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TMI Blog1960 (2) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... rity, it concedes that a part of the amount was rightly decreed. The controversy before us has thus been confined to the question as to whether the decree of the court below should be set aside to the extent to which it is objected to by the appellant. In order to understand the scope of that controversy it is necessary to bear the following facts in mind. At the material point of time, the plaintiff-firm carried on the business of exporting cocoanuts and copra outside the territory of the Madras State within which the East Godavary district was then comprised. The transactions now in question relate to the period from Ist April, 1949, to 31st March, 1950, and it is common ground between the parties that all of them are what may be called inter-State sales. On the basis of the periodical returns submitted by the plaintiff, the Deputy Commercial Tax Officer, Amalapuram, determined the net actual turnover of the plaintiff's business for the aforesaid period at Rs. 8,92,699-2-3 by his order dated 16th October, 1950. In that order, he has stated: "Sales are almost (sic) to dealers outside the province but no exemptions are claimed as the (sic) considered perhaps, inadmissible." His o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that part of the plaintiff's turnover which comprises transactions up to 26th January, 1950, would be valid while its levy upon the rest of the turnover would be illegal. One would have thought therefore that the plaintiff would be entitled to a decree for a refund of the sum which was levied upon the latter item. But it has been strenuously maintained by the counsel for the respondent that he is nevertheless entitled to have the decree of the trial Court maintained in its integrity. He has argued that the order of assessment dated 16th October, 1950, is a composite order; that it cannot be split up into two parts consisting of what is good and what is bad; and that the Court is bound to set it aside in its entirety. He adds, however, that this course would not affect the right of the taxing authorities to make a proper and valid assessment afresh. The proposition so submitted seemed to us even at the outset altogether unacceptable and despite the able and elaborate arguments of the learned counsel we remain unconvinced that it is right. Now in this case, we must remember that the plaintiff as well as the defendant proceeded upon the footing that the tax was properly leviable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions of this Court upon which reliance has been placed by Mr. Sastry compel us to accept his proposition. The most recent of these decisions is in Basappa v. Provincial Government of Madras (Now Andhra Pradesh) represented by the District Collector, Kurnool[1958] 2 An. W.R. 393. In this case the learned Judges applied to the facts before them what they considered to be the rule laid down by the Supreme Court in Ram Narain Sons Ltd. v. Assistant Commissioner of Sales Tax[1955] 6 S.T.C. 627; A.I.R. 1955 S.C. 765. They were dealing with three suits instituted against the Government, two of which were for refund of sums of money collected by way of sales tax and the other was for a declaration that an assessment was illegal and for an injunction restraining the defendant from collecting the tax levied. The plaints averred that all the transactions with respect to which the tax was imposed were transactions of sale beyond the Province of Madras as it then was. The learned judges found that the transactions which comprised the turnover fell into the following four categories: "Cases (1) where the plaintiff himself was the consignor as well as the consignee; (2) where the plaintiff h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m them by way of sales tax the levy of which they alleged was illegal and ultra vires while in the other suit the plaintiffs sought a declaration that an assessment was illegal and an injunction restraining the defendant from collecting the tax. In each of the cases the levy was impugned on the ground that the transactions to which they related were "outside sales". After discussing the evidence in the cases, their Lordships observed as follows: "Having regard to what has been stated above, we hold that where the consignor and consignee is the seller and the consignor is miller and consignee (the) plaintiff, the sales took place outside and no sales tax is leviable on those transactions and in the other two cases where the consignor is seller and consignee (the) buyer and where the consignee and consignor is buyer the sales took place inside the Province and are liable to sales tax under the Act." Then they dealt with the contention, to quote their own words, "that the assessment being a composite one dealing with transactions which are taxable and those that are not taxable, in each of A.S. Nos. 295 and 296 of 1952, it cannot be split up and the whole thing is said to be infected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple a vital distinction which is indicated by the recent decision of the Supreme Court in Sales Tax Officer, Banaras v. Kanhaiya Lal Mukund Lal Saraf[1958] 9 S.T.C. 747. The cause of action in the former case is the improper order of assessment while the cause of action in the latter case is the payment or collection. No attempt was made in either case to ascertain what is the foundation upon which a claim for refund rests. The learned judges would seem to have thought that the cause of action which the plaintiff has in seeking the repayment is not the collection of the amount from him but the invalidity of the order of assessment which preceded the collection. They had not the advantage which we now have, of the guidance afforded by the above decision of the Supreme Court on this aspect of the law. In this decision, it seems to us, their Lordships have indicated the true basis upon which a claim for repayment of tax illegally levied could be founded. Such a claim they held falls within the scope of section 72 of the Indian Contract Act. They observed that under that section, a mistake of law just as much as a mistake of fact, could sustain a claim for repayment and that if ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability we would have to deal with the same." The court, it must be remembered, is not a taxing authority. All taxes should be levied and collected in accordance with law by the appropriate authorities. Where an order of assessment includes items which are not taxable and which are further inseparable from other items which are taxable then the order is liable to be set aside in toto. Where they are separable, the order may be partly set aside. In a claim for refund by an assessee where tax has already been collected, the court is concerned to determine the exact amount which has been paid under mistake or collected by force and the plaintiff suing for repayment must allege and prove with precision the sum so paid or exacted at any rate in all cases where it is possible for him to do so. We are inclined to hold that, where the plaintiff can easily establish and the court will have no difficulty in finding what is the exact amount paid in excess, then the court should insist upon his doing so. Apart from these considerations which are based upon the subsequent decision of the Supreme Court in Sales Tax Officer, Banaras v. Kanhaiya Lal Mukund Lal Saraf[1958] 9 S.T.C. 747. and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held by the Madras High Court in M.P. Kumaraswami Raja, In re[1955] 6 S.T.C. 113., that such provisional orders could not be legally made under the Act as it stood. (There has been an Amendment Act validating such orders retrospectively since 1939 but that would only prevent claims for refund). So, the payment of Rs. 9,684 was a payment de hors a proper assessment order towards the tax. Thus it is clear that it would not help the plaintiff to have the order dated 16th October, 1950, set aside. Moreover, as we have already stated in the present case, the facts are all available and it would be mere matter of elementary arithmetic to determine which part of the sum collected by the appellant could be attributed to illegal assessment. Even a most superficial examination of the relevant record would show what turnover of the plaintiff relates to the period before 26th January, 1950, and to the subsequent period. It would not be beyond the capacity of the court to determine that amount: and we cannot see how it is beyond its jurisdiction. We would, therefore, hold that the plaintiff is not entitled to claim a refund of the amount of tax relating to transactions before 26th Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X
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