1967 (4) TMI 177 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of sales tax assessment on works contracts.
2. Entitlement to refund of tax paid based on a Supreme Court decision.
3. Timeliness of filing a petition for refund.

Analysis:

1. The petitioner, an engineering contractor, was assessed to sales tax under the General Sales Tax Act for works contracts executed between 1950-51 to 1959-60. The petitioner sought a refund of the taxes paid based on a Supreme Court decision declaring the levy of sales tax on works contracts as beyond the state's legislative competence and unconstitutional. The State did not dispute the facts of the assessment but argued that the assessments were valid until set aside in appropriate proceedings. However, the Court held that the assessments were without jurisdiction due to lack of legislative competence, as established by previous Supreme Court decisions. The Court ruled that a petition for refund under Article 226 of the Constitution could be entertained within three years of the date the mistake became known, which was the date of the Supreme Court's decision. Therefore, the petitioner was entitled to a refund of the taxes paid on works contracts during the period covered by the Supreme Court decision.

2. The petitioner's claim for a refund included taxes paid for the year 1959-60. The Court clarified that the petitioner was only entitled to a refund for the turnover ending on 25th January 1960, as per the Supreme Court decision. The Court directed the respondents to refund the amount of Rs. 31,216.76 for the years 1950-51 to 1958-59. Additionally, the Court instructed the petitioner to request the determination of turnover for the period from 1st April 1959 to 25th January 1960, for which the sales tax and surcharge collected should be refunded. The total amount to be refunded for the year 1959-60 was specified as Rs. 2,709.80 for sales tax and Rs. 67.74 for surcharge. The respondents were ordered to refund these amounts to the petitioner.

3. The Court addressed the timeliness of the petition for refund, noting that it was filed within three years of the Supreme Court's decision on the legislative competence of the state to levy tax on works contracts. As the petition was within the prescribed timeframe, the Court found the petitioner eligible for the refund of taxes paid during the relevant period. The original petition was disposed of with the direction for the refunds to be processed, and no costs were awarded in the matter.