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State of Andhra Pradesh Vs. Venkataramana Chuduva and Muramura Merchant and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberT.R.C. Nos. 85, 87, 105, 106, 108 and 109 of 1982
Judge
Reported in[1986]159ITR59(AP); [1984]57STC179(AP)
ActsBombay Sales Tax Act, 1959 - Sections 20; Andhra Pradesh General Sales Tax Act, 1957 - Sections 5(1), 13, 14(1), 14(4), 14(4A), 19(1), 20, 21, 21(1), 21(2), 22 and 22(1)
AppellantState of Andhra Pradesh
RespondentVenkataramana Chuduva and Muramura Merchant and anr.
Appellant AdvocateA. Venkataramana, Government Pleader for ;Commercial Taxes
Respondent AdvocateS.R. Ashok, Adv.
Excerpt:
.....condoned delay - hence appeal - court observed that assessee had no sufficient reason for not filing appeal or suit within limitation against assessment - held, tribunal erroneously condoned delay. - - he submitted that, if the respondents herein wanted to contest their liability, they ought to have preferred appeals, which they failed to do. the proviso to section 19(1), however, empowers the appellate authority to admit an appeal preferred after a period of thirty days if he is satisfied that the dealer had sufficient cause for not preferring the appeal within that period. yet another possible remedy for the department is to avail of the provisions contained in sub-sections (5) and (6) of section 14. under sub-section (5), if an appeal or other proceeding is pending before..........t.r.c. number tax appeal date of service delay in filing number : of the order of the appeal : assessment : ------------------------------------------------------------------------ year-month-days trc. 108 of 1982 372/79 15-10-1974 3-9-26 ' 109 of 1982 373/79 24-12-1975 2-7-21 ' 85 of 1982 374/79 30-11-1976 1-8-11 ' 87 of 1982 375/79 14-7-1975 0-3-05 ' 106 of 1982 376/79 28-5-1976 2-2-01 ' 105 of 1982 377/79 26-4-1977 1-3-03 ------------------------------------------------------------------------ 2. the assistant commissioner refused to condone the delay, land dismissed the appeals as barred by limitation, whereupon the respondents carried the matter in appeal to the sales tax appellate tribunal. the tribunal condoned the delay holding that there was sufficient cause for not.....
Judgment:

Jeevan Reddy, J.

1. The respondents-assessees are dealers in puffed and parched rice. Assessments were made against them under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as 'the Act'), subjecting the turnover relating to puffed and parched rice, to tax at 4 per cent under section 5(1) of the Act. No appeals were preferred by the respondents against the orders of assessment, within the prescribed period. The Supreme Court delivered its judgment in Alladi Venkateswarulu v. Government of Andhra Pradesh on 21st February, 1978. It was reported in the law journal Sales Tax Cases : [1978]3SCR190 sometime in April-May, 1978. It is only thereafter that the respondents preferred appeals before the Assistant Commissioner, Hyderabad-II Division, accompanied by petitions for condoning the delay in filing the appeals. The following table mentions the particulars of the date of assessment order and the delay in filing the appeal in each case :-

------------------------------------------------------------------------ T.R.C. Number Tax Appeal Date of service Delay in filing Number : of the order of the appeal : assessment : ------------------------------------------------------------------------ Year-Month-Days TRC. 108 of 1982 372/79 15-10-1974 3-9-26 ' 109 of 1982 373/79 24-12-1975 2-7-21 ' 85 of 1982 374/79 30-11-1976 1-8-11 ' 87 of 1982 375/79 14-7-1975 0-3-05 ' 106 of 1982 376/79 28-5-1976 2-2-01 ' 105 of 1982 377/79 26-4-1977 1-3-03 ------------------------------------------------------------------------

