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Kathira Match Factory and ors. Vs. State of Tamil Nadu - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberAppeal Nos. 612 to 623 of 1978
Judge
Reported in[1981]48STC69(Mad)
ActsCentral Sales Tax Act, 1956 - Sections 3, 6, 6(1A), 7, 8, 8(2), 8(2A), 8(5), 9, 9(1), 9(2), 9(3), 10, 11, 12, 13 and 17; Tamil Nadu General Sales Tax Act, 1959 - Sections 2, 3, 3D(1) and 16; Uttar Pradesh Trade Tax Act, 1948 - Sections 3, 3D and 7
AppellantKathira Match Factory and ors.
RespondentState of Tamil Nadu
Appellant AdvocateR.M. Abdul Kareem and ;S.A. Kareem, Advs.
Respondent AdvocateAdditional Government Pleader
Cases ReferredLarsen and Toubro Limited v. Joint Commercial Tax Officer
Excerpt:
(i) sales tax - reassessment - central sales tax act, 1956 - appellants sold matches in course of inter-state trade and commerce - sales tax levied under act of 1956 on inter-state sale - received refund of sales tax levied on excise duty portion of turnover in full and final settlement of claim - subsequently government validated levy of sales tax on excise duty portion of turnover - amount refunded to appellant was sought to be recovered - whether amount cannot be recovered without any reassessment - refund of excise duty portion of turnover of tax unlawful - retention of tax by appellant also became unlawful - held, reassessment not required as demand originally made became effective. (ii) jurisdiction - article 226 of constitution of india - whether civil court had jurisdiction to.....varadarajan, j.1. these appeals have been filed by the defendants in o.s. nos. 28, 29, 31, 39, 37, 34, 30, 27, 32, 33, 35 and 41 of 1976 on the file of the sub court, tuticorin, against the judgments and decrees passed in those suits, decreeing the suits as prayed for with costs. 2. the state of tamil nadu, represented by the commercial tax officer, tuticorin, filed the above suits for recovery of sales tax amounts refunded to the defendants as per the orders of the high court. the defendants are the manufacturers of and dealers in safety matches. they sold matches during the years 1957-58 to 1965-66 in the course of inter-state trade and commerce. sales tax under the central sales tax act (74 of 1956) was levied on those inter state sales. the defendants filed writ petitions in the high.....
Judgment:

Varadarajan, J.

1. These appeals have been filed by the defendants in O.S. Nos. 28, 29, 31, 39, 37, 34, 30, 27, 32, 33, 35 and 41 of 1976 on the file of the Sub Court, Tuticorin, against the judgments and decrees passed in those suits, decreeing the suits as prayed for with costs.

2. The State of Tamil Nadu, represented by the Commercial Tax Officer, Tuticorin, filed the above suits for recovery of sales tax amounts refunded to the defendants as per the orders of the High Court. The defendants are the manufacturers of and dealers in safety matches. They sold matches during the years 1957-58 to 1965-66 in the course of inter-State trade and commerce. Sales tax under the Central Sales Tax Act (74 of 1956) was levied on those inter State sales. The defendants filed writ petitions in the High Court, as detailed below, questioning the levy.

Defendants in Writ Petitions Nos. Years for which tax was

levied

O.S. No. 28 of 1976 2602 to 2610 of 1967 1957-58 to 1965-66

O.S. No. 29 of 1976 2798 to 2801 of 1967 1962-63 to 1965-66

O.S. No. 31 of 1976 2641 to 2649 of 1967 1957-58 to 1965-66

O.S. No. 39 of 1976 2712 to 2716 of 1967 1961-62 to 1965-66

O.S. No. 37 of 1976 2707 to 2711 of 1967 1961-62 to 1965-66

O.S. No. 34 of 1976 2736 to 2739 of 1967 1962-63 to 1965-66

O.S. No. 30 of 1976 2621 to 2624 of 1967 1962-63 to 1965-66

O.S. No. 27 of 1976 2626 to 2628 of 1967 1962-63 to 1965-66

O.S. No. 32 of 1976 2612 to 2630 of 1967 1957-58 to 1965-66

O.S. No. 33 of 1976 2637 to 2640 of 1967 1961-62 to 1965-66

O.S. No. 35 of 1976 2765 to 2768 of 1967 1962-63 to 1965-66

O.S. No. 41 of 1976 2769 to 2775 of 1967 1958-59 to 1965-66

3. The High Court allowed the writ petitions following an earlier decision in Larsen and Toubro Limited v. Joint Commercial Tax Officer, Madras 1967 20 S.T.C.150, against which the plaintiff in these suits had already filed an appeal in the Supreme Court. The Supreme Court reversed this Court's decision and held that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, were not ultra vires while confirming the decision of the High Court that the levy of sales tax on the excise duty portion of the turnover is invalid in law in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 . Thus, the Supreme Court struck down the levy of sales tax only on the excise duty portion of the turnover and not the tax on the other portion. Thereafter, the defendants in all these suits, except O.S. No. 31 of 1976, filed petitions before the commercial tax authorities stating that they were prepared to receive refund of the tax relating to the excise duty portion of the turnover alone. The defendant in O.S. No. 41 of 1976 also filed such petitions except for the years 1963-64 and 1964-65. Thus the defendants gave up the claim for refund of the tax levied on the other portion of the turnover.

4. The Board of Revenue directed the Deputy Commercial Tax Officer to refund the tax levied on the excise duty portion of the turnover. The defendants in all the suits, except O.S. No. 31 of 1976, filed affidavits stating that they were receiving the sales tax levied on the excise duty portion of the turnover in full and final settlement of their claims. The defendant in O.S. No. 41 of 1976 filed such affidavit except for the years 1963-64 and 1964-65. The defendants in the various suits received the amounts as indicated hereunder :

petitions filed against the levy of sales tax under the Central Sales Tax Act, 1956, judgments were delivered by the High Court on 30th January, 1968, accepting the contention urged on behalf of the defendants in these suits that sub-sections (2) and (2A) of section 8 of the Central Sales Tax Act, 1956, are ultra vires and that the levy of sales tax on the excise duty portion of the turnover is invalid in law. The plaintiff did not file any appeal against that decision so far as these defendants are concerned. Consequently, that judgment has become final as between the parties to the present suits. Ordinance No. 4 of 1969, which was replaced by Central Act No. 28 of 1969 validated the levy of sales tax on the excise duty portion of the turnover, the Ordinance and the Act had nothing to do with the decision of the High Court striking down sub-sections (2) and (2A) of section 8 of the Central Sales Tax Act, 1956. This position has been made clear by the High Court's orders in Writ Petitions Nos. 2602 to 2610, 2648, 2649 and 2641 to 2647 of 1967, and the Supreme Court's orders in S.L.P. Nos. 2012 to 2023 of 1973 made subsequent to the date of promulgation of Ordinance No. 4 of 1969. In view of the Supreme Court's judgment, these suits have to be dismissed in limine. The Deputy Commercial Tax Officer, Kovilpatti, revised the assessments after the decision of the High Court in the said writ petitions, holding that sub-sections (2) and (2A) of section 8 of the Central Sales Tax Act, 1956, were ultra vires and the levy of sales tax on the excise duty portion of the turnover was invalid in law. Thereafter, the original orders of assessment are no longer in force. The Deputy Commercial Tax Officer, who has the power to rectify the mistakes in assessment, has not exercised the power, and has not reassessed the turnover. He has no power to make a reassessment after the expiry of five years from the end of each of the assessment years. The Supreme Court's decision in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 is binding only on Nataraja Mudaliar and not any of the defendants in these suits. The plaintiff has no right to question the validity of the decision of the High Court in the said writ petitions so far as the defendants in these suits are concerned. The High Court has cancelled the security bonds executed by the defendants in all the suits barring the defendants in O.S. Nos. 31 and 33 of 1976 by its orders dated 29th July, 1979, in C.M.P. Nos. 18280 to 18288, 18310 to 18313, 18294 to 18298, 18280 to 18293, 17729 to 17732, 17717 to 17720, 17721 to 17724, 17708 to 17716, 18299 to 18302 and 18303 to 18309 of 1968 respectively, after the promulgation of Ordinance No. 4 of 1969. These orders have deprived the plaintiff of the right to rely upon either Ordinance No. 4 of 1969 or Act No. 28 of 1969 which replaced the same. Under these circumstances, the defendants contended that the plaintiff is not entitled to any relief.

5. Seven common issues were framed by the learned Subordinate Judge, Tuticorin, who tried these suits separately and found that there is no necessity for any reassessment to claim the amounts refunded to the defendants, that the court has jurisdiction to entertain the suits, that the amounts were refunded to the defendants only under orders of this Court and not voluntarily, that the plaintiff is entitled to recover the amounts on the basis of the original assessments, that this Court's decisions in the writ petitions do not constitute res judicata barring the present suits and that the suits are not barred by limitation in view of article 112 of the Limitation Act, which provides a period of 30 years. On these findings, he decreed the suits as prayed for with costs.

