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TMI Blog1980 (7) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... ax was levied O.S. No. 28 of 1976 2602 to 2610 of 1967 1957-58 to 1965-66 O.S. No. 29 of 1976 2798 to 2801 of 1967 1962-63 to 1965-66 O.S. No. 31 of 1976 2641 to 2649 of 1967 1957-58 to 1965-66 O.S. No. 39 of 1976 2712 to 2716 of 1967 1961-62 to 1965-66 O.S. No. 37 of 1976 2707 to 2711 of 1967 1961-62 to 1965-66 O.S. No. 34 of 1976 2736 to 2739 of 1967 1962-63 to 1965-66 O.S. No. 30 of 1976 2621 to 2624 of 1967 1962-63 to 1965-66 O.S. No. 27 of 1976 2626 to 2628 of 1967 1962-63 to 1965-66 O.S. No. 32 of 1976 2612 to 2630 of 1967 1957-58 to 1965-66 O.S. No. 33 of 1976 2637 to 2640 of 1967 1961-62 to 1965-66 O.S. No. 35 of 1976 2765 to 2768 of 1967 1962-63 to 1965-66 O.S. No. 41 of 1976 2769 to 2775 of 1967 1958-59 to 1965-66 The High Court allowed the writ petitions following an earlier decision in Larsen and Toubro Limited v. Joint Commercial Tax Officer, Madras[1967] 20 S.T.C. 150., against which the plaintiff in these suits had already filed an appeal in the Supreme Court. The Supreme Court reversed this Court's decision and held that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, were not ultra vires while confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31 of 1976. The defendants in O.S. No. 41 of 1976 filed W.M.P. Nos. 458 and 459 of 1970 for punishing the Deputy Commercial Tax Officer for contempt for not obeying the High Court's order for refund of the tax levied in the years 1963-64 and 1964-65. The High Court ordered even in those writ miscellaneous petitions on 24th April, 1971, to refund the amount within 15 days. The Deputy Commercial Tax Officer thereafter refunded a sum of Rs. 17,230.94 to the defendants in the suit on 6th May, 1971. In all, a sum of Rs. 99,628.67 has been refunded to the defendants in O.S. No. 41 of 1976 as indicated above. Subsequently, the Government of India promulgated Ordinance No. 4 of 1969 validating the levy of sales tax already made, including the levy on the excise duty portion of the turnover, and replaced the Ordinance by Central Act No' 28 of 1969. Section 9(1) of that Act, which came into force on 30th August, 1969, lays down that: "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 rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in Writ Petitions Nos. 2602 to 2610, 2648, 2649 and 2641 to 2647 of 1967, and the Supreme Court's orders in S.L.P. Nos. 2012 to 2023 of 1973 made subsequent to the date of promulgation of Ordinance No. 4 of 1969. In view of the Supreme Court's judgment, these suits have to be dismissed in limine. The Deputy Commercial Tax Officer, Kovilpatti, revised the assessments after the decision of the High Court in the said writ petitions, holding that sub-sections (2) and (2A) of section 8 of the Central Sales Tax Act, 1956, were ultra vires and the levy of sales tax on the excise duty portion of the turnover was invalid in law. Thereafter, the original orders of assessment are no longer in force. The Deputy Commercial Tax Officer, who has the power to rectify the mistakes in assessment, has not exercised the power, and has not reassessed the turnover. He has no power to make a reassessment after the expiry of five years from the end of each of the assessment years. The Supreme Court's decision in State of Madras v. Nataraja Mudaliar[1968] 22 S.T.C. 376 (S.C.). is binding only on Nataraja Mudaliar and not any of the defendants in these suits. The plaintiff has no right to question the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution of India and are unconstitutional and void, and that while under the Tamil Nadu General Sales Tax Act the excise duty is deductible from the turnover, no such provision has been made for deduction of the excise duty from the turnover of inter-State sales or purchases under the Central Sales Tax Act, 1956, with the result that unequal burden will fall on differences in the quantum of turnover because of allowance in one case and disallowance in another, of deduction of excise duty, and that will impede the freedom of inter-State trade, commerce and intercourse under article 301 of the Constitution of India and is not saved by article 303. The State filed an appeal against the decision in only one of the writ petitions disposed of in that batch of cases in 20 S.T.C. 150 namely W.P. No. 836 of 1966, which had been filed by one Nataraja Mudaliar with certificate granted by this Court. It was held by the Supreme Court in that case (22 S.T.C. 376) that sub-sections (2), (2A), and (5) of section 8 of the Central Sales Tax Act, 1956, do not infringe articles 301 and 303(1) of the Constitution and are, therefore, not ultra vires of Parliament, and that in the matter of determining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Sales Tax Act, 1956, inclusive of the portion of the tax levied on the excise duty portion of the turnover. The defendants in O.S. No. 41 of 1976, out of which A.S. No. 623 of 1978 has arisen, also filed W.M.P. Nos. 458 and 459 of 1970 for punishing the Deputy Commercial Tax Officer for contempt for not obeying the High Court's order made in W.P. Nos. 2769 to 2775 of 1967, and those petitions had been dismissed on 23rd April, 1971, after the refund of a total sum of Rs. 99,628.67 in August, September and October, 1968. During the course of the arguments, the learned counsel for the respondent submitted that the defendants in the other suits also filed contempt petitions before this Court and that they were also dismissed on 23rd April, 1971, as detailed below: Defendants in Appellants in W.M.P. Nos. O.S. No. 28 of 1976 A.S. No. 612 of 1978 8233 to 8241 of 1970 O.S. No. 29 of 1976 A.S. No. 613 of 1978 96 to 99 of 1970 O.S. No. 34 of 1976 A.S. No. 615 of 1978 119 to 122 of 1970 O.S. No. 37 of 1976 A.S. No. 016 of 1978 91 to 95 of 1970 O.S. No. 39 of 1976 A.S. No. 617 of 1978 106 to 110 of 1970 O.S. No. 30 of 1976 A.S. No. 618 of 1978 7530 to 7533 of 1970 O.S. No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecome final and cannot be questioned by the plaintiff in these suits and the suits should have been dismissed. Ordinance No. 