Skip to content


The Associated Cement Companies Ltd. Vs. the State of Tamil Nadu and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberWrit Petition Nos. 3364 and 3365 of 1979 and W.A. Nos. 489 to 491 of 1979 and Tax Case (Revision) No
Judge
Reported in[1986]63STC63(Mad)
ActsTamil Nadu General Sales Tax Act, 1959 - Sections 38
AppellantThe Associated Cement Companies Ltd.
RespondentThe State of Tamil Nadu and anr.
Appellant AdvocateG. Narayanan, Adv.
Respondent AdvocateK.S. Bakthavatsalam, Additional Government Pleader (C.T.)
Cases ReferredState of Madhya Pradesh (Now Maharashtra) v. Haji Hasan Dada
Excerpt:
sales tax - assessments - section 38 of tamil nadu general sales tax act, 1959 - whether company entitled to refund of surcharge levied on it and admittedly paid and whether relief could not be given to company - whether certain document not filed before assessing authority could be filed and accepted by tribunal - surcharge collected without any authority of law - justice and equity demands refund of amounts so collected to company - company entitled to refund of surcharge - no laches or unreasonable delay made out on part of company - petitions filed before this court within few months from date of discovery of mistake - right of company to secure refund not lost. - - the company sells the cement manufactured by it at its factory in madukkarai to consumers as well as stockists in.....ratnam, j. 1. all these cases are dealt with together as a common point arises for decision and relate to the same assessee, namely, the associated cement companies ltd. (hereinafter referred to as 'the company'). the circumstances under which these proceedings arise may be briefly noticed. the company manufactures and sells cement and is a registered dealer under the tamil nadu general sales tax act and the central sales tax act. the factory of the company is situate at madukkarai, a panchayat township, about 14 kilometres away from coimbatore. the company sells the cement manufactured by it at its factory in madukkarai to consumers as well as stockists in accordance with certain standard terms and conditions of sale prescribed by the company according to which supply of cement has to be.....
Judgment:

Ratnam, J.

1. All these cases are dealt with together as a common point arises for decision and relate to the same assessee, namely, the Associated Cement Companies Ltd. (hereinafter referred to as 'the company'). The circumstances under which these proceedings arise may be briefly noticed. The company manufactures and sells cement and is a registered dealer under the Tamil Nadu General Sales Tax Act and the Central Sales Tax Act. The factory of the company is situate at Madukkarai, a panchayat township, about 14 kilometres away from Coimbatore. The company sells the cement manufactured by it at its factory in Madukkarai to consumers as well as stockists in accordance with certain standard terms and conditions of sale prescribed by the company according to which supply of cement has to be made in jute bags of 50 kilograms nett weight each. In case of transport by rail, the cement should be delivered to the carrier at the works' railway siding, while, in the case of transport by road, the delivery will be at the works at the risk of the buyer on production of the identical copy of the order form issued by the company. A further clause provided that though the price is f.o.r. destination, the company's responsibility for loss or shortage or damage during transit ceased from the time of delivery at the works to the carrier and the obtaining of a clean railway receipt for the goods. The Tamil Nadu Sales Tax (Surcharge) Act, 1971, (Act 24 of 1971), was passed to levy surcharge on the sales tax on the sale or purchase of goods within the limits of the area where the Act was in force. That Act came into force in the then municipal town of Coimbatore on 29th June, 1971. Under section 1(3)(b)(iii) thereof, the Government was empowered to direct by notification that the Act shall come into force on such date as may be specified in suburban areas of the city of Madurai or the municipal towns of Salem, Coimbatore, Tiruchirappalli, or other municipal town or township. Section 2(c)(ii) of the Act defined a suburban area as an area within such distance not exceeding 32 kilometres of the municipal towns of Salem, Coimbatore or Tiruchirappalli or other municipal town or township. Section 5 of the Act provided that the sale or purchase of goods shall be deemed to have taken place in the area in which the Act is in force, wherever the contract of sale or purchase might have been made if the specific or ascertained goods are within such area at the time when the contract of sale or purchase is made, and in the case of unascertained or future goods, when such goods are appropriated to the contract of sale or purchase by the seller or purchaser. With reference to the sales of cement effected by the company in accordance with the standard terms and conditions above referred to, though under section 5 of the Tamil Nadu Sales Tax (Surcharge) Act, 1971, the sale of cement shall be deemed to have taken place at Madukkarai since the goods were at Madukkarai works at the time when the contract of sale or purchase was made, yet, Madukkarai, where the factory of the company was situate was not notified as a suburban area for the purposes of the applicability of Act 24 of 1971 and, therefore, no surcharge was exigible under that Act. However, the Joint Commercial Tax Officer, Rural Circle, Coimbatore, levied surcharge on the company from the assessment year 1971-72 and the company had also been paying, without being aware of the correct legal position, the surcharge so demanded under a mistake, according to it. The details of the surcharge so paid by the company for the years 1971-72 up to 1975-76 are shown below :

