TMI Blog1990 (2) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1942, that under the provisions of the enactment, every grower of coffee has to get himself registered and must deliver its marketable coffee to the Coffee Board, that a separate provision has also been made regarding the finance of the Board and that the said provision deals with a general fund and a pool fund, as provided under sections 31 and 32 of the Coffee Act. It is further alleged in the affidavit that the general fund would consist of all amounts paid to the Board by the Central Government under subsection (1) of section 31 of the Coffee Act, and all sums transferred to the General Fund under the proviso to sub-section (2) of section 32 and all fees levied and collected by the Board under the Act, and that the Pool Fund shall be credited with all sums realised by sales by the Coffee Board from the surplus pool. It is also alleged in the affidavit that the Government of Karnataka effected an amendment to the Karnataka Sales Tax Act in the year 1970 by which section 6 was inserted therein by which a levy of purchase tax was made on goods transferred from Karnataka to other States, otherwise than by sale, that pursuant to the said amendment, the Government of Karnataka, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Rules authorising such levy, that the Coffee Board cannot by a circular say that the goods sold in the pool sale of auction will be delivered only on making the contingency deposit and that the demand for contingency deposit paid is clearly illegal and without jurisdiction. It is also alleged by the petitioner in the affidavit filed in support of the petition that the Coffee Board having challenged the said assessment proceedings itself, it is not open to the Coffee Board to seek the contingency deposit from the dealer as a contingency measure to meet its liability, and that a pool sale dealer in an auction conducted by the Coffee Board cannot be in any event liable to pay the purchase tax, that the liability to pay purchase tax could only be fastened either on the Coffee Board or the grower of the coffee. A reference to the affidavit, filed by the Coffee Board, before the Karnataka High Court is made in the affidavit filed herein by the petitioner. After making the reference it is alleged in the affidavit that the liability cannot be passed on to the pool sale dealer, that it is not open to the Coffee Board to levy the contingency deposit, that the contingency deposit c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board and which was directly exported out of India by the Coffee Board, that it is true that the Coffee Board disputed the said assessments in writ petitions and that they were waiting for the final disposals pending on the files of Karnataka High Court. (It is to be seen that his counter-affidavit has been filed in the year 1985, when the above-mentioned Writ petitions were pending before the Karnataka High Court). It is also claimed in the counter-affidavit that the Coffee Board is a statutory body, that its finances have to be managed as set out by the Act, that after meeting the establishment expenses and the liability for tax, the balance has to be distributed to the growers whose coffee is pooled with and is marketed by the Coffee Board, that no portion of the proceeds realised by the sale of coffee is retained by the Coffee Board, that the Coffee Board pays in various instalments to the growers the entirety of money after meeting the expenses and taxes, and as such there will be no funds left with the Coffee Board for payment of purchase tax at a later date if such liability is fastened on the Coffee Board. It is also claimed in the counter-affidavit that the liability to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter-affidavit that if the minimum reserve price is raised, the pool sale dealers will be obliged to purchase coffee only over and above the said minimum reserve price, that what is paid by them will go into the pool fund of the Coffee Board, that it will go thereafter either as sales tax liability or surplus to the coffee growers, and that by collecting such amount separately by way of contingency deposit they thought that they will stand to gain as in the event of the Coffee Board being held not liable to purchase tax and that the Coffee Board had agreed to change its stand and to collect contingency deposit as desired by them. It is further claimed in the counter-affidavit that when all the pool sale dealers are going to pass on the incidence of such liability to their buyers as the entirety of coffee grown in India is only marketed through the Coffee Board, no discrimination could be alleged by the petitioner herein. It is also stated that there is no violation of principles under article 14 of the Constitution arises in this case. It is also claimed in the counter-affidavit that in respect of coffee sold to pool sale dealers the minimum release price is fixed by the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were pending before the Karnataka High Court, the Coffee Board was making certain payments and as such, being a statutory body, the Coffee, Board cannot go without protecting its interests as ultimately it is the interests of the growers which is sought to be protected. 5.. A reply affidavit has been filed by the petitioner-company stating that the question was pending adjudication before the High Court of Karnataka till it came to be decided by order dated 16th August, 1985, in the case in Coffee Board v. Commissioner of Commercial Taxes [1986] 60 STC 142; (1985) 2 KLJ 397, wherein the High Court of Karnataka held that the delivery of coffee constituted a sale by the grower and purchase by the Board and that the subject-matter of this writ petition relates to the period prior to the decision of the Karnataka High Court upholding the levy of purchase tax. It is also alleged in the reply affidavit that the Supreme Court upheld the judgment of the High Court of Karnataka which is reported in Coffee Board v. Commissioner of Commercial Taxes, Karnataka [1988] 70 STC 162; AIR 1988 SC 1487, with regard to the imposition of purchase tax upon the Coffee Board, that after the judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of contingency deposit in view of the Circular issued in the year 1984. The learned counsel contends that the short question falls for consideration is whether the dealer in coffee is bound to pay the contingency deposit which is almost equivalent to purchase tax to be paid by the Coffee Board to the State. 