4 of 1969, which was replaced by Central Act No. 28 of 1969, validated the levy of sales tax on the excise duty portion of the turnover; but the Ordinance and the Act have nothing to do with the decision of the High Court striking down sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act. Therefore, the suits are barred by res judicata and should have been dismissed. (3) The Deputy Commercial Tax Officer, Kovilpatti, revised the assessments after the decision of the High Court in the writ petition, holding that subsections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, are ultra vires and the levy of sales tax on the excise duty portion of the turnover is invalid in law, and thereafter the original orders of assessment are no longer in force and the Deputy Commercial Tax Officer, who has power to rectify the mistakes in assessment, has not exercised the power, and the amounts could not be recovered without any reassessment, which could not be made after the expiry of five years from the end of each of the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere can be varying rates in different States, but all below two per cent. Likewise inter-State sales of goods other than declared goods are chargeable at the rate of ten per cent or at the rate prevailing in the taxing State, whichever is higher. If, however, under the law of the taxing State, local sales of any goods by a dealer are exempt from tax generally or subject to tax at lower than two per cent such exemption or lower rate of tax will apply to turnover of inter-State sales of such goods. This is what is provided in sub-section (2A) of section 8. The explanation to the sub-section limits the scope of applicability of local exemptions in certain circumstances to inter-State sales. Sub-section (5) of section 8 confers power upon the State Government to allow by notification exemption or lower rate of tax on inter-State sales of any class or classes of specified goods, notwithstanding the fact that under the State law there is no exemption or a different rate of tax obtains. The effect of such a scheme of taxation is obviously, to our minds, quite discriminatory and considerably affects the freedom of trade, commerce and intercourse. The differential rates or exemptions in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the States and is levied ultimately for the benefit of the States and is statutorily assigned to the States ..... The Central sales tax though levied for and collected in the name of the Central Government is a part of the sales tax levy imposed for the benefit of the States. By leaving it to the States to levy sales tax in respect of a commodity on intra-State transactions no discrimination is practised: and by authorising the State from which the movement of goods commences to levy on transactions of sale Central sales tax, at rates prevailing in the State, subject to the limitation already set out, in our judgment, no discrimination can be deemed to be practised. .........The view expressed by the High Court that sections 8(2), 8(2A) and 8(5) infringe article 301 and article 303(1) cannot be sustained." Regarding the validity of sales tax on the excise duty portion, the learned Judges have observed at page 393 of the Reports: "If under the Madras General Sales Tax Act in computing the turnover the excise duty is not liable to be included and by virtue of section 9(1) of the Central Sales Tax Act tax has to be levied in the same manner as the Madras General Sales Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w; the one, public policy and necessity, which makes it to the interest of the State that there should be an end to litigation-interest republicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for the same cause-nemo debet bis vexari pro eaden causa'. In this sense the recognised basis of the rule of res judicata is different from that of technical estoppel. 'Estoppel rests on equitable principles and res judicata rests on maxims which are taken from the Roman Law.' Therefore, the argument that res judicata is a technical rule and as such is irrelevant in dealing with petitions under article 32 cannot be accepted. The same question can be considered from another point of view. If a judgment has been pronounced by a court of competent jurisdiction it is binding between the parties unless it is reversed or modified by appeal, revision or other procedure prescribed by law. Therefore, if a judgment has been pronounced by the High Court in a writ petition filed by a party rejecting his prayer for the issue of an appropriate writ on the ground either that he had no fundamental right as pleaded by him or there has been no contravention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court under article 32. The cause of action for the two applications would be the same. It is the assertion of the existence of a fundamental right and its illegal contravention in both cases and the relief claimed in both the cases is also of the same character. Article 226 confers jurisdiction on the High Court to entertain a suitable writ petition, whereas article 32 provides for moving this court for a similar writ petition for the same purpose. Therefore, the argument that a petition under article 32 cannot be entertained by a High Court under article 226 is without any substance; and so the plea that the judgment of the High Court cannot be treated as res judicata on the ground that it cannot entertain a petition under article 32 must be rejected. .....we hold that if a writ petition filed by a party under article 226 is considered on the merits as a contested matter and is dismissed the decision thus pronounced would continue to bind the parties unless it is otherwise modified or reversed by appeal or other appropriate proceedings permissible under the Constitution. It would not be open to a party to ignore the said judgment and move this court under article 32 by an origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t wrong decision has not been superseded by any appeal or other procedure like review, which the law provides, it would be binding on the parties to that extent. In Devilal Modi v. Sales Tax