6. The appellant-defendants in the aforesaid 12 suits are manufacturers and dealers in matches. They sold matches during the years 1957-58 to 1965-66 in the course of inter-State trade. Sales tax under the Central Sales Tax Act (74 of 1956) was levied on those sales, including even the excise duty in the turnover for the purpose of assessment. The defendants filed several writ petitions, as indicated in the earlier part of the judgment, questioning the levy of sales tax in respect of the aforesaid dealings. The High Court allowed the writ petitions following the earlier decision in Larsen and Toubro Limited v. joint Commercial Tax Officer, Madras 1967 20S.T.C.150, where it has been held that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act (74 of 1956) offended articles 301 and 303(1) of the Constitution of India and are unconstitutional and void, and that while under the Tamil Nadu General Sales Tax Act the excise duty is deductible from the turnover, no such provision has been made for deduction of the excise duty from the turnover of inter-State sales or purchases under the Central Sales Tax Act, 1956, with the result that unequal burden will fall on differences in the quantum of turnover because of allowance in one case and disallowance in another, of deduction of excise duty, and that will impede the freedom of inter-State trade, commerce and intercourse under article 301 of the Constitution of India and is not saved by article 303. The State filed an appeal against the decision in only one of the writ petitions disposed of in that batch of cases in 20 S.T.C. 150 namely W.P. No. 836 of 1966, which had been filed by one Nataraja Mudaliar with certificate granted by this Court. It was held by the Supreme Court in that case (22 S.T.C. 376) that sub-sections (2), (2A), and (5) of section 8 of the Central Sales Tax Act, 1956, do not infringe articles 301 and 303(1) of the Constitution and are, therefore, not ultra vires of Parliament, and that in the matter of determining the taxable turnover the same rules will apply by virtue of section 9(1) of the Central Sales Tax Act, whether the tax is to be levied under the Central Sales Tax Act or the General Sales Tax Act, and that if under the Tamil Nadu General Sales Tax Act, in computing the turnover, excise duty is not liable to be included and by virtue of section 9(1) of the Central Sales Tax Act, Central sales tax has to be levied in the same manner as under the Tamil Nadu General Sales Tax Act, the excise duty will not be liable to be included in the turnover for the purpose of Central sales tax. Thus, the Supreme Court, in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 confirmed this Court's decision in Larsen and Toubro Limited v. Joint Commercial Tax Officer ([1967] 20 S.T.C. 150.) that the excise duty is not liable to be included in the turnover for assessment to tax under the Central Sales Tax Act, 1956, but reversed this Court's decision that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, were ultra vires the Constitution of India and held that those sub-sections of section 8 were valid in law. Thereafter, the defendants in all the suits, except O.S. No. 31 of 1976 out of which A.S. No. 615 of 1978 has arisen, filed petitions before the commercial tax authorities stating that they were prepared to receive refund of the tax relating to the excise duty portion of the turnover. The defendants in O.S. No. 41 of 1976, out of which A.S. No. 623 of 1978 has arisen, filed such an affidavit for all the years except 1963-64 and 1964-65. The Board of Revenue directed the Deputy Commercial Tax Officer concerned to refund the tax levied on the excise duty portion of the turnover and the various amounts mentioned supra were refunded to the defendants in all the suits, except O.S. No. 31 of 1976. The defendants in O.S. No. 31 of 1976 moved the High Court by filing W. M.P. Nos. 460 to 466 of 1970 for punishing the Commercial Tax Officer for contempt for not obeying the orders of the High Court in W.P. Nos. 2641 to 2649 of 1967 and the High Court directed by order dated 23rd April, 1971, refund of the amount within 15 days. The Deputy Commercial Tax Officer accordingly refunded a sum of Rs. 1,37,040.88 to the defendants in O.S. No. 31 of 1976 on 6th May, 1971. This sum of Rs. 1,37.040.88 is stated to be the entire tax levied under the Central Sales Tax Act, 1956, inclusive of the portion of the tax levied on the excise duty portion of the turnover. The defendants in O.S. No. 41 of 1976, out of which A.S. No. 623 of 1978 has arisen, also filed W.M.P. Nos. 458 and 459 of 1970 for punishing the Deputy Commercial Tax Officer for contempt for not obeying the High Court's order made in W.P. Nos. 2769 to 2775 of 1967, and those petitions had been dismissed on 23rd April, 1971, after the refund of a total sum of Rs. 99.628.67 in August, September and October, 1968. During the course of the arguments, the learned counsel for the respondent submitted that the defendants in the other suits also filed contempt petitions before this Court and that they were also dismissed on 23rd April, 1971, as detailed below :

Defendants in Appellants in W.M.P. Nos. O.S. No. 28 of 1976 A.S. No. 612 of 1978 8233 to 8241 of 1970 O.S. No. 29 of 1976 A.S. No. 613 of 1978 96 to 99 of 1970 O.S. No. 34 of 1976 A.S. No. 615 of 1978 119 to 122 of 1970 O.S. No. 37 of 1976 A.S. No. 616 of 1978 91 to 95 of 1970 O.S. No. 39 of 1976 A.S. No. 617 of 1978 106 to 110 of 1970 O.S. No. 30 of 1976 A.S. No. 618 of 1978 7530 to 7533 of 1970 O.S. No. 27 of 1976 A.S. No. 619 of 1978 111 to 114 of 1970 O.S. No. 32 of 1976 A.S. No. 620 of 1978 7521 to 7529 of 1970 O.S. No. 33 of 1976 A.S. No. 621 of 1978 115 to 118 of 1970 O.S. No. 35 of 1976 A.S. No. 622 of 1978 181 to 184 of 1970

7. Subsequently, the Government of India passed Ordinance No. 4 of 1969 validating the levy, including the levy already made, of sales tax on the excise duty portion of the turnover and replaced the Ordinance by Central Act No. 28 of 1969. Section 9(1) of that Act, which came into force on 30th August, 1969, lays down :

'Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the 9th day of June, 1969, shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act.'

8. The plaintiff thereafter called upon the defendants to pay the amounts refunded to them and filed the suits for recovery of the amounts alleging that the amounts have not been paid in spite of the communication dated 2nd February, 1974, calling upon the defendants to pay the amounts with interest within a week.

9. The main objections on behalf of the defendants are :

(1) That the Tamil Nadu General Sales Tax Act of 1959 and the Central Sales Tax Act of 1956 are complete codes in themselves in which provisions have been made for assessment, levy, collection, refund, etc., of sales tax, and the civil court has no jurisdiction to entertain the suits for payment of the amounts refunded to the defendants.

(2) In the writ petitions filed against the levy of sales tax under the Central Sales Tax Act, judgments were delivered on 30th January, 1968, accepting the contention of the defendants that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act were ultra vires and that the levy of sales tax on the excise duty portion of the turnover was invalid in law. The plaintiff did not file any appeal against that decision so far as these defendants are concerned, and consequently the judgments in the writ petitions have become final and cannot be questioned by the plaintiff in these suits and the suits should have been dismissed. Ordinance No. 4 of 1969, which was replaced by Central Act No. 28 of 1969, validated the levy of sales tax on the excise duty portion of the turnover; but the Ordinance and the Act have nothing to do with the decision of the High Court striking down sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act. Therefore, the suits are barred by res judicata and should have been dismissed.

(3) The Deputy Commercial Tax Officer, Kovilpatti, revised the assessments after the decision of the High Court in the writ petition, holding that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, are ultra vires and the levy of sales tax on the excise duty portion of the turnover is invalid in law, and thereafter the original orders of assessment are no longer in force and the Deputy Commercial Tax Officer, who has power to rectify the mistakes in assessment, has not exercised the power, and the amounts could not be recovered without any reassessment, which could not be made after the expiry of five years from the end of each of the assessment years.

10. It was further contended that the amount refunded cannot be recovered under section 72 of the Indian Contract Act. On the other hand, it was submitted on behalf of the respondent that no reassessment is necessary, particularly having regard to the scope of the validating provision made in Central Act No. 28 of 1169, that the decisions of this Court in the writ petitions filed by the defendants do not constitute res judicata and that the amounts refunded could be recovered and section 72 of the Indian Contract Act is applicable.

11. We shall first note what was decided by this Court in Larsen and Toubro Limited v. Joint Commercial Tax Officer 1967 20S.T.C.150 and by the Supreme Court in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 , which arose out of the appeal preferred by the State against the decisions rendered in the said Larsen and Toubro Limited v. Joint Commercial Tax Officer 1967 20 S.T.C.150 in favour of one of the parties, namely, Nataraja Mudaliar. The Division Bench of this Court has held in Larsen and Toubro Limited v. Joint Commercial Tax Officer 1967 20 S.T.C.150that the provisions of sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act. 1956, impose or authorise the imposition of varying rates of taxes in different States on same or similar inter State transactions, and the resultant inequality in the burden of tax affects and impedes inter-State trade, commerce and intercourse offending articles 301 and 303(1) of the Constitution and are therefore unconstitutional and void. The learned Judges have also held that while under the Tamil Nadu General Sales Tax Act the excise duty is deductible from the turnover, no such provision has been made for deduction of the excise duty from the turnover of inter-State sales or purchases under the Central Act, with the result that unequal burden will fall on differences in the quantum of turnover because of allowance in one case and disallowance in another, of deduction of excise duty, and that it will impede the freedom of inter-State trade, commerce and intercourse under article 301 of the Constitution and is not saved by article 303. The learned Judges have observed :

'Though on inter-State sales of declared goods falling within section 8(2), the rate of tax to be imposed on that cannot exceed two per cent in view of section 15(1), nevertheless, there can be varying rates in different States, but all below two per cent. Likewise inter-State sales of goods other than declared goods are chargeable at the rate of ten per cent or at the rate prevailing in the taxing State, whichever is higher. If, however, under the law of the taxing State, local sales of any goods by a dealer are exempt from tax generally or subject to tax at lower than two per cent such exemption or lower rate of tax will apply to turnover of inter-State sales of such goods. This is what is provided in sub-section (2A) of section 8. The explanation to the sub-section limits the scope of applicability of local exemptions in certain circumstances to inter-State sales. Sub-section (5) of section 8 confers power upon the State Government to allow by notification exemption or lower rate of tax on inter-State sales of any class or classes of specified goods, notwithstanding the fact that under the State law there is no exemption or a different rate of tax obtains. The effect of such a scheme of taxation is obviously, to our minds, quite discriminatory and considerably affects the freedom of trade commerce and intercourse. The differential rates or exemptions in various States have an unequal burden on same or similar goods which affects their free movement or flow in inter-State trade and commerce .... The unequal burden because of different rates of tax or exemption in the States brings about inequality in the conditions and circumstances necessary for free flow of trade or commerce from one State to another. Differential rates or exemptions obtaining in the several States being automatically applied by virtue of section 8(2) to Central taxation, they will certainly have the effect of discriminating between the goods of one State and the goods of another and may affect the free flow of trade in such goods as between the States. Sub-sections (2A) and (5) of section 8, in our opinion, will only aggravate the discrimination ........