----------------------------------------------------------------------Sl. Surcharge assessed SurchargeNo. Year ----------------------------- Total paidOn cement On freight(1) (2) (3) (4) (5) (6)----------------------------------------------------------------------Rs. P. Rs. P. Rs. P. Rs. P.1. 1971-72 88,051.54 9,828.46 97,880.00 97,880.002. 1972-73 79,458.72 8,811.28 88,270.00 88,270.003. 1973-74 75,868.75 7,034.25 82,903.00 82,903.004. 1974-75 1,17,497.15 9,276.85 1,26,774.00 1,26,773.565. 1975-76 1,63,136.21 10,752.79 1,73,889.00 1,73,889.07-------------------------------------------------------Total 5,24,012.37 45,703.63 5,69,716.00 5,69,715.63----------------------------------------------------------------------

In this state of affairs, on 9th August, 1977, the company received a letter dated 6th August, 1977, from one of its direct consumers pointing out that surcharge was not leviable on transactions of sales of cement effected by the company from its works at Madukkarai. On receipt of that letter, the company consulted its lawyer and secured legal opinion on 9th October, 1978, to the effect that surcharge was not leviable in respect of the transactions of sales effected by the company, and realised that the company had been paying the surcharge demanded without the authority of law under Tamil Nadu Act 24 of 1971 by mistake. For the assessment years 1971-72 to 1975-76 above referred to, the company had preferred appeals against the orders of the assessing authorities questioning its liability to pay sales tax on the turnover relating to freight and levy of surcharge thereon. It appears that for all these years, originally the company disputed its liability to tax on the freight and the surcharge thereon under the Tamil Nadu Tax (Surcharge) Act, 1971, as under :

----------------------------------------------------------------------Sl. No. Year Amount(1) (2) (3)----------------------------------------------------------------------Rs. P.1. 1971-72 11,507.702. 1972-73 8,811.283. 1973-74 7,034.254. 1974-75 9,289.535. 1975-76 10,865.49----------------------------------------------------------------------

2. The Appellate Assistant Commissioner dismissed the appeals and further appeals were preferred by the company to the Tribunal with reference to the assessments made under the Tamil Nadu General Sales Tax Act, 1959, and levy of surcharge thereon. The Tribunal took the view that freight charges are liable to sales tax and dismissed the appeals. With reference to the appeals preferred by the company relating to the Tamil Nadu Sales Tax (Surcharge) Act, 1971, the company filed petitions in C.T.M.P. Nos. 278 to 282 of 1978 to amend column 8(c) of the appeal memorandum as shown hereunder in column (4) and to raise additional grounds.