Officer[1965] 16 S.T.C. 303 (S.C.); [1965] 1 S.C.R. 686. the appellant, who had been assessed to sales tax, challenged the order of assessment by a writ petition in the High Court. On the dismissal of the petition by the High Court, he appealed to the Supreme Court. At the hearing of the appeal, he sought to raise some additional contentions. But the appeal was dismissed as the additional contentions were not permitted to be raised. Thereupon another writ petition was filed raising those additional contentions and challenging the order of assessment for the same year. The High Court dismissed the petition on merits. The Supreme Court has held on appeal that the appeal should be dismissed as the principle of constructive res judicata is applicable in the circumstances of the case. This decision also would show that it is not open to the parties, who have not filed any appeal against the decision of this Court in the writ petitions filed by the appellants in these suits to contend that the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as attained finality, will operate as res judicata between the parties in a subsequent suit or proceeding. ......Article 141 of the Constitution enacts that the law declared by the Supreme Court 'shall be binding on all courts' within the territory of India. This means that when the Supreme Court expresses its view on any particular point of law, such expression of view shall be considered as overriding a contrary view expressed on the point in an earlier decision of any court. Even obiter dicta of the Supreme Court if deliberately made upon a question with the intention of settling the law, are binding on all courts. However, article 141 does not confer on the Supreme Court any legislative function. The Supreme Court only interprets the law as it stands, but does not amend the law. Their Lordships' decision declared the existing law but did not purport to enact any fresh law." This decision is in accord with the earlier decision of the Supreme Court in State of West Bengal v. Hemant KumarA.I.R. 1966 S.C. 1061., referred to above, and shows, that the decision of this Court in the writ petitions filed by the defendants in the suits constitutes res judicata. In Har Swarup v. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was a surprise inspection of the residence of one Pitchaimuthu which resulted in the discovery of 29 slips of which 8 were held to refer to the assessees. In another surprise inspection of the records of two individuals under whom Pitchaimuthu was working, 27 more slips were recovered out of which 25 were said to relate to the assessees. On the basis of the slips relating to the assessees, the assessing officer issued a notice under section 16 of the Tamil Nadu General Sales Tax Act, 1959, requiring them to show cause why the turnover for each of these two years should not be determined as having escaped assessment. After following the prescribed procedure, by an order dated 15th December, 1964, the assessing authority by best of judgment determined the escaped turnover for the two years, at higher amounts. The assessees preferred two writ petitions against those orders alleging that section 16 of the Tamil Nadu General Sales Tax Act authorised only the assessment of the actual escaped turnover by best of judgment method. It was ultimately held in those writ petitions by a Full Bench in P.S. Subramaniam Chettiar Sons v. Joint Commercial Tax Officer III, Dindigul[1966] 18 S.T.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered similar arguments. Discussing about the validating statutes in general, the Supreme Court in Shri P.C. Mills v. Broach Municipality[1971] 79 I.T.R. 136 (S.C.); A.I.R. 1970 S.C. 192. made the following oft-quoted observations: 'When a legislature sets out to validate a tax declared by a court to be illegally collected under ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 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, all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been done or taken in accordance with law. In Chhotalal Keshavram v. Additional Assistant Commissioner of Sales Tax, Raipur[1974] 33 S.T.C. 456., originally the period of assessment of tax escaped was three years which, by the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1964, was raised to five years, and the sales tax autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment ceases to exist. In such a situation, the declaration of the law made by the court loses its value and efficacy and such a declaration cannot operate as res judicata between the parties after the law itself has been amended. The learned judges have observed in that decision that: "No judgment of a court can take away the power of the legislature to make law with retrospective effect. If there is any conflict between the declaration of law made by a court and the exercise of legislative power, the declaration of law made by the court will yield to the legislative enactment." We hold that the Parliament was competent to enact section 9(1) of Central Act No. 28 of 1969 with retrospective effect and that it has taken away the effect of the decision of this Court in the writ petitions filed by the defendants in these suits in so far as it relates to the levy of tax on the excise duty portion of the turnover. But, having regard to the decisions referred to above, we hold that the decision of this Court in the writ petitions filed by the defendants in so far as it relates to the invalidity of assessing to tax the excise duty portion of the turnover does not constitute res ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a total failure of consideration, and an action for money had and received does not lie if the consideration fails only in part and that it was not disputed that the defendant was in possession of the land in question at the time of the notification and there can be no question that the Government succeeded in recovering possession of the land and in getting rid of whatever claim the defendant had to the land, by means of these proceedings and by means of the payment, and therefore it is impossible to say that there was no consideration for the