After a careful consideration we have reached the conclusion and hold that sub-sections (2), (2A) and (5) of section 8 offend articles 301 and 303(1) of the Constitution and are unconstitutional and void.'

12. In the appeal by the State against the decision of the said Bench in so far as it related to Nataraja Mudaliar the Supreme Court has held in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, do not infringe article 301 and article 303(1) of the Constitution of India and are, therefore, not ultra vires the Parliament, and that in the matter of determining the taxable turnover the same rules would apply by virtue of section 9(1) of the Central Sales Tax Act, whether the tax is to be levied under the Central Sales Tax Act or the Tamil Nadu General Sales Tax Act and that, if, under the Tamil Nadu General Sales Tax Act, in computing the turnover, excise duty is not liable to be included and by virtue of section 9(1) of the Central Sales Tax Act, Central sales tax has to be levied in the same manner as under the Tamil Nadu Act, the excise duty will not be liable to be included in the turnover for the purposes of Central sales their Lordships of the Supreme Court have observed :

'Prevalence of differential rates of tax on sales of the same commodity cannot be regarded in isolation as determinative of the object to discriminate between one State and another ....... The Central Sales Tax Act is enacted under the authority of the Union Parliament, but the tax is collected through the agency of the States and is levied ultimately for the benefit of the States and is statutorily assigned to the States ......... The Central sales tax though levied for and collected in the name of the Central Government is a part of the sales tax levy imposed for the benefit of the States. By leaving it to the States to levy sales tax in respect of a commodity on intra-State transactions no discrimination is practised : and by authorising the State from which the movement of goods commences to levy on transactions of sale Central sales tax, at rates prevailing in the State, subject to the limitation already set out, in our judgment, no discrimination can be deemed to be practised.

....... The view expressed by the High Court that sections 8(2), 8(2A) and 8(5) infringe article 301 and article 303(1) cannot be sustained.'

13. Regarding the validity of sales tax on the excise duty portion, the learned Judges have observed at page 393 of the Reports :

'If under the Madras General Sales Tax Act in computing the turnover the excise duty is not liable to be included and by virtue of section 9(1) of the Central Sales Tax Act tax has to be levied in the same manner as the Madras General Sales Tax Act, the excise duty will not be liable to be included in the turnover .... We are of the view that in the matter of determining the taxable turnover the same rules will apply by virtue of section 9(1) of the Central Sales Tax Act, whether the tax is to be levied under the Central Sales Tax Act or the General Sales Tax Act.'

14. Thus, the Supreme Court has confirmed the decision of the Division Bench of this Court in so far as it relates to the excise duty portion of the turnover being not liable to be included in the turnover for the purpose of assessment, but has set aside this Court's decision in so far as it held that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, are ultra vires Parliament. But it must be noted that the State had not filed any appeal against the decision of this Court in the writ petitions filed by the defendants in these suits rendered following the decision in Larsen and Toubro Limited v. Joint Commercial Tax Officer [1967] 20 S.T.C. 150. The submission of the learned counsel for the defendants, therefore, is that those decisions have become final and it is not open to the plaintiff to recover the amounts refunded to the defendants taking advantage of the decision of the Supreme Court in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 which had been filed by the State against this Court's decision rendered in the writ petition filed by a third party, Nataraja Mudaliar. Ordinance No. 4 of 1969 was passed by the Central Government and subsequently replaced by Central Act No. 28 of 1969. Section 9(1) of that Act had been extracted by us earlier.

15. The Supreme Court observed in Daryao v. State of U.P. : [1962]1SCR574 :

'As has been observed by Halsbury, 'the doctrine of res judicata is not a technical doctrine applicable only to records; it is a fundamental doctrine of all courts that there must be an end of litigation'. Halsbury also adds that the doctrine applies equally in all courts, and it is immaterial in what court the former proceeding was taken, provided only that it was a court of competent jurisdiction, or what form the proceeding took, provided it was really for the same cause. 'Res judicata', it is observed in Corpus Juris, 'is a rule of universal law pervading every well regulated system of jurisprudence, and is put upon two grounds, embodied in various maxims of the common law; the one, public policy and necessity, which makes it to the interest of the State that there should be an end to litigation - interest republicae ut sit litium; the other, the hardship on the individual that he should be vexed twice for the same cause - nemo debet bis vexari pro eaden causa'. In this sense the recognised basis of the rule of res judicata is different from that of technical estoppel. Estoppel rests on equitable principles and res judicata rests on maxims which are taken from the Roman Law.' Therefore, the argument that res judicata is a technical rule and as such is irrelevant in dealing with petitions under article 32 cannot be accepted.

The same question can be considered from another point of view. If a judgment has been pronounced by a court of competent jurisdiction it is binding between the parties unless it is reversed or modified by appeal, revision or other procedure prescribed by law. Therefore, if a judgment has been pronounced by the High Court in a writ petition filed by a party rejecting his prayer for the issue of an appropriate writ on the ground either that he had no fundamental right as pleaded by him or there has been no contravention of the right proved or that the contravention is justified by the Constitution itself, it must remain binding between the parties unless it is attacked by adopting the procedure prescribed by the Constitution itself. The binding character of judgments pronounced by courts of competent jurisdiction is itself an essential part of the rule of law, and the rule of law obviously is the basis of the administration of justice on which the Constitution lays so much emphasis ..... Similar is the statement of the law in Corpus Juris : 'the doctrine of estoppel by judgment does not rest on any superior authority of the court rendering the judgment, and a judgment of one court is a bar to an action between the same parties for the same cause in the same court or in another court, whether the latter has concurrent or other jurisdiction. The rule is subject to the limitation that the judgment in the former action must have been rendered by a court or tribunal of competent jurisdiction' (Corpus Juris Secundum, Vol. 50 - Judgments). 'It is, however, essential that there should have been a judicial determination of rights in controversy with a final decision thereon.' In other words, an original petition for a writ under article 32 cannot take the place of an appeal against the order passed by the High Court in the petition filed before it under article 226. There can be little doubt that the jurisdiction of this court to entertain applications under article 32 which are original cannot be confused or mistaken or used for the appellate jurisdiction of this court which alone can be invoked for correcting errors in the decisions of High Courts pronounced in writ petitions under article 226. Thus, on general considerations of public policy there seems to be no reason why the rule of res judicata should be treated as inadmissible or irrlevant in dealing with petitions filed under article 32 of the Constitution ........

The next question to consider is whether it makes any difference to the application of this rule that the decision on which the plea of res judicata is raised is a decision not of this court but of a High Court exercising its jurisdiction under article 228 ........ The scope of the writs, orders or directions which the High Court can issue in appropriate cases under article 226 is concurrent with the scope of similar writs, orders or directions which may be issued by this court under article 32. The cause of action for the two applications would be the same. It is the assertion of the existence of a fundamental right and its illegal contravention in both cases and the relief claimed in both the cases is also of the same character. Article 226 confers jurisdiction on the High Court to entertain a suitable writ petition, whereas article 32 provides for moving this court for a similar writ petition for the same purpose. Therefore, the argument that a petition under article 32 cannot be entertained by a High Court under article 226 is without any substance; and so the plea that the judgment of the High Court cannot be treated as res judicata on the ground that it cannot entertain a petition under article 32 must be rejected.

...... we hold that if a writ petition filed by a party under article 226 is considered on the merits as a contested matter and is dismissed the decision thus pronounced would continue to bind the parties unless it is otherwise modified or reversed by appeal or other appropriate proceedings permissible under the Constitution. It would not be open to a party to ignore the said judgment and move this court under article 32 by an original petition made on the same facts and for obtaining the same or similar orders or writs. If the petition filed in the High Court under article 226 is dismissed not on the merits but because of the laches of the party applying far the writ or because it is held that the party had an alternative remedy available to it, then the dismissal of the writ petition would not constitute a bar to a subsequent petition under article 32 except in cases where and if the facts thus found by the High Court may themselves be relevant even under article 32. If a writ petition is dismissed in limine and an order pronounced in that behalf, whether or not the dismissal or not the dismissal would constitute a bar would depend upon the nature of the order. If the order is on the merits it would be a bar; if the order shows that the dismissal was for the reason that the petitioner was guilty of laches or that he had an alternative remedy it would not be a bar, except in cases which we have already indicated. If the petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata ....... If the petition is dismissed as withdrawn it cannot be a bar to a subsequent petition under article 32, because in such a case there has been no decision on the merits by the court.'

16. The decision rendered in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 would be binding on the parties to that decision, namely, the State of Madras and Nataraja Mudaliar, and not the defendants in these suits.

17. In State of West Bengal v. Hemant Kumar : 1966CriLJ805 it has been observed that a wrong decision by a court having jurisdiction is as much binding between the parties as a right one and may be superseded only by appeals to higher tribunals or other procedure like review which the law provides. The decision rendered by this Court in the writ petitions filed by the defendants in these suits questioning the levy of sales tax under the Central Sales Tax Act, 1956, following the decision in Larsen and Toubro Ltd. v. Joint Commercial Tax Officer 1967 20S.T.C.150 would appear to be wrong in so far as it related to the validity of sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, in view of the Supreme Court's decision in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 . However, since that wrong decision has not been superseded by any appeal or other procedure like review, which the law provides, it would be binding on the parties to that extent.

