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TMI Blog1986 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... 1958] 9 STC 747 (SC) imply that the provisions of the Indian Limitation Act are applicable to cases under the U. P. Sales Tax Act and whether these observations are inconsistent with the view taken by the Honourable High Court in the case of Sales Tax Commissioner, U. P. v. Sada Sukh Vyopar Mandal [1959] 10 STC 57 (All.) ? 2. Whether in these cases in which refund was claimed on the principles of section 72 of the Indian Contract Act, the period of limitation under article 96 of the Limitation Act could be taken into consideration by the sales tax authorities in refusing to allow refund ? 3. Whether under the circumstances of the case as stated above, the Additional judge (Revisions), Sales Tax, was legally justified in holding that the sums deposited by the company towards sales tax for the year 1949-50 was refundable to the company ? 4. Whether the Additional judge (Revisions), Sales Tax, was legally justified in entertaining the revision application in question of the aforesaid company after the lapse of several years from the date of the assessment order particularly when the appeal and the revision application of the company in respect of that assessment order were dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dismissed that application as barred by period of limitation prescribed under article 96 of the First Schedule to the Indian Limitation Act, 1908. The assessee thereafter filed revision to the Court of Additional judge (Revisions) Sales Tax, U. P., against the order of the Sales Tax Officer rejecting the claim for refund. The Court of the Additional judge (Revisions), Sales Tax, U.P., directed refund of sales tax of Rs. 3,535-3-0 for 1948-49, Rs. 9,205-12-0 for 1949-50, Rs. 3,653-8-0 for 1950-51 and Rs. 5,014-3-3 for 1951-52. It may be mentioned that prior to April 1, 1959, there was no section dealing with any period of limitation for refund. Section 29 was added by the U. P. Sales Tax (Amendment) Act (7 of 1959) and came into force with effect from April 1. 1959. The first proviso to section 29 is as follows: " Provided that no claim to the refund of any tax or other amount paid under this Act shall be allowed unless it is made within twenty-four months from the date on which the order of assessment was passed or within twelve months of the final order passed in appeal, revision or reference in respect of the order of assessment, whichever period is later, " It appears that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question whether tax collected by -the State without authority of law can be directed to be refunded without any period of limitation was considered in a writ application by the Calcutta High Court in Suresh Chandra Bose v. State of West Bengal [1976] 38 STC 99. This decision of the single judge of the Calcutta High Court was approved by the Division Bench of that High Court in State of West Bengal v. Suresh Chandra Bose [1980] 45 STC 118. The court under article 226 directed refund in that case. The court emphasised that when moneys are paid to the State which the State has no legal right to receive, it is ordinarily the duty of the State subject to any special provisions of any particular statute or special facts and circumstances of the case, to refund the amount of the tax paid. This court in Raja Jagdambika Pratap Narain Singh v. Central Board of Direct Taxes [1975] 100 ITR 698 (SC) had to consider this aspect from the point of view of the Income-tax Act. This court was dealing with the question of limitation in granting relief in the background of article 226 of Constitution of India. But this court observed that any legal system, especially one evolving in a developing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d judges, the matter was disposed of by the opinion of third learned judge. The year involved was the assessment year 1948-49. Four identical questions were referred to the High Court. Pathak J. (as his Lordship then was of the Allahabad High Court), expressed the view that the first question had been framed in the abstract without relevance to the facts of the present case and, therefore, need not be answered. With this view, the other learned judge, Gulati J., agreed. We are also of the same opinion. The facts before the High Court were identical with the facts of the present case. In order to appreciate the contentions raised in this case, it is necessary to bear in mind the relevant provisions of the U.P. Sales Tax Act, 1948 (hereinafter called " the Act "). Section 3 of the Act enjoins that subject to the provisions of the Act, every dealer shall, for each assessment year, pay a tax at the rates provided by or under section 3A or section 3D on his turnover of sales or purchases or both, as the case may be, which shall be determined in such manner as may be prescribed. It is not necessary for the present purpose to deal in detail with the said provisions. Various sections