payment. Broomfield, J., who agreed with Beaumont, C.J., in the view that it could not be stated that there was failure of consideration even if the defendant is not really the owner of the land, has observed regarding the other question that to all intents and purposes the money was paid under compulsion of legal process and that being so, the plaintiff has no ground of action under section 72, Contract Act, even if there was a mistake. This decision will not apply to the facts of the present case, for, in that case the defendant was found to have been in possession of the land acquired under the provisions of the Land Acquisition Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department demanded payment of the tax from the petitioners on the ground that once the assessments had become final, the amounts charged thereunder remained payable and the State was entitled to collect it. The petitioners had filed writ petitions for prohibiting the officers from recovering the amounts. The learned Judges have observed: "It appears to us that the words 'levy' and 'collection' are used in article 265 of the Constitution in a comprehensive manner and that they are intended to include and envelop the entire process of taxation......And, what article 265 enjoins is that every stage in this entire process must be authorised by the law. ......The petitioners are not objecting to any mode of collection. Their objection is more fundamental. They object to the collection itself. The answer given on behalf of the State to this objection of theirs is that the assessment has become final. Now, to say that an assessment has become final is not equivalent to saying that the assessment is lawful-as has been demonstrated in the present case. When we say that an assessment has become final all that we ordinarily mean is that the assessee may no longer challenge it in the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxes have been assessed and paid were declared void in Mohammad Siddiq v. State of Madhya BharatA.I.R. 1956 M.B. 214. A portion of the tax had already been paid by the assessees. The Supreme Court observed: "It cannot now be disputed that this payment was made under a mistake within section 72 of the Indian Contract Act and so the Government to whom the payment has been made by mistake must in law repay it. The question is: whether the relief of repayment has to be sought by the taxpayer by an action in a civil court or whether such an order can be made by the High Court in exercise of its jurisdiction under article 226 of the Constitution. The jurisdiction conferred by article 226 is in very wide terms. This article empowers the High Court to give relief by way of enforcement of fundamental rights and other rights by issuing directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari. According to the petitioners a writ in the nature of mandamus can be appropriately used where money has been paid to the Government by mistake to give relief by commanding repayment of the same. That in a number of cases the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial Tax Officer v. Rayalaseema Constructions[1966] 17 S.T.C. 505 (S.C.)., their Lordships of the Supreme Court have observed: "In State of Madras v. Gannon Dunkerley Co. (Madras) Ltd.[1958] 9 S.T.C. 353 (S.C.). this court held, agreeing with the Madras High Court, that the provisions introduced by the Madras General Sales Tax (Amendment) Act, 1947, were ultra vires the powers of the Provincial Legislature. After considering the relevant constitutional provisions, this court came to the definite conclusion that the State Legislature had no competence to impose a tax on 'indivisible building contracts'. There is therefore no doubt that the relevant provisions of the Madras General Sales Tax Act in so far as they deal with 'indivisible building contracts' are ultra vires the powers of the State Legislature and therefore void. It follows that in the instant case, the sales tax authorities have acted outside the Act in making an assessment on the basis of the relevant part of the charging section which was declared to be ultra vires by this 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.)., this court by a majorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party receiving the same. ......The Privy Council decision in Shiba Prasad Singh v. Srish Chandra Nandi(3) has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it. No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of section 72 of the Indian Contract Act, even though such a distinction has been made in America-vide the passage from Willoughby on the Constitution of the United States, Vol. I, p. 12 op. cit. To hold that tax paid by mistake of law cannot be recovered under section 72 will be not to interpret the law but to make a law by adding some such words as 'otherwise than by way of taxes' after the word 'paid'. If this is the true position, the fact that both the parties, viz., the respondent and the appellants, were labouring under a mistake of law and the respondent made the payments voluntarily would not disentitle it from receiving the said amounts. The amounts paid by the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to repay or return them irrespective of any consideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like. If once that circumstance is established the party is entitled to the relief claimed. If, on the other hand, neither mistake of law nor of fact is established, the party may rely upon the fact of the monies having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion. ...No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is not more to blame than the other. Estoppel arises only when the plaintiff by his acts or conduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to his detriment; it is only then that the plaintiff is estopped from setting up a different state of facts." This decision will clearly apply to the facts of the present cases where the excise duty portion of the sales tax had been refunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging section of the Act, is not a finding on a collateral fact. This is equally true