18. In Devilal Modi v. Sales Tax Officer : [1965]1SCR686 the appellant, who had been assessed to sales tax, challenged the order of assessment by a writ petition in the High Court. On the dismissal of the petition by the High Court, he appealed to the Supreme Court. At the hearing of the appeal, he sought to raise some additional contentions. But the appeal was dismissed as the additional contentions were not permitted to be raised. Thereupon another writ petition was filed raising those additional contentions and challenging the order of assessment for the same year. The High Court dismissed the petition on merits. The Supreme Court has held on appeal that the appeal should be dismissed as the principle of constructive res judicata is applicable in the circumstances of the case. This decision also would show that it is not open to the parties, who have not filed any appeal against the decision of this Court in the writ petitions filed by the appellants in these suits to contend that the judgment in those writ petitions does not constitute res judicata.

19. In Gulabchand Chhotalal Parikh v. State of Gujarat : [1965]2SCR547 the appellant prayed for the issue of a writ of mandamus and a writ of prohibition against the State in the writ application filed in the High Court on the ground that his liability as surety for some contractors stood discharged on account of a particular action of the State. The High Court dismissed the writ petition on merits after full contest. The appellant thereupon filed a suit against the State and raised the same plea that he was discharged from liability as surety on the same grounds. The trial court and the appellate courts held that the suit was barred by res judicata in view of the judgment of the High Court in the writ petition. In the Supreme Court it has been held that on the general principles of res judicata the decision of the High Court on the writ petition under article 226 of the Constitution on merits on the matter after full contest operates as res judicata in a subsequent regular suit between the same parties in respect of the same matter. This decision also would show that the decisions in the writ petitions filed by the defendants in those suits which had not been questioned in any appeal or other procedure like review, which the law provides, would operate as res judicata in these regular suits filed by the State which was a party to those writ petitions.

20. In State of Madhya Pradesh v. Mulamchand : AIR1973MP293 , Shiv Dayal, J., has observed :

'Where a decision on a question of law in relation to a given set of facts attains finality, it operates as res judicata in a later suit or proceeding between the same parties. This will be so even if it was erroneous. In Bindeswari v. Bageshwari it was held that 'where the decision of the court in a previous suit determined that the section had never applied to a transaction, a court in a new suit between the same parties with regard to the same transaction cannot try anew the issue as to its applicability in face of the express prohibition in section 11 of the Code'.

...... It follows from this that even if in the earlier case an issue of law was wrongly interpreted in ignorance of a binding precedent, or if in a subsequent binding precedent the law had been interpreted otherwise, the earlier decision on the question of law, which has attained finality, will operate as res judicata between the parties in a subsequent suit or proceeding.

...... Article 141 of the Constitution enacts that the law declared by the Supreme Court 'shall be binding on all courts' within the territory of India. This means that when the Supreme Court expresses its view on any particular point of law, such expression of view shall be considered as overriding a contrary view expressed on the point in an earlier decision of any court. Even obiter dicta of the Supreme Court if deliberately made upon a question with the intention of settling the law, are binding on all courts. However, article 141 does not confer on the Supreme Court any legislative function. The Supreme Court only interprets the law as it stands, but does not amend the law. Their Lordships' decision declared the existing law but did not purport to enact any fresh law.'

21. This decision is in accord with the earlier decision of the Supreme Court in Stale of West Bengal v. Hemant Kumar : 1966CriLJ805 , referred to above, and shows, that the decision of this Court in the writ petitions filed by the defendants in the suits constitutes res judicata.

22. In Har Swarup v. The General Manager, Central Railway : AIR1975SC202 , their Lordships of the Supreme Court have observed :

'It would appear from exhibit 1 that the reliefs claimed by the petitioner in Special C.A. No. 182 of 1971 were exactly the same as in the present case. The grounds covered were also identical. The High Court held that the petitioner was not entitled to any relief and dismissed his writ application. He failed in getting a chance to appeal to this court from the judgment of the Bombay High Court. In such a situation it has got to be held that the petitioner's claim is barred by the principles of res judicata.'

23. In the present case the State has not filed any appeal against the decision in the writ petitions filed by the defendants in these suits following the decision in Larsen and Toubro Ltd. v. Joint Commercial Tax Officer [1967] 20 S.T.C. 150. But the effect of that decision in so far as it has held that the inclusion of the excise duty portion in the turnover for the purpose of assessment to tax under the Central Sales Tax Act, 1956, which has been confirmed by the Supreme Court in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 has been lost by the enactment of section 9(1) in Central Act No. 28 of 1969.

24. The learned counsel for the respondent did not bring to our notice any decision for holding that the decision rendered by this Court in the writ petitions filed by the defendants in these suits in so far as it relates to the validity of sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, would not constitute res judicata in the present suits. In this connection he relied only upon the decisions in Shri Prithvi Cotton Mills v. Broach Municipality : [1971]79ITR136(SC) and of a Bench of this Court in P. S. Subramania Chettiar & Sons v. State : of Tamil Nadu [1977] 39 S.T.C. 103. The assessees in P. S. Subramania Chettiar & Sons v. State of Tamil Nadu [1977] 39 S.T.C. 103 were dealers in paddy and rice. They submitted returns for the assessment years 1961-62 and 1962-63. On a check of accounts, it was found that the turnover in both the years was more than those returned by the assessees, and the assessing officer adopted the turnover as disclosed in the accounts and determined the total turnover and taxable turnover oil 5th October, 1962, and 29th October, 1963, respectively. But in July, 1964, there was a surprise inspection of the residence of one Pitchaimuthu which resulted in the discovery of 29 slips of which 8 were held to refer to the assessees. In another surprise inspection of the records of two individuals under whom Pitchaimuthu was working, 27 more slips were recovered out of which 25 were said to relate to the assessees. On the basis of the slips relating to the assessees, the assessing officer issued a notice under section 16 of the Tamil Nadu General Sales Tax Act, 1959, requiring them to show cause why the turnover for each of these two years should not be determined as having escaped assessment. After following the prescribed procedure, by an order dated 15th December, 1964, the assessing authority by best of judgment determined the escaped turnover for the two years, at higher amounts. The assessees preferred two writ petitions against those orders alleging that section 16 of the Tamil Nadu General Sales Tax Act authorised only the assessment of the actual escaped turnover by best of judgment method. It was ultimately held in those writ petitions by a Full Bench in P. S. Subramaniam Chettiar & Sons v. Joint Commercial Tax Officer III, Dindigul [1966] 18 S.T.C. 357 F.B., that section 16, as it stood at the relevant time, authorised only the assessment of the actual escaped turnover and did not enable the assessing officer to determine the escaped turnover by best of judgment method. Accordingly, the writ appeals were allowed by the Full Bench on 22nd August, 1966, and the reassessment orders were quashed with the observation that the assessing authority was at liberty to proceed further under section 16 in the light of that judgment. Subsequent, the Government proceeded to amend the provision by Tamil Nadu Act No. 18 of 1966. By section 2 of that Act the original section 16 was substituted by a new section 16 with retrospective effect from 1st April, 1959, which clearly enabled the assessing officer to determine the escaped turnover also by best of judgment method. The amending Act thereafter validated the earlier assessments made and provided for consequential remedies by section 3. The learned Judges have observed :

'The original order of assessment was made at a time when the assessing authority had no jurisdiction to determine the turnover on the best of judgment and, therefore, it was illegal. But, the amending provision conferred a jurisdiction on the assessing authority to determine the turnover on the best of judgment and this provision was given retrospective operation. Therefore, the order shall be deemed to have been made under the amended provision, which was given retrospective operation and, if so considered, the order will be valid and legally made. That apart, the validating provision contained in section 3 also, in our opinion, validates all assessments irrespective of the fact whether they were the subject-matter of judicial consideration or otherwise. The language used in section 3 shows that no assessment made under the provisions of section 16 of the principal Act before the date of publication of the Act shall be deemed to be invalid or ever to have been invalid on the ground only that such assessment was not in accordance with the law. But the learned counsel for the petitioners contended that in order to deem an order to be invalid or as not invalid, there should be an assessment order and, in case where by a writ of certiorari, the order has been quashed and removed from the record, the validating provision could not be applied. The matter is not res integra. Number of cases have considered similar arguments. Discussing about the validating statutes in general, the Supreme Court in Shri P.C. Mills v. Broach Municipality : [1971]79ITR136(SC) made the following oft-quoted observations :

'When a legislature sets out to validate a tax declared by a court to be illegally collected under ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidity imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid anti legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected anti by legislative fiat makes the new meaning binding upon courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively, so as to bind even past transactions. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax.' We are not concerned with a case of recovering back the amount refunded. The case is still in the stage of assessment and collection and no question of refund and recovery arises. We are, therefore, of the opinion that in view of section 2, which retrospectively amended section 16, and section 3, which validated the assessments, the original order of assessment made under section 16 had been made valid and effective.'

25. The learned Judges in this case have followed the decision of the Supreme Court in Shri Prithvi Cotton Mills v. Broach Municipality : [1971]79ITR136(SC) .

26. Section 9(1) of Central Act No. 28 of 1969 has validated the levy, collection, action taken or thing done under the principal Act, as amended by that Act, by saying that notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the 9th day of June, 1969, shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly, all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been done or taken in accordance with law.