----------------------------------------------------------------------Sl. No. Year Original Amendmentdispute sought for(1) (2) (3) (4)----------------------------------------------------------------------Rs. P. Rs. P.1. 1971-72 11,507.70 97,880.002. 1972-73 8,811.28 88,270.003. 1973-74 7,034.25 82,903.004. 1974-75 9,289.53 1,26,774.005. 1975-76 10,865.49 1,73,889.27----------------------------------------------------------------------

3. This was opposed by the State on the ground that as the company had not raised a dispute before the authorities below as regards the higher figures sought to be brought in by means of the amendment, it would not be open to the company to raise additional grounds in that regard or even pray for an amendment. The Tribunal was of the opinion that its jurisdiction was confined only to the subject-matter of the dispute before the first appellate authority and as the items covered by the proposed amendment and additional grounds of appeal were not so disputed by the company before the assessing authority or the first appellate authority, they could not be brought before the Tribunal properly as the subject-matter of the appeals either at the time of the filing of the appeals before the Tribunal or even at a later stage, by means of additional grounds or petitions for amendment. The Tribunal was also of the view that it had no inherent powers by the exercise of which the company can be enable to raise additional grounds touching upon matters not forming the subject-matter of the appeal before the first appellate authority. Ultimately, the Tribunal upheld the levy of surcharge on freight, as the appeals preferred by the company disputing its turnover by the inclusion of freight had been rejected. The appeals filed by the company as well as the petitions for amendment were, therefore, dismissed. Tax Revision Cases Nos. 1077 to 1081 of 1979 have been preferred by the company against that order under section 38 of the Tamil Nadu General Sales Tax Act.

4. Besides, the company preferred W.P. Nos. 3396 to 3398 of 1979 in relation to the assessment years 1972-73, 1975-76 and 1974-75 respectively praying for the issue of a writ of mandamus or other appropriate writ. In those proceedings, the company after referring to the circumstances under which it became aware that surcharge was not leviable and the proceedings taken by it before the Tribunal and the result thereof took the stand the no surcharge was payable by the company for the years in question as such levy was not authorised by law, but had been paid by mistake which was discovered only on 9th October, 1978, and that the Tribunal had also failed to discharge its statutory duties. Claiming that the company had no other alternative remedy and that its only effective remedy was under article 226 of the Constitution of India and also stating that the company had addressed a letter to the State of Tamil Nadu as well as the Joint Commercial Tax Officer calling upon them to refund the surcharge paid by mistake but that did not evoke any reply and, therefore, the company became entitled to a refund of the surcharge so paid by it in respect of the assessment years set out earlier, the writ petitions in W.P. Nos. 3396 to 3398 of 1979 were filed. Those writ petitions were dismissed in limine on the ground that as the company had not taken steps to set aside the assessment orders, the question of refund did not arise and that a question of limitation would also arise, which should be considered only in the course of a properly instituted suit and not in a writ petition. Against the dismissal of these writ petitions, W.A. Nos. 489 to 491 of 1979 have been preferred by the company.

5. In relation to the assessment years 1971-72 and 1973-74, the company has preferred W.P. Nos. 3364 and 3365 of 1979 alleging the very same grounds urged by it in W.P. Nos. 3396 to 3398 of 1979.

6. In the common counter-affidavit filed by the State of Tamil Nadu as well as the Joint Commercial Tax Officer, Rural Circle, Coimbatore, in W.P. Nos. 3364 and 3365 of 1979, it was stated that the writ petitions are misconceived and not maintainable and should be dismissed in limine on account of laches on the part of the company. While admitting the payment of surcharge by the company in a sum of Rs. 97,880 and Rs. 82,903 for the assessment years 1971-72 and 1973-74 and also the aggregate payment to the tune of Rs. 5,69,716 for the years 1971-72 to 1975-76, it was contended that the ignorance on the part of the company with reference to the correct legal position cannot be a ground for refund. Referring to the receipt of a letter by the company from a customer on 9th August, 1977, and the obtaining of the legal opinion on 9th October, 1978, the State took the stand that that it was so stated only to establish that the claim was not barred by limitation. An objection was also taken that the assessments for the years in question had been completed and had also become final and in the absence of further steps taken by the company against those assessments, it was not open to it to invoke the jurisdiction under article 226 of the Constitution of India. Reliance was also placed on the dismissal of W.P. 3396 to 3398 of 1979 to contend that the relief prayed for by the company for refund of the surcharge was not sustainable either factually or legally.

