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inder Singh Harbans Singh and anr. Vs. the State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Petition No. 827 of 1979
Judge
Reported in[1982]49STC347(MP)
Appellantinder Singh Harbans Singh and anr.
RespondentThe State of Madhya Pradesh and ors.
Appellant AdvocateB.L. Nema and ;Y.S. Dharmadhikari, Advs.
Respondent AdvocateM.V. Tamaskar, Government Adv.
DispositionPetition dismissed
Cases ReferredGarlapati Anjaneyulu and Co. v. State of A.P.
Excerpt:
.....with the decision of the tribunal so reached. the best that can be said in favour of the petitioners is that the assessments had been made under a wrong entry in the schedule annexed to the said act, but that will not render the assessments a nullity. these assessments in question were perfectly within the jurisdiction of the taxing authorities and, unless challenged under normal machinery provided in the act, are perfectly valid and enforceable. it was submitted that a petition for a writ of mandamus filed within the period prescribed for a like relief in a regular suit should not ordinarily be rejected on the ground of delay. it will, therefore, be not in the fitness of things to allow the petitioners refund of that tax and thus make them doubly rich. [1972] 30 stc 120, it..........leave little room for a suit to challenge an assessment. a challenge can, however, be laid in a suit to an assessment which is based on an ultra vires provision or when it was made in violation of the fundamental principles of judicial procedure, e. g., without any notice to the assessee, and cases where a wrong entry has been resorted to for the purpose of assessment stand on quite a different footing. these assessments in question were perfectly within the jurisdiction of the taxing authorities and, unless challenged under normal machinery provided in the act, are perfectly valid and enforceable.7. realising that a successful challenge cannot be made to the assessments which had otherwise become final, the petitioners have chosen to file these petitions. as we have earlier indicated.....
Judgment:
ORDER

B.C. Varma, J.

1. This order shall also govern the disposal of Miscellaneous Petitions Nos. 94, 360, 589, 590, 591, 592, 593, 594, 595, 596, 597 and 644 of 1979.

2. The petitioners in all these petitions under Article 226 of the Constitution of India are registered dealers under the M. P. General Sales Tax Act, 1958. They deal in purchase and sale of different commodities including jeera*, ajwain* somph*, methi* and dania*. For the assessment years 1963-64 to 1972-73, sales of these commodities were assessed to sales tax for which purpose they were treated as falling under the residuary entry No. 1, Schedule II, Part VI, of the Act and not as oil-seeds. Tax was charged at 6 per cent or 7 per cent. The petitioners accepted the assessment and paid tax accordingly. However, in a case arising under the Orissa Sales Tax Act, the Assistant Commissioner of Sales Tax held these articles to be 'oil-seeds' within the meaning of Section 14(vi) of the Central Sales Tax Act and gave the assessee the benefit of a lower rate of tax. The order was affirmed by the Sales Tax Tribunal. On a reference being made at the instance of the department under Section 24 of the Orissa Sales Tax Act, the conclusion reached by the Tribunal was upheld by the High Court. The department then appealed before the Supreme Court under Article 136 of the Constitution. The Supreme Court by its judgment dated 30th March, 1976, in Civil Appeals Nos. 912 to 916 of 1971 dismissed the appeals. This decision was reported in July issue of A.I.R., as State of Orissa v. Dinabandhu Sahu : [1976]3SCR966 .

3. After the pronouncement of the decision of their Lordships of the Supreme Court in Dinabandhu Sahu's case : [1976]3SCR966 , the present petitions were filed before this Court between 24th March, 1979, and 30th March, 1979. The contention in all these petitions is that the entry relating to 'oil-seeds' appearing in Section 14(vi) of the Central Act is virtually the same as it appeared in entry No. 7, Part I, of Schedule II of the State Act, at the relevant time, and since the commodities in question have been held to be oil-seeds in Dinabandhu Sahu's case : [1976]3SCR966 , they should have been assessed at a lower rate of tax which ranged between 2 per cent to 3 per cent during the period in question. They claim that they paid tax at the higher rate only under mistake. The relief claimed is that the tax imposed be declared ultra vires and the department be directed to refund the excess tax so collected. Although these petitions were filed nearly three years after the pronouncement of the judgment in Dinahandhu Sahu's case : [1976]3SCR966 and much after the assessments became final in all these, the assessment orders were not challenged even when the hearing of these petitions commenced. It was only after the matter was partly heard that applications were moved in each case seeking permission to amend the petitions claiming further relief of setting aside the assessment.

4. The foundation of the petitioners' claim is the decision of the Supreme Court in Dinabandhu Sahu's case : [1976]3SCR966 . What is urged is that in that decision the Supreme Court has declared the commodities in question to be 'oil-seeds' and, therefore, the payment of sales tax by the petitioners on the sales of these commodities as falling under the residuary clause was by mistake. We are unable to read the decision in Dinabandhu Sahu's case : [1976]3SCR966 as suggested. There, as we have earlier indicated, the High Court on a reference made to it under Section 24 of the Orissa Sales Tax Act by the State Tribunal declined to interfere with the view taken by the Tribunal that the commodities were 'oil-seeds'. The Supreme Court was hearing an appeal against that order of the High Court. It was in such a situation that the Supreme Court observed in paragraph 12 of the judgment that all that was to be seen in that appeal under Article 136 of the Constitution was whether it was a fit case for interference with the order of the High Court when it held that the Sales Tax Tribunal was right in its conclusion. The observations are :

If, therefore, the Tribunal in the facts and circumstances of the case held that the particular commodities came within the definition of Clause (vi) of Section 14 of the Central Act, it is not possible to hold that it was not right.

