TMI Blog1978 (11) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... 2468, 2702 to 2708 and 2767 to 2770 of 1966 that the line of activities carried on by the respondent cannot be deemed to be sales. The respondent thereafter requested the Deputy Commercial Tax Officer, II Division, Mount Road, Madras-2, for refund of the aforesaid sum of Rs. 22,218 by its letter dated 10th November, 1967. The demand has not been complied with. The action of the appellants in levying the said tax has been declared to be illegal and void. The appellants are, therefore, bound to refund the amount to the respondent. The respondent filed the suit in these circumstances for the recovery of the said amount together with interest from the date of the suit. The second appellant adopted the written statement of the first appellant. The first appellant contended that the allegation that the respondent has been resisting the demands for sales tax on its transactions for the years 1961-62 to 1965-66 on the ground that no sales were involved in the transactions and that the authorities had not accepted the position is not correct. The respondent did not put forth any case for the assessment year 1961-62. But for the year 1962-63 the respondent disputed only the tax of Rs. 371 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transaction of the respondent is of an advertising agency and will not be liable to sales tax and that the levy is not in order. On issue No. 4 relating to the question, whether the respondent is estopped from putting forward the claim, the learned First Assistant Judge held that there is no estoppel against law. On issue No. 5 relating to the bar of limitation, the learned First Assistant Judge held that since the decision of the High Court in the said writ petitions was rendered in March, 1967, and the suit has been filed in November, 1968, it is not barred by limitation. On these findings, the learned First Assistant Judge decreed the suit as prayed for with costs. The respondent filed a return for each of the years 1961-62 to 1965-66. For the year 1961-62, the Joint Commercial Tax Officer accepted the return and assessed the respondent to tax and there was no appeal against this order. For the year 1962-63, the Joint Commercial Tax Officer added some additional turnover, rejecting the claim of the respondent for exemption, and passed an assessment order. There was an appeal by the respondent to the Appellate Assistant Commissioner of Commercial Taxes against the addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar to those carried on by the respondent do not involve any element of sale and are not liable to sales tax under the Tamil Nadu General Sales Tax Act, 1959. There is also exhibit B-6, whereby it has been held by the commercial tax authorities that the business of the respondent was of advertisement agencies and that it is not in any sense liable to tax under the Act. The learned First Assistant Judge also held that the business of the respondent was of advertising agencies and is not liable for assessment to tax under the Tamil Nadu General Sales Tax Act, 1959. In these circumstances, the question that the respondent was not liable to tax on the transactions for the years 1961-62 to 1965-66 was not disputed before us by the learned counsel for the appellants. No ground has been taken in the memorandum of grounds of appeal against the decision of the learned First Assistant Judge that there is no bar of limitation. The only contention urged before us is that the civil court has no jurisdiction to entertain the suit in view of section 51 of the Tamil Nadu General Sales Tax Act and we are called upon to decide only that question. Section 3 of the Tamil Nadu General Sales Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s served in the manner prescribed by any person who objects to such order, or the Deputy Commissioner on the ground that the Appellate Tribunal has either decided erroneously or failed to decide any question of law. Section 51, providing for bar of suits and proceedings to set aside or modify assessments except as provided in the Act, reads: "(a) No suit or other proceedings shall, except as expressly provided under this Act be instituted in any court to set aside or modify any assessment made under this Act. (b) No injunction shall be granted by any court in respect of any assessment made, or to be made, or in respect of any action taken, or to be taken, in pursuance of any of the provisions of this Act." At the relevant time rule 16 of the Tamil Nadu General Sales Tax Rules, 1959, provided for refund and stated inter alia that "if there are no arrears of tax due under the Act from the dealer, or if after such adjustment there is still an excess, the officer shall serve upon the dealer a notice in form C for refunding the amount of the excess tax, and along with such notice, he shall also send to the dealer a voucher for claiming refund of that amount from the treasury". Now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the illegality was discovered soon after the Supreme Court delivered judgment in Bengal Immunity Company Limited v. State of Bihar[1955] 6 S.T.C. 446 (S.C.); [1955] 2 S.C.R. 603. and section 20 of the Bombay Sales Tax Act did not bar the institution of the suit. Section 20 of that Act reads: "Save as is provided in section 23, no assessment made and no order passed under this Act or the Rules made thereunder by the Commissioner or any person appointed under section 3 to assist him shall be called into question in any civil court, and save as is provided in sections 21 and 22, no appeal or application for revision shall lie against any such assessment or order." The claim made by the appellant in that case was resisted by the respondent, the State of Bombay, on several grounds, one of them being that the civil court had no jurisdiction to entertain the suit in view of the bar under section 20 of the Act. The other ground was that the appellant's contention that section 20 was ultra vires of the Constitution was without any substance. The suit was dismissed, upholding the plea that the civil court had no jurisdiction in view of section 20. The Division Bench of the Bombay High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us be seen that the appropriate authorities have been given power in express terms to examine the returns submitted by the dealers and to deal with the question as to whether the transactions entered into by the dealers are liable to be