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TMI Blog1978 (10) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... e was issued to the assessee demanding payment on or before 7th May, 1969, of Rs. 2,14,591.87 towards sales tax and Rs. 98.20 towards surcharge. On receipt of the notice the assessee sent a letter on 25th April, 1969, to the department informing it that more than what was demanded in the notice had really been paid even long before and requesting that that amount may either be refunded or at least adjusted towards the demand made under the Kerala Act. No reply was sent to that letter. On 16th February, 1970, the department made an assessment for the same period under the Central Act. The tax found due under that Act was Rs. 10,407.17. As the amount deposited by the firm up to 20th April, 1967, was really in excess by Rs. 2,31,932.39 (Rs. 2,42,339.56 10,407.17) that was directed to be refunded to the assessee. It was accordingly withdrawn by the assessee on 10th March, 1970. Thereafter the assessee deposited on 31st March, 1970, the amount of Rs. 2,14,690.07 (2,14,591.87 + 98.20) demanded under the Kerala Act. On 7th May, 1970, on the allegation that the assessee had not paid in due time the sales tax and surcharge demanded under the Kerala Act notice was issued by the Assistant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plainly relevant and material. 8.. A payment need not necessarily be by giving cash or by issuing cheque. It can be by adjustment also. If a creditor is in possession of money belonging to his debtor and it is available for appropriation towards any account, on adjustment of it at the instance of the debtor towards a particular debt due from him there is to that extent discharge of that debt. In such cases, adjustments operate as payments. 9.. When there are more debts than one due from a debtor and he makes payment to the creditor it is open to the debtor to direct it to be appropriated towards a particular debt due from him and the creditor is bound to do that. This is a general rule since the Clayton's case(1812) 35 E.R. 781. decided more than 150 years back and cited and followed in City Discount Company Limited v. Mclean(1874) L.R. IX Common Pleas 692. More than half a century after the decision in the Clayton's case[1812] 35 E.R. 781. the general principle laid down there was incorporated in section 59 of the Indian Contract Act, 1872. It is sections 59 to 61 of that Act, which deal with the subject of appropriation. Of them sections 60 and 61 deal with modes of approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not specifically covered by it general principles of law are excluded from consideration and cannot be applied even if they are not inconsistent with it. Otherwise, even principles of interpretation of statutes cannot be applied to it. A statute until it is repealed is living law. To attempt to imprison it within the sections in it is about as reasonable as to attempt to confine a stream within a pond. The water in the pond would soon become a stagnant pool and there would no longer be a living stream. General principles of law to the extent they are not specifically excluded are applicable to any enactment. With respect we consider the decision in Jogendra Mohan Sen v. Uma Nath Guha[1908] I.L.R. 35 Cal. 636., as laying down the correct law and do not agree with the decision in Ganga Bishun Singh v. Mahomed Jan[1906] I.L.R. 33 Cal. 1193. 13.. No immutable boundary is fixed in the Central and Kerala Acts to the area of operation of general principles of law. There is nothing in those enactments to indicate, even indirectly, exclusion of the principles regarding appropriation of payments. The principles embodied in sections 59 and 60 of the Indian Contract Act do not offend a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in excess by Rs. 2,31,932.39 and that it was available for withdrawal that the assessee happened to withdraw it and redeposit in cash the entire tax due under the Kerala Act. 16.. What was found in the assessment order under the Central Act was that the amount of Rs. 2,42,339.56 already deposited up to 20th April, 1967, was in excess by Rs. 2,31,932.39. So it was excess amount belonging to the assessee and lying with the department as available for adjustment and appropriation long before 30th May, 1969, the date on which the tax of Rs. 2,14,591.87 under the Kerala Act became due. And when the assessee asked the department to apply it towards payment of the tax due under the Kerala Act there was no option left with it but to apply it accordingly. Therefore, even if the liabilities under the two assessment orders are considered as distinct and separate the assessee was not a defaulter up to 10th March, 1970. 17.. The authority empowered to make the assessment and collect the tax under both the Central and Kerala Acts is the same. The establishment of the officer in making assessment and collections under the two Acts is one and the same. In the present case, it was really th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of inter-State sales thereof) but for section 15(b) of the C.S.T. Act, whereunder tax, if any, levied under the G.S.T. Act on intrastate sale or purchase of any declared goods is to be refunded if those goods have been subsequently sold in the course of inter-State trade or commerce. The State Government issued a notification under section 8 of the C.S.T. Act, S.R.O. No. 350/65 dated 13th August, 1965, directing that no tax under the C.S.T. Act shall be payable by any dealer in respect of declared goods sold in the course of inter-State trade or commerce, where tax has been levied and collected in respect of sale or purchase of such declared goods under the G.S.T. Act on condition that lie shall not claim refund under section 15(b) of the C.S.T. Act. Note that both section 15(b) and S.R.O. No. 350/65 apply only to cases where tax has already been paid or collected under the G.S.T. Act; under section 15(b) tax levied under the G.S.T. Act is to be refunded on payment of tax under the C.S.T. Act, and under S.R.O. No. 350/65, if tax has been already paid under the G.S.T. Act, no tax is payable under the C.S.T. Act. Though section 15(b) does not in terms provide as to what is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same towards tax that will be found to be due from him under the C.S.T. Act. The assessment of 31st December, 1968, proceeds on the premise that tax in respect of the appellant's dealings in copra is payable under the G.S.T. Act and not under the C.S.T. Act. This is presumably so since no assessment of tax under the C.S.T. Act has been made as on 31st December, 1968, and, therefore, no tax as such has been paid thereunder, as otherwise the demand (perhaps, not the assessment) under the G.S.T. Act would be improper as an exercise in futility as explained in the preceding paragraph. In view of the fact that under the law the appellant is liable to pay tax only under one or the other of the two statuteseither in respect of intrastate transactions of declared goods under the G.S.T. Act or in respect of inter-State sales of these goods under the C.S.T. Act-, and since the authorities have proceeded on the basis that the appellant's liability for tax is in respect of intra-State transactions in these goods (copra), as on the date of demand, i.e., on 9th April, 1969, there was with the person making the demand the unapplied sum of Rs. 2,42,339.56 as belonging to the appellant-firm and at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority had not, and could not have, applied any portion of the sum of Rs. 2,42,339.56 as per the appellant's direction, and that authority applied a small portion thereof, Rs. 10,407.17, towards the appellant's tax liability under the C.S.T. Act only on 16th February, 1970, after the appellant revoked the direction as per his letter dated 25th April, 1969. At any rate the appellant's direction to apply the sums paid in discharge of his tax liability on inter-State sales of copra could not be complied with so far as Rs. 2,31,932.39 is concerned, and this was so always from and after 31st December, 1968, for the inability to do so did not arise by force of the refund order rather, because it could not be applied according to the wishes of the appellant, it was refunded. The same authority to whom the sums were paid, made the assessment on 31st December, 1968, whereby he held that in respect of the appellant's dealings in copra, its tax liability is on intra-state dealings under the G.S.T. Act, and not on inter-State sales under the C.S.T. Act. The appellant was, therefore, entitled to seek adjustment of the amounts paid by it and lying with the assessing authority to its credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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