TMI Blog1960 (3) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendant on account of such taxes. The payment was made by cheque, being cheque No. 041203 dated 14-12-1953 for ₹ 10,000/- drawn on the Oriental Bank of Commerce Ltd., having its office at 12, India Ex- change Place, Calcutta within the jurisdiction. The plaintiff was compelled to deposit a further sum of ₹ 1096-13-0 in respect of such assessment in order to appeal from the said pretended orders. The said payment was also made by cheque No. 011015 dated 23-7-1955 for ₹ 1096-13-0 drawn on Oriental Bank of Commerce Ltd. having its office at 12, India Exchange Place, Calcutta within the jurisdiction. 2. The plaintiff preferred appeals from the said pretended orders. By an order dated 24-9-1955, the Assistant Commissioner, Sales Tax, Chotta Nagpur Division in the State of Bihar allowed the appeal holding inter alia that the plaintiff could not be assessed to pay tax in Bihar. On or about 13-10-1955, the plaintiff filed with Superintendent of Sales Tax, Dhanbad from Calcutta within the jurisdiction an application for refund of ₹ 11,096-13-0. The defendant did not pay the said sum or any portion thereof. Under these circumstances, the plaintiff claims refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff conceded that it was not a part of cause of action. I took the view that Section 80 is not part of the cause of action and I am told by counsel that it has recently been held by Appellate Court that that view is correct. As to paragraphs 2, 3, 4, 5 and 9 in the plaint, the plaintiff bases part of the cause oo?= action first on payment of ₹ 10,000/- by cheque drawn on Oriental Bank of Commerce Ltd., having its office at 12, India Exchange Place, Calcutta. Secondly that the order dated 24-9-1955 allowing the appeal was received by the plaintiff at Calcutta. Thirdly, paragraph 9 alleges that the defendant is liable to pay the sum of ₹ 13,176.69 nP. at Calcutta. 7. The phrase 'cause of action' has received considerable judicial gloss. The definition enunciated by Rankin, C. J. in Engineering Supplies Ltd. v. Dhandhania and Co. AIR1931Cal659 , is the entire set of facts that gives rise to an enforceable claim or in the words of Fry L. J., 'everything, which, if not proved, gives the defendant as immediate right to judgment, in other words, every fact which is material to be proved to entitle the plaintiff to succeed, every fact which the defendant could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff contended that as a result of the appeals heard by the Sales Tax Authorities assessment orders are set aside and therefore in the absence of any assessment order the State of Bihar is not entitled to retain any money. The appeals were allowed by holding that according to the latest decision of the Supreme Court (meaning the Bengal Immunity case) the plaintiff could not be assessed to pay tax in Bihar. That is the basis of setting aside the assessment. It should also be noted that the assessments of all the three years were set aside by one composite order though there were three separate assessments for the three years. aS to payment of sales tax it appears that there was one composite payment for all the three years on 14-12-1953 for the sum of ₹ 10,000/- and the balance sura of Rs. l,096/8/- was paid on 23-7-1955 during the pendency of the appeals before, the Sales Tax Authorities. 10. The Bihar Sales Tax Act, 1947 defines sale in Section 2(g) thereof. Section 2(i) defines turnover as the aggregate of the amount of the sale prices received and receivable by a dealer in respect of sale or supply of goods or carrying out of any contract effected or made during a given p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof, shall wherever the delivery or contract of sale is made, be deemed for the purpose of this Act to have taken place in Bihar, From 1-4-1951 to 31-3-1952 an explanation was added to this definition of sale. Section 33 of the Bihar Sales Tax Act was inserted by the Adaptation of Laws Order, 1951 published in the Government of India, Ministry of Law, Notification No. S. R. O. 508 dated 4-4-1951 and is deemed to have come into force on 26-1-1950. It is only necessary to state here that Section 33 of the Bihar Sales Tax Act is in same words as Article 286(1)(a) of the Constitution. 12. Article 286(1)(a) came up for consideration before the Supreme Court in the case of State of Bombay v. United Motors reported in [1953]4SCR1069 . It was held there that though the sales falling within the explanation would in fact be in the course of inter-state trade they became by reason of the fiction introduced therein, invested with the character of intra-state sates and would be liable to be taxed by the State within which the goods were delivered for consumption. The scope of the explanation to Article 286(1)(a) again came up for consideration before the Supreme Court in Bengal Immun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sists of two principal limbs. The first limb states that the law imposing taxes on inter-state trade or commerce during the specified period from 1 April 1951 to 6 September 1955 is valid. The second limb enacts that all