TMI Blog1986 (4) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... is no specific prohibition against refund, one should not get entangled in the cobweb of procedures but do substantial justice. The above requirements in this case, in our opinion, have been satisfied and, therefore, we affirm. the direction of the Additional judge (Revisions), Sales Tax, for refund of the amount to the dealer and affirm the High Court's judgment on this basis. Appeal dismissed. - Civil Appeal No. 874, 875, and 876 of 1974, S.T.R. Nos. 763-765 of 1970 - - - Dated:- 10-4-1986 - Judge(s) : K. N. SINGH., SABYASACHI MUKHARJI JJ. R.A. Gupta, for the appellant. Mrs. A.K. Verma and D.N. Mishra, for the respondent. JUDGMENT The judgment of the court was delivered by SABYASACHI MUKHARJI J.- -These appeals by special leave arise from the decision of the High Court of Allahabad. Under section 11(3) of the U. P. Sales Tax Act, 1948, as amended from time to time, the following questions were referred to the High Court for opinion at the instance of the Commissioner of Sales Tax and the statement of the case was submitted : " 1. Whether the observations (subject, however, to the question of estoppel, waiver, limitation or the like) made by their Lordshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell. The words " taxes on the sale of goods" in entry No. 48, List II, Schedule VII of the Government of India Act, 1935, conferred power on the provincial Legislature to impose a tax Only when there had been a completed sale and not when there was only an agreement to sell. For the same reason, Explanation III to section 2(h) of the said Act which provided that forward contract " shall be deemed to have been completed on the date originally agreed upon delivery " and section 3B of the Act also must be held to be ultra vires. As a consequence, the assessee in this case filed a revision in 1955 for quashing the order for this year. It may be mentioned that the assessee bad been taxed on the basis of sale of such forward contracts. The assessee after Coming to, know of the decision of this court mentioned hereinbefore filed a revision in 1955 for quashing the assessment order in question. The revision was dismissed in September, 1958, on the ground that it had been filed after a long delay and was barred by limitation. The assessee subsequently filed application before the Sales Tax Officer for refund of the amount which was deposited in accordance with the assessment order for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate had no right to that money. The assessee was not liable to pay that money. This position in law came to the knowledge of the parties only on this court's decision being rendered on May 3, 1954. The assessee filed a revision as appears from the statement of case for quashing the assessment for the relevant year in 1955, i. e., within a year, which was dismissed in 1958 on the ground that it had been filed after a long delay and was barred by limitation. The assessee thereafter made a formal application for refund on May 24, 1959. That was dismissed on the ground of claim being barred by limitation on the principles of article 96 of the First Schedule of the Indian Limitation Act, 1908. Article 265 of the Constitution enjoins that no tax shall be levied or collected except by authority of law. Tax in this case indubitably has been collected and levied without the authority of law. It is, therefore, refundable to the assessee. The question is : is there any machinery for refund of that tax to the assessee and, if so, is there any limitation for refund of the tax collected without the authority of law ? If the State collects because of its powers moneys not due to it, can it be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are living in democratic society governed by the rule of law and every government which claims to be inspired by ethical and moral values must do what is fair and just to the citizen, regardless of legal technicalities, this court hoped and trusted that the Central Government would not seek to. defeat the legitimate claim of the assessee for reimbursement of sales tax in that case on the amount of freight by adopting a legalistic attitude but would do what fairness and justice demanded. It is true that this is an appeal from a reference under section 11(3) of the U.P. Sales Tax Act, 1948. The rights and the obligations of the parties must be found within the four corners of the Act and this court in an appeal under an Act must act under the four corners of law but in interpreting the relevant procedural provisions, fairness and justice should be the approach and even in a fiscal statute, equity should prevail, wherever language permits. With this background, let us examine the actual provisions of the Act. As mentioned in the order of the High Court, the order under appeal was passed by the High Court relying on the order of the Special Bench of that High Court for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty, if realised, to be refunded. Section 10 is not material for our present purpose. Section 11 deals with a revision by the High Court in special cases, and section 11(8) enjoins that the High Court shall, after hearing the parties to the revision, decide the questions of law involved therein, and where as a result of such decision, the amount of tax, fee or penalty is required to be determined afresh, the High Court may send a copy of the decision to the Tribunal for fresh determination of the amount, and the Tribunal shall thereupon pass such orders as are necessary to dispose of the case in conformity with the said decision. Section 5 of the Limitation Act has been made applicable. The other material section for our present purpose is section 29 which was added in the Act wef April 1, 1959, providing for refund. The said section stipulates that the assessing authority shall, in the manner prescribed, refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under the Act. Then there is provision for payment of interest if there is delay in refund with which we are not concerned. Sub-section (3) of section 29 provides certain embargo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order was erroneous in law. It was held by a Bench of three learned judges that an application for refund of sales tax paid under an order of assessment made by the Assistant Commissioner of Sales Tax could not be entertained by that officer on the plea that the order was made on an erroneous view of the law unless the order was set aside in appropriate proceedings. There the assessee had paid the amount of tax assessed on him by the Assistant Commissioner of Sales Tax on his turnover from his business in yarn for the period November 13, 1947, to November 1, 1948, and then applied to that officer under section 13 for an order refunding the amount on the plea that in the turnover were included dyeing charges which were not taxable. It was held that the application was not maintainable under section 13 (as originally passed). There this court after referring to the judicial Committee's decision in CIT v. Tribune Trust [ 1948] 16 ITR 214 (PC) held that such an order by the taxing authority was not possible but it has to be borne in mind that in this case the imposition of the tax was really without authority of law as contemplated under article 265. Therefore, from the beginning, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s declared ultra vires by this court and, therefore, it was held that section 18A of the Act was not a bar to the maintainability of the suit. Shah and Ramaswami JJ. however, took a different view. But if the realisation of the tax and the collection of tax on forward contracts was an act beyond the authority and ultra vires, then money retained by the taxing authority should be refunded to the citizen concerned. There is no express prohibition against that refund. In State, of Kerala v. Aluminium Industries Ltd. [1965] 16 STC 689 (SC) this court reiterated that money paid under a mistake of law comes within the word " mistake " in section 72 of the Indian Contract Act, and there was no question of estoppel when the mistake of law was common to both the assessee and the taxing authority. Where the assessee did not raise the question that the relevant sales were outside the taxing State and were, therefore, exempt under article 286(1)(a) of the Constitution (as it then was), the Sales Tax Officer had no occasion to consider it, and sales tax was levied by mistake of law, it was ordinarily the duty of the State, subject to any provision of law relating to sales tax, to refund the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or dealer made an application for revision, the Additional Judge (Revisions) could direct a refund because money was being illegally retained by the Revenue. If mistake either of law or of fact is established, the assessee is entitled to recover the money and the party receiving it is bound to return it irrespective of any other consideration. In this case, there is no delay in making the application for claiming the refund as set out hereinbefore. It is apparent that the assessment order and the realisation of the money was based on ultra vires provisions of the Act. This should have been and ought to have been ignored. On that basis the present application was made. It is true that except the special provisions indicated before, there is no specific provision which prescribes a procedure for applying for refund in such a case. But the rules or procedures are handmaids of justice, not its mistress. It is apparent in the scheme of the Act that sales tax is leviable only on a valid transaction. If excess amount is realised, refund is also contemplated by the scheme of the Act. In this case, undoubtedly, sales tax on forward contracts has been illegally recovered on a mistaken view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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