1965 (7) TMI 46 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to tax levy at a higher rate under the proviso to section 3(1)(b) of the Act. Refund of excess tax paid due to unconstitutionality of the levy. Interpretation of error apparent on the face of the record in the context of rectification of assessments. Timeliness of applications for rectification under rule 18 of the Madras General Sales Tax Rules, 1939. Quashing of orders by the Sales Tax Appellate Tribunal.

Analysis:
The judgment addresses multiple petitions challenging the levy of tax at a higher rate under the proviso to section 3(1)(b) of the Act. The petitioners, engaged in the sales of food and drink, contested the constitutionality of the levy, citing previous decisions that deemed it discriminatory and unconstitutional. The Court referred to precedents like K.M. Goel v. State of Madras and Krishna Iyer v. State of Madras to establish the unlawful nature of the higher tax rate. The petitioners sought refunds of excess tax paid following these decisions, invoking rule 18 of the Madras General Sales Tax Rules of 1939 and section 55 of the Madras General Sales Tax Act, 1959.

The Sales Tax Appellate Tribunal initially rejected the petitions for rectification, claiming that the decisions on unconstitutionality did not constitute an error apparent on the face of the record. However, the High Court disagreed, citing judgments like Walchandnagar Industries v. Gaitonde and Mahendralal v. State of Uttar Pradesh to support the position that assessments based on unconstitutional laws constitute an error. The Court also clarified the interpretation of error apparent on the face of the record in the context of rectification under rule 18, emphasizing the timeliness of applications for rectification.

In light of the legal principles discussed, the Court found that the assessments made under the unconstitutional law indeed constituted an error apparent from the record. The Tribunal's refusal to grant rectification was deemed erroneous, and the Court quashed the Tribunal's orders. The judgment highlighted the need for the Tribunal to reconsider the matter and provide the petitioners with the appropriate reliefs they were entitled to. Additionally, the Court addressed the timeliness of applications for rectification under rule 18, ensuring that the petitions were within the permissible timeframe.

The Court's decision to quash the Tribunal's orders extended to all related petitions, including one against the Appellate Assistant Commissioner's order. The judgment emphasized the need for fresh consideration of the matters in light of the constitutional invalidity of the tax levy. Ultimately, the petitions were allowed, and no costs were awarded in any of the cases, providing relief to the petitioners challenging the higher tax rate under the Act.