of the appropriate authorities functioning under other similar Sales Tax Acts and the Income-tax Act. The expression "assessment made" in section 20 of the Bombay Sales Tax Act, 1946, cannot mean only an assessment properly or correctly made. It takes in all assessments made or purported to have been made under the Act. An order of assessment, though erroneous and though based on an incorrect finding of fact, is nevertheless an order of assessment within the meaning of the section; and section 20 in terms provides that it will not be called in question in any civil court. An assessment based on an erroneous finding about the character of the transaction is not an assessment made without jurisdiction and is not outside the purview of section 20. The words used in section 20 are so wide that even erroneous orders of assessment made would be entitled to claim protection against the institution of a civil suit. The jurisdiction of a civil court can be excluded even without an express provision. It is observed in that decision: "There is no doubt that a claim for the refund of sales tax alleged to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of tax which is alleged to have been illegally recovered from it by the respondent, and the ground on which the said relief is claimed is that at the time when the tax was recovered, the appellant was under a mistake of fact and law. According to the appellant, even the respondent might have been labouring under the same mistake of fact and law, because the true constitutional and legal position in regard to the jurisdiction and authority of different States to recover sales tax in respect of outside sales was not correctly appreciated until this court pronounced its decision in the Bengal Immunity Co.'s case[1955] 6 S.T.C. 446 (S.C.); [1955] 2 S.C.R. 603. That being so, can it be said that the Act provides an appropriate remedy for recovering a tax alleged to have been illegally levied and collected, where the party asking for the said relief pleads a mistake of fact and law?...... Section 13 of the Act expressly provides for refunds. It lays down that the Commissioner shall, in the prescribed manner, refund to a registered dealer applying in this behalf any amount of tax paid by such dealer in excess of the amount due from him under this Act. The proviso to this section p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed to sales tax under the Travancore-Cochin General Sales Tax Act, 1950, for the period 16th August, 1950, to 31st March, 1951, on a turnover which included tax collected from their constituents on their sales transactions. After having paid the tax, the respondents instituted a suit in the court of the District Judge for the recovery of the sum of Rs. 7,500 odd claiming that it was in excess of the tax lawfully due from them under the Act. It has been held that section 23A of the Act was incorporated in the Act after the suit was instituted and it did not exclude the jurisdiction of the civil court to try the suit which was properly instituted before it was enacted, that the jurisdiction of the civil court may be excluded expressly or by clear implication arising from the scheme of the Act, and where the legislature sets up a special tribunal to determine questions relating to rights or liabilities which are the creation of a statute, the jurisdiction of the civil court would be deemed excluded by implication; and that even if the jurisdiction of the civil court is excluded, where the provisions of the statute have not been complied with or the statutory tribunal has not act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt to entertain a suit for tax assessed under the Act was excluded expressly, and by the clear implication of the Act as well... In Basappa's case(3), the taxpayer sought in an action for refund of tax paid a decree on the plea that the transactions in respect of which tax was levied were 'outside sales', and it was held that in the absence of express exclusion of the jurisdiction of the civil court, the action for refund of tax was maintainable. But the nature of the transactions taxed in the Kamala Mills' case[1965] 16 S.T.C. 613 (S.C.); 57 I.T.R. 643 (S.C.). was not different. In the judgment in Kamala Mills' case(2), it was pointed out that the jurisdiction of the civil court to entertain a suit for refund of tax paid in compliance with an order of assessment may be excluded either expressly or by necessary implication, and as the scheme of the Bombay Sales Tax Act, 1946, indicated that a complete machinery was set up by constituting appropriate authorities under the Act, and creating a hierarchy of authorities to deal with the problem of levying tax as contemplated by the Act, jurisdiction of the civil court to entertain the suit was excluded by implication as well as by expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the dealer and which also nullified the effect of an order of the court or tribunal to the contrary, was passed. The officer then issued to the petitioners notices in form B under rule 12 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, calling upon them to remit the amount refunded to them. The petitioners challenged the demand in proceedings under article 226 of the Constitution. Referring to the decision of Rajagopala Ayyangar, J., in M.M. Muthukaruppan Chettiar v. Deputy Commercial Tax Officer(5) the learned Judges observed that: (1) [1964] 15 S.T.C. 144 (S.C.). (4) [1960] 11 S.T.C. 443. (2) [1965] 16 S.T.C. 613 (S.C.); 57 I.T.R. 643 (S.C.). (5) [1960] 11 S.T.C. 220. (3) [1968] 22 S.T.C. 376 (S.C.). "The learned Judge held that, if the tax had remained uncollected, the provisions of section 17 would enable a levy or collection at the enhanced rate, but those provisions would not enable the Government to get back what was collected at the higher rate and refunded under a valid order of a court. It might be noticed that section 17 of the Act did not nullify orders passed by courts. The principle of that decision cannot, however, apply to the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due under the final assessment is found to be lower than the tax paid on the provisional