1958 (12) TMI 30 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to assessment orders for sales tax on works contracts turnover and claim for refund based on the decision of the Madras High Court and Supreme Court. Request for a mandamus for refund of illegally collected sales tax.

Analysis:
The petitioner, a P.W.D. contractor, entered into contracts for construction work and claimed complete exemption from sales tax on the ground that the turnover related to works contracts, citing a decision of the Madras High Court. The Deputy Commercial Tax Officer levied sales tax on the turnover, leading to a dispute. The State did not contest that the turnover was from works contracts. The Supreme Court had upheld the Madras High Court's decision on a similar matter, making the assessment orders illegal. The Government Pleader argued against granting a mandamus for refund, citing reasons such as lack of specific prayer for quashing orders, delay in filing, and the State's right to raise defenses like limitation or estoppel in a separate action for refund.

The High Court rejected the argument that absence of a specific prayer for quashing orders disentitles the petitioner from seeking their invalidation. Refunding the tax collected based on illegal orders inherently requires a declaration of their invalidity. The court acknowledged the Government Pleader's points but emphasized the need to quash illegal orders promptly, especially with reference to the Supreme Court's decision. The petitioner relied on a recent Supreme Court case justifying a mandamus for refund post an invalidity declaration, but the Government Pleader highlighted that the Supreme Court did not address this specific issue. The court noted the importance of not depriving the State of raising defenses in a refund claim and the significance of timely legal action.

Ultimately, the High Court decided to quash the assessment orders as they were unsustainable and doubted the petitioner's ability to challenge them through other means due to legal provisions. Despite refusing to issue a mandamus for refund, the court found it necessary in the interest of justice to invalidate the assessment orders to prevent their detrimental use against the petitioner. No costs were awarded in the matter.