7. During the pendency of W.A. Nos. 489 to 491 of 1979 and W.P. Nos. 3364 and 3365 of 1979, the company filed C.M.P. Nos. 15112 to 15114 of 1982 and W.M.P. Nos. 14606 and 14607 of 1982 respectively to permit the company to amend the prayer in all the writ petitions into one of a writ of certiorarified mandamus and directing the State of Tamil Nadu as well as the Joint Commercial Tax Officer to refund to the company the respective amounts levied by the authorities by way of surcharge and paid by the company. We do not see any serious objection to the granting of the amendment of the prayer and, indeed, there cannot be any objection to the granting of the amendment relating to the nature of the writ prayed for. We, therefore, order C.M.P. Nos. 15112 to 15114 of 1982 in W.A. Nos. 489 to 491 of 1979 and W.M.P. Nos. 14606 and 14607 of 1982 in W.P. Nos. 3364 and 3365 of 1979.

8. Thus, the main question for consideration is, whether the company is entitled to a refund of the surcharge levied on it and admittedly paid by it. It is seen from the records that M/s. Jay Shree Tea & Industries Limited, Calcutta-17, wrote a letter to the company on 6th August, 1977, drawing its attention to the charging of 5 per cent. surcharge on Tamil Nadu general sales tax in the bills issued by the company for the supply of cement from Madukkarai works and stating that the Tamil Nadu Sales Tax (Surcharge) Act, 1971, is inapplicable to such sales effected from Madukkarai works. In this letter, the attention of the company was also drawn to section 5 of the Tamil Nadu Sales Tax (Surcharge) Act, 1971, and it was further stated that the cement was actually despatched by the company from the Madukkarai works and, therefore, the place of sale was only Madukkarai and not Madras and so surcharge was not at all payable. The letter winds up with a request for refund of the surcharge collected from it on the various supplies effected by the company. The records also further disclose that on receipt of this letter, the company sought legal opinion and obtained an opinion from Thiru K. K. Venugopal, Senior Advocate, on 9th October, 1978. Thereafter, the company, by its letter dated 11th January, 1979, drew the attention of the Commissioner of Commercial Taxes to the fact that Madukkarai, where the factory of the company is situate, is not within the municipal limits of Coimbatore town and enquired whether the sale and delivery of the cement by the company at Madukkarai as per its standard terms and conditions of sale would attract the provisions of the Tamil Nadu Sales Tax (Surcharge) Act, 1971. To this, on 15th March, 1979, the Commissioner of Land Revenue and Commercial Taxes sent a reply in the following terms :

'Tvl. The Associated Cement Companies Limited, Madras, are informed that Madukkarai which is 13 kms off Coimbatore Municipality will attract the provisions of the Surcharge Act from 1st April, 1979, on which date the Act will be extended to the peripheral area of 16 kilometres as announced in the recent budget. The sales effected at Madukkarai are not liable to surcharge prior to the date.

(Sd.) M. S. GURUSAMY

Assistant Secretary II.'

It is thus seen from the above reply that even according to the Commercial Taxes Department, the sales of cement effected by the company at Madukkarai are not liable to surcharge for the assessment years in question. In this state of affairs, the question is, whether the company is not entitled to a refund of the amounts admittedly levied and paid by the company, without the authority of law.

