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TMI Blog1972 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... there any machinery provision in the Mysore Sales Tax Act, 1957, read with section 9 of the Central Sales Tax Act, 1956, for effecting recovery of the amount of tax refunded on the basis of Yaddalam's case[1965] 16 S.T.C. 231 (S.C.). , without making rectification or revision of final assessment orders?" 2.. In Harakchand's case[1969] 23 S.T.C. 197., the facts are these: In respect of the assessment year 1957-58, the Commercial Tax Officer made an order of assessment by which the turnover of the petitioner therein relating to the sale of cloth held by him on 14th December, 1957, was included in the assessment. In Writ Petition No. 1235 of 1962, this court held that section 5 of the Mysore Sales Tax Act, 1957, did not charge that part of the turnover with sales tax and set aside that part of the assessment. On the strength of the order of this court, the petitioner applied for a refund which was accordingly granted to him. Subsequently, the Mysore Sales Tax (Amendment) Act (9 of 1964) amended section 5(5A) retrospectively and validated all assessments notwithstanding any judgment, decree or order of any court. Thereupon, the Commercial Tax Officer called upon the petitioner to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax under the Central Sales Tax Act, 1956, hereinafter called the Act. The company paid quite a large sum, a little over 3 1/2 lakhs, as tax but the fortune appears to have smiled on it. Some dealers in Mysore State were then contending that if no sales tax would be liable under the Mysore Sales Tax Act, if the sales in the course of inter-State sales or commerce are deemed to have taken place inside the State, then no tax is chargeable under the Act. In a sales tax revision petition preferred by one Yaddalam Lakshminarasimiah Setty, this court upheld the contention: see Yaddalam Lakshminarasimhiah Setty and Sons v. The State of Mysore[1962] 13 S.T.C. 583. The appeal preferred by the State of Mysore against the decision of this court was dismissed by the Supreme Court but on a different ground: see The State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons(2). After this decision which is popularly called the Yaddalam's case(2), the petitioner preferred Writ Petitions Nos. 550 to 551 of 1967, challenging the validity of the orders of assessment pursuant to which it had already paid the tax. Following the decision in Yaddalam's case(2), this court allowed the writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mending Act. Sub-section (1-A) of section 6 of the Act, which was inserted retrospectively, provides: "6. Liability to tax on inter-State sales.-(1)...... (1-A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State......" Section 9 provides: "9. Validation of assessments, etc.-(1) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the 9th day of June, 1969, shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly- (a) all acts, proceedings or thing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax to be invalidly imposed because the power to tax is wanting or the statutes or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law." 7.. Often we find the Legislature passing an amending and validating Act, and it comes for scrutiny before the courts. Reference, may be made to the decision of the Supreme Court in Sadasib Prakash Brahmchari, Trustee of Mahiparakash Muth v. The State of OrissaA.I.R. 1956 S.C. 432. Therein, certain schemes framed in pursuance of sections 38 and 39 of the Orissa Hindu Religious Endowments Act (No. 4 of 1939) were held invalid by the decision of the Supreme Court on the basis of the then existing law. Thereafter, the Orissa Legislature brought an amendment intr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of assessment. By the said provisions, it is now made clear that even if no tax was leviable under the general sales tax law of any State, in respect of any intra-State transactions of sale, tax will be leviable on the sale of any goods effected by a dealer in the course of inter-State trade or commerce. Next comes section 9, validating all assessments made before 9th June, 1969. It opens with a non obstante clause overriding anything contained in any judgment, decree or order of any court or other authority. What this section in effect says is that the assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action taken or anything done in relation to such assessment, reassessment, levy or collection under the provisions of the Act, shall be deemed to be valid and effective as if they were made under the provisions of the Act which stood amended by the amending Act. Certain consequences follow from these savings which are to be found in clauses (a) to (c). Clause (a), again a deeming clause directs that all acts, proceedings or things done or taken by the Government or by any officer, in connection with the assessment, reassessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or proceedings taken in connection with it or pursuant thereto. 11.. Hence, it is no longer possible to cite the decision in Yaddalam's case' as declaring a rule of law invalidating the assessments. The assessments are now valid and effective as if made pursuant to subsection (1-A) of section 6 of the main Act. The said section 9 of the amending Act expressly states further that all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any authority in connection with the assessment shall be deemed to be and to have always been done or taken in accordance with law; it also prevents or prohibits the taking of any proceedings for refund of any tax collected or the enforcement of any decree or order directing refund of any such tax. 12.. The result is that the assessment having been validated retrospectively, further action thereon already taken is also validated; among other things a demand notice issued pursuant to an order of assessment is also validated. If the tax has already been collected, no refund thereof can be claimed. As the assessment is valid and enforceable, the retention of money already refunded also necessarily b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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