levies and collections or purported levies or collections are valid. Counsel for the plaintiff conceded that if there had been an assessment order in existence the plaintiff could not claim any refund. The question which falls for determination is whether the setting aside of the assessment order or the absence of an assessment order entitles the plaintiff to claim refund. In my opinion, the answer is in the negative. What has been held by the Act to be valid is tax levied or collected or purported to have been levied or collected. Even in the absence of any assessment, it is indisputable that taxes have been levied or purported to have been levied. In the case of Sundararamier and Co. v. State of Andhra Pradesh, [1958]1SCR1422 , the Sales Tax Validation Act was considered. It was held that the policy behind the said Act is obviously to declare the law as interpreted in the United Motors case, [1953]4SCR1069 , as the law governing sales falling within the Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to Article 286(1) provides that for the purposes of Sub-clause (a) a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods by reason of such sale or purchase passed in another State. Article 286 provides that except in so far as Parliament may by law otherwise provide no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce. It is further provided there that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of the Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the 31st day of March, 1951. In exercise of the powers conferred by the proviso to Clause (2) of Article 286 of the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the context and setting the explanation to Section 22 of the Madras Act authorises the State of Madras to impose a tax on sales falling within its purview. The effect of the non-obstante clause in Section 22 of the Madras Act was held in the Andhra Pradesh case to render explanation effective. The combined result of the definition of sale and Section 33 of the Bihar Sales Tax Act is that any sales in which goods are delivered for consumption in the State of Bihar the property therein shall be deemed to have passed inside the State notwithstanding that it has under the Sale of Goods Act passed outside the State. On that construction those sales will fall within the definition and will be taxable. Adaptation Order by the President is not open to attack. In the Andhra Pradesh case. [1958]1SCR1422 , it was held that though there was an imposition of tax on explanation sales it could be enforced only when Parliament so provided. That would be so by reason of the judgment in the Bengal Immunity case, [1955]2SCR603 . 18. The true scope of the Sales Tax Validation Act was further held in the Andhra Pradesh case, [1958]1SCR1422 , to be that the Sales Tax Validation Act lifted the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is created by the charging sections. Payment has been made and thereafter there is no assessment. The question in substance is whether there can be payment without assessment and whether the plaintiff is entitled to any refund. 20. In the case of Whitney v. Inland Revenue Commissioners. 1926 AC 37, Lord Dunedin said: Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective ..... Now there are three stages in the imposition of a tax : there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next there is the assessment. Liability does not depend on assessment. That ex hypothesis has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly come the methods of recovery, if the person taxed does not voluntarily pay. In the case of W. H. Cocker line and Co. v. Commissioners of Inland Revenue (1931) 16 Tax 1, a contention was made that there could be no payment without an assessment. Lord Hanworth M.R. did not accept that contention to be sound and said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order does not destroy that statutory liability. Secondly, taxes which have been levied or collected or purported to be levied or collected in respect of the period between I April 1951 and 31 March 1953 are valid under the Sales Tax Validation Act. Thirdly upto 31 March, 1951 the law imposing tax is valid. Taxes have been paid. Neither the levy nor the payment is illegal, therefore the plaintiff is not entitled to any refund. 22. The next question is whether the payment was made under any mistake as alleged in the plaint. The witness Harcharan Das stated that the payment was made under the belief that the sum was payable. He further said that the belief was because of the judgment of the Supreme Court in the case of United Motors. [1953]4SCR1069 . Counsel for the plaintiff relied on the decision of Sales Tax Officer, Banaras v. Kanhailal Mukundlal, [1959]1SCR1350 . At page 1360 (of SCR) : (at p. 141 of AIR), it is said that payment by mistake in Section 72 of the Contract Act must refer to a payment which was not legally due and which could not have been enforced. The mistake is in thinking that the money paid was due when in fact it was not due. At page 1361 (of SCR) : (a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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