2. The Assistant Commissioner refused to condone the delay, land dismissed the appeals as barred by limitation, whereupon the respondents carried the matter in appeal to the Sales Tax Appellate Tribunal. The Tribunal condoned the delay holding that there was sufficient cause for not filing the appeals within the prescribed time. The Tribunal held that in view of the judgment of the High Court dated 24th August, 1976 [Reported as Nooka Agaiah v. Government of Andhra Pradesh [1977] 39 STC. 521] [which held that puffed and parched rice are not the same commodity as rice and therefore liable to be taxed as 'general goods' under section 5(1)], the respondents (dealers) were justified in not filing the appeals, soon after receiving the orders of assessment. But, when the Supreme Court reversed the judgment of the High Court, and when they came to know of the said judgment, they filed the appeals within a few months thereafter and that, in these circumstances, it must be held that there was sufficient cause for the respondents not to file appeals within the period prescribed. The Tribunal purported to follow the decisions of this Court in T.R.C. No. 1 of 1967 and T.R.C. Nos. 1 to 6 of 1968.

3. In these tax revision cases, it is contended by Sri A. Venkataramana, the learned Government Pleader, that the Tribunal was in error in holding that the decision of the Supreme Court rendered a few years later, reversing the judgment of the High Court, constituted sufficient cause for condoning the delay. He submitted that, if the respondents herein wanted to contest their liability, they ought to have preferred appeals, which they failed to do. On the contrary, they took a conscious decision not to file the appeals, and having done so, they cannot again say that they were prevented from filing the appeals within time by some circumstances. In any event, the judgment of the Supreme Court years later, cannot constitute a sufficient cause.

4. On the contrary, Mr. S. R. Ashok, the learned counsel for the respondents, supported the reasoning of the Tribunal. Counsel also contended that whether there is a sufficient cause or not is a question of fact and is not amenable to interference by this Court under section 22 of the Act.

5. Before dealing with the submissions of the learned counsel, it is necessary to clarify the factual aspect. None of the respondents (dealers) raised any contention or objection before the assessing authority that puffed rice and parched rice is not exigible to tax as 'general goods' under section 5(1). It was not their contention that they should be taxed only at 1 per cent, as is sought to be contended for the first time in appeals. Show cause notices under rule 12 of the Andhra Pradesh General Sales Tax Rules were served on the respondents calling for their written objections, if any, to the proposed turnovers. The respondents filed their replies stating that they have no objection, whereupon the assessments were completed. The second fact to be noticed is that, by the date of service of the assessment orders, in four tax revision cases, i.e., T.R.C. Nos. 108, 109, 87 and 106 of 1982 the decision of the High Court aforesaid (dated 24th August, 1976, reported in Nooka Agaiah v. Government of Andhra Pradesh [1977] 39 STC 521; 1977 Tax LR 2067) was not delivered. Only in two cases, i.e., T.R.C. Nos. 85 and 105 of 1982 were the assessment orders served after the High Court rendered its decision. Indeed, it is doubtful whether the respondent in T.R.C. No. 85 of 1982 knew of the High Court's judgment by 30th November, 1976, when he received the order of assessment. However, in the absence of any material in that behalf, we shall presume that he knew of the High Court's judgment rendered in August, 1976, when he received the order of assessment on 30th November, 1976, and therefore, decided not to file an appeal in view of the judgment of the High Court. So far as the respondent in T.R.C. No. 105 of 1982 is concerned, he received the order of assessment long after the judgment of the High Court was delivered, and we shall proceed on the assumption that he decided not to file an appeal in view of the judgment of the High Court. Though such a presumption in the case of these two assessees may not be readily drawn, in view of the fact that they never disputed the taxing of the said goods as general goods, before the assessing authority, we cannot overrule the possibility of these assessees coming to know of the correct legal position after receiving the orders of assessment, but yet deciding not to file appeals in view of the judgment of the High Court. Thus, the case of the two respondents in T.R.C. Nos. 85 and 105 of 1982 stands on a different footing than the case of the respondents in the other four T.R.Cs. (The appeals in all these matters were actually filed sometimes in July-September, 1978).