9. We first proceed to consider whether relief could not be given to the company in the tax revision cases in view of certain recent pronouncements of this Court, contrary to the view earlier held and referred to by the Tribunal. We may recall that the Tribunal, while dealing with the appeals preferred by the company, though fit to dismiss them on the short ground that the freight had been properly included in the turnover under the Tamil Nadu General Sales Tax Act and the levy of surcharge thereon was, therefore, in order and that the subject-matter of the appeal sought to be introduced in C.T.M.P. Nos. 278 to 282 of 1978 by an amendment at the instance of the company was not agitated before the first appellate authority and, therefore, the Tribunal had no jurisdiction or even inherent power to entertain such a claim. Though it may be that this view was, to some extent, justified by the state of law, as it then stood, the width and the amplitude of the jurisdiction and powers of the Tribunal under the Tamil Nadu General Sales Tax Act, 1959, in dealing with the assessments appealed against before it, came to be considered by a Full Bench of this Court in State of Tamil Nadu v. Arulmurugan and Co. [1982] 51 STC 381. Though the main question for decision was whether the C form not filed before the assessing authority could be filed and accepted by the Tribunal, yet, in considering the powers and jurisdiction of the Tribunal in dealing with an appeal against an order of assessment, the Full Bench, after referring to the decisions of the Supreme Court in McMillan's case : [1958]33ITR182(SC) and Mahalakshmi Textile Mills' case : [1967]66ITR710(SC) , observed at page 392 thus :

'An appellate authority under the taxing enactments sits in appeal, only in a manner of speaking. What it does, functionally, is only to adjust the assessment of the appellant in accordance with the facts on the record and in accordance with the law down by the legislature. An appeal is a continuation of the process of assessment, and an assessment is but another name for adjustment of the tax liability to accord with the taxable event in the particular taxpayer's case. There can be no analogy or parallel between a tax appeal and an appeal, say, in civil cases. A civil appeal, like a law suit in the court of first instance out of which it arises, is really and truly an adversary proceeding, that is to say, a controversy or tussle over mutual rights and obligations between contesting litigants ranged against each other as opponents. A tax appeal is quite different. Even as the assessing authority is not the taxpayer's 'opponent', in the strictly procedural sense of the term, so too the appellate authority sitting in appeal over the assessing authority's order of assessment is not strictly an arbitral tribunal deciding a contested issue between two litigants ranged on opposite sides. In a tax appeal, the appellate authority is very much committed to the assessment process. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiative, without being prodded by any of the parties. It can enhance the assessment, taking advantage of the opportunity afforded by the taxpayer's appeal, even though the appeal itself has been mooted only with a view to a reduction in the assessment. These are special and exceptional attributes of the jurisdiction of a tax appellate authority. These attributes underline the truth that the appellate authority is no different, functionally and substantially, from the assessing authority itself. This position has been well brought out in more than one decision of the Supreme Court. The Mcmillan's case : [1958]33ITR182(SC) , which we earlier referred to, may be regarded as highlighting only one aspect of the wide range and peculiar slant of the appellate power in fiscal matters. We may cite another decision, of the Supreme Court, Mahalakshmi Textile Mills' case : [1967]66ITR710(SC) , which also had arisen under the Indian Income-tax Act, 1922, as highlighting, from another angle, the peculiar position of tax appellate tribunals. A general view of the position of appellate authorities under the tax codes is laid down in yet another decision of the Supreme Court. In Commissioner of Income-tax, v. Kanpur Coal Syndicate : [1964]53ITR225(SC) the Supreme Court again examined the nature and scope of the powers of the appellate authorities under the Income-tax Act, and observed that the scope of the Appellate Assistant Commissioner's power is 'conterminous with that of the Income-tax Officer', and that the Appellate Assistant Commissioner 'can do what the Income-tax Officer can do and can also direct him to do what he has failed to do'. It is needless to point out that the provisions defining appellate powers in the Income-tax Act are, in pari materia, with those laid down in sales tax enactments as well. Having regard, therefore, to the weight of authority of the Supreme Court rulings on the nature of the appellate jurisdiction in tax matters, some of the decisions of the High Courts, we have noticed earlier, which tend to espouse an all-too restricted view of the appellate functions under the sales tax laws, must be held to have got the legal position quite wrong.'