7. Mr. Sundara Swamy, the learned counsel for the petitioner, further contends that the collection of contingency deposit is without authority of law and that there is no provision to collect from buyers like petitioner herein, especially when they pay sales tax. The learned counsel contends that by this way the petitioner has to pay tax twice one by way of purchase tax and another by way of sales tax. The learned counsel also contends that the Coffee Board, being a statutory body, cannot make any collection without authority of law. He also contends that during the period from 16th May, 1984 to 15th November, 1985, the petitioner was a buyer, that he was paying the sales tax during that period and that the petitioner was not liable to pay purchase tax under the guise of contingency deposit. The learned counsel further argues that under the Karnataka Sales Tax Act, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany had the benefit of the reduced reserve price, they cannot now turn around and ask the question of refund of contingency deposit. The learned counsel refers to the decisions in State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd. [1960] 11 STC 734 (SC), in Veerabhadra Pillai v. Ramanuia Aiyangar AIR 1927 Mad 1088 and in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 44 STC 42, for this proposition. The learned counsel also contends that the issue raised by the learned counsel for the petitioner is purely on the question of contract and that it will not attract a petition filed under article 226 of the Constitution even assuming that the contingency deposit has been collected from the petitioner. 10.. Mr. Sundara Swamy, the learned counsel for the petitioner, replies that no question of estoppel arises in this case and that the petitioner herein has not given any undertaking as contended by the Coffee Board. The learned counsel also refers to the "law relating to estoppel" by representation by George Spencer Bower-II edition at page 131 for this proposition. 11.. I have considered the arguments of the learned counsel for the petitioner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of convenience, the said circular is extracted as follows: "...Coffee Board, Bangalore AC. III/S. Tax 84/474 Dated: 16-5-1984 To All pool sales dealers Dear Sirs, Sub: Levy of purchase tax on Coffee Board in respect of coffee sold in pool (sic) auctions-making a provision for meeting the contingent liability of purchase tax-reg. The Government of Karnataka have levied purchase tax on the value of coffees transferred from Karnataka to other States otherwise than by way of sale. The Government of Kerala have introduced purchase tax on coffee with effect from 1st April, 1984, at the point of first purchase in that State. The Board has taken the stand in the assessment proceedings relating to Karnataka that there is no purchase of coffee by it from the planting community and has contested the assessments in writ petition before the Karnataka High Court. Since the outcome of these writ petitions is not known, it has become necessary to make a provision to meet the contingent liability of purchase tax. However, the Fortysixth Amendment to the Constitution by Parliament with effect from 3rd February, 1983, holding that the compulsory acquisition is also a sale has also contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent on the auction prices as contingent liability but no sales tax and additional sales tax on sale of coffee with effect from 1st April, 1984..." In view of the circular mentioned above, the petitioner-company herein was one of the persons who was challenging the contingency deposit towards the liability of the Board, which may occur or may not occur because at that time, the writ petitions filed by the Board were pending before the Karnataka High Court. A reading of the circular extracted above, clearly shows that the dealers like the petitioner herein have accepted to pay the contingency deposit for making provision for meeting the contingent liability of purchase tax. Though it is clearly stated in the circular that the Board was taking the stand by way of a precautionary measure, the Board thought it fit to take that measure. It is equivalent to the rate of purchase tax. The learned counsel for the petitioner heavily relies on the judgment of the Karnataka High Court which is reported in Consolidated Coffee Ltd. v. Coffee Board, Karnataka [1989] 74 STC 272, for the proposition that the Board can pay the tax from the pool fund since paying tax is a statutory obligation incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company to object the matter in a petition under article 226 of the Constitution? I think it cannot. In my view, it falls within the ambit of the breach of contract between the Board and the petitionercompany with regard to the sale of coffee in an auction and if at all the petitioner-company is aggrieved, surely in my view, a petition under article 226 of the Constitution is not the proper remedy. It has been repeatedly held so and also recently held by a Division Bench of this Court in the Shipping Corporation of India v. Shaik Mohammed Rowther and Company (P.) Ltd. 1987 WLR 638. On this ground alone, I am inclined to dismiss the Writ Petition No. 3675 of 1985. 12.. A delivery order of the Coffee Board has been shown before me. In the said delivery order, it has been clearly stated that the sales tax is at 6 per cent and the contingency deposit is at 6.45 per cent, apart from excise and sales tax. As such, the petitioner-company is fully aware, even when the delivery note was issued, that the purchase tax has to be paid by the Board to the State. 13.. Apart from that, the petitioner-company should not be allowed to take a different stand after paying the contingency deposit a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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