assessment, the officer is directed to issue a notice in form C for refunding the excess tax. If the former is less than the latter, a notice in form B is to be issued, making a demand on the assessee for the amount of the deficit. No question will arise, if the amount paid by way of provisional assessment is equal to that assessed as tax. What the rule contemplates is a mere arithmetical computation after the order of assessment is made. There is no power to alter or correct the amount or to issue notices in form B or C more than once............When an assessment is varied in appeal or revision, rule 12 does not enable an issue of form B or C notice to collect the deficiency in or refund the excess payment of tax. The rule-making authorities have, therefore, provided separate rules for the purpose. Rules 14-A and 15(2) of the Madras General Sales Tax Rules provide for the case of modification of assessment by the appellate and revisional authorities. They state: '14-A. Where the tax as determined by the initial assessing authority appears to the appellate authority under section 11 or revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was chargeable at a certain rate on "leaves of tobacco, manufactured tobacco used for smoking, eating and for snuff, and tobacco chura used for the manufacture of bidis" sold by an importer. Locally grown tobacco was not, however, subject to a similar tax. The writ petitioners before that High Court sold imported as well as locally grown tobacco, and the sales tax authorities assessed them to sales tax on the basis of a taxable turnover determined after deducting from their turnover the sale of "domestic tobacco" and recovered the tax accordingly. The petitioners filed a petition under article 226 of the Constitution of India challenging the validity of the imposition of sales tax on tobacco imported by them on the ground that it contravened the provisions of article 304(a) of the Constitution of India and claimed a refund of the tax already collected from them. The High Court held that the imposition of sales tax on the petitioners in respect of the sales of tobacco imported into Madhya Bharat was illegal, being in violation of article 304(a) of the Constitution, and that the petitioners were entitled to refund of the amount paid by them as tax. The learned Judges observed: "We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision of the Supreme Court is that payment by the assessee of a tax, which is subsequently declared to be ultra vires, must be regarded as a payment made under mistake and the party receiving the same is bound to return the amount of tax irrespective of any consideration whether the moneys have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like." This decision also shows that a petition under article 226 of the Constitution of India for the issue of a writ of mandamus requiring the Sales Tax Officer to refund the tax illegally collected, could be filed. It would follow that a similar writ could be issued directing return of the tax wrongly refunded to the assessee. Then there can be no doubt that the suit which is in the nature of an alternative remedy would lie. Under these circumstances, we are unable to agree with the learned counsel for the defendants that the civil court has no jurisdiction to decide the question in these suits whether the plaintiff is entitled to recover the excise duty portion of the sales tax levied under the Central Sales Tax Act, 1956, refunded to the defendants. The learned counsel for the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the net turnover shall be liable to deduction in determining the taxable turnover under the Central Sales Tax Act, 1956", and accordingly dismissed the tax revision cases. Their Lordships of the Supreme Court observed in their judgment that the legal position has been changed as a result of the issue of the Central Sales Tax (Amendment) Ordinance, 1969 (No. 4 of 1969), which was promulgated on 9th June, 1969. Clause 9 of that Ordinance provides: "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 commencement of this Ordinance, 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 Ordinance and accordingly- (a) all acts, proceedings or things done or taken by the Government or by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Sales Tax Act, 1956. The tax thus collected has been shown separately in the various invoices issued by the defendants in each of the suits. The sales tax collected by the defendants from the plaintiffs had been originally remitted by the defendants to the Mysore sales tax authorities. Subsequently, the Supreme Court on 10th November, 1964, held in State of Mysore v. Yaddalam Lakshminarasimhiah Setty Sons[1965] 16 S.T.C. 231 (S.C.). that though section 6 of the Central Sales Tax Act is the charging section, the liability to pay tax is subject to the other provisions of the Act, that section 9(2) provides that tax shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State, that the tax under the Central Act shall be levied in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected and that, therefore, if no tax was exigible in respect of the same transactions under the Mysore Sales Tax Act, no tax was payable under the Central Act. Relying on the said decision, the sales tax authorities of the Mysor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In that case a hotel proprietor was assessed to sales tax for 1953-54 at the enhanced rate of tax of 4 1/2 pies in the rupee under the proviso to section 3(1)(b) of the Madras General Sales Tax Act, 1939. Later, the said proviso to section 3(1)(b) was held to offend article 14 of the Constitution by the High Court. In view of the said decision, the Tribunal held that the assessee was liable to be taxed only at 3 pies in the rupee. On the basis of the order of the Tribunal which became final, a certain sum was refunded to the assessee in September, 1956. Subsequently, the proviso to section 3(1)(b) was replaced with retrospective effect by another proviso and the earlier assessments were validated. Thereafter the assessing authority issued a notice to the assessee requiring him to repay the