To similar effect is the decision in Commissioner of Income-tax v. Indian Express (Madurai) Pvt. Ltd. : [1983]140ITR705(Mad) , where a claim for deduction for gratuity was not raised before the assessing authority or the first appellate authority or even in the grounds of appeal before the Tribunal. During the hearing of the appeal, an additional ground was allowed to be raised relating to this issue and the question arose whether the Tribunal had the jurisdiction to permit the raising of such an additional ground with reference to a matter not raised earlier. In pointing out that the Tribunal had jurisdiction to do so, this Court observed at page 722 as follows :

'Since the be-all and end-all of the statutory provisions, especially those relating to the administration and management of income-tax, is to ascertain the taxpayer's liability correctly, to the last pie, if it were possible, the various provisions relating to appeal, second appeal, reference and the like can hardly be equated to a lis or dispute as arises between the two parties in a civil litigation. Although the income-tax statute makes the department or its officers figure as parties in appeal proceedings, they are not in the strict sense what are called by American writers as parties to adversary proceedings. This is so, because the very object of the appeal is not to decide a point raised as a dispute, but any point which goes into the adjustment of the taxpayer's liability. In that sense, a view prevails, even in England, that the authorities sitting in appeal in a tax case, cannot be regarded as deciding a lis, but they are only engaged in an administrative act of adjusting the taxpayer's liability. Under out fiscal jurisprudence, we may regard the appellate authorities as exercising quasi-judicial functions in the same sense as a taxing officer does. But, even so, the proceedings before them lack the basic elements of adversary proceedings. It, therefore, follows that the discussion and the scope of the appellate jurisdiction of the Tribunal and other authorities under the tax code cannot be pursued by drawing a parallel to civil litigation with particular reference to appeals from decrees, and the like. The insistence on one party to the appeal being entitled to the fruits of finality, as it is called, and the appellate authority being confined to the subject-matter of the appeal are all ideas which might have relevance if the discussion centres on purely civil litigation and such like adversary proceedings as in an industrial dispute. But in a case where the revenue is all the while a party, in a manner of speaking, and is also at the same time, an authority vested with the responsibilities of drawing up the assessment and laying down the correct liability, it would not be in accord with the scheme of the Act to impose restrictions on the ambit and the power of the Tribunal by such like notions as finality, subject-matter of the appeal, and the like.'

It is at once clear from the decisions referred to above and the observations extracted therefrom that the view taken by the Tribunal that in the appeals preferred by the company, it is not open to it to raise a dispute with reference to a subject-matter, which did not figure either before the assessing authority or before the first appellate authority, is plainly erroneous. Normally, on such a conclusion, the company would be permitted to raise the dispute again before the Tribunal and obtain relief at its hands. That again on the facts of this case would not be insisting upon the company going through a formality almost with a vengeance, for, even as per the letter dated 15th March, 1979, referred to earlier, the surcharge had been collected without any authority of law and justice and equity demand the refund of the amounts so collected to the company.

