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TMI Blog1968 (7) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... consisting of Chandra Reddy, C.J., and Gopalakrishnan Nair, J., in Surya Trading Firm v. State o Andhra Pradesh[1963] 14 S.T.C. 720. that a dealer coming within the purview of section 8(2) of the Central Sales Tax Act, 1956, should be regarded as a dealer governed by the provisions of the Andhra Pradesh General Sales Tax Act, 1957, for all purposes. It was founded on the clause "shall be calculated at the same rate and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State." This contention was, however, rejected by the Bench which held that the position of a dealer under that section, viz., section 8(2), could not be equated to a dealer under the Andhra Pradesh General Sales Tax Act and that an assessee would be deemed to be a dealer under the State Act only for the limited purpose of calculating the rate and not for all purposes. The decision in Yaddalam Lakshminarasimhiah Setty & Sons v. State of Mysore [1962] 13 S.T.C. 583. which took a different view was not brought to the notice of the Bench. In any case, the State of Mysore went in appeal to the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty & Sons[1965] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate at multi-points. This decision was rendered on November 10, 1964, by which time in many States, at any rate in so far as the State of Andhra Pradesh is concerned, assessments were being made in accordance with the law as understood by the High Court. These assessments in respect of transactions of sale of the several commodities to outside State dealers at the first purchase point under the provisions of the Andhra Pradesh General Sales Tax Act had become final and the tax had been paid. But now having regard to the Supreme Court decision referred to above, it is contended by the petitioners that the tax has been paid under a mistake of law which could be recovered if writ petitions under article 226 of the Constitution could be filed within three years from the date of discovery of the mistake of law under which the amount was paid. In support of this contention the petitioners rely upon two decisions in State of Madhya Pradesh v. Bhailal Bhai[1964] 15 S.T.C. 450. and State of Kerala v. Aluminium Industries Ltd.[1965] 16 S.T.C. 689., in which it was held that relief for refund of tax paid under a mistake of law could be granted. But before we deal with these two decisions, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valid, a similar argument based on inconsistency with section 22 would be valid and would lead to the conclusion that section 72 does not even apply to mistake of fact. The argument submitted to their Lordships was that section 72 only applies if there is no subsisting contract between the person making the payment and the payee, and that the Indian Contract Act does not deal with the case where there is a subsisting contract but the payment was not due under it. But there appears to their Lordships to be no good reason for so limiting the scope of the Act. Once it is established that the payment in question was not due, it appears to their Lordships to be irrelevant to consider whether or not there was a contract between there parties under which some other sum was due." Bhagwati, J., dealing with the observations of the Privy Council, stated at pages 756 and 759: "There is no conflict between the provisions of section 72 on the one hand and sections 21 and 22 of the Indian Contract Act on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted tobacco and not on home-grown tobacco and so it did not come within the special provisions of article 304(a) of the Constitution and consequently the infringement of article 301 of the Constitution which resulted from the imposition of a tax on import of goods made the provisions void in law. The prayer for refund was allowed. Against that decision the State of Madhya Pradesh filed an appeal and their Lordships of the Supreme Court also, agreeing with the view taken by the Madhya Pradesh High Court, held that the notification imposing tax contravenes article 301 and is not saved by article 304(a); the assessment of tax was thus invalid in law. Then came the question as to whether refund of tax collected under a mistake of law could be ordered in a writ petition as it could have been decreed in a civil suit under section 72 of the Indian Contract Act. The important question to which their Lordships were addressing their mind was posed by Das Gupta, J., at page 457 as follows: "The question is: whether the relief of repayment has to be sought by the taxpayer by an action in a civil court or whether such an order can be made by the High Court in exercise of its jurisdiction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, 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 extraordinary remedy of mandamus. Again, where even if there is no such delay, the Government or the statutory authority against whom the consequential relief is prayed for raises a Prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the court should ordinarily refuse to issue the writ of mandamus for such payment. In both these kinds of cases i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , showing a net turnover of Rs. 23,02,776-1-9 and deposited necessary sales tax. There appears to have been no assessment as such. But before that could be done, the respondent discovered its mistake in not claiming an exemption in connection with sales made to the State of Punjab and had paid Rs. 71,000 in excess of sales tax due from it. It addressed a letter to the Sales Tax Officer on August 29, 1951, for repayment of this amount and thereafter pursued the matter by correspondence, when eventually, the Sales Tax Officer on October 1, 1952, asked the company to move the Government directly detailing