TMI Blog1986 (4) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of Sales Tax Commr. U.P. v. Sadasukh Veopar Mandal (1959) 10 STC 57. 2. Whether, in these cases in which refund was claimed on the principle of Section 72 of the Indian Contract Act the period of limitation under Article96 of the Limitation Act could' be taken into consideration by the Sales Tax authorities in refusing to allow refund? 3. Whether under the circumstances of this case as stated above, the Addl. Judge (Revisions) Sales Tax was legally justified in holding that the sums deposited by the Company towards sales tax for the year 1949-50, was refundable to the company? 4. Whether, the Addl. Judge (Revisions) Sales Tax was legally justified in entertaining the revision application in question of the aforesaid Company after the lapse of several years from the date of the assessment order particularly when the appeal and the revision application of the Company in respect of the assessment year were dismissed? 2. The questions relate to the assessment year 1949-50 and for subsequent years. In view of the decision of the Allahabad High Court in Commr. of Sales Tax. U.P. Lucknow v. Auraiya Chambers of Commerce which was in respect of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax U.P. against the order of the Sales-tax Officer rejecting the claim for refund. 7. The Court of Additional Judge (Revision) Sales Tax U.P. directed refund of sales-tax of ₹ 3,535/3/- for 1948-49, ₹ 9,205/12/- for 1949-50, ₹ 3,653/8/- for 1950-51 and ₹ 5,014/3/3 for 1951-52. It may be mentioned that prior to 1st April, 1959, there was no Section dealing with any period of limitation for refund. Section 29 was added by U.P. Sales Tax (Amendment) Act VII of 1959 and came into force with effect from 1st April, 1959. The first proviso to Section 29 is as follows: Provided that no claim to the refund of any tax or other amount paid under this Act shall be allowed unless it made within 24 months from the date on which the order for assessment was passed or within 12 months of the final order passed in appeal, revision or reference in respect of the order of assessment whichever period is later. 8. It appears that the claim for refund in the instant case was made after 1st April, 1959. At the time when the taxes were paid and the assessment was made there was no limitation. The Additional Judge (Revision) Sales Tax U.P. held that there was no period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1976 Cal 110. This decision of the single Judges of the Calcutta High Court was approved by the Division Bench of that High Court in State of West Bengal v. Suresh Chandra Bose 45 STC 118 : 1979 Tax LR 172. The Court under Article 226 directed refund in that case. The Court emphasised that when moneys are paid to the State which the State has no legal right to receive, it is ordinarily the duty of the State subject to any special provisions of any particular statute or special facts and circumstances of the case, to refund the tax of the amount paid. 14. This Court in Jagdambika Pratap Narahi Singh v. Central Board of Direct Taxes [1975] 100 ITR 698 (SC), had to consider from the point of view of the Income-tax Act this aspect. This Court was dealing with the question of limitation in granting a relief in the background of Article 226 of the Constitution of India. But this Court observed that any legal system, especially one evolving in a developing country, might permit judges to play a creative role and innovate to ensure justice without doing violence to the norms set by legislation. But to invoke judicial activism to set at nought legislative judgment is subversive of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court) expressed the view that the first question had been framed in the abstract without relevance to the facts of the present case and therefore need not be answered. With this view the other learned Judge, Gulati J. agreed. We are also of the same opinion. The facts before the High Court were identical with the facts of the present case. 19. In order to appreciate the contentions raised in this case it is necessary to bear in mind the relevant provisions of the U.P. Sales Tax Act, 1948 (hereinafter called the 'Act'). Section 3 of the Act enjoins that subject to the provisions of the Act, every dealer shall, for each assessment year, pay a tax at the rates provided by or under Section3-A or Section 3D on his turnover of sales or purchases or both as may be which shall be determined in such manner as may be prescribed. It is not necessary for the present purpose to deal in detail with the said provisions. 20. Various Sections of the Act deal with the various stages of taxation. It is not necessary to deal with these in detail. 