10. We now proceed to consider the claim of the company for the issue of a writ of certiorarified mandamus quashing the assessment orders and also directing a refund of the amounts paid by the company for the assessment years in question. The levy of the surcharge on the company has not been under the authority of law. Indeed, no attempt has been made to justify the levy at all. Ordinarily, therefore, the company is entitled to a refund of the surcharge by the issue of an appropriate writ. However, in such matters, it is well-established, as pointed out by the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai : [1964]6SCR261 that article 226 of the Constitution of India empowers the High Court to order repayment of money realised by the Government without the authority of law. At the same time, it has to be borne in mind that the remedy is now intended to supersede the other modes of obtaining the relief as the issue of such writs is a matter of discretion. It is also not easy or desirable to lay down rules with reference to the exercise of such discretion. Unreasonable delay on the part of the person entitled to claim a refund and the raising of a prima facie triable issue regarding the non-availability of such a relief on the ground of limitation would justify the refusal of the writ of mandamus for such payment. In the affidavit in support of the writ petitions, the company had clearly set out the circumstances under which it became aware that the surcharge was not leviable and how, under a mistake, the company had been paying the surcharge levied. The letter dated 6th August, 1977, originating from M/s. Jay Shree Tea & Industries Limited, Calcutta-17, was responsible for the launching of an enquiry into the applicability of the Tamil Nadu Sales Tax (Surcharge) Act, 1971, to the company with reference to the sales effected by it at its factory at Madukkarai. Thereafter, the company had taken steps to secure legal opinion in that regard and the record discloses that such an opinion was made available to the company only on 9th October, 1978. Armed with the opinion of the counsel, the company wrote on 11th January, 1979, to the Commercial Taxes Department for a clarification whether the provisions of the Tamil Nadu Sales Tax (Surcharge) Act, 1971, are applicable to the transactions of sale and despatch of cement effected by the company from its factory at Madukkarai. The reply to that, earlier extracted, was issued only on 15th March, 1979. It has also been admitted by the Commercial Taxes Department in that letter dated 15th March, 1979, that surcharge was not leviable prior to 1st April, 1979, in respect of sales of cement effected by the company at Madukkarai. That would mean that the surcharge had been collected from the company illegally and without the authority of law, which would enable the company to pray for a refund of the amounts so collected. Taking into consideration the several steps taken by the company as detailed above, it cannot be said that there was any unreasonable delay on the part of the company in approaching this Court praying for relief under article 226 of the Constitution of India, which had been done by the company at the earliest in July, 1979. We are, therefore, not disposed to decline relief to the company on the ground of unreasonable delay, especially when no materials have been placed before the Court on behalf of the respondents in these proceedings to show that the company had knowledge of the illegal and unauthorised levy of the surcharge even prior to 6th August, 1977. No laches or unreasonable delay on the part of the company had been made out. We, therefore, accept the case of the company that only on 6th August, 1977, on receipt of the letter from a stockist, the mistake was discovered and, immediately thereafter, legal opinion was secured and a communication was also addressed by the company to the Commercial Taxes Department for a clarification and that when the reply was received by the company some time in March, 1979, steps had been taken by the company in July, 1979, to secure relief by filing the writ petitions.

11. We now proceed to consider whether there is prima facie any impediment in the way of grant of relief to the company, on grounds like limitation. The orders of assessment for the years 1971-72, 1972-73 and 1973-74 were passed on 24th January, 1975, 24th January, 1975, and 29th January, 1975, respectively. With reference to those years, the earliest point of time, when the mistake was discovered by the company was, on 6th August, 1977, on receipt of the letter from the stockist and thereafter, steps had been taken by the company as set out earlier. Therefore, when the writ petitioners were filed before this Court in July, 1979, within a few months from the date of the discovery of the mistake, namely, 6th August, 1977, the right of the company to secure a refund was prima facie not lost. Regarding the assessment years 1974-75 and 1975-76, the assessment orders were passed on 30th October, 1976, and 15th April, 1977, respectively and obviously in July, 1979, when the writ petitions were filed claiming refund, that claim could not have become barred. Prima facie, therefore, there is nothing to indicate that the question of limitation can be pleaded as a bar to the claim of the company for refund of the surcharge admittedly illegally levied and collected.

12. We have earlier pointed out how the levy of surcharge on the company by the assessment proceedings for the years in question is clearly without the authority of law and would merit interference by this Court by quashing the assessments and directing a refund, unless the company had in any manner disabled itself from claiming such reliefs. No circumstance which would disentitle the company from claiming the relief of refund has been brought to out notice. We may also state that the demand for surcharge, in the circumstances of this case, was illegal and in such cases, as pointed out by the Supreme Court in Shiv Shanker Dal Mills v. State of Haryana : [1980]1SCR1170 , there is no law of limitation especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. In that decision, the following observations of the Supreme Court are apposite :

'Where public bodies, under colour of public laws, recover people's moneys, later discovered to be erroneous levies, the dharma of the situation admits of no equivocation. There is no law of limitation, especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. Nor is it palatable to our jurisprudence to turn down the prayer for high prerogative writs, on the negative plea of 'alternative remedy' since the root principle of law married to justice, is ubi jus ibi remedium.'