27. In Chhotalal keshavram v. Additional Assistant Commissioner of Sales Tax, Raipur [1974] 33 S.T.C. 456., originally the period of assessment of tax escaped was three years which, by the Madhya Pradesh General Sales Tax (Second Amendment) Act, 1964, was raised to five years, and the sales tax authorities were given the power to assess within that period in spite of the judgment Act set at naught the Supreme Court's decision between the same parties reported in Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax. : [1964]51ITR557(SC) The action of the State Legislature was challenged as unconstitutional on two grounds, namely, that the principle of res judicata being applicable, the State Legislature should not nullify the decision of the Supreme Court and secondly that as article 141 of the Constitution of India provides that the law declared by the Supreme Court was to be the law of the land, the State of Madhya Pradesh could not nullify that decision of the Supreme Court. The first objection was repelled by the learned Judges observing that the legislature would have the power to amend a law retrospectively so as to nullify the decisions of law courts. The second objection was also held to be untenable on the ground that the Supreme Court has laid down in Janapada Sabha v. C. P. Syndicate Ltd. 1971 M.P.L.J 467 S.C. that :

'It is open to the legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the legislature to say that a judgment of a court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the court. Therefore, the limitation on the legislature would be that it cannot declare ineffective a law declared by the Supreme Court, although it may have power to amend an enactment retrospectively. That would be the effect of article 141 of the Constitution of India.'

28. There can be no doubt that Parliament has power to validate an act done even retrospectively.

29. In Sheo Narain Jugdish Narain v. State of Uttar Pradesh [1974] 33 S.T.C. 488, a Bench of the Allahabad High Court also has held that normally a judgment which has become final operates as res judicata between the parties to the litigation on the points already decided. But this rule does not hold Good when the legislature alters the law retrospectively. Retrospective alteration has the necessary consequence that the law which was construed by the court before its amendment ceases to exist. In such a situation, the declaration of the law made by the court loses its value and efficacy and such a declaration cannot operate as res judicata between the parties after the law itself has been amended. The learned Judges have observed in that decision that :

'No judgment of a court can take away the power of the legislature to make law with retrospective effect. If there is any conflict between the declaration of law made by a court and the exercise of legislative power, the declaration of law made by the court will yield to the legislative enactment.'

30. We hold that the Parliament was competent to enact section 9(1) of Central Act No. 28 of 1969 with retrospective effect and that it has taken away the effect of the decision of this Court in the writ petitions filed by the defendants in these suits in so far as it relates to the levy of tax on the excise duty portion of the turnover. But, having regard to the decisions referred to above, we hold that the decision of this Court in the writ petitions filed by the defendants in so far as it relates to the invalidity of assessing to tax the excise duty portion of the turnover does not constitute res judicata and that the decision of this Court in those writ petitions in so far as it relates to the levy of sales tax on the transactions in question on the other portion of the turnover constitutes res judicata and that it is not open to the plaintiff in these suits to claim that portion of the sales tax pertaining to the turnover excluding the excise duty portion thereof.

31. The learned counsel for the defendants submitted that notice of demand was necessary before instituting the suits and without a valid order of assessment there could be no notice of demand. He relied upon the decision in Secretary of State v. Tatyasaheb : AIR1932Bom386 . In that case the plaintiff claimed repayment of a sum of Rs. 37,000 odd as money paid under a mistake which, it is alleged, was discovered in 1922. The moneys had been paid in respect of a claim by the defendant under the Land Acquisition Act. The land was described by a term which denotes that it was not Government land. The compensation fixed by the Land Acquisition Officer was increased by the District Judge and subsequently by the High Court. The appeal by the Collector for reducing the compensation was dismissed. All the appeals were disposed of in the year 1912 and the compensation of Rs. 37,000 odd was paid subsequently. Subsequently, it was contended by the Government that the land did not belong to the defendant but belonged all the time to the Government, and the money given as compensation was sought to be recovered on two grounds, namely, that there was total failure of consideration and that the payment was made by mistake so that the money is repayable under section 72 of the Contract Act. The defendant had been found to have been in possession of the land from 1839-40 prior to the notification under the Land Acquisition Act. Beaumont, C.J., relying upon the decision in Marriot v. Hampton [1797]2 Sm. L.C.386 held that where money has been paid by the plaintiff to the defendant under the compulsion of legal process, which is afterwards discovered not to have been due, the plaintiff cannot recover it back in an action for money had and received, and that that principle was applied in India, as seen from Kishen Sahai v. Bakhtawar Singh I.L.R. [1898] All 237; (1898) 18 A.W.N. 24.. Regarding the contention that there was total failure of consideration, the learned Chief Justice observed that there was not a total failure of consideration, and an action for money had and received does not lie if the consideration fails only in part and that it was not disputed that the defendant was in possession of the land in question at the time of the notification and there can be no question that the Government succeeded in recovering possession of the land and in getting rid of whatever claim the defendant had to the land, by means of these proceedings and by means of the payment, and therefore it is impossible to say that there was no consideration for the payment.

32. Broomfield, J., who agreed with Beaumont, C.J., in the view that it could not be stated that there was failure of consideration even if the defendant is not really the owner of the land, has observed regarding the other question that to all intents and purposes the money was paid under compulsion of legal process and that being so, the plaintiff has no ground of action under section 72, Contract Act, even if there was a mistake. This decision will not apply to the facts of the present case, for, in that case the defendant was found to have been in possession of the land acquired under the provisions of the Land Acquisition Act for about 60 years prior to the date of notification and he might not have parted with possession of the land but for the acquisition proceedings.

33. In Bihar State v. Jhawarmal : AIR1958Pat310 the learned Judges have observed :

'The principle of law is well-established that money paid under pressure or compulsion of legal process cannot be recovered, and when money is paid in these circumstances, section 72 of the Contract Act has no application.'

34. In the suit which was the subject-matter of appeal before the Patna High Court in that case, the plaintiff prayed for recovery of Rs. 600 odd which is said to have been illegally realised from him on account of arrears of cess by the defendant. The plaintiff's case was that no cess was due from him and that a warrant of arrest was issued against him and under pressure of the process of court the plaintiff paid the amount. The defence was that the plaintiff had Purchased at a revenue sale the property whereunder he was liable to pay cess and revenue for the same. It was found by the High Court that a portion of the amount was actually due from the plaintiff. In those circumstances the question for consideration was whether the plaintiff was entitled to maintain the suit under section 72 of the Contract Act which states that a person to whom money has been paid or anything delivered by mistake or under coercion, must repay or return it. The learned Judges have relied on the decision in Marriot v. Hampton [1797]2 Sm. L.C.386 and Kishen Sahai v. Bakhtawar Singh (1898)I.L.R. 20 All.237; (1898) 18 A.W.N. 24.) and made the above observation. The decision will not apply to the facts of the present cases in so far as they relate to the excise duty portion of the tax refunded to the defendants.

35. In Rayalseema Constructions v. Deputy Commercial Tax Officer [1959]10 S.T.C.345 decided by a Division Bench, the petitioners were assessed to sales tax and the officers making the assessments bona fide believed that the assessments were in accordance with law. Subsequently it was established by judicial decisions that the law conferred upon the officers no power to make the levy. The assessments made on the petitioners became final, because one of the petitioners did not appeal against the assessment and had paid a portion of the assessed tax and the appeal preferred by the other petitioner was dismissed as time-barred. The department demanded payment of the tax from the petitioners on the ground that once the assessments had become final, the amounts charged thereunder remained payable and the State was entitled to collect it. The petitioners had filed writ petitions for prohibiting the officers from recovering the amounts. The learned Judges have observed :

'It appears to us that the words 'levy' and 'collection' are used in article 265 of the Constitution in a comprehensive manner and that they are intended to include and envelop the entire process of taxation ...... And, what article 265 enjoins is that every stage in this entire process must be authorised by the law.

...... The petitioners are not objecting to any mode of collection. Their objection is more fundamental. They object to the collection itself. The answer given on behalf of the State to this objection of theirs is that the assessment has become final. Now, to say that an assessment has become final is not equivalent to saying that the assessment is lawful - as has been demonstrated in the present case. When we say that an assessment has become final all that we ordinarily mean is that the assessee may no longer challenge it in the manner provided by the appropriate statute, that is to say, by resorting to the remedy of appeal, revision or reference, as the case may be. It may be that these remedies have been tried unsuccessfully or it may be that the time within which these remedies should have been sought has expired. But it does not follow that the assessment is lawful .. There can be no doubt whatever that the levy of sales tax so far as it relates to immovable property would be illegal. The Sales Tax Officer would have no jurisdiction whatever to do that. None the less, if owing to some reason or other the assessee omits to appeal the assessment would have become final. The finality of an assessment under the terms of a taxing statute is not always or necessarily conclusive of the legality of the assessment. An assessment made without jurisdiction, or in pursuance of a provision which is found to be ultra vires, continues to be unlawful, and nothing less than a validating provision properly enacted would alter that fact.'

36. This decision also will not apply to the facts of the present suits in so far as they relate to the excise duty portion of the tax refunded to the defendants, which has been validated by Central Act No. 28 of 1969.

37. In Firm A.T.B. Mehtab Majid & Co. v. State of Madras : AIR1963SC928 the petition was filed under article 32 of the Constitution raising the question of statutory right - and the aggrieved party comes to the court for enforcement of the right it will not be giving complete relief if the court merely declares the existence of such right or the fact that that existing right has been infringed ......

38. For the reasons given above, we are clearly of opinion that the High Courts have power for the purpose of enforcement of fundamental rights and statutory rights to give consequential relief by ordering repayment of money realised by the Government without the authority of law.'

39. This decision also appears to be against the contention of the defendants that the plaintiff in these suits is not entitled to recover the portion of the sales tax levied under the Central Sales Tax Act, 1956, on the excise duty portion of the turnover.