What their Lordships seem to lay down is that in view of the evidence adduced in that case and on its own facts and circumstances, if the Sales Tax Tribunal had reached a particular conclusion (of facts), the High Court was perfectly justified in not interfering with the decision of the Tribunal so reached. In our opinion, that decision cannot be read as laying down or declaring the law that the commodities, namely, aniseed (somph*), coriander seeds (dania*), cuminseed (jeera*, safed jeera*) and fenugreek seeds (methi*), shall always be treated as oil-seeds. This decision, therefore, does not furnish any cause of action to the petitioners for the relief they have claimed in the petitions. These petitions are, therefore, liable to be dismissed on this short ground.

5. The effect of the judgment in Dinabandhu Sahu's case : [1976]3SCR966 is not to render any provision of the M. P. General Sales Tax Act ultra vires or unconstitutional. That decision only says that certain commodities are oil-seeds and have to be taxed accordingly. That decision does not render any provision of the State Act as unconstitutional. It, therefore, cannot have the effect of rendering the assessment orders without jurisdiction and it cannot be said that the assessment orders under which payment of tax has been made suffer from want of jurisdiction. The Dinabandhu Sahu's case : [1976]3SCR966 cannot be read to mean that those assessments were made in contravention of any constitutional provision. The payment of taxes, therefore, was made under valid assessment orders which remained unchallenged through under the normal machinery provided under the Act. The best that can be said in favour of the petitioners is that the assessments had been made under a wrong entry in the schedule annexed to the said Act, but that will not render the assessments a nullity.

6. Refund of tax can be directed only when an order of assessment has been annulled. Under the scheme of the State Act, an assessment made by the Sales Tax Officer can be challenged by an appeal before the Appellate Assistant Commissioner of Sales Tax and by a further appeal before the Sales Tax Tribunal followed by a reference to the High Court under Section 44 of the Act. A revision can also be preferred before the Commissioner of Sales Tax. This course admittedly was not followed. The assessments, which' have thus become final, could not be questioned in any civil court by virtue of Section 37 of the Act which is as follows :

37. Save as provided in Section 44, no assessment order or the determination of liability to pay any tax or penalty or the recovery of any tax or penalty made under this Act or the Rules made thereunder by the Commissioner or any person appointed under Section 3 to assist him shall be called into question in any civil court and save as provided in Sections 38 and 39, no appeal or application for revision shall lie against any such assessment or order.

Of course, a suit to challenge an assessment may lie and refund may be ordered where the assessment is based on a charging section which is ultra vires, as it cannot be said that the assessment was made under the Act: see Venkataraman and Co. v. State of Madras : [1966]60ITR112(SC) ; or where the notification issued under the charging section contravened Article 301 of the Constitution and was, therefore, ultra vires : see Dhulabhai v. State of M. P. : [1968]3SCR662 . In Firm Radha Kishan v. Ludhiana Municipality : [1963]50ITR187(SC) , it was held that an assessment of terminal tax, which was questioned on the ground that the municipality applied a wrong rate of tax by wrongly determining the character of taxable commodity was not open to challenge in the civil court; but it was pointed out that if a municipality levied a tax on a commodity which was not taxable at all, a civil suit will lie; the former being a case where the municipality acts under the Act although wrongly, whereas the latter is a case where the entire action is outside the Act. Recently, in Bata Shoe Co. v. Jabalpur Municipality : [1977]3SCR182 , after a review of authorities on the subject, the Supreme Court pointed out that the circumstance that the municipality might have acted in excess of or irregularly in the exercise of that power cannot support the conclusion that the assessment or recovery of the tax is without jurisdiction. It was held that questions of correctness of the assessment apart from its constitutionality are for the decision of the authorities set up by the Act and a civil suit cannot lie if the orders of those authorities are given finality. These authorities lead to an inference that the factor that the liability to pay tax (income-tax or sales tax) is a creature of these taxing Acts which normally provide an elaborate machinery for assessment; that the taxing authorities have in general authority to decide finally questions of fact and law pertaining to their own jurisdiction and that these Acts usually contain an exclusionary provision expressly restraining a suit to challenge an assessment made under the Act, leave little room for a suit to challenge an assessment. A challenge can, however, be laid in a suit to an assessment which is based on an ultra vires provision or when it was made in violation of the fundamental principles of judicial procedure, e. g., without any notice to the assessee, and cases where a wrong entry has been resorted to for the purpose of assessment stand on quite a different footing. These assessments in question were perfectly within the jurisdiction of the taxing authorities and, unless challenged under normal machinery provided in the Act, are perfectly valid and enforceable.