assessed under the relevant provisions of the Act or not. In our opinion, it is plain that the very object of constituting appropriate authorities under the Act is to create a hierarchy of special tribunals to deal with the problem of levying assessment of sales tax as contemplated by the Act The whole activity of assessment beginning with the filing of the return and ending with an order of assessment, falls within the jurisdiction of the appropriate authority and no part of it can be said to constitute a collateral activity not specifically and expressly included in the jurisdiction of the appropriate authority as such. We are, therefore, satisfied that Mr. Sastri is not right when he contends that the finding of the appropriate authority that a particular transaction is taxable under the charging section of the Act, is a finding on a collateral fact and it is only if the said finding is correct that the appropriate authority can validly exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Sales Tax Appellate Tribunal. Without filing any revision to the High Court within sixty days, the plaintiff filed a suit in the civil court for recovering the amount after issuing a statutory notice under section 80 of the Code of Civil Procedure. The defence was that the suit was barred under section 18-A of the Madras General Sales Tax Act, 1939. The learned Judges were concerned with the plea of legal bar to the maintainability of the suit. The contention urged before them was that the sales tax authority had failed to comply with article 286(2) of the Constitution and that this must be considered as non-compliance with a fundamental provision of the statute as would make the entire proceedings before the appropriate authorities illegal and without jurisdiction. Disagreeing with that contention, the learned Judges observed: "Before the sales tax authority could come to a conclusion that the transaction is hit by article 286 of the Constitution there is necessarily an anterior stage in the proceedings involving an examination of the details of the transaction, and it is only after it has decided on such examination that the sale is outside the State, can it decide that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as regards jurisdiction of the civil court to entertain the suit as well as limitation. The trial court rejected both the contentions and decreed the suit. The High Court held on appeal that there was no bar of limitation and that the reassessment of octroi duty ultimately fixed in the appeal by the Sub-Divisional Officer could not be questioned in the civil court. The Supreme Court dismissed the appeal filed by the plaintiffs observing that the error could be corrected only in the manner provided in the Act and by the authority prescribed thereunder and that the remedy by way of a suit is barred. The learned Judges have observed: "In Kamala Mills' case[1965] 16 S.T.C. 613 (S.C.); A.I.R. 1965 S.C. 1942., it was observed that if a statute creates a special right or liability, provides for the determination of that right or liability by tribunals specially constituted in that behalf and lays down that all questions in regard to that right or liability shall be exclusively determined by the tribunals so constituted, it becomes pertinent to enquire whether remedies normally associated with actions in a civil court are prescribed by the said statute or not. If the court is satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gally collected from the respondent. In Union of India v. Sarojini Rajah[1974] 97 I.T.R. 37; [1975] 2 I.T.J. 22., the plaintiff filed a suit for the recovery of Rs. 15,370.00 odd with interest. Her case was that immediately after her husband's death on 30th November, 1959, she received a number of notices from the income-tax department in respect of the arrears of income-tax stated to be due by her husband, including copies of notices issued to certain banks attaching monies belonging to her husband, that, on receipt of those notices, she intimated the Income-tax Officer that she had no monies or assets of her husband, that a notice dated 10th December, 1959, also had been issued to her calling upon her to pay a sum of Rs. 15,370 odd stated to be due as tax on the provisional assessment under section 23B of the Income-tax Act, that she understood that the notice to be one relating to the provisional assessment of her income and in that mistake she paid the amount and that she realised when a few days later she received another notice demanding payment of a sum of Rs. 10,487 odd in pursuance of a provisional assessment of her own income that the earlier demand related to the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the returns submitted by the respondent itself, as required by section 12(1) of the Act, and the amount could not be refunded to the respondent without a finding that the assessment itself was wrong on the ground that the transactions carried on by the respondent are works contracts and did not involve any element of sale. Though the respondent has not prayed for a declaration that the assessment orders are not valid, there is, in effect, a prayer for the court to hold so when the respondent seeks to recover the amount on the ground that there was no transaction of sale and that the amount has been collected illegally. In these circumstances, we do not agree with the learned First Assistant Judge that the respondent does not seek to set aside or modify the assessment orders made by the commercial tax authorities but simply wants a refund of the money that has been collected from it illegally. It is not possible to order any refund of the money except on the basis that the assessment orders are wrong on the ground that the transactions carried on by the respondent are not sales liable to be assessed under the provisions of the Act. We also do not agree with the observation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot seek the setting aside or modification of the assessment orders made by the commercial tax authorities, but simply wants a refund of the money that has been collected from it illegally". We are of the opinion that this view of the learned First Assistant Judge is wholly incorrect, for, the respondent cannot recover the money except on the basis that the orders of the appropriate authorities assessing the respondent to sales tax are illegal and cannot be allowed to stand. There can be no order for refund of the amount except on an implied finding