sum refunded to him on the ground that by reason of the amendment made retrospectively the refund made was not proper. That demand was challenged by the assessee before this Court, and this Court expressed the view that: 'When the excess over three pies per rupee was refunded to the petitioner, it was an amount lawfully due to him and was properly paid. The only question is, whether the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(2). If the reasoning of the High Court is correct then it is the assessees who will be deprived of the benefit of section 10(1) of the Amendment Act because there could not have been any finding in the original assessment orders that the assessees had not collected tax. The legislative intention is clear and beyond doubt. The law gives a further opportunity to the assessees whose assessments are sought to be reopened to satisfy the assessing authorities that they had not collected tax in respect of the turnovers in question. Rule 38 of the Mysore Sales Tax Rules must be read with section 10 of the Amendment Act. If so read, it is clear that the assessing authorities before reassessing the dealers should afford them reasonable opportunity to satisfy them that they have not collected tax." This decision does not help the defendants in the present case, for, those observations were made having regard to the fact that in all cases except in one before the learned Judges of the Supreme Court which were dealt with separately, their Lordships were told that the assessees had not been given opportunity to show that they had not collected sales tax in respect of the turnover with which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decisions in Harakchand Rugchand v. State of Mysore[1969] 23 S.T.C. 197., Hira Lal Rattan Lal v. Sales Tax Officer[1973] 31 S.T.C. 178 (S.C.)., Gill and Co. (P.) Limited v. Commercial Tax Officer, II Circle, Gadag[1973] 31 S.T.C. 336 (F.B.)., State of Andhra Pradesh v. Shah Jamnadas Amichand[1975] 35 S.T.C. 281. and State of Uttar Pradesh v. Modi Industries Limited[1977] 40 S.T.C. 73 (S.C.). and contended that no reassessment is necessary. In Harakchand Rugchand v. State of Mysore[1969] 23 S.T.C. 197., in respect of the assessment year 1957-58 the Commercial Tax Officer made an assessment order by which the turnover of the assessee relating to the sale of cloth held by him on 14th December, 1957, was also included in the assessment. But in the order made in the writ petition on 21st August, 1963, that part of the assessment was set aside, in the view that the relevant part of section 5 of the Mysore Sales Tax Act, 1957, did not charge that part of the turnover with sales tax. But, by the Mysore Sales Tax (Amendment) Act, 1963, section 5(5A) was amended retrospectively and in consequence, the turnover which had been included by the Commercial Tax Officer in the order of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of this court. If the order of assessment was, therefore, a good assessment, the tax paid by the petitioner should not have been refunded to him and if it was nevertheless refunded, because this court directed the refund, the Commercial Tax Officer on the validation of the assessment, had the power to call upon the petitioner to repay the amount which had been refunded to him. The liability to pay back that amount was a consequence which plainly flowed from retrospective validation. It is difficult to understand the assertion that the impugned demand was not possible unless there was a rectification of the assessment. The assessment, on validation, no longer suffered from the infirmity of invalidity which constituted the foundation of the judgment of this court in Writ Petition No. 1235 of 1962. As the assessment order now stands after its validation, the amount refunded to the petitioner was tax properly payable by him. A rectification of the order of assessment was necessary only if without such rectification the amount refunded could not have been demanded as tax and it became necessary for the Commercial Tax Officer to clothe himself with the authority to demand it, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification dated 1st October, 1964, "foodgrains" were specified under section 3-D for single point tax at the stage of first purchase. The sales tax authorities sought to bring to tax, on the basis of section 3-D and the notification, the first purchases of processed or split foodgrains including dal on the ground that they constituted a separate item quite independent of the unprocessed or unsplit foodgrains. The Allahabad High Court in Tilok Chand Prasan Kumar v. Sales Tax Officer, Hathras, District Aligarh[1970] 25 S.T.C. 118., held that such a levy was invalid. Subsequent to that decision, the U.P. Sales Tax (Amendment and Validation) Act, 1970, replacing an Ordinance, was passed and explanation II was added to section 3-D(1) providing that "split or processed foodgrains shall be deemed to be different from unsplit or unprocessed foodgrains" and nothing in sub-section (1) "shall be construed to prevent the imposition, levy or collection of the tax in respect of the first purchases of split or processed foodgrains merely because tax had been imposed, levied or collected earlier in respect of the first purchases of those foodgrains in their unsplit or unprocessed form". Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading the notification in the light of section 3-D, explanation II to that section and section 7 of the Act." In Gill and Co. (P.) Limited v. Commercial Tax Officer, II Circle, Gadag[1973] 31 S.T.C. 336 (F.B.)., after the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.). the petitioner filed writ petitions challenging the validity of the orders of assessment pursuant to which it had already paid the tax on inter-State sales which would not be liable to tax if they had been intrastate sales. The High Court allowed the writ petitions following the decision in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.). and quashed the assessment orders. Pursuant to the orders of the High Court the assessing authority refunded to the petitioner the entire tax paid by it. Subsequently, the Parliament passed the Central Sales Tax (Amendment) Act (28 of 1969) with the object of rendering the decision of the Supreme Court in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.). ineffective and thereupon the assessing authority issued notices calling upon the petitioner to pay back the amount refunded to it. The petitioner thereupon filed wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy or collection of any tax made or purporting to have been made, any action taken or any thing 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......... It is indisputable that the introduction of sub-section (1A) of section 6 of the main Act has been given retrospective effect as if it has been in the original Act at the initial enactment itself. Such introduction of the said sub-section, therefore, in the words of the Supreme Court, has so fundamentally altered the conditions on which the decision in Yaddalam's case(2) was rendered that the said decision could not have been given in the altered circumstances. That means that the amendment has rendered the decision ineffective by removing the very basis of the decision. By the express language of section 9 of the amending Act, assessments made must be deemed to be as valid and effective as if the same had been made under the principal Act as amended, that is to say, as if they had been made in the light of or pursuant to sub-section (1A) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1964-65 certain inter-State transactions of the petitioner in turmeric were taxed under the Central Sales Tax Act, 1956. But on appeal, following the decision in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.)., it was held that since such transactions were not amenable to local tax if they had taken place inside the State, they were also not liable to tax under the Central Act. Subsequently the Central Sales Tax (Amendment) Act (28 of 1969) was passed and thereupon the Commercial Tax Officer issued notices asking the petitioner to either claim exemption under section 10 of the Amendment Act or otherwise pay the amount as per the assessment validated by section 9 of that Act. The assessee filed a writ petition contending that a combined reading of sections 9 and 10 would mean that the assessments had to be reopened in order to determine the tax liability. The learned Judges held that section 9 of Act No. 28 of 1969 validated all assessments notwithstanding anything contained in any judgment, decree or order of any court or authority, and that even if the assessments were set aside in appeal or quashed in proceedings under article 226 of the Constitution the assessments would be valid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that the assessee was entitled to interest at 2 per cent on the refundable amount. The assessee accordingly made an application to the revising authority to pass an order for refund of a certain sum with interest at 2 per cent. The revising authority, however, dismissed the application by order dated 28th December, 1968, on the ground that section 31 inserted in the Act by the U.P. Bikiri Kar (Sanshodhan) Adhiniyam, 1962, with retrospective effect has provided that notwithstanding the option exercised by the assessee, the tax would have to be computed in the light of the rates prevailing in the assessment year as if they were projected upon the turnover of the previous year. The assessee then filed an application under article 226 of the Constitution and the High Court held that its judgment dated 24th July, 1961 might be said to have become erroneous as a result of the amendment, but so long as that judgment stood, it was binding upon the parties and the revising authority had no option except giving effect to it in its order passed under section 11(6). In the appeal, their Lordships of the Supreme Court have observed: "It was at that stage that section 31, which was inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 Act which was in force prior to the date of the decision holding that the particular provision was invalid in law, shall be deemed to be valid and effective as if such assessment, reassessment, levy or collection had been made, or action or thing taken or done under the provisions of the Act which had been revalidated as amended by the Amendment Act. These enactments also say that all acts, proceedings or things done or taken by any Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be and to have always been done or taken in accordance with law. Therefore, the original assessment has to be deemed to have been made in accordance with law, and the revision of assessment and refund have to be held to have been not in accordance with law and there is no necessity for any reassessment. We hold accordingly as regards the excise duty portion of the tax refunded to the defendants. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74, and proportionate costs. The suits regarding the balance are dismissed but without costs, having regard to the fact that the liability to pay interest has not been seriously disputed and the claim of the plaintiff for a portion of the amount claimed in O.S. Nos. 31 and 41 of 1976 has been disallowed only on the ground that the decision in the writ petitions filed by the defendants in those suits constitutes res judicata. Therefore, we allow A.S. Nos. 612, 613 and 615 to 622 of 1978 in part, namely, regarding the interest allowed by the trial court on the principal amounts claimed in those suits from the date of refund up to 1st February, 1974, and we allow A.S. Nos. 614 and 623 of 1978 in part except regarding the excise duty portion of the tax refunded to the defendants in those suits and the interest thereon from 2nd February, 1974, without costs for the above reason, and we dismiss all the appeals in other respects with proportionate costs. The plaintiff shall have proportionate costs in the lower court as well. We think it unnecessary to remand O.S. Nos. 31 and 41 of 1976 for the purpose of ascertaining the excise duty portion of the tax refunded to the defendants in those ..... X X X X Extracts X X X X X X X X Extracts X X X X
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