40. In Deputy Commercial Tax Officer v. Rayalaseema Constructions [1966]17 S.T.C. 505 S.C., their Lordships of the Supreme Court have observed :

'In State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. : [1959]1SCR379 this court held, agreeing with the Madras High Court, that the provisions introduced by the Madras General Sales Tax (Amendment) Act, 1947, were ultra vires the powers of the Provincial Legislature. After considering the relevant constitutional provisions, this court came to the definite conclusion that the State Legislature had no competence to impose a tax on 'indivisible building contracts'. There is therefore no doubt that the relevant provisions of the Madras General Sales Tax Act in so far as they deal with 'indivisible building contracts' are ultra vires the powers of the State Legislature and therefore void. It follows that in the instant case, the sales tax authorities have acted outside the Act in making an assessment on the basis of the relevant part of the charging section which was declared to be ultra vires by this court. In K. S. Venkataraman & Co. (P.) Ltd. v. State of Madras : [1966]60ITR112(SC) , this court by a majority held that by reason of the fact that the relevant part of the charging section was held to be ultra vires, section 18-A of the Act was not a bar for the maintainability of a suit claiming refund of the tax illegally collected.

Learned counsel for the appellant has however contended that the High Court was in error in issuing a writ of mandamus when the proper remedy of the respondent was to file a suit. It is no doubt true that when there is an alternative remedy, the High Court will not normally entertain an application under article 226, but where, as in the instant case, the High Court has chosen to exercise its jurisdiction to grant relief to the respondent, this court will not interfere with the jurisdiction exercised by the High Court.'

41. This decision also appears to be against the contention of the defendants that the plaintiff is not entitled to ask for repayment of the portion of the sales tax relatable to the excise duty portion of the turnover refunded to the defendants, and that the civil court has no jurisdiction to entertain the suits.

42. In Sales Tax Officer v. Kanhaiya Lal : [1959]1SCR1350 , after extracting section 72 of the Indian Contract Act, their Lordships of the Supreme Court have observed :

'The term 'mistake' has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as well as a mistake of fact. It was, however, attempted to be argued on the analogy of the position in law obtaining in England, America and Australia that money paid under a mistake of law could not be recovered and that that was also the intendment of section 72 of the Indian Contract Act.

...... There is no warrant for ascribing any limited meaning to the word 'mistake' as has been used therein and it is wide enough to cover not only a mistake of fact but also a mistake of law. There is no conflict between the provisions of section 72 on the one hand and sections 21 and 22 of the Indian Contract Act on the other and the true principle enunciated is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was due when in fact it was not due and that mistake, if established, entitles the party paying the money to recover it back from the party receiving the same.

...... The Privy Council decision in Shiba Prasad Singh v. Srish Chandra Nandi . has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the same is bound to repay or return it. No distinction can, therefore, be made in respect of a tax liability and any other liability on a plain reading of the terms of section 72 of the Indian Contract Act, even though such a distinction has been made in America - vide the passage from Willoughby on the Constitution of the United States, Vol. I, p. 12 op. cit. To hold that tax paid by mistake of law cannot be recovered under section 72 will be not to interpret the law but to make a law by adding some such words as 'otherwise than by way of taxes' after the word 'paid'.

If this is the true position, the fact that both the parties, viz., the respondent and the appellants, were labouring under a mistake of law and the respondent made the payments voluntarily would not disentitle it from receiving the said amounts. The amounts paid by the respondent under the U.P. Sales Tax Act in respect of the forward transactions in silver, had already been deposited by the respondent in advance in accordance with the U.P. Sales Tax Rules and were appropriated by the State of U.P. towards the discharge of the liability for the sales tax on the respective assessment orders having been passed. Both the parties were then labouring under a mistake of law, the legal position as established later on by the decision of the Allahabad High Court in Budh Prakash Jai Prakash v. Sales Tax Officer, Pilibhit : AIR1952All764 , subsequently confirmed by this court in Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash : [1955]1SCR243 not having been known to the parties at the relevant dates. This mistake of law became apparent only on May 3, 1954, when this court confirmed the said decision of the Allahabad High Court and on that position being established the respondent became entitled to recover back the said amounts which had been paid by mistake of law. The state of mind of the respondent would be the only thing relevant to consider in this context and once the respondent established that the payments were made by it under a mistake of law, (and it may be noted here that the whole matter proceeded before the High Court on the basis that the respondent had committed a mistake of law in making the said payments), it was entitled to recover back the said amounts and the State of U.P. was bound to repay or return the same to the respondent irrespective of any other consideration. There was nothing in the circumstances of the case to raise any estoppel against the respondent nor would the fact that the payments were made in discharge of a tax liability come within the dictum of the Privy Council above referred to. Voluntary payment of such tax liability was not by itself enough to preclude the respondent from recovering the said amounts, once it was established that the payments were made under a mistake of law. On a true interpretation of section 72 of the Indian Contract Act the only two circumstances there indicated as entitling the party to recover the money back are that the monies must have been paid by mistake or under coercion. If mistake either of law or of fact is established, he is entitled to recover the moneys and the party receiving the same is bound to repay or return them irrespective of any consideration whether the monies had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like. If once that circumstance is established the party is entitled to the relief claimed. If, on the other hand, neither mistake of law nor of fact is established, the party may rely upon the fact of the monies having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion. .... No question of estoppel can ever arise where both the parties, as in the present case, are labouring under the mistake of law and one party is not more interested in the other. Estoppel arises only when the plaintiff by his acts or conduct makes a representation to the defendant of a certain state of facts which is acted upon by the defendant to his detriment; it is only then that the plaintiff is estopped from setting up a different state of facts.'

43. This decision will clearly apply to the facts of the present cases where the excise duty portion of the sales tax had been refunded to all the defendants, except in O.S. No. 31 of 1976, and the defendants in O.S. No. 31 of 1976 except for the years 1963-64 and 1964-65 in view of the affidavits filed by them that they are prepared to receive refund of the tax relating to the excise duty portion of the turnover and the payments had been made in view of the decision of the Supreme Court in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 confirming this Court's decision in Larsen and Toubro Ltd. v. Joint Commercial Tax Officer [1967] 20 S.T.C. 150 that the levy of sales tax on the excise duty portion of the turnover under the Central Sales Tax Act, 1956, is invalid in law. Having regard to the fact that section 9(1) of Central Act No. 28 of 1969 has been introduced with retrospective effect, it is clear that the refund has to be held to have been made under a mistaken view of the law relating to the matter. In these circumstances, we are unable to hold that the plaintiff is not entitled to ask for repayment of the portion of the sales tax relatable to the excise duty portion of the turnover refunded to the defendants. We hold that the plaintiff is entitled to ask for repayment of that portion of the tax refunded to the defendants.

44. The learned counsel for the defendants submitted that the civil court has no jurisdiction to decide disputes arising under the Sales Tax Acts. In this connection he relied upon decisions of the Supreme Court in Kamala Mills Ltd. v. State of Bombay : [1965]57ITR643(SC) and State of Kerala v. N. Ramaswami lyer & Sons : [1966]61ITR187(SC) . The Kamala Mills' case : [1965]57ITR643(SC) arose under the Bombay Sales Tax Act, 1946. Under the provisions of the Act all questions pertaining to the liability of the dealers to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. The whole activity of assessment, beginning with the filing of the return and ending with an order of assessment, falls within the jurisdiction of the appropriate authority, and no part of it can be said to constitute a collateral activity not specifically and expressly included in the jurisdiction of the appropriate authority as such. The finding of the appropriate authority that a particular transaction is taxable under the charging section of the Act, is not a finding on a collateral fact. This is equally true of the appropriate authorities functioning under other similar Sales Tax Acts and the Income-tax Act. The expression 'assessment made' in section 20 of the Bombay Sales Tax Act, 1946, cannot mean only an assessment properly or correctly made. It takes in all assessments made or purported to have been made under the Act. An order of assessment, though erroneous and though based on an incorrect finding of fact, is nevertheless an order of assessment within the meaning of the section; and section 20 in terms provides that it will not be called in question in any civil court. An assessment based on an erroneous finding about the character of the transaction is not an assessment made without jurisdiction and is not outside the purview of section 20. The words used in section 20 are so wide that even erroneous orders of assessment made would be entitled to claim protection against the institution of a civil suit. The jurisdiction of a civil court can be excluded even without an express provision. It is observed in that decision :

'There is no doubt that a claim for the refund of sales tax alleged to have been paid by the appellants through mistake is a claim of a civil nature and normally it should be triable by the ordinary courts of competent jurisdiction as provided by section 9 of the Code; but this section itself lays down that the jurisdiction of the civil courts to try suits of a civil nature can be excluded either expressly or impliedly; and so, the point raised for our decision in the present appeal is whether on a fair and reasonable construction of section 20, it can be said that the jurisdiction of the civil court is barred either expressly or impliedly.

If we examine the relevant provisions which confer jurisdiction on the appropriate authorities to levy assessment on the dealers in respect of transactions to which the charging section applies, it is impossible to escape the conclusion that all questions pertaining to the liability of the dealers to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct; whether or not transactions which are not mentioned in the return, but about which the appropriate authority has knowledge, fall within the mischief of the charging section; what is the true and real extent of the transactions which are assessable; all these and other allied questions have to be determined by the appropriate authorities themselves; and so, we find it impossible to accept Mr. Sastri's argument that the finding of the appropriate authority that a particular transaction is taxable under the provisions of the Act, is a finding on a collateral fact which gives the appropriate authority jurisdiction to take a further step and make the actual order of assessment. The whole activity of assessment beginning with the filing of the return and ending with an order of assessment, falls within the jurisdiction of the appropriate authority and no part of it can be said to constitute a collateral activity not specifically and expressly included in the jurisdiction of the appropriate authority as such ......

Reverting then to section 20, it seems to us plain that the words used in this section are so wide that even erroneous orders of assessment made would be entitled to claim its protection against the institution of a civil suit ......

In the present case, the appellant wants relief of refund of tax which is alleged to have been illegally recovered from it by the respondent, and the ground on which the said relief is claimed is that at the time when the tax was recovered, the appellant was under a mistake of fact and law. According to the appellant, even the respondent might have been labouring under the same mistake of fact and law, because the true constitutional and legal position in regard to the jurisdiction and authority of different States to recover sales tax in respect of outside sales was not correctly appreciated until this court pronounced its decision in the Bengal Immunity Co.'s case : [1955]2SCR603 . That being so, can it be said that the Act provides an appropriate remedy for recovering a tax alleged to have been illegally levied and collected, where the party asking for the said relief pleads a mistake of fact and law ........

