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2017 (3) TMI 1690 - HC - VAT and Sales TaxDoctrine of frustration - presence of disturbing element in the contract, preventing performance of the Contract - Payment of Compounding Tax - Whether the petitioner, carrying on a quarry and crusher unit, be permitted to withdraw from the compounding applied for in the year 2016-17, for reason of failure to obtain licenses from the local authority, to carry on the quarry and crusher operations? Held that:- It was stated that the contract was not an ordinary contract for sale and purchase. It was an integral part of a development scheme and there was no time limit within which the roads and drains were to be made. The first requisition order was passed nearly 15 months after the contract and the work was not commenced even within that time. Even when the contract was entered into, the war had already commenced and requisition orders for military purposes were normal events. There was also scarcity of materials and various restrictions by the Government, due to the prevailing war situation - The ground on which frustration was claimed, did not amount to a supervening circumstance, which alone could be successfully alleged to claim frustration under Section 56. To plead frustration under Section 56 of the Contract Act, there should be a supervening impossibility, which was never in the contemplation of the parties at the time when the contract was entered into - the petitioner did not have a D & O license at the time, when the petitioner approached the Appellate Authority for being permitted to pay tax under the compounding scheme. The petitioner also did not press for a D & O licence with respect to the quarry, since no such permit could have been issued to the petitioner without an Environmental Clearance. The petitioner's prayer for consideration of the D & O license for the crusher unit was also on the ground that even if he cannot quarry mineral, he could obtain minerals from other quarries and carry on the crusher operations - It cannot at all be said that the dismissal of the writ petition was a supervising impossibility, which stood against the petitioner's performance of the obligation under the compounding scheme. It is established that there was no supervening subsequent event, which was not in the contemplation of the petitioner, when the petitioner had applied for compounding. The petitioner wanted the best of both worlds; the entitlement under the compounding scheme if the unit was permitted and a regular assessment if not permitted. The petitioner with eyes open, without any license or permit applied for compounding and on denial of the license seeks to turn around and plead frustration - The claim at best is that the obligation under the scheme, which the petitioner voluntarily opted, is onerous. The petitioner hence cannot be permitted to wriggle out of the obligation to pay the compounding tax. Petition dismissed.
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