TMI Blog1964 (1) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... DKAR P.B. , WANCHOO K.N., DAS GUPTA K.C., SHAH J.C., RAJAGOPALA AYYANGAR N. JJ. M.C. Setalvad, Senior Advocate, (S.N. Andley, Rameshwar Nath and P.L. Vohra of Rajinder Narain and Co., with him), for the respondent in C.A. No. 362 of 1962. Adhikari, Advocate-General for the State of Madhya Pradesh, (I.N. Shroff with him), for the appellants in all the appeals. S.N. Andley, Rameshwar Nath and P.L. Vohra of Rajinder Narain and Co., for the respondents in C.A. Nos. 636 to 377 and 858 to 867 of 1962 and 25 to 27 of 1963. -------------------------------------------------- The Judgment of the Court was delivered by DAS GUPTA, J.- These 31 appeals by the State of Madhya Pradesh are against the orders made by the High Court of Madhya Pradesh in 31 applications under Article 226 of the Constitution by dealers in tobacco. All these petitioners carried on business in Madhya Bharat which later became part of the State of Madhya Pradesh. They were assessed to sales tax on their sales of tobacco in accordance with the notification issued by the State Government in exercise of powers under section 5 of the State Sales Tax Act and large amounts were collected by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in respect of sales or supplies of goods effected from the 1st day of May, 1950; (c) every other dealer was made liable to pay tax on his taxable turnover in respect of sales or supplies of goods effected from the 1st day of May, 1950, if the total turnover in the previous year exceeded Rs. 12,000. By later amendments the word "processor" was deleted from clause (b) of the section and the meaning of the words "any other" in clause (c) was made clearer by substituting the words "any goods of a dealer not falling in clause (a) or clause (b)". There was also an amendment in 1950 making it clear that the taxable turnover on which the tax liability arose was in respect of sales or supplies of goods effected in Madhya Bharat. Section 5 of the Act provides that the tax payable by a dealer shall be at a single point and shall not be less than Rs. 1-9-0 per cent. or more than 6 per cent. of the taxable turnover, as notified from time to time by the Government by publication in the Official Gazette. This is subject to a proviso that the Government may in respect of a special class of goods charge tax up to 12 per cent. on the taxable turnover. The second sub-section of section 5 em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at directly impeded the freedom of trade and commerce guaranteed by Article 301 of the Constitution. It is true that the import by itself would not bring in the liability to tax and that if the imported goods were not sold in Madhya Bharat no tax would be payable. Quite clearly however by far the greater part of the tobacco leaves, manufactured tobacco (for eating and smoking) and tobacco used for bidi manufacturing that would be imported into the State would be sold in Madhya Bharat. That a very considerable amount was so sold is clear from the very assessment orders made in these several cases. There can be no doubt therefore that even though it is the sale in Madhya Bharat of the imported goods that creates the liability to tax and not the import by itself, the trade and commerce as between Madhya Bharat and other parts of India is directly impeded by this tax. On the authority of this Court's decision in Atiabari Tea Co., Ltd. v. State of Assam [1961] 1 S.C.R. 809., it must therefore be held that the tax contravenes the provisions of Article 301 of the Constitution. It may be mentioned that the later decision of this Court in Automobile Transport (Rajasthan) Ltd. v. State of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been as suggested by the learned Advocate-General that though the tax is payable at the point of sale by an importer the sale by the same person of goods manufactured or produced in Madhya Bharat would also be liable to tax, the word "importer" would not have been used in column (3) but the word "dealer" would have been used and the point of sale would have been indicated by some other words as the "first sale in Madhya Bharat" or "the sale to the retailer in Madhya Bharat" as the rule- making authority chose. The matter becomes even more clear if in column (3) we read for "importer" the definition of "importer of goods" in section 2(1) of the Act. Reading this we find that the point of sale in Madhya Bharat at which the tax is payable is the sale "by the dealer who brings or causes to be brought into Madhya Bharat any goods from outside for the purpose of processing, manufacturing or sale" or "who purchases goods in Madhya Bharat for the purpose of sale from a dealer who does not ordinarily carry on business in Madhya Bharat". When only such a sale is being made the point at which the tax is payable there is hardly any scope for a serious argument that the notification was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment by mistake to give relief by commanding repayment of the same. That in a number of cases the High Courts have used the writ of mandamus to enforce such repayment is not disputed. In a recent case in Firm Mehtab Majid and Co. v. The State of Madras A.I.R. 1963 S.C. 928; 14 S.T.C. 355., this Court made in a petition under Article 32 an order for refund of tax illegally collected from the petitioner under rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The ques- tion whether the Court has this power to order refund was not however raised there. In Sales Tax Officer, Banaras v. Kanhaiya Lal Makund Lal Saraf [1958] 9 S.T.C. 747; [1959] S.C.R. 1350., the appellants disputed the correctness of the High Court's order made in an application under Article 226 of the Constitution directing refund of taxes that had been paid under the U.P. Sales Tax Act on the respondent's forward transactions in silver bullion. After the levy of sales tax on such transactions was held to be ultra vires by the High Court of Allahabad the respondent asked for refund of the tax paid and when that was refused he applied to the High Court under Article 226 of the Constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved party in seeking this special remedy and what excuse there is for it. Another is the nature of controversy of facts and law that may have to be decided as regards the availability of consequential relief. Thus, where, as in these cases, a person comes to the court for relief under Article 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment. Whether repayment should be ordered in the exercise of this discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule for universal application. It may however be stated as a general rule that if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party by this extra- ordinary remedy of mandamus. Again, where even if there is no such delay the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the tax provisions in question to be void. It was necessary for the High Court to consider this question of delay before any order for refund was made. It does not appear how- ever that any attention was paid to this question. In making the orders for refund in each of these cases the High Court merely said this: "The present case is governed by Bhailal Bhai's case [1960] M. P. C. 304 ; 11 S. T. C. 511. Learned Government Advocate formally raised the question of the remedy open to the petitioner for refund of tax in order to keep the point open in the Supreme Court. We accordingly allow this petition and issue a writ directing the opponents to refund to the applicant-firm the amount of tax collected from it during the above- mentioned period." The learned Judges appear to have failed to notice that the delay in these petitions was more than the delay in the petition made in Bhailal Bhai's [1960] M.P.C. 304; 11 S.T.C. 511., case out of which Civil Appeal No. 362 of 1962 has arisen. On behalf of the respondents-petitioners in these appeals (C.A. Nos. 861 to 867 of 1962) Mr. Andley has argued that the delay in these cases even is not such as would justify refusal of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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