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 prescribes 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. Therefore, it cannot be said that even for the claim which the appellant seeks to make in the present suit, there is no alternative remedy prescribed by the Act ... Our conclusion, therefore, is that section 20 should be construed in the same manner in which section 18A of the Madras General Sales Tax Act was construed by this court in Firm of Illuri Subbayya Chetty & Sons : [1963]50ITR93(SC) and that even on this wide construction, the said section is constitutionally valid.'

45. The learned counsel for the defendants submitted that there is no provision in the Sales Tax Act for calling back tax wrongly refunded to the assessee. The assessee is not entitled to retain that money. The money can be got back by moving the civil court.

46. In State of Kerala v. N. Ramaswami lyer & Sons : [1966]61ITR187(SC) the respondents were assessed to sales tax under the Travancore-Cochin General Sales Tax Act, 1950, for the period 16th August, 1950, to 31st March, 1951, on a turnover which included tax collected from their constituents on their sales transactions. After having paid the tax, the respondents instituted a suit in the court of the District Judge for the recovery of the sum of Rs. 7,500 odd claiming that it was in excess of the tax lawfully due from them under the Act. It has been held that section 23A of the Act was incorporated in the Act after the suit was instituted and it did not exclude the jurisdiction of the civil court to try the suit which was properly instituted before it was enacted, that the jurisdiction of the civil court may be excluded expressly or by clear implication arising from the scheme of the Act, and where the legislature sets up a special tribunal to determine questions relating to rights or liabilities which are the creation of a statute, the jurisdiction of the civil court would be deemed excluded by implication; and that even if the jurisdiction of the civil court is excluded, where the provisions of the statute have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure, the civil courts have jurisdiction to examine those cases. It was further held that 'turnover' included the sales tax received by the dealer as part of the price and there was at the material time no express provision in the Act which obliged the taxing authority to exclude from the computation of the taxable turnover the amount of sales tax collected by the dealer and the taxing authority therefore had not infringed any prohibition imposed on him. Their Lordships of the Supreme Court have extracted the following observations of Subba Rao, J., as he then was, in K. S. Venkataraman & Co. (P.) Ltd. v. State of Madras : [1966]60ITR112(SC) :

'If a statute imposes a liability and creates an effective machinery for deciding questions of law or fact arising in regard to that liability, it may, by necessary implication, bar the maintainability of a civil suit in respect of the said liability. A statute may also confer exclusive jurisdiction on the authorities constituting the said machinery to decide finally a jurisdictional fact thereby excluding by necessary implication the jurisdiction of a civil court in that regard.'

47. They have observed :

'In a case recently decided by this court, Kamala Mills Ltd. v. State of Bombay : [1965]57ITR643(SC) , exclusion of the jurisdiction of the civil court to entertain and decide suits for refund of tax paid fell to be determined. In that case a dealer was assessed to tax under the Bombay Sales Tax Act (5 of 1946) in respect of 'outside sales' which by virtue of the ban imposed by article 286 of the Constitution were not taxable. The dealer sued to recover the tax paid by him. This court held that where the Sales Tax Officer by misconceiving the nature of the transactions brings to tax transactions in respect of which the State has no authority to legislate for levying tax because of the ban imposed by article 286 of the Constitution, the validity of the order of assessment of tax cannot be reopened in a suit for refund of tax paid. The Bombay Sales Tax Act (5 of 1946), it is true, contained section 20 which in terms enacted that an assessment shall not be called in question in any civil court, but the court in Kamala Mills' case : [1965]57ITR643(SC) held that the jurisdiction of the civil court to entertain a suit for tax assessed under the Act was excluded expressly, and by the clear implication of the Act as well ....

In Basappa's case : [1964]5SCR517 , the taxpayer sought in an action for refund of tax paid a decree on the plea that the transactions in respect of which tax was levied were 'outside sales', and it was held that in the absence of express exclusion of the jurisdiction of the civil court, the action for refund of tax was maintainable. But the nature of the transactions taxed in the Kamala Mills' case : [1965]57ITR643(SC) was not different. In the judgment in Kamala Mills' case : [1965]57ITR643(SC) , it was pointed out that the jurisdiction of the civil court to entertain a suit for refund of tax paid in compliance with an order of assessment may be excluded either expressly or by necessary implication, and as the scheme of the Bombay Sales Tax Act, 1946, indicated that a complete machinery was set up by constituting appropriate authorities under the Act, and creating a hierarchy of authorities to deal with the problem of levying tax as contemplated by the Act, jurisdiction of the civil court to entertain the suit was excluded by implication as well as by express enactment ......

The action of the taxing authority in Basappa's case : [1964]5SCR517 in taxing transactions which he erroneously held were taxable was no more outside the Act, than the action of the taxing authority in Kamala Mills' case : [1965]57ITR643(SC) . If it be granted that the jurisdiction of the civil court may be excluded by express enactment or by necessary intendment arising from the scheme of the Act, Basappa's case : [1964]5SCR517 must be regarded as wrongly decided.

It is true that even if the jurisdiction of the civil court is excluded, where the provisions of the statute have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure, the civil courts have jurisdiction to examine those cases.'

48. In the present cases what is sought to be recovered in these suits is the tax refunded to the defendants in view of the decision of this Court in the writ petitions filed by the defendants, on the basis that the defendants are not entitled to retain the sales tax relatable to the excise duty portion of the turnover in view of the enactment of section 9(1) of Central Act No. 28 of 1969 and that they are not entitled to retain the tax relatable to the other portion of the turnover refunded to them in view of the subsequent decision of the Supreme Court in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 .

49. In T. V. Sundaram lyengar and Sons Private Ltd. v. Deputy Commercial Tax Officer, Madurai Town I [1960]11 S.T.C.443, which came up before a Bench of this Court, the petitioners, who were registered dealers, were assessed to sales tax on the amount representing sales tax collected by them in the years 1948-49 and 1949-50. The Sales Tax Appellate Tribunal on appeal held that the petitioners were not liable to pay sales tax on that amount and directed a refund of it. Against this order of the Tribunal a revision petition was filed in the High Court. During the pendency of that revision petition, the officer refunded the amount to the petitioner after obtaining an undertaking from them that they would repay the amount refunded in case the High Court set aside the order of the Tribunal. The High Court, however, upheld the order of the Tribunal. Subsequently the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954, which in effect provided that sales tax collected by a dealer would form part of the turnover of the dealer and which also nullified the effect of an order of the court or tribunal to the contrary, was passed. The officer then issued to the petitioners notices in form B under rule 12 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, calling upon them to remit the amount refunded to them. The petitioners challenged the demand in proceedings under article 226 of the Constitution. Referring to the decision of Rajagopala Ayyangar, J., in M. M. Muthukaruppan Chettiar v. Deputy Commercial Tax Officer [1960]11 S.T.C.220the learned Judges observed that :

'The learned Judge held that, if the tax had remained uncollected, the provisions of section 17 would enable a levy or collection at the enhanced rate, but those provisions would not enable the Government to get back what was collected at the higher rate and refunded under a valid order of a court. It might be noticed that section 17 of the Act did not nullify orders passed by courts. The principle of that decision cannot, however, apply to the present case, where the effect of section 3 of Act XVII of 1954 is to make all orders, whether by court or tribunal, invalid, with the result that what now stands as the order of the assessment is the original order of the Deputy Commercial Tax Officer, assessing turnover by including the amount of sales tax collected by the petitioners from their customers. Section 3 would also make the order of refund void and of no legal effect.

But the mere fact that the orders of the Sales Tax Appellate Tribunal and the High Court in revision and the orders of refund pending the revision cases were rendered invalid and of no legal effect, could not nullify or reverse the factum of refund. By reason of the subsequent enactment the petitioners became disentitled to the amount of refund. Possibly they are not entitled to retain the same. How is that amount to be got back by the Government Can that be done under the power under rule 12 In other words, the question in the present case is not so much whether the refund is valid or invalid, but whether the machinery provided by the Act enables the Government to get back the money refunded to the petitioners. The impugned notices, calling upon the assessees to pay back the amount purport to be issued under the provisions of rule 12 of the Turnover and Assessment Rules. That rule states :

'After making the final assessment under sub-rule (2) or (3) of rule 11, the assessing authority shall examine whether any and if so, what amount is due from the dealer towards it after deducting any tax already paid on the provisional assessment, with reference to rule 7, rule 8 or sub-rule (4) of rule 11. If any amount is found to be due from the dealer towards the final assessment, the assessing authority shall serve upon the dealer a notice in form B, and the dealer shall pay the sum demanded at the time and in the manner specified in the notice. If the tax due on the final assessment is lower than the tax already paid on the provisional assessment, he shall serve upon the dealer a notice in form C for refunding the excess tax. If the final assessment is exactly equal to the tax already paid on the provisional assessment, the assessing authority shall inform the dealer what the final assessment is and that no further amount is due from him towards it.' Rule 12, on its terms, will only apply to the case of an original assessment. If the tax due under the final assessment is found to be lower than the tax paid on the provisional assessment, the officer is directed to issue a notice in form C for refunding the excess tax. If the former is less than the latter, a notice in form B is to be issued, making a demand on the assessee for the amount of the deficit. No question will arise, if the amount paid by way of provisional assessment is equal to that assessed as tax. What the rule contemplates is a mere arithmetical computation after the order of assessment is made. There is no power to alter or correct the amount or to issue notices in form B or C more than once ....... When an assessment is varied in appeal or revision, rule 12 does not enable an issue of form B or C notice to collect the deficiency in or refund the excess payment of tax. The rule-making authorities have, therefore, provided separate rules for the purpose. Rules 14-A and 15(2) of the Madras General Sales Tax Rules provide for the case of modification of assessment by the appellate and revisional authorities. They state :

'14-A. Where the tax as determined by the initial assessing authority appears to the appellate authority under section 11 or revising authority under section 12 to be less than the correct amount of the tax payable by the dealer, the appellate or revising authority shall, before passing orders, determine the correct amount of tax payable by the dealer issuing a notice to the dealer and after making such enquiry as such appellate or revising authority considers necessary.