6. We shall first take up the case of the respondents in T.R.C. Nos. 85 and 105 of 1982. The question squarely arises in these two tax revision cases whether the judgment of the Supreme Court delivered in February, 1978, and reported in April/May, 1978, constitutes a sufficient cause for condoning the delay of 1 year, 8 months, and 11 days in one case, and 1 year, 3 months, and 3 days in the other case, in filing the appeals. An appeal has to be preferred within thirty days of the receipt of the order of assessment, as provided by section 19(1) of the Act. The proviso to section 19(1), however, empowers the appellate authority to admit an appeal preferred after a period of thirty days if he is satisfied that the dealer had sufficient cause for not preferring the appeal within that period. As stated above, we shall proceed on the assumption for the purpose of these cases that the respondents herein did not file appeals in view of the judgment of the High Court, but decided to file the appeals after coming to know of the judgment of the Supreme Court. The argument of Sri S. R. Ashok, the learned counsel for the respondents, is that in view of the judgment of the High Court, it would have been an idle formality on the part of the respondents to file appeals; but, when they came to know of the decision of the Supreme Court, they preferred appeals immediately. He submits further that, in view of the decision of the Supreme Court, it must be held that the tax has been collected from the respondents without the authority of law and that this circumstances should also be taken into consideration by the appellate authority while considering the question of condoning the delay. He relied upon certain decisions of this Court, which we shall refer to presently.

7. Ordinarily, whether there is sufficient cause for condoning the delay in preferring an appeal is a question of fact; but, in the circumstances of this case, it has practically become a question of law. The question is, whether a subsequent decision of the Supreme Court, which established that a dealer has been subjected to tax contrary to law, furnishes a sufficient cause for condoning the delay in preferring the appeal, where the dealer had decided not to file an appeal within the prescribed time, in view of then prevailing position of law. In this connection, it is necessary to notice the remedies available to the department in a converse case. Such a survey would serve as a back-drop to the discussion of the question in issue herein.

8. Take a case where the assessing or the first appellate authority has held certain goods not exigible to tax, or subjected them to a lower rate of tax in view of the then prevailing legal position; but, subsequently the High Court or the Supreme Court holds that those goods are taxable, or taxable at a higher rate, as the case may be. What are the remedies open to the department in such a case There is no right of appeal conferred on the department against the order of the assessing authority, or the first appellate authority; but, it has got certain other remedies open to it in such a situation. One is the power to reopen the assessment by the assessing authority, under sub-section (4) of section 14. But, this power has to be exercised only within a period of four years from the date on which any order of assessment or levy was served on the dealer : [vide sub-section (4-A) of section 14]. The other remedy is to invoke the power of revision by the Commissioner/Deputy Commissioner, under section 20 : (see Minerals and Metals Trading Corporation of India Limited v. Deputy Commissioner, Commercial Taxes, Visakhapatnam [1978] 42 STC 372). But, this power has to be exercised within a period of four years from the date on which the order was served on the dealer. Yet another possible remedy for the department is to avail of the provisions contained in sub-sections (5) and (6) of section 14. Under sub-section (5), if an appeal or other proceeding is pending before the High Court or the Supreme Court, involving a question of law having a direct bearing on the assessment in question, the period during which such appeal or proceeding was pending, shall be excluded in computing the period of four years specified in sub-section (4-A) as well as in sub-section (1) of section 14. Availing of this provision, an assessment can be made or reopened even beyond the period of four years. Under sub-section (6), the Commissioner is empowered to direct, by general or special order, any assessing authority to defer assessment in respect of any class of goods or any class of dealers pending clarification by it of any question referred to it, if such question has a direct bearing on such assessment. In such a case, the period between the date of such direction and the date on which such clarification is received, shall be excluded in computing the period of four years specified in sub-section (1).

9. We shall now consider what are the remedies open to an assessee in such a situation, i.e., where he discovers, after the assessment order or the appellate order, as the case may be, has become final, that he has been subjected to levy of tax without the authority of law, i.e., contrary to law.