that the said orders are illegal and unsustainable. Mr. V. Ratnam very strongly relied upon the decision of the Supreme Court in Dhulabhai v. State of Madhya Pradesh[1968] 22 S.T.C. 416 (S.C.); A.I.R. 1969 S.C. 78. The contention of the plaintiffs in the suits filed for the refund of tax collected under section 5 of the Madhya Bharat Sales Tax Act, 1950, in those cases was that the amount was illegally collected against a constitutional prohibition under article 301 and the levy was not saved under article 304(a). The notifications issued by the Government imposing tax on tobacco imported at different rates was declared void in the Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. (3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the tribunals. (4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit. (5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected, a suit lies. (6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case, the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e[1968] 22 S.T.C. 416 (S.C.); A.I.R. 1969 S.C. 78., the Supreme Court has held broadly that every order of assessment, which is not in accordance with law, is such as could be challenged by instituting a suit in a civil court without having recourse to the provisions specifically made available in the Act for questioning the correctness of the same. We say this, having regard to the fact that, in that case, the Supreme Court has not differed from its earlier decision in the Kamala Mills' case[1965] 16 S.T.C. 613 (S.C.); A.I.R. 1965 S.C. 1942., which has been referred to in the decision without any disapproval, and the Supreme Court had held in the Kamala Mills' case[1965] 16 S.T.C. 613 (S.C.); A.I.R. 1965 S.C. 1942. that for the purpose of section 20 of the Bombay Sales Tax Act, which corresponds to section 18-A of the Madras General Sales Tax Act of 1939 and section 51 of the present Act, they were not prepared to hold that an assessment based on an erroneous finding about the character of the transaction is an assessment made without jurisdiction and is, as such, outside the purview of section 20 of the Bombay Sales Tax Act, that section 20 of the Act is wide enough to cover all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of copra in the definition of "coconut" and the amendment was retrospective from 15th June, 1957. The allegation in the plaint in that case was that as a result of the amendment the levy of sales tax and its collection had become illegal and that the plaintiffs were entitled to refund of the tax paid by them under coercion. The claim was resisted on several grounds, including the ground of non-maintainability of the suit in the civil court. The trial Judge held that the claim did not pertain to the merits or propriety of the assessment and that the jurisdiction of the civil court to entertain the suit was not barred. Even in the appeal it was contended that the civil court had no jurisdiction to entertain the suit and also the claim for refund is unsustainable, because the assessment itself had not been set aside or modified. The contention regarding the non-maintainability of the suit was repelled by the learned Judges and they have observed: "It is necessary to take notice of an aspect peculiar to these cases. The claim for restitution arises by reason of a supervening event. Where the claim for restitution arises because of such event and the retention of the tax previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried on by the respondent did not involve any element of sale and could not, therefore, be taxed under the provisions of the Act, which recourse, in view of section 51 of the Act, could be had only before the hierarchy of tribunals constituted under the provisions of the Act itself. Mr. V. Ratnam finally relied upon the decisions of the House of Lords in Anisminic Ltd. v. Foreign Compensation Commission[1969] 1 All E.R. 208. and of the Supreme Court in Raja Jagadambika Pratap Narain Singh v. Central Board of Direct Taxes[1975] 100 I.T.R. 698 (S.C.).) and submitted that the orders of assessment of the respondent for the years 1961-62 to 1965-66 are nullifies and they could be questioned in a civil court. In the English case, the appellants before the House of Lords submitted a claim for the first respondent, the Foreign Compensation Commission, whose determination thereof could not be questioned in any court of law by virtue of section 4(4) of the Foreign Compensation Act, 1950. In May, 1963, the Commission provisionally determined that the appellants before the House of Lords had failed to establish their claim on the ground that the T.E.D.O., which had become the successor-in-ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors, it is as much entitled to decide that question wrongly as it is to decide it rightly...... If it is entitled to enter on the enquiry and does not do any of those things which I have mentioned in the course of the proceedings, then its decision is equally valid whether it is right or wrong subject only to the power of the court in certain circumstances to correct an error of law." The appeal was allowed by the majority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd authority under the Act an assessing officer has made an order of assessment, that clearly falls within the scope of section 51 of the Act corresponding to section 18-A of the Act of 1939. We are, therefore, of the opinion that these last two decisions relied upon by Mr. Ratnam do not help the respondent. Thus, on a consideration of the various decisions to which our attention had been drawn and the materials on records, we hold that the assessment orders in this case had been passed on the basis of the admission made by the respondent in the returns submitted by the respondent for the relevant years, that the appropriate authorities had jurisdiction to pass the orders of assessment, that the amounts could not be ordered to be refunded to the respondent except on the footing that the assessment orders are erroneous, that the finding that the assessment orders are erroneous which alone would lead to an order for refund of the amount collected in pursuance thereof could be given only by the Tribunals constituted in accordance with the provisions of the very Act, that there was a provision for refund of the amount wrongly collected in rule 16, which has now been replaced by secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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