7. Realising that a successful challenge cannot be made to the assessments which had otherwise become final, the petitioners have chosen to file these petitions. As we have earlier indicated that the effect of Dinabandhu Sahu's case : [1976]3SCR966 is not to declare any charging provision unconstitutional or to declare the assessments as contravening any constitutional provision, it cannot be said that the assessments were made without jurisdiction. No refund, therefore, can be granted to the petitioners. In State of M.P. v. Haji Hasan Dada [1966] 17 STC 343, the Supreme Court observed that there is abundant authority for the view that unless it is set aside by appropriate proceedings under the Act, which authorises the levy of tax, full effect must be given to an order of assessment even if it be later found that the order of assessment was erroneous. In order to meet this situation, the petitioners during the course of hearing applied for amendment of their petitions seeking permission to pray for a relief of declaration that the assessments were illegal and ultra vires. We are not inclined to grant these applications for amendment which have been filed after inordinate delay which has remained unexplained.

8. These petitions are also liable to be dismissed on the ground of delay and laches. The judgment in Dinabandhu Sahu's case : [1976]3SCR966 was pronounced on 30th March, 1976. It was reported in July part of the All India Reporter of that year. These petitions were then filed just before the expiry of three years after the pronouncement of that judgment. The delay in filing these petitions is, therefore, obvious. It cannot be denied that unlike a civil suit where the claim is one of a right, the relief in a petition under Article 226 of the Constitution can be denied to a party who is not vigilant of his right and does not invoke jurisdiction of the court expeditiously. It was, however, urged that from the date the judgment in Dinabandhu Sahu's case : [1976]3SCR966 , was reported in the All India Reporter, a civil suit claiming refund would be within time in view of Section 17(1)(c) read with Article 24 of the Limitation Act having been filed within three years of the discovery of the mistake under which the tax is said to have been paid. It was submitted that a petition for a writ of mandamus filed within the period prescribed for a like relief in a regular suit should not ordinarily be rejected on the ground of delay. In support of this submission, reliance was placed on a decision of the Supreme Court in State of M.P. v. Bhailal Bhai : [1964]6SCR261 . In that case, it was held that the charging section in the relevant Sales Tax Act contravened the provisions of Article 301 of the Constitution and was also not saved under Article 304(a) and was therefore invalid. The invalid imposition was held to have interfered with the fundamental rights or even the statutory rights and, therefore, it was observed that the money was raised by the Government without due authority of law and a refund was consequently directed. Considering the question of delay in this background, the Supreme Court observed :

The court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it will almost always be proper for the court to hold that it is unreasonable.

Similar observations were made in Tilokchand Motichand v. H.B. Munshi : [1969]2SCR824 , where Bachawat, J., held that the High Court acts on the analogy of the statute of limitation in a proceeding under Article 226 though the statute does not expressly apply to the proceeding. It was observed that the extraordinary remedies under the Constitution are not intended to enable the claimant to recover money, the recovery of which by suit is barred by limitation. These decisions cannot, however, be said to be authorities for the proposition that whenever a petition under Article 226 of the Constitution is filed within a period of limitation provided for a suit for similar relief, the petition should not be rejected on the ground of undue delay. Utmost expedition is the sine qua non for such claim and the court must be moved at the earliest possible time and civil and criminal actions should not be converted into proceedings for obtainment of writs. On a finding reached by us that the assessments could not be challenged by a suit, the analogy of a civil suit cannot render any assistance to the petitioners. In a case of unreasonable delay in approaching the court, it is not justifiable to lend aid to a party by the extraordinary remedy of a writ of mandamus. The question of delay will have to be decided on the facts and circumstances of each case and it is neither easy nor desirable to lay down any rule of universal application in this behalf. Having regard to the facts and circumstances of these petitions, we are of the opinion that no satisfactory explanation has been offered for the delay in approaching this Court. These petitions are also liable to be dismissed on the ground of undue delay.

9. There is yet another reason why the petitioners should not be granted the relief of refund of the tax; and it is this. Sales tax is an indirect tax, the incidence of which is ultimately shifted to the consumers. In all probability, the sales tax paid by the petitioners must have been recovered by them from the purchasers. It will, therefore, be not in the fitness of things to allow the petitioners refund of that tax and thus make them doubly rich. This is also the view of the Andhra Pradesh High Court where, in Gurram Sreeramulu, Garlapati Anjaneyulu and Co. v. State of A.P. [1972] 30 STC 120, it was held that even if the court is satisfied having regard to all the circumstances that the petitioner is entitled to refund of the tax, the petitioner may still not be granted the discretionary relief if it results in retention of the sales tax collected by the petitioner from the public and imposes the burden on the State of refunding the tax which it had collected under a valid assessment order. For this reason also, we do not think that the petitioners have made out a case for refund of sales tax in their favour.

10. For the reasons aforesaid, the petitions fail and are hereby dismissed. There shall, however, be no order as to costs of these petitions. The security amount shall be refunded to the petitioners.

*Transliterated from Hindi


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