10. Where tax has been levied and paid under a mutual mistake as to law, a suit or writ petition can be maintained within three years from the date of discovery of the mistake, for refund of the amount : vide State of Kerala v. Aluminium Industries Ltd. [1965] 16 STC 689 (SC) but, where the question has been put in issue and has been gone into and decided by the appropriate authority, it cannot be said that the tax was paid under a mutual mistake and in such a case, a suit or writ will not be maintainable, and the only course open would be to file an appeal or apply for revision, while asking for condonation of the delay in filing the appeal or revision, as the case may be : vide Kamala Mills Ltd. v. State of Bombay [1965] 16 STC 613 (SC). Again, where there are questions of fact to be gone into, the writ or suit may not be a proper remedy, as pointed out by the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai : [1964]6SCR261 and an unreported decision of this Court dated 21st September, 1982, in W.P. No. 5226 of 1982. Here again, an appeal would be a proper remedy.

11. Where, of course, the very provision of the Act under which the tax has been collected, is struck down, the remedy of suit or writ for refund, within a period of three years from the date of the judgment, is recognized.

12. While on this aspect, we may refer to the decision of this Court in Venkatarama & Company v. Additional Commercial Tax Officer [1973] 32 STC 263, cited by the learned counsel for the assessee. In that case, the assessees claimed before the assessing authority, as well as the appellate authority that the expression 'all books' appearing in G.O.Ms. No. 133 dated 29th January, 1964, does take in the exercise books, account books, etc., and therefore, they are exempted from exigibility to tax. This contention was overruled and tax was levied for the assessment years 1964-65 to 1969-70. After this Court rendered its judgment in Govindaswamy Binding Works v. State of Andhra Pradesh [1972] 29 STC 219 holding that the expression 'all books' appearing in the said notification includes day-books, account books, ledgers, journals, etc., the assessees filed writ petitions seeking refund of the tax. This Court quashed the portions of the assessment orders which related to imposition of tax on the turnover of exercise books, account books, etc., and directed the department to refund the tax collected on the basis of such assessment orders. We find that the decision of the Supreme Court in Kamala Mills Ltd. v. State of Bombay [1965] 16 STC 613 (SC) was not brought to the notice of this Court. Be that as it may, all that one need say is that the principle enunciated in Venkatarama & Company's case [1973] 32 STC 263 has to be read subject to the decision of the Supreme Court in Kamala Mills Ltd.'s case [1965] 16 STC 613 (SC).

13. So far as the facts of the case before us are concerned, it is evident that both the assessing authority, as well as the assesses wee labouring under a mutual mistake that puffed rice and parched rice were exigible to tax as 'general goods' under section 5(1) of the Act. In such a situation, it was open to the assessees to file a suit or a writ petition for refund of the excess tax collected from them, within three years of their coming to know of the mistake. In this case, however, we are not concerned with that aspect.

14. The other remedy open to the assessees is to prefer an appeal or revision, as the case may be, along with a petition for condoning the delay, on the ground that in view of the position of law obtaining on the date of receipt of the impugned order, they decided not to file an appeal; but, since the subsequent decision establishes the said assumption to be incorrect, and further that the tax has been illegally collected from them, they are now preferring the appeal and that the same should constitute 'sufficient cause' within the meaning of the proviso to sub-section (1) of section 19, or sub-section (2) of section 21, or the proviso to sub-section (1) of section 22, as the case may be. The observations in Kamala Mills Ltd. v. State of Bombay [1965] 16 STC 613 (SC) make this position clear. While holding that section 20 of the Bombay Sales Tax Act completely barred a suit, the Supreme Court observed :