of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refund in case of excess realisation or excess payment by the taxing authority of the dues from the seller as well as from the assessee, is recognised in the scheme of the Act. Section 72 of the Indian Contract Act, 1872, recognised that a person to whom money has been paid or anything delivered by mistake or under coercion, must repay or return it. In this case, it is not disputed that mistake of law is also a mistake covered by the provisions of section 72 of the Indian Contract Act. If the law declared by this court in Budh Prakash Jai Prakash's case [1954] 5 STC 193 (SC); [1955] 1 SCR 243 is correct, as it must be, then the payment of tax by the dealer, the respondent herein, was under a mistake of law and realisation by the revenue authorities was also under a mistake. Therefore, such sum should be refunded. This is recognised in the provisions of the Act as we have noted before. The principle of section 72 of the Indian Contract Act has been recognised. This was the view expressed by Pathak J. on this aspect. We are in respectful agreement. But the learned judge was unable to find in the provisions of the Act any authority for directing the refund without suit. The quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adras [1966] 17 STC 418 (SC), this court had occasion to deal with a problem similar to this. The appellant-company there was carrying on the business of building contractors and was assessed to sales tax under the Madras General Sales Tax Act, 1939, during the years 1948-49 to 1952-53 on the basis that the contracts executed by them were works contracts. On April 5, 1954, the Madras High Court held in Gannon Dunkerley and Co. (Madras) Ltd. v. State of Madras [1954] 5 STC 216, that the relevant provisions of the Act empowering the State of Madras to assess indivisible building contracts to sales tax were ultra vires the powers of the State Legislature. The appellant issued a notice to the State of Madras under section 80 of the Code of Civil Procedure claiming refund of the amounts collected from them, and, as the demand was not complied with, filed a suit in the city civil court on March 23, 1955, for recovery of the amount of taxes illegally levied and collected from them. The relevant provisions of the Act empowering the sales tax authorities to impose sales tax on indivisible building contracts were unconstitutional and void and the sales tax authorities had no jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 96 of the Limitation Act, 1908. But this court reiterated that it is the duty of the State to investigate the facts when the mistake was brought to its notice and to make a refund if the mistake was proved and the claim was made within the period of limitation. In the instant case before us, as we have noted, the mistake indubitably was there. There was no dispute that the tax was not due and had been collected wrongly. There is no dispute that the assessee is entitled to the same. There is no dispute that the assessee made application within a year of the knowledge of the mistake. There is no dispute, therefore, that had a suit been filed under article 96 of the Limitation Act, 1908, or an application made under section 29 of the Act, the claim would have been allowed but the revision was dismissed on the ground that it was belated. The revision of the assessment order was wrong but the consequential relief of refund could have been granted. In that view of the matter, we should construe the provisions in such manner as there is no contra-indication which will ensure justice to the party and not deny it and hold that the order of the Additional Judge (Revisions) was correct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund specifically has been mentioned. There is no prohibition against refund except the prohibition of two years under the proviso of section 29. In this case that two years' prohibition is not applicable because the law was declared by this court in Budh Prakash Jai Prakash's case [1954] 5 STC 19 3 (SC) [1955] 1 SCR 243 on May 3, 1954, and the revision was filed in 1955 and it was dismissed in 1958 on the ground that it had been filed after long delay. Thereafter the assessee had filed an application before the Sales Tax Officer for refund. The refund was claimed for the first time on May 24, 1959. The Sales Tax Officer had dismissed the application as barred by limitation under article 96 of the First Schedule of the Indian Limitation Act, 1908. The assessee filed revision before the Court of Additional judge (Revisions) rejecting the claim for refund. If the law of limitation is applicable, then section 5 of the Limitation Act is also applicable and it is apparent that the application originally was made within time within two years as contained in the proviso. Article 96 of the First Schedule of the Limitation Act, 1908, prescribes a period of limitation of three years from th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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