1. The petitioners in these cases are all dealers in goods which are called as 'declared goods' under the provisions of section 14 of the Central Sales Tax Act (Central Act). Because the turnovers relating to the said goods were liable to purchase tax under section 5 of the Karnataka Sales Tax Act (Karnataka Act) read with Schedule IV thereof, orders of assessment were passed by the respective assessing authorities under the Karnataka Act levying purchase tax in respect of the said turnovers. In view of section 15 of the Central Act, as it stood then, and the proviso to sub-section (4) of section 5 of the Karnataka Act, the purchase tax levied in respect of the turnover of the said goods was directed to be refunded to the petitioners in some of these cases by the order of assessment; in some cases no levy of tax at all was made and in some cases by a separate order the amount recovered by way of purchase tax was ordered to be refunded, because in all cases the goods in question had been sold in the course of inter-State sale. All the assessing authorities, having regard to the language of section 15 of the Central Act and the proviso to sub-section (4) of section 5 of the Karnataka Act, proceeded to pass the orders referred to above, on the footing that there was no need to enquire into the question whether the taxes under the Central Act had been paid by the assessees.
2. Later on, section 15 of the Central Act and the proviso to section 5 of the Karnataka Act were amended by the appropriate Legislatures with retrospective effect. The effect of the above amendments was that the purchase tax paid by a dealer in respect of 'declared goods' would be refundable to him only if he had actually paid the Central sales tax on the said goods. It is not disputed that the petitioners in all these cases have not paid the Central sales tax in respect of the turnover relating to the sale of the goods in question in the course of inter-State sale. Since the Central Act and the Karnataka Act were amended as stated above, several assessing authorities with whom we are concerned, in these cases, proceeded to issue notices of demand to the petitioners calling upon them to pay the purchase tax in respect of the goods in question which they were either liable to pay or which had been refunded to them, on the ground that the amendment had been made with retrospective effect entitling them to issue the said notices of demand.
3. In these petitions, the petitioners have challenged the said notices of demand.
4. The contention urged on behalf of the petitioners is that an assessee is liable to pay only such sales tax which had been levied by an order of assessment. If an order of assessment does not say that the assessee is liable to pay certain tax, no notice of demand calling upon the assessee to recover it can be issued and no coercive steps also can be taken against him to realise such tax. The assessment orders passed against the petitioners in these cases can be classified into three categories. They are :
(1) The assessment orders in which no levy has been made at all in respect of the turnover of the declared goods under sub-section (4) of section 5 of the Karnataka Act on the ground that it was unnecessary to do so because of the proviso to the said sub-section;
(2) The assessment orders in which there has been a levy of sales tax payable under the main part of sub-section (4) of section 5 of the Karnataka Act and an order directing refund under the proviso to the said sub-section; and
(3) The assessment orders levying purchase tax under sub-section (4) of section 5 of the Karnataka Act followed by separate orders directing refund of the tax attributable to those declared goods which have been subsequently sold in the course of inter-State sale.
5. The learned Government Advocate made two submissions in the course of his argument, viz., (1) that in view of the amendments made to the Central Act and the State Act, the petitioners became liable to pay the taxes under sub-section (4) of section 5 read with Schedule IV of the Karnataka Act even without any order of rectification passed in respect of the assessment orders in question; and (2) that in cases of assessment orders falling under the third category, referred to above, since there had been valid assessment of the tax payable under sub-section (4) of section 5 of the Karnataka Act on the assessees, the amounts refunded pursuant to subsequent orders passed by the assessing officers would become recoverable even without the rectification of the orders of assessment. I do not think that either of the two submissions made on behalf of the revenue is tenable. By the amendment in question, the assessees were no doubt made liable to pay taxes under sub-section (4) of section 5 of the Karnataka Act, if they had not paid the taxes under the Central Act. But, in order to recover the said tax, it would be necessary to pass an appropriate order of assessment. The amendments to the statute do not empower the assessing officers to make a demand of the tax straightaway without following the procedure applicable to assessments of sales tax. When the orders of assessment do not state that the assessee is liable to pay the tax demanded, it would be necessary to rectify them first by bringing them in conformity with the intendment of the law. There can be no difference between the cases falling under categories 1 and 2, referred to above, and the cases falling under the third category, because an order of refund which has been passed subsequent to the order of assessment pursuant to the requirement of the proviso to sub-section (4) of section 5 of the Karnataka Act should be treated for all purposes as part of the original order of assessment itself. If that is so, even in such cases, rectification of the orders of assessment would be necessary if the tax is to be recovered from the assessees in respect of whom such assessment orders have been passed. Admittedly, in these cases, there are no orders rectifying the assessment orders. Hence, the assessing officers are not entitled to issue notices of demand calling upon the petitioners to pay the purchase tax solely on the basis of the amendments made to the Central Act and the Karnataka Act.
6. Before concluding it is necessary to state that these cases are distinguishable from the facts in Gill & Co. (P.) Ltd. v. Commercial Tax Officer ( 31 S.T.C. 336.). In Gill & Co.'s case ( 31 S.T.C. 336.), there was an earlier order of assessment which had been quashed by the court on the ground that there was no provision to pass the said order. Later on, the Legislature amended the law by validating the assessment order and removing the infirmity pointed out by the court with retrospective effect. The result was that the order of assessment revived and became enforceable. But, in these cases, no validation of assessment orders was possible as the assessment orders themselves became defective only on account of the retrospective amendments of the Karnataka Act and the Central Act and the defects had to be removed by appropriate rectification before making a demand of the tax in question.
7. Therefore, the notices of demand which are impugned in these petitions are hereby quashed. However, there will be no order as to costs.
8. Petitions allowed.