21. Section 7-F deals with recovery or refund of petty amounts to be ignored. The Section is significant in the sense that it proceeds on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnised that a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. In this case it is not disputed that mistake of law is also a mistake covered by the provisions of Section 72 of the Indian Contract Act. If the law declared by this Court in Budh Prakash Jai Prakash's case [1955] 1 SCR 243 (supra) is correct, as it must be, then the payment of tax by the dealer, the respondent herein, was under a mistake of law and realisation by the revenue authorities was also under a mistake. Therefore such sum should be refunded. This is recognised in the provisions of the Act as we have noted before. The principle of Section 72 of the Indian Contract Act has been recognised. 24. This was the view expressed by Pathak, J. on this aspect. We are in respectful agreement. But the learned judge was unable to find in the provisions of the Act any authority for directing the refund without a suit, The question therefore arises whether in a case where assessment order determining the liability was void, but the same was not set aside, can the sales tax authorities grant refund of the tax assessed there under? The learned Judge posed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under the Madras General Sales Tax Act, 1939, during the years 1948-49 to 1952-53 on the basis that the contracts executed by them were works contract. On 5th April, 1954, the Madras High Court held in Gannon Dunkerlay Co. v. State of Madras that the relevant provisions of the Act empowering the State of Madras to assess indivisible building contracts to sales tax were ultra vires the powers of the State Legislature. The appellant issued a notice to the State of Madras under Section 80 of the CPC claiming refund of the amounts collected from them, and, as the demand was not complied with, filed a suit in the City Civil Court on 23rd March, 1955, for recovery, of the amount of taxes illegally levied and collected from them. The relevant provisions of the Act empowering the Sales lax Authorises to impose sales tax on indivisible building contracts were unconstitutional and void and the Sales Tax Authorities had no jurisdiction to assess the appellant in respect of the transactions and the appellant having paid the amounts under a mistake of law was entitled to a refund of the same. Following the decision of the Privy Council in Raleigh Investment Co. Ltd. v. Governor-General in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case before us as we have noted mistake indubitably was there. There was no dispute that the tax was not due and had been collected wrongly. There is no dispute that the assessee is entitled to the same. There is no dispute that the assessee made application within a year of the knowledge of the mistake. There is no dispute therefore that had a suit been filed under Article 96 of the Limitation Act, 1908 or an application made under Section 29 of the Act, the claim would have been allowed but the revision was dismissed on the ground that it was belated. The revision of the assessment order was wrong but the consequential relief of refund could have been granted. In that view of the matter we should construe the provisions in such manner as there is no contradiction which will ensure justice to the party and not denied to it and hold that the order of the Additional Judge (Revision) was correct and the assessee was entitled to refund. 27. In Sales Tax Officer, Banaras v. Kanhaiya Lal Makund Lal Saraf [1959] 1 SCR 1350, the contention was raised on behalf of the Sales Tax Authorities to urge that the procedure laid down in U.P. Sales Tax Act by way of appeal and revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s case [1955] 1 SCR 243 on 3rd May, 1954 and the revision was filed in 1955 and it was dismissed in 1958 on the ground that it had been filed after a long delay. Thereafter the assessee had filed an application before the Sales Tax Officer for refund. The refund was claimed for the first time on 24th May, 1959. The Sales Tax Officer had dismissed the application as barred by limitation under Article 96 of the First Schedule of the Indian Limitation Act, 1908. 30. The assessee filed revision before the Court of Additional Judge (Revisions) rejecting the claim for refund. If law of limitation, is applicable then Section 5 of the Limitation Act is also applicable and it is apparent that the application originally was made within time before two years as contained in the proviso. Article 96 of the First Schedule of the Limitation Act, 1908 prescribes a period of limitation of three years from the date when the mistake becomes known for filing a suit. If that principle is also kept in mind, then when the judgment came to be known in May, 1954, then in our opinion, when the assessee had made an application in 1955, it was not beyond the time. 31. Where indubitably there is in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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