1970 (12) TMI 67 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the proviso to rule 8 of the M.P. Sales Tax (Central) Rules, 1957.
2. Entitlement of the petitioner to a concessional tax rate.
3. Authority of the respondents to withhold the tax amount.
4. Applicability of the Limitation Act to the petitioner's claim.
5. Discretionary relief under Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Validity of the Proviso to Rule 8 of the M.P. Sales Tax (Central) Rules, 1957:
The petitioner, Caltex (India) Ltd., was assessed by the Assistant Commissioner of Sales Tax, Indore, who rejected the claim for a concessional tax rate on sales amounting to Rs. 96,959, citing non-compliance with rule 8 of the M.P. Sales Tax (Central) Rules, 1957. The rule stated that no single declaration shall cover more than one transaction of sale exceeding Rs. 5,000. The Supreme Court, in a similar context, held that such rules could only be framed by the Central Government under section 13(1)(d) of the Central Sales Tax Act, rendering the state rule inconsistent and unenforceable. Following this, the M.P. High Court also held the proviso to rule 8 unenforceable.

2. Entitlement of the Petitioner to a Concessional Tax Rate:
The petitioner claimed a concessional tax rate of 2% for sales supported by 'C' forms. The Assistant Commissioner rejected this for sales to M/s. G. Rai and Company, Jhansi, leading to an additional tax liability. The petitioner contended that the rejection was based on an invalid rule, thus the tax was paid under a mistake of law.

3. Authority of the Respondents to Withhold the Tax Amount:
The petitioner sought a refund of Rs. 8,965.23, arguing that the tax was paid under a mistake of law, and the respondents had no legal authority to withhold it. The court agreed, noting that money paid under a mistake of law can be recovered under section 72 of the Indian Contract Act, as established in various precedents.

4. Applicability of the Limitation Act to the Petitioner's Claim:
The court examined whether the claim would be barred by limitation if it were the subject of a suit in August 1969. Under the Indian Limitation Act, 1908, and the new Limitation Act, 1963, the period of limitation begins when the mistake becomes known to the plaintiff. The court determined that the petitioner could not have known of the mistake before the Supreme Court's decision on 14th April 1967, and thus the writ petition filed within three years of this date was timely.

5. Discretionary Relief under Article 226 of the Constitution:
The court considered whether to exercise its discretion to grant relief under Article 226. It noted that while unreasonable delay could bar relief, the petition was filed within a reasonable period from when the mistake became known. The court found no undue delay and determined that the petitioner should not be required to seek relief through a suit, as the amount was being withheld without legal authority.

Conclusion:
The court quashed the part of the Assistant Commissioner's order rejecting the concessional rate for sales of Rs. 96,959 and directed the respondents to refund the excess tax amount paid. The petition was allowed, with each party bearing its own costs, and the security amount was ordered to be refunded to the petitioner.

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