'Let us, therefore, examine the question as to whether the Act with which we are concerned in the present appeal, provides for a remedy to claim a refund of tax alleged to have been illegally recovered. Section 13 of the Act expressly provides for refunds. It lays down that the Commissioner shall, in the prescribed manner, refund to a registered dealer applying in this behalf any amount of tax paid by such dealer in excess of the amount due from him under this Act. The proviso to this section prescribes a period of limitation of twenty-four months from the date on which the order of assessment was passed or within twelve months of the final order passed on appeal, revision, or reference in respect of the order of assessment, whichever period is later. Then, we have section 21 which provides for the remedy of an appeal; and section 22 which provides for a revisional remedy. It is significant that though section 21(1) prescribes a period of sixty days for appeal and section 22 prescribed a period of four months for revision, under section 22B the prescribed authority is given power to extend the period of limitation if it is satisfied that the party applying for such extension had sufficient cause for not preferring the appeal or making the application within such period. Section 23A provides for rectification of mistake. It is thus clear that the appellant could have either appealed or applied for revision and prayed for condonation of delay on the ground that the mistake which was responsible for the recovery of the tax illegally levied, was discovered on the 6th September, 1955, because such a plea would have been perfectly competent under section 22B. In other words, if the appellant had pursued a remedy available to it under section 21 or section 22 read with section 22B, its case would have been considered by the appropriate authority and the validity of the grounds set up by it for the refund of the tax in question would have been legally examined .....'.

15. There is also article 265 of the Constitution of India, which says that no tax shall be levied and collected except by authority of law. In this view of the matter, it must be held that a subsequent decision of the High Court or the Supreme Court, as the case may be, which changes the position, interpretation, or the understanding of law, constitutes a sufficient cause for condoning the delay in filing an appeal or revision, as the case may be, where it is established that on the date of receipt of the impugned order, the filing of an appeal or revision would have been an empty formality having regard to the position of law then obtaining. This would be so, whether the assessee raised a dispute before the authority, or paid the tax under a mutual mistake. This is the view taken by this Court in two unreported cases, viz., (i) T.R.C. Nos. 1 to 6 of 1968 disposed of on 12th March, 1970; and (ii) T.R.C. No. 1 of 1967 disposed of on 11th March, 1970. A learned single Judge of the Delhi High Court also has taken the same view in B. L. Grover v. Union of India AIR 1980 Delhi 45, a case arising under the Arbitration Act and the Limitation Act.

16. We shall now refer to the cases relied upon by the learned Government Pleader in support of his contention that such a subsequent judgment cannot constitute a sufficient cause for condoning the delay in filing the appeal. In Andal Sweet Stall & Tiffin Dining Hall v. State of Tamil Nadu [1981] 48 STC 551, a Bench of the Madras High Court has taken the view that a judgment pronounced by a Court long after the expiry of the period of limitation cannot be taken advantage of for filing an appeal with a petition to excuse the delay in filing the appeal. Unfortunately, the observations of the Supreme Court in Kamala Mills Ltd. v. State of Bombay [1965] 16 STC 613 (SC), referred to above, were not brought to the notice of the Bench which decided this case.

17. The next decision is in V. V. Kudva v. E.S.I. Corporation AIR 1972 Mys 204. In that case, a Bench of the Mysore High Court held that a litigant who acquiesced in the judgment of the Court by not preferring an appeal within the period of limitation, cannot prefer an appeal after a subsequent ruling of the Supreme Court or of the High Court, which is favourable to him. It was also observed that the advice of the Advocate that this case is not fit for appeal, which advice may turn out to be a mistaken one in the light of the subsequent ruling, cannot be regarded as a sufficient cause for condoning the delay. This, of course, is not a case arising under a taxation law, in which case - as pointed out above - article 265 of the Constitution should make a difference in the approach of the Court. The Kerala High Court also seems to have taken a similar view in 1981 KLT 21, which again does not appear to be a case under a taxation law. In view of the observations of the Supreme Court in Kamala Mills Ltd.'s case [1965] 16 STC 613 (SC) quoted hereinbefore, it is not possible for us to accept the view expressed by the Madras, Mysore and Kerala High Courts, more particularly when the decisions of the Mysore and Kerala High Courts are not rendered under a taxing enactment.