13. The Supreme Court also referred to the extraordinary nature of the remedy under article 226 of the Constitution of India and stated that though essentially discretionary, although founded on legal injury, in the exercise of that flexible power, it is open to the court to pass such order as public interest dictates and equity projects. Further, in this case, with reference to an area, viz., Madukkarai, to which the provisions of the Tamil Nadu Sales Tax (Surcharge) Act, 1971, did not then apply, the authorities had assumed their application and had proceeded to levy surcharge. The levy and collection of surcharge was by a process of application of statutory provisions which were inapplicable to the area in question and, therefore, the proceedings lacked jurisdiction as well as statutory authority to levy surcharge and the assessment proceeding would, therefore, be a nullity. Thus equity and public interest also compel the refund of the illegal exactions to the company.

14. We may now refer to the decision in State of Madhya Pradesh (Now Maharashtra) v. Haji Hasan Dada : [1966]2SCR854 relied on by the Additional Government Pleader. In that case, refund of tax was prayed for by a registered dealer as provided for under section 13 of the C.P. and Berar Sales Tax Act (21 of 1947) and that was not granted, as the order of assessment made by the Assistant Commissioner was not appealed against or modified in any manner under the provisions of that Act. That was upheld by the Supreme Court on the ground that the mere application for refund of tax was not maintainable, for so long as the order passed by the Assistant Commissioner stood, that order cannot be ignored and a refund granted country to such an order. Such is not the situation in this case, as the company had challenged the orders before the Tribunal and this Court as well and that decision cannot assist the State in any manner. The substance of the complaint in these cases is that the surcharge had been levied without any authority of law and the order relating to that is a nullity as being one ex facie without jurisdiction and the challenge in such cases is against the order, which is non est and, therefore, the question of exhausting the alternative remedy could hardly be stated to arise. On the facts of this case, we do not see any justification at all for turning down the prayer for the issue of a writ on the negative plea of alternative remedy. We, therefore, hold that the company is well-founded in its complaint before this Court that the levy of surcharge made on it by the assessing authority for the assessment years in question on the sales of cement effected by it at its factory at Madukkarai is a nullity and that it is entitled to claim a refund of the surcharge so levied and paid by the company.

15. Earlier, in the course of this judgment, we have already set out the amount of surcharge assessed on the sales of cement effected by the company and also on freight for the assessment years in question. There is no dispute raised with reference to the correctness of these amounts or the payment thereof by the company. We have earlier held that the company is entitled to a refund of these amounts collected from it illegally and without any authority of law. A writ of certiorarified mandamus will, therefore, issue quashing the assessment orders dated 24th January, 1975, 24th January, 1975, 29th January, 1975, 30th October, 1976 and 15th April, 1977, for the assessment years 1971-72 to 1975-76 in so far as they relate to the levy of surcharge and directing the respondents in the proceedings to refund a sum of Rs. 97,880.00, Rs. 88,270.00, Rs. 82,903.00, Rs. 1,26,774.00 and Rs. 1,73,889.00 respectively (totalling to Rs. 5,69,716.00) to the company.

16. In the result, W.P. Nos. 3364 and 3365 of 1979 and W.A. Nos. 489 to 491 of 1979 will stand allowed as prayed for. Since the company has been granted the relief prayed for by it in the writ proceedings, it is unnecessary to pass orders to the same effect in the tax revision cases also. In that view, Tax Revision Cases Nos. 1077 to 1081 of 1979 are dismissed. There will, however, be no order as to costs in the writ appeals, writ petitions and the tax revisions cases.

17. Writ petitions allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //