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TMI Blog1997 (1) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner. 2.. The facts of the case may be summarised thus. The petitioner runs a cinema at Jaipur. Monthly assessment orders annexures 1 to 11 for the period from December, 1971 to October, 1972 were passed by the Commercial Taxes Officer, Circle B , Jaipur on March 19, 1975. Under the Act, surcharge at the rate of 10 paise per ticket if the payment for admission was less than Rs. 2 and 20 paise per ticket if such payment exceeded Rs. 2, was levied under section 4B of the Act with effect from December 10, 1971. The petitioner duly deposited the tax and surcharge for the above period. In the case of another cinema, a question had arisen regarding the rate of surcharge on tickets issued to children, students and defence personnel at concessional rate. Government issued clarification vide its letter No. F.7(41) FD/CT/72 dated November 2, 1973 that in case where the amount of payment for admission per ticket was reduced to less than Rs. 2 on account of the above concession, the rate of surcharge applicable on such tickets would be 10 paise. By assessment orders annexures 1 to 11 dated March 19, 1975, it was held that Rs. 12,362.30 had been recovered and deposited as surcharge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he face of the record which crept in the assessment orders is mentioned in any of the notices. By order dated June 29, 1978, return of the said amount of Rs. 12,362.30 has been ordered stating that this excess amount collected and deposited did not belong to the petitioner and as such he is not entitled to keep it. Under the facts and circumstances of the case, it cannot be said that a mistake apparent on the face of the record crept in the assessment orders annexures 1 to 11. When it is so, the order dated June 29, 1978 annexure 14 could not be passed for depositing back Rs. 12,362.30. As a matter of fact, Rs. 12,362.30 had already been refunded to the petitioner by adjustment towards the tax of the subsequent period. There is no question of return of this amount by the petitioner. The respondents have no authority of law to collect the said amount. 7.. The petitioner is not liable to pay back the said amount of Rs. 12,362.30 on the ground of unjust enrichment also. The Act does not authorise the denial of refund on the ground of unjust enrichment. Unlike High Courts and Supreme Court which, in their extraordinary jurisdiction, may decline to grant relief on the ground that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter referred to as the Act ). There is no dispute about this factual position stated hereinabove. 10.. The pleadings of the parties and contentions raised on their behalf by the counsel have given rise to the following three points for our decision: (1) Whether respondent No. 3 on June 29, 1978 had the power to amend his earlier assessment orders dated March 19, 1975 under rule 32 of the Rules on the ground that there was a mistake apparent from the record and to direct the petitioners to pay over to the department the amount of Rs. 12,362.30 wrongly collected by way of surcharge. (2) Whether this amount of Rs. 12,362.30 could be retained by the petitioners. (3) Whether this amount of Rs. 12,362.30 could be claimed by the department. Point No. 1: 11.. Respondent No. 3 on June 29, 1978 revised his earlier assessment orders dated March 19, 1975 on the ground that there was a mistake apparent from the record inasmuch as no refund of this amount could be allowed to the petitioners. Such a mistake could be rectified by him under rule 32 of the Rules. The contention of the learned counsel for the petitioners, Shri J.N. Sharma, is that the respondent No. 3 while acting und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In other words, such a mistake can be detected by a simple inspection of the record. Keeping this rule in mind we have to decide as to whether the respondent No. 3 was justified in amending his earlier assessment orders dated March 19, 1975. These assessment orders disclosed the payment by the petitioners of the excess amount of surcharge to the tune of Rs. 12,362. 30. The amount had already been deposited with the department. It was an excess amount of surcharge which was admittedly collected from the viewers who came to see the films in the theatre. It transpired that this excess amount of surcharge did not belong to the petitioners. Its retention by the petitioners was not warranted. It was this mistake which was rectified by respondent No. 3 vide his order dated June 29, 1978 after giving hearing to the petitioners. The detection of such a mistake did not call for any comprehensive review of the assessment orders dated March 19, 1975. It should thus be held to be a mistake apparent from the record which could be rectified by respondent No. 3 and which he rightly did on June 29, 1978 13.. Shri Sharma has placed his reliance upon the decision in Western Indian State Motor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gued by the counsel. Thus the review petitions were dismissed. All these cases can be distinguished from the case in hand on facts. In the decision of the Rajasthan High Court referred to above the question concerned the lack of authority of officer to file the appeal itself. The objection went to the root of the matter. It was not a mistake apparent from the record. In the review petitions before the apex court the decision in the original case was sought to be reviewed on the ground that material facts were not brought to its notice. No review application could be allowed in the facts and circumstances of the above case. In the present case the heart of the matter is that a particular amount of money which was wrongly collected as surcharge and which was deposited with the department was ordered to be refunded vide assessment orders dated March 19, 1975. Such refund was not permissible. The orders were amended by the respondent No. 3 vide his order dated June 29, 1978 after giving an opportunity of hearing to the petitioners. 14.. It is thus held that there was a mistake apparent from the record which had crept into the orders dated March 19, 1975 and respondent No. 3 had the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax paid by certain parties. The State Legislature stepped in with the insertion of section 14A in the orissa Act which provided that refund could be claimed only by the persons from whom the dealer had realised the amount by way of sales tax or otherwise. The effect of this amendment was that the dealer could not claim the refund of tax paid on sales outside the State, but only the persons from whom the dealer had realised the amount. The apex court held that the State Legislature had the legislative competence to make such a provision under entry 54 of List II of Schedule VII to the Constitution. It held thus, the Legislature of the Orissa State was, therefore, competent to exercise power in respect of the subsidiary or ancillary matter of granting refund of tax improperly or illegally collected, and the competence of the Legislature in this behalf is not canvassed by counsel for the assessees . The question whether the State Legislature had the legislative competence to make a provision directing the assessees to pay over to the department the amount of tax unauthorisedly collected by them was not considered by the apex Court. 17.. The second important case is R. Abdul Quad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned therein. Even so, there is a limit to such incidental or ancillary power flowing from the legislative entries in the various lists in the Seventh Schedule. These incidental and ancillary powers have to be exercised in aid of the main topic of legislation, which in the present case, is a tax on sale or purchase of goods. All powers necessary for the levy and collection of the tax concerned and for seeing that the tax is not evaded are comprised within the ambit of the legislative entry as ancillary or incidental. But where the legislation under the relevant entry proceeds on the basis that the amount concerned is not a tax exigible under the law made under that entry, but even so lays down that though it is not exigible under the law, it shall be paid over to Government, merely because some dealers by mistake or otherwise have collected it as tax, it is difficult to see how such a provision can be ancillary or incidental to the collection of tax legitimately due under a law made under the relevant taxing entry. We do not think that the ambit of ancillary or incidental power goes to the extent of permitting the Legislature to provide that though the amount collected-may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case is of Ashoka Marketing Ltd. v. State of Bihar [1970] 26 STC 254 (SC); [1970] 3 SCR 455. The sales tax authorities included an amount representing railway freight in the assessee s sales of cement. The appellate authority set aside the orders directing the inclusion of railway freight in the turnover. The excess tax paid was not refunded. Instead, a new section 20A was inserted by way of amendment in the Bihar Sales Tax Act. It provided that such excess amount shall be refunded to the person from whom it was collected or else it shall be deposited with the Government and such a deposit shall constitute a good and complete discharge of the liability of the dealer in respect of such amount to the person from whom such amount was collected. The person from whom the dealer had collected the amount shall be entitled to apply for refund of the amount to him. By way of this amendment the amount of tax on the railway freight was sought to be retained by treating it as deposit and in the event of the deposit having been returned to recover it. The apex Court held that such a provision was bad because it could not be covered by entry 54 of List II of Schedule VII. A clever device can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (i) Where there has been a contravention referred to in clause (a), a penalty of an amount not exceeding two thousand rupees; .................... and, in addition, ...... any sum collected by the person by way of tax in contravention of section 46 shall be forfeited to the State Government. (emphasis* supplied). .............................. 23.. It was this forfeiture clause which was specifically under challenge. Gujarat High Court declared section 37(1) as ultra vires the provisions of the Constitution. But the challenge was thrown out in the apex Court. It was held that forfeiture is also a variant of penalty. His Lordship Kailasam, J., held at page 527 of the report (STC) as hereunder: I am unable to accept the plea that forfeiture is not a penalty. Forfeiture is one form of penalty. Forfeiture of property is one of the punishments provided for in the Indian Penal Code. For contravention of the sales tax law the section provides two forms of punishment, levy of penalty and forfeiture, and the use of the word forfeiture as distinct from penalty will not make it any the less a penalty. Section 37(1)(b)(ii) provides that the sum collected by the person by way of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 55. 4.. That the forfeiture is a variant of penalty. It is valid and is necessary to ensure proper and effective implementation of the sales tax laws-Joshi, Sales Tax Officer case [1977] 40 STC 497 (SC). 5.. That absolute liability can be imposed and acts without mens rea are also punishable-Joshi, Sales Tax Officer case [1977] 40 STC 497 (SC). 26.. A perusal of all these authorities goes to show that our Constitution frowns upon the unjust enrichment of private persons who collect money either by way of tax or otherwise than in accordance with the provisions of law. Such an amount cannot be pocketed by them, be they dealers. It must be refunded to the persons from whom it was collected or else it must go to the Government. The doctrine of unjust enrichment is a just and salutary doctrine. Article 265 which provides that no tax can be levied without the authority of law is to be read in the context of the principles embodied in the preamble which is the signature-tune of our Constitution. We have also to keep in our mind the Directive Principles of the Constitution. 27.. We have to consider the facts of this case in the light of the principles laid down in the decisions d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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