18. Another decision upon which the learned Government Pleader placed strong reliance, is in Ajit Singh v. State of Gujarat : 1981CriLJ293 . There, the State took a decision, on proper advice not to file an appeal against an order of acquittal. In a revision petition filed against the order of acquittal, the Court made certain observations, in pursuance of which an appeal was filed by the State along with a petition for condoning the delay. It was held by the Supreme Court that the above facts do not constitute a sufficient cause for condoning the delay. It observed that, when a party allows limitation to expire and pleads sufficient cause for not filing the appeal earlier, the sufficient cause must establish that because of some event or circumstance arising before limitation expired, it was not possible to file an appeal within time. It observed further that, no event or circumstance arising after the expiry of limitation can constitute such sufficient cause. There may be events or circumstances subsequent to the expiry of limitation which may further delay the filing of the appeal, but that the limitation has been allowed to expire without the appeal being filed, must be traced to a cause arising within the period of limitation - it observed. Basing upon the above observations, the learned Government Pleader contended that the assessees in this case took a conscious decision not to file an appeal within a period of thirty days after receiving the orders of assessment, and because the judgment of the Supreme Court is a fact arising subsequent to the expiry of the period of limitation, it cannot constitute a sufficient cause. We are not prepared to agree with his submission. The reason why the assessees in T.R.C. Nos. 85 and 105 of 1982 decided not to file appeals was, as explained hereinbefore, the decision of this Court dated 24th August, 1976 (reported in Nooka Agaiah v. Government of Andhra Pradesh [1977] 39 STC 521; 1977 Tax LR 2067), which was a fact existing even prior to the expiry of the period of limitation prescribed for filing he appeals by these two assessees.

19. For the above reasons, we hold that the Tribunal was right in holding that the assessee - respondents in T.R.C. Nos. 85 and 105 of 1982 had sufficient cause for not filing the appeals within the time prescribed, and in holding that the delay ought to have been condoned.

20. Now coming to the other four tax revision cases, the decision of the High Court in Nooka Agaiah v. Government of Andhra Pradesh [1977] 39 STC 521; 1977 Tax LR 2067 was not rendered, much less reported by the date of receipt of the assessment orders by these assessees. These assessees, therefore, had no sufficient cause for not filing the appeals, if they wanted to dispute their liability. Both the judgment of the High Court, as well as the judgment of the Supreme Court were rendered long after the period of limitation for filing the appeals expired. In such a case - and applying the principle of the decision of the Supreme Court in Ajit Singh v. State of Gujarat : 1981CriLJ293 , it cannot be said that these assessees have established sufficient cause for condoning the delay in filing the appeals. Nothing prevented them, if they chose to dispute their liability, from filing an appeal within thirty days after receiving the orders of assessment. We must make it clear that, we are merely holding that there was no sufficient cause for condoning the delay in filing the appeals in the case of these assessees. The fact that they could have filed a suit or a writ petition for refund of the tax on the ground that it was paid under a mutual mistake of law, is immaterial in this context. So far as the position under the proviso to sub-section (1) of section 19 is concerned, what an assessee has to explain is : why did he not file an appeal within the period prescribed, and what was it that prevented him from filing the appeal until the day he actually filed it In such a case, he must file the appeal soon after coming to know of the subsequent decision of the Court. He must move immediately after coming to know of the subsequent decision. For the above reasons, we find that the Tribunal was in error in holding that these assessees too had established sufficient cause for not filing the appeals within time, and in directing the condonation of delay. We make it clear that this order does not preclude the assessees in these four tax revision cases from adopting such other legal remedies as may be open to them under law.

21. Accordingly, T.R.C. Nos. 85 and 105 of 1982 are dismissed; but, the other four tax revision cases, viz., T.R.C. Nos. 87, 106, 108 and 109 of 1982, are allowed. In the circumstances of the case, there shall be no order as to costs. Advocate's fee Rs. 150 in each.

22. The learned Government Pleader makes an oral request for grant of leave to appeal to the Supreme Court against our decision in T.R.C. Nos. 85 and 105 of 1982 under article 133(1)(a) of the Constitution. We are not, however, persuaded that these cases involve a substantial question of law of general importance which in our opinion needs to be decided by the Supreme Court. As pointed out in the judgment, we have merely followed the decision of the Supreme Court in Kamala Mills Ltd. v. State of Bombay [1965] 16 STC 613 (SC), though, it may be, that we have disagreed with the view taken by some other High Courts. The request for oral leave is accordingly rejected.


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