse of several years from the date of the assessment order. In view of my answer to the third question, it is not necessary, I think, to express any opinion on this point. I accordingly answer the questions referred as follows: Question No. (1): Need not be answered. Question No. (2): In the negative.. Question No. (3): In the negative. Question No. (4): Need not be answered. There is no order as to costs. Counsel's fee is assessed at Rs. 100. GULATI, J.-I regret very much that I cannot subscribe to the view taken by my learned brother Pathak, J., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aphs 1 and 2 of his aforesaid judgment, the learned Additional Judge (Revisions), Sales Tax, was legally justified in holding that the provisions of the Indian Limitation Act would not apply to claim of refund under the U.P. Sales Tax Act in spite of the observations of the Honourable Supreme Court of India in 1958 Sales Tax Cases page 759, Sales Tax Officer, Varanasi v. M/s. Kanhaiya Lal Mukund Lal Saraf[1958] 9 S.T.C. 747 (S.C.); A.I.R. 1959 S.C. 135. ? (3) Whether the learned Additional Judge (Revisions), Sales Tax, was legally justified in entertaining the revision application in question of the aforesaid company after the lapse of several years from the date of the assessment order particularly when the appeal and the revision application of the company were dismissed? (4) Whether the learned Additional Judge (Revisions), Sales Tax, was legally justified in ignoring the view of the Honourable Supreme Court expressed in 1958 Sales Tax Cases page 759, Sales Tax Officer, Varanasi v. M/s. Kanhaiya Lal Mukund Lal Saraf, Varanasi[1958] 9 S.T.C. 747 (S.C.); A.I.R. 1959 S.C. 135., and in holding that, irrespective of the pointed observations of the Honourable Supreme Court, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Saraf[1958] 9 S.T.C. 747 (S.C.); A.I.R. 1959 S.C. 135.The only dispute which arose between the parties was as to whether the assessee's claim for refund was barred by time. The Judge (Revisions) purported to follow the decision of this court in Sales Tax Commissioner, U.P. v. Sada Sukh Vyopar Mandal1959] 10 S.T.C. 57., where it was observed at page 65 that there was no period of limitation for claiming a refund under the Sales Tax Act. The department on the other hand relied upon the following observations of the Supreme Court at page 759 in the case of Kanhaiya Lal Mukund Lal Saraf[1958] 9 S.T.C. 747 (S.C.); A.I.R. 1959 S.C. 135.: "If mistake either of law or of fact is established, he is entitled to recover the moneys and the party receiving the same is bound to repay or return them irrespective of any consideration whether the moneys had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like." The department's contention was that the underlined portion (sic) of the above-quoted observation clearly suggested that in respect of a claim for a refund of tax based upon section 72 of the Indian Contract Act, there would be a period of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of the Act. Therefore, if the assessee in the instant case had applied to the Sales Tax Officer for refund on the ground that the provision authorising the imposition of tax on forward transactions was ultra vires, the Sales Tax Officer would not have been competent to entertain such an application because he had no authority to adjudicate upon such a question as has been held by the Supreme Court in K.S. Venkataraman Co. Ltd. v. State of Madras[1966] 17 S.T.C. 418 (S.C.); 60 I.T.R. 112 (S.C.)., and any decision given by the Sales Tax Officer about the vires of the provisions would have been beyond his jurisdiction and all further proceedings by way of revision or a reference would be barred. But, such is not the case here. The Supreme Court had already declared the levy of tax on forward transactions to be ultra vires. The law declared by the Supreme Court is binding upon all courts and tribunals which are bound to give effect to such a declaration of the law. In such a situation, the Sales Tax Officer was bound to entertain the application for refund and to pass an appropriate order thereon. Such an order cannot be said to be beyond the jurisdiction of the Sales Tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt matter depending on as to whether or not there was a period of limitation for making such a claim and whether the assessee's claim was within time. In view of the answer proposed by me to question No. (3), the other questions relating to limitation would directly arise. But I do not propose to answer those questions because if the view taken by brother Pathak, J., on question No. (3) is correct, then no other question would arise. It is, therefore, necessary that the controversy over question No. (3) should be resolved first. BY THE COURT.-We have differed in the answer to question No. (3). That question is: "Whether under the circumstances of the case as stated above, the Additional judge (Revisions), Sales Tax, was legally justified in holding that the sums deposited by the company towards sales tax for the year 1948-49 was refundable to the company?" In the circumstances, we refer this question to a third Honourable Judge for his opinion. The papers of this case shall be laid before the Honourable Chief justice for appropriate orders. In pursuance of the abovesaid order, the case came on for hearing before VERMA, J., on 14th July, 1970. VERMA, J.-This sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued. Thereafter, the Commissioner of Sales Tax applied for a reference to this court and the learned Additional Judge (Revisions), Sales Tax, referred four questions for decision to this court. I am only concerned with the third question which I have already quoted above. R.S. Pathak, J., has taken the view that, as the amount deposited by the dealer was not legally realisable under the Sales Tax Act, the order of the Sales Tax Officer was not under the Act and that, therefore, the order passed by the Additional Judge (Revisions), Sales Tax, too was without jurisdiction. I shall quote his own words: "The Additional Judge (Revisions) could, under section 10, revise only an order made under the Act. If the order of the Sales Tax Officer refusing refund cannot be ascribed to any jurisdiction vested in him under the Act, the revising authority had no jurisdiction to revise that order." I find it very difficult to agree with this view. In the Sales Tax Officer, Banaras, and Others v. Kanhaiyalal Mukund Lal Saraf[1958] 9 S.T.C. 747 (S.C.); A.I.R. 1959 S.C. 135., their Lordships have clearly laid down that if money has been paid to the sales Tax department either by mistake of fact or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order complained of was the order rejecting the refund application. There can be no dispute, I think, that the revision application made by the assessee was filed within time. The Additional Judge (Revisions) was justified in entertaining the revision application. The fourth question is answered accordingly. GULATI, J.-Originally I had answered question No. (3) only leaving other questions unanswered because there was a difference of opinion between us on question No. (3) Question No. (3) has now been answered in favour of the assessee in accordance with the opinion of the learned third Judge. After going through the judgment of my brother Pathak, J., I have no hesitation in agreeing with the answers proposed by him to the other questions. BY THE COURT.-In view of the opinion expressed by us in our respective judgment and the opinion returned by the third Judge, the four questions referred in this case are answered as follows: Question No. (1): Need not be answered. Question No. (2): In the negative. Question No. (3): In the affirmative. Question No. (4): In the affirmative. The assessee is entitled to its costs which we assess at Rs. 100 Counsel's fee is as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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