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TMI Blog1979 (9) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... rothers v. Commercial Tax Officer[1957] 8 S.T.C. 478., and the decision of the Supreme Court in State of Madras v. Gannon Dunkerley Co.[1958] 9 S.T.C. 353 (S.C.)., the law came to be well-settled that in the case of works contract there was no sale of goods and it was beyond the competence of the State Legislature to impose tax on the supply of materials used in such a contract. Accordingly, the respondent was not a dealer and rule 2(ii)(c) of the Bengal Sales Tax Rules, 1941, under which the respondent was assessed, was void and ultra vires. It was contended by the respondent that, in view of the said decisions, he became entitled to the refund of the amount of sales tax already paid by him and was entitled to have his registration certificate cancelled. The respondent submitted returns for the years 1959, 1960 and 1961 thereby declaring no sales or turnover. On 10th April, 1962, the respondent wrote a letter to the Commercial Tax Officer, Collootola Charge, stating, inter alia, that he was a sanitary contractor executing sanitary works. In the said letter, he requested the Commercial Tax Officer to cancel his registration as a dealer in view of the decisions of the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent that, after the said decision of the appeal court, he was advised that the assessments, having been made on the basis that the respondent was a dealer and not a contractor, were all invalid and the money paid by the respondent in respect of the said assessments became refundable to him. Accordingly, the respondent wrote to the Secretary, Department of Finance, West Bengal, Calcutta, on 2nd May, 1972, claiming refund of the said sum of Rs. 18,812.45. The respondent did not receive any reply to the said letter. On the contrary, steps were taken for realisation of the dues on the basis of the assessments for the years 1963, 1964 and 1965 and certificate proceedings were started against the respondent. Thereafter, the respondent made an application for cancellation of the registration certificate which was cancelled by the Commercial Tax Officer with effect from 22nd August, 1972. On 1st September, 1972, the respondent made seven sets of applications before the Commercial Tax Officer, Collootola Charge, claiming refund of diverse amounts of taxes realised illegally and/or without any authority of law from him for the years 1951-52 to 1957-58. All the said applications for refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut, instead of granting any relief to the respondent as prayed by him, the Commercial Tax Officer proceeded to impose penalty on the respondent for his non-payment of the arrears of sales tax for the subsequent periods. The penalty that was imposed was set aside by this Court on the ground that the Commercial Tax Officer had no authority or jurisdiction to realise sales tax from the respondent as the said rule 2(ii)(c) was ultra vires the power of the State Legislature. It is, however, contended by Mr. Dutta, the learned Advocate appearing on behalf of the appellants, that the orders of assessments for the periods in question, that is, for the years from 1951 to 1958, not having been challenged by the respondent in appeal, the said orders became final and cannot be reopened for the purpose of refund to the respondent. In support of this contention, reliance has been placed on behalf of the appellants on the decision of the Privy Council in Commissioner of Income-tax, West Punjab v. Tribune Trust, Lahore[1948] 16 I.T.R. 214 (P.C.). In that case, the assessee, the Tribune Trust, claimed that, as the income of the trust derived from property held under trust wholly for charitable pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, a nullity. Merely because an order has been passed by the officer and has not been appealed against, it does not become legal and final, if otherwise it is void; for instance, if there is a flagrant violation of natural justice, the order by a Tribunal may be a nullity. On the strength of the above two decisions, it has been strongly urged on behalf of the appellants that as the respondent had not taken any steps for getting the orders of the Commercial Tax Officer set aside by preferring appeals, the same became final and conclusive and no refund could be made. We regret, we are unable to accept the contention. In these two cases, the appellant claimed exemption from payment of tax. It was not the case of the appellants in either of the said cases that the imposition of tax was ultra vires and beyond the competence of the legislature. There is a distinction between exemption claimed on a particular item and the provision of law under which assessments are made is ultra vires. In the first case, the order of assessment is not void but illegal and liable to be set aside in appeal, but, in the other case, the assessment is void. A void assessment, in our opinion, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondition of section 12(1) is not satisfied, namely, that the respondent was not a dealer at all. Accordingly, in our view, section 12(1) and, consequently, the proviso to the same, are not at all applicable. This contention of the appellants, therefore, fails. It is next contended on behalf of the appellants that even assuming that section 12(1) does not apply, still the respondent should have made the claim within a reasonable time. The decision of the Supreme Court in the Gannon Dunkerley's case[1958] 9 S.T.C. 353 (S.C.). was given in 1958. It is contended that the respondent having come to know of the legal position in 1962 that the taxes were illegally realised from him for the impugned periods, he should have made the application at least within three years from his knowledge. The respondent, however, made the application for refund on 29th August, 1972, and, as such, the application for refund was barred by limitation. There is no period of limitation fixed under the law for claiming refund of tax realised by virtue of an order of assessment, which is void. However, the Supreme Court has in some cases laid down that a claim for refund should be made within a reasonable peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation, the court should ordinarily refuse to issue the writ of mandamus for such payment. It has been further observed that the maximum period fixed by the legislature as the time within which the relief by a suit in a civil court must be brought may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under article 226 can be measured. The court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy, but where the delay is more than this period, "it will almost always be proper for the court to hold that it is unreasonable". In State of Kerala v. Aluminium Industries Ltd.[1965] 16 S.T.C. 689 (S.C.)., it has been observed by the Supreme Court that money paid under a mistake of law comes within the word "mistake" in section 72 of the Contract Act and there is no question of estoppel when the mistake of law is common to both the assessee and the taxing authority. If refund is not made, remedy through court is open, subject to the same restriction and also to the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him because the law under which the taxes were realised was void, does not take any step in the matter either by making an application for refund or bringing it to the notice of the authorities concerned about the illegal realisation of the tax under a common mistake of law or, in other words, if the party sits idle during the period of time within which a civil action is to be brought, in such a case, the High Court should not exercise its discretion in granting relief to that party for refund. The remedy provided by article 226 of the Constitution is not meant for a careless and negligent person. Before any relief is granted to a person, the court should be satisfied that he was diligent all through and did not waste time before he came for relief under article 226. We may now consider whether the respondent can be said to be so negligent as to refuse him the relief prayed for by him for the refund of taxes illegally realised from him under the void provision of law. It has been stated already that as soon as it came to his knowledge that the taxes paid by him were illegally realised by the appellants under a void rule, namely, rule 2(ii)(c) of the Bengal Sales Tax Rules, he br ..... X X X X Extracts X X X X X X X X Extracts X X X X
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