TMI Blog1975 (11) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Madras v. Gannon Dunkerley Co. (Madras) Ltd.[1958] 9 S.T.C. 353 (S.C.)., it became apparent that the petitioner was not a dealer and rule 2(ii)(c) of the Bengal Sales Tax Rules, 1941, under which the petitioner was assessed was declared to be void and ultra vires. In the premises, the petitioner became entitled to refund of the sales tax already paid and was entitled to have his registration certificate cancelled. The petitioner stated that the petitioner, thereafter, submitted for the years 1959, 1960 and 1961 returns declaring no sales or turnover. On 10th April, 1962, the petitioner wrote a letter to the Commercial Tax Officer, Colootolla Charge, requesting him to cancel the certificate of registration on the ground that the petitioner was a contractor and not a dealer within the meaning of the said Bengal Finance (Sales Tax) Act, 1941, and as such, his registration should be cancelled. The petitioner was informed in reply by the Commercial Tax Officer on 26th May, 1962, that the said question of cancellation of the certificate of registration would be considered on completion of pending assessments. The petitioner states that the petitioner made a further representat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming the refund of the said amount of Rs. 18,812.45. No reply was received by the petitioner. On the contrary steps were taken for realisation of the dues on the basis of the assessments for the years 1963, 1964 and 1965 and certain proceedings have been taken, which have been mentioned in annexure D of the petition. Thereafter, the petitioner made an application for cancellation of the registration certificate, which was cancelled by the Commercial Tax Officer with effect from 22nd August, 1972. On 1st September, 1972, the petitioner made seven sets of applications before the Commercial Tax Officer, Colootola Charge, claiming refund of diverse amounts of taxes realised illegally and/or without any authority of law from him, according to the petitioner, as set out below: Year Amount (1) 1951-52 Rs. 5,348.62 (2) 1952-53 Rs. 667.00 (3) 1953-54 Rs. 2,044.47 (4) 1954-55 Rs. 4,664.34 (5) 1955-56 Rs. 2,999.40 (6) 1956-57 Rs. 2,338.62 (7) 1957-58 Rs. 760.00 On 12th January, 1973, the petitioner received seven letters from the Commercial Tax Officer, Colootola Charge, informing that the said applications for refund of the taxes have been rejected by orders dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount due" from him as contemplated in sub-section (1) of section 12 of the Act. I am unable to accept this contention urged on behalf of the respondents. If the petitioner was not liable to pay any tax then the "entire tax" paid by the petitioner would be tax "in excess of the amount due" from him under the Act. If a person is not liable under the Act, yet on a mistaken basis he pays the tax, in my opinion, it could be said that he has paid the tax in excess of the amount due from him under the Act. In that case, the entirety of the amount paid would be in excess of the amount due from him under the Act because it is not due from him under the Act. The construction urged on behalf of the respondent, in my opinion, would be illogical because in that event if a person had paid tax, say of Rs. 10, in excess would be entitled to refund but if a man who was not liable to pay any tax at all, has paid Rs. 1,000 as tax would not be entitled to any refund. Such a construction, in my opinion, should not be made unless the statute compels me to do so. I find no warrant for such a compulsion in the language used in section 12 of the Act. But section 12 cannot have any application in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessment was made under a provision which was ultra vires and, as such, it was void. That being the position, in my opinion, the fact that the petitioner has not asked for setting aside the assessments and the said assessments have not been set aside do not debar the petitioner from asking for the refund of the amount. The next contention on behalf of the respondents was that this application was belated. It was contended that rule 2(ii)(c) of the Bengal Sales Tax Rules, 1941, under which the petitioner had been assessed as a dealer was declared ultra vires by the Supreme Court as early as in 1958 and, in any event, since 1962 the petitioner knew that the petitioner had paid the tax on a mistaken notion. But the petitioner made the present application on 4th May, 1973. In the premises it was urged that the petitioner was not entitled to any relief and the application should be refused. In aid of this submission reliance was placed on the case of State of Kerala v. Aluminium Industries Ltd.[1965] 16 S.T.C. 689 (S.C.). There the Supreme Court had observed that the money paid under a mistake of law was within the word "mistake" in section 72 of the Contract Act and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast impugned order, which related to the assessment year 1961-62 and the writ petition, which was filed in September, 1968. However, the High Court made an observation that, if so advised, the petitioner might file appeals under section 30 of the Indian Income-tax Act, 1922, and pray for condonation of delay under section 30(2) of the said Act. Against the order of the High Court the assessee came up in appeal before the Supreme Court. It was held by the Supreme Court that article 226 was not a blanket power, regardless of temporal and discretionary restraints. If a party was inexplicably insouciant and unduly belated due to laches, the court might ordinarily deny redress and if the High Court had exercised its discretion to refuse, the Supreme Court should decline to disturb such exercise unless the ground was too untenable. To awaken the Supreme Court's special power gross injustice and grievous departure from the well-established criteria in this jurisdiction had to be made out. In the case in question, long years had elapsed after the High Court had held the taxed income to be agricultural. The reason for the inaction was stated to be an illusory expectation of suo motu modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 965] 16 S.T.C. 689 (S.C.).This is also in consonance with justice, equity and good conscience. In the case of Raja Jagadambika Pratap Narain[1975] 100 I.T.R. 698 (S.C.). , the Supreme Court observed that a legal system in a developing country must permit judges to play a creative role to ensure justice without doing violence to the language used by the legislature. Sub-section (2) of section 12 of the Act has, in my opinion, no application to the facts and circumstances of this case because the assessments under which moneys in question were paid are void being based on provisions, which are ultra vires. Sub-section (1) of section 12 is an indication of the legislative recognition of the ordinary duty to refund in cases of excess realisation. There is no specific provision disentitling the petitioner from getting the refund. The present fiscal climate has also to be borne in mind. Attempts are being made to generate the attitude of tax compliance and create an atmosphere of co-operation between the tax-payers and tax-collectors, knowledge and evidence of the fact that, taxes not due if paid or realised would be refunded, would create an atmosphere of confidence which will be conduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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