all the facts. The respondent then appears to have moved the Government and asked for refund, but received no reply. It had therefore to file the writ petition on May 30, 1954. In view of these facts, the Supreme Court thought it better to call for a report from the Sales Tax Officer on the question whether the sales with respect to which sales tax amounting to Rs. 54,375-5-0 was levied were outside the State and were therefore exempt under article 286(1)(a) of the Constitution, as it then was, and whether the writ petition was within three years of the date on which the mistake firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the orders which the taxing officer would legitimately pass in exercise of the powers vested in him, even though his interpretation of a particular provision is ultimately found to be wrong, will the same principles be applicable for entertaining a writ petition to quash those orders long after the tax has been collected, on the ground that a different view has been taken by a higher court in some other case? In other words, the question is, in cases where an order under which sales tax is levied is not void, but was made in exercise of his jurisdiction, even on an erroneous interpretation of law, which order has not been challenged or even if challenged had been confirmed, or where the order made by the sales tax authority is in accord with the view taken by the High Court of that State, can the same principles upon which refund has been directed by the Supreme Court be made applicable to entertain a writ of certiorari to quash those orders, which would be lawful until they are so quashed, filed within the same period of limitation as that prescribed for a suit, contrary to the established practice of rejecting those petitions if filed beyond six months, unless it be that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Act and not outside it, that if it acts on the basis of a provision of the statute which is ultra vires, to that extent it would be acting outside the Act and that in that event, a suit to question the validity of such an order made outside the Act would lie in a civil court. It was further held that the expression "under this Act" in section 18-A of the Madras General Sales Tax Act, 1939, refers both to procedural and substantive provisions of the Act, that, therefore, any assessment made under an ultra vires provision of the Act cannot be said to be made under the Act and section 18-A would not be a bar to the maintainability of a suit for refund of the amounts paid in respect of such an assessment, and that the procedural machinery under the Act can be utilised only to decide disputes that arise under the substantive provisions of the Act, which are not ultra vires. It is, therefore, evident that where an order is passed by the sales tax authorities in exercise of the jurisdiction vested in them under the Act, no suit can be filed; but if an order is passed under the provisions which are ultra vires, illegal or void, the sales tax authorities not having jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n inferior court or tribunal is based on an obvious misinterpretation of the relevant statutory provision, or sometimes in ignorance of it, or may be even in disregard of it, or is expressly founded on reasons which are wrong in law, the said conclusion can be corrected by a writ of certiorari. In all these cases, the impugned conclusion should be so plainly inconsistent with the relevant statutory provision that no difficulty is experienced by the High Court in holding that the said error of law is apparent on the face of the record. It may also be that in some cases, the impugned error of law may not be obvious or patent on the face of the record as such and the court may need an argument to discover the said error; but there can be no doubt that what can be corrected by a writ of certiorari is an error of law and the said error must, on the whole, be of such a character as would satisfy the test that it is an error of law apparent on the face of the record. If a statutory provision is reasonably capable of two constructions and one construction has been adopted by the inferior court or tribunal, its conclusion may not necessarily or always be open to correction by a writ of cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the record? In other words, can it be said that the impugned collection of taxes was so plainly inconsistent with the relevant statutory provisions that no difficulty was experienced by the High Court in holding that such an error of law was apparent on the face of the record? In our view, it cannot be so said. In some of the writ petitions in which collections of taxes have been made pursuant to the orders made subsequent to the judgment of their Lordships of the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty & Sons[1965] 16 S.T.C. 231. it cannot be said, if the principles of that judgment govern all these cases, that there is no error apparent on the face of the record. But it is contended that that case does not govern all these writ petitions. We shall however deal with this aspect a little later, but for the present, if that decision applies, and writ petitions have been filed within a reasonable period thereafter, those errors will have to be corrected and the orders set aside and refund of the tax paid directed, notwithstanding that ordinary remedies were available for the assessee to have those orders set aside. But in regard to cases which have been decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Pradesh[1967] 2 An. W.R. 406. It cannot be denied that the judgment of the Supreme Court in the Mysore case was pronounced on November 10, 1964, and a copious extract and a full note of this decision appeared in the Supreme Court Notes five days thereafter on November 15, 1964, as Case No. 340 at page 238. Even if we were to accept the contention that the first time it was fully reported in 16 S.T.C. 231, on March 15, 1965, and that date has to be taken into account, even then, though the orders of assessment were made on the basis of the law as understood prior to the Supreme Court decision, no steps were taken either to appeal to the higher authorities, nor were any petitions filed before this court within a reasonable period, namely within 6 months thereafter. The explanation that they only discovered their mistake after the Sales Tax Tribunal's order on August 1, 1966, or the judgment of this court confirming that order on March 31, 1967, in respect of rice, in State of A.P. v. O. Venkateswarlu & Bros.[1967] 20 S.T.C. 340., does not in any way condone the delay in filing the petitions. The basis of all these decisions is the application of the principle enunciated by thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers have to pay income-tax, as the department treats this as their income. We do not however, on this score, consider that they would not be entitled, if they had come within a reasonable time to have the orders quashed. We are only referring to this in order to consider whether there are any extraordinary circumstances to condone the long and inordinate delay, in entertaining these petitions. Annexure omitted.-Ed. Apart from this, Sri Ramachandra Reddy contends that the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty & Sons[1965] 16 S.T.C. 231. was concerned with the assessment for the year 1957-58 under the Central Sales Tax Act, 1956, as it stood prior to the amendments in 1958 and therefore it has no application to the present cases and the relative provisions of the law governing them. We find that except for W.P. 3708 of 1967, 3717 of 1967 and 3742 of 1967 where the orders of assessments related to 1957-58 and were made respectively on October 15, 1959, August 15, 1964, and October 18, 1961, in all the other writ petitions assessments were made after the amendment of the Central Act and, therefore, the question squarely arises in all these petitions as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Nor is there any provision that in such a case the Central tax should prevail and the State tax should be refunded. This aspect of the matter was not at all considered, and could not have fallen for consideration, by the Supreme Court in the Mysore case. That case therefore cannot govern the assessment for the year of assessment 1957-58 in respect of declared goods. A similar question came to be considered by the Madras High Court in Khader & Co. v. State of Madras[1966] 17 S.T.C. 396., where a Bench of that court consisting of Veeraswami and Kailasam, JJ., after referring to the decision of the Supreme Court in the Mysore case as also the amendments to section 15 and the provisions of the Madras General Sales Tax Act, held that the Supreme Court in that case was concerned with an assessment for the year 1957-58 under the Central Sales Tax Act, 1956, as it stood prior to the amendment in 1958 and that therefore the principle of that decision does not apply to a case concerning assessment year 1958-59 onwards. At page 403 Veeraswami, J., speaking for the Bench observed: "Section 15, as it now stands, clearly visualises that where sales of declared goods are to be taxed only at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s valid and the tax paid pursuant to it is not liable to be refunded." With great respect, we are in entire agreement with the conclusions of the Bench arrived at on the reasoning given by the learned judge. The Andhra Pradesh General Sales Tax Act also has analogous provisions in section 5 and section 6 which contains a similar proviso. Sub-section (1) of section 5, which is the charging section, levies tax on every dealer whose total turnover for a year is not less than Rs. 10,000. Sub-section (2)(a) and (b) however direct that sales of goods mentioned in the First or Second Schedule as the case may be shall be taxed only at the rates and at the point of the sale specified as applicable thereto, effected in the State by the dealer purchasing them, on his turnover of purchase in each year relating to such goods irrespective of the quantum of turnover. Section 6 is as follows: "Notwithstanding anything contained in section 5, the sales or purchases of declared goods by a dealer shall be liable to tax at the rate, and only at the point of sale or purchase, specified against each in the Third Schedule on his turnover of such sales or purchases for each year irrespective of the quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 8(2-A) of the Central Act read with item 66(b) of Schedule I of the Andhra Pradesh Act, inter-State sales of rice obtained from paddy that had already suffered tax at 3 per cent. was exigible to tax at I per cent. and not at two per cent. In respect of non-declared goods, therefore, though the principle in State of Mysore v. Lakshminarasimhiah Setty & Sons[1965] 16 S.T.C. 231. will apply, it cannot be said that the petitioners got knowledge of the mistake of law only after the decision of this court in State of Andhra Pradesh v. Oruganti Venkateswarlu & Bros.(1) on 31st March, 1967. The question whether paddy had been subjected to tax or not and rice was shelled out of such paddy will be a matter in controversy between the department and the assessee, and until that is decided, which can only be done by the hierarchy of tribunals under the Act, it cannot be said that the tax levied was levied under a mistake of law, entitling the petitioners to a refund in these petitions. This principle will be applicable to the other non-declared goods also. Both for this reason, as also for the reason, in respect of all the petitions including the three petitions dealing with assessments of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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