15. (2) The order passed on appeal or revision shall be given effect to by the licensing or assessing authority who shall refund within two months from the date of the communication of the order any excess tax or fee found to have been collected and shall also have power to collect any additional tax or fee which is found to be due in the same manner as a tax or fee assessed by himself.'

There would be no necessity for these provisions in the rules if under rule 12 itself the assessing authority had a power to issue demands or make refunds on an alteration in the assessment being made by all appellate or revisional authority. Rule 12 can, therefore, apply only for those cases expressly provided for by it, that is, a case of the initial assessment. If once a demand or refund certificate has been issued, it ceases to have effect except in cases covered by rules 14-A and 15(2) of the General Sales Tax Rules. A fortiori rule 12 cannot apply to a case where as a result of the statute like Act XVII of 1954 there has been a variation in the assessment : neither rule 14-A, 15(2) or any other rule would apply to such a case. Therefore, rule 12 cannot be used to get back an amount refunded to the assessee by the issue of form B notice ...... There is thus no machinery provided either in the Act or Rules to enable the Government to collect under rule 12 the amount paid by way of refund.'

50. This decision would show that there is no machinery provided either in the Act or the Rules to enable the Government to collect under the provisions of the Act the amount paid by way of refund and that the amount could be recovered only either by resort to proceedings under article 226 or article 32 of the Constitution of India or by filing a suit in the civil court.

51. In Bhailal Bhai v. State of Madhya Pradesh [1960]11S.T.C.511 which came up before a Division Bench of the Madhya. Pradesh High Court, by a notification dated 24th October, 1953, issued by the Government under section 5 of the Madhya Bharat Sales Tax Act, 1950, sales tax was chargeable at a certain rate on 'leaves of tobacco, manufactured tobacco used for smoking, eating and for snuff, and tobacco chura used for the manufacture of bidis' sold by an importer. Locally grown tobacco was not, however, subject to a similar tax. The writ petitioners before that High Court sold imported as well as locally grown tobacco, and the sales tax authorities assessed them to sales tax on the basis of a taxable turnover determined after deducting from their turnover the sale of 'domestic tobacco' and recovered the tax accordingly. The petitioners filed a petition under article 226 of the Constitution of India challenging the validity of the imposition of sales tax on tobacco imported by them on the ground that it contravened the provisions of article 304(a) of the Constitution of India and claimed a refund of the tax already collected from them. The High Court held that the imposition of sales tax on the petitioners in respect of the sales of tobacco imported into Madhya Bharat was illegal, being in violation of article 304(a) of the Constitution, and that the petitioners were entitled to refund of the amount paid by them as tax. The learned Judges observed :

'We are clear in our mind that the imposition of sales tax on the petitioners in respect of the sales of tobacco imported into Madhya Bharat was in violation of article 304(a) and thus illegal.

The question whether, if as we think, the levy of sales tax on the petitioners in respect of the sales effected by them of the imported tobacco is ultra vires, they can ask for a refund of the amount of sales tax already paid by them, is concluded by the decision of the Supreme Court in Sales Tax Officer, Banaras v. Kanhaiya Lal : [1959]1SCR1350 . That was a case in which him position of sales tax on forward transactions in silver bullion was held to be ultra vires by the High Court of Allahabad in Budh Prakash Jai Prakash v. Sales Tax Officer, Kanpur [1952]3S.T.C.185, which was subsequently affirmed by the Supreme Court in Sales Tax Officer. Pilibhit v. Budh Prakash Jai Prakash : [1955]1SCR243 . Thereafter, the assessee-firm in that case applied to the Sales Tax Officer, Banaras, for a refund of the amount of sales tax paid by it. When this was refused, the firm filed all application in the Allahabad High Court under article 226 of the Constitution and asked for a writ of certiorari for quashing three assessment orders and a writ of mandamus requiring the Sales Tax Officer to refund the tax amount. That petition was allowed and a writ of mandamus directing the taxing authority to refund the amount to the assessee was issued. The learned single Judge of the Allahabad High Court took the view that the payment of illegal tax by the assessee was a payment under mistake and that, therefore, under section 72 of the Contract Act the taxing authority was bound to refund the moneys unlawfully received by it from the assessee on account of sales tax. When the matter went up before the Supreme Court, the main question that was canvassed was whether section 72 of the Contract Act applied. It was held by the Supreme Court that the term 'mistake' in section 72 of the Contract Act has been used without any qualification or limitation whatever and comprises within its scope a mistake of law as well as of fact and that where it is once established that the payment, even though it be of a tax, has been made by a party labouring under a mistake of law, the party is entitled to recover the same and the party receiving the same is bound to repay or return it. The effect of the decision of the Supreme Court is that payment by the assessee of a tax, which is subsequently declared to be ultra vires, must be regarded as a payment made under mistake and the party receiving the same is bound to return the amount of tax irrespective of any consideration whether the moneys have been paid voluntarily, subject, however, to questions of estoppel, waiver, limitation or the like.'

52. This decision also shows that a petition under article 226 of the Constitution of India for the issue of a writ of mandamus requiring the Sales Tax Officer to refund the tax illegally collected, could be filed. It would follow that a similar writ could be issued directing return of the tax wrongly refunded to the assessee. Then there can be no doubt that the suit which is in the nature of an alternative remedy would lie.

53. Under these circumstances, we are unable to agree with the learned counsel for the defendants that the civil court has no jurisdiction to decide the question in these suits whether the plaintiff is entitled to recover the excise duty portion of the sales tax levied under the Central Sales Tax Act, 1956, refunded to the defendants.

54. The learned counsel for the defendants then submitted that reassessment vis-a-vis the Central Sales Tax (Amendment) Act (28 of 1969) is necessary and that the plaintiff is not entitled to recover the amount without a fresh reassessment having regard to the fact that the original assessment orders had been revised before the amounts were refunded to the defendants. In Deputy Commissioner v. Aluminium Industries Ltd. [1970]25S.T.C. 476 S.C. the assessees were finally assessed for the year 1960-61 under the Central Sales Tax Act, 1956, by the Sales Tax Officer, by his order dated 18th October, 1962, and for the assessment year 1961-62 on 29th October, 1962. In both the assessments, the assessee made a claim for deduction of the trade discount paid to its customers from its gross turnover in determining the taxable turnover, and that claim was allowed by the Sales Tax Officer. But the Deputy Commissioner took the view that the claim was not admissible under law and accordingly he took action under section 15(1) of the General Sales Tax Act, 1125 M.E., and revised the orders of the Sales Tax Officer by disallowing the above claim. The assessee took the matter in appeal before the Appellate Tribunal which held that the irregularity sought to be rectified was one relating to escaped turnover and that the order passed by the Deputy Commissioner on 23rd June, 1986, was clearly beyond four years from the assessment year 1960-61 and was barred by limitation. The Appellate Tribunal did not decide the other question, namely, whether the trade discount was an allowable deduction and therefore no turnover had escaped assessment. The Deputy Commissioner took the matter in revision to the High Court and contended that the Appellate Tribunal was not justified in holding that the irregularity sought to be rectified was assessment of escaped turnover and as such the same was barred by limitation. The High Court did not decide the question as to whether the order impugned was barred by limitation. On the other hand, the High Court examined the question raised by the assessee on the merits as to whether the 'trade discount' was a permissible deduction in assessment under the Central Sales Tax Act, and held that in view of section 9(3) of the Central Sales Tax Act read with rule 7(1)(a) of the General Sales Tax Rules, 1950, 'all deductions allowed under the State law to be made from the gross turnover in determining the net turnover shall be liable to deduction in determining the taxable turnover under the Central Sales Tax Act, 1956', and accordingly dismissed the tax revision cases. Their Lordships of the Supreme Court observed in their judgment that the legal position has been changed as a result of the issue of the Central Sales Tax (Amendment) Ordinance, 1969 (No. 4 of 1969), which was promulgated on 9th June, 1969. Clause 9 of that Ordinance provides :

'Validation of assessments, etc. - (1) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the commencement of this Ordinance, shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Ordinance and accordingly -

(a) all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been, done or taken in accordance with law;

(b) no suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of any such tax; and

(c) no court shall enforce any decree or order directing the refund of any such tax.

(2) For the removal of doubts, it is hereby declared that nothing in sub-section (1) shall be construed as preventing any person -

(a) from questioning in accordance with the provisions of the principal Act, as amended by this Ordinance, any assessment, reassessment, levy or collection of tax referred to in sub-section (1), or

(b) from claiming refund of any tax paid by him in excess of the amount due from him by way of tax under the principal Act as amended by this Ordinance.'

55. Their Lordships of the Supreme Court have observed :

'These two clauses have been made expressly retrospective and the result, therefore, is that the law as stated in the majority decision of this Court in Lakshminarasimhiah's case : [1965]2SCR129 has been superseded.'

56. They held that the appeals before them should be allowed and the judgment dated 23rd July, 1968, of the Kerala High Court in Tax Revision Cases Nos. 10 and 11 of 1967 should be set aside and they also set aside the orders passed by the Appellate Tribunal and the Deputy Commissioner and the Sales Tax Officer and directed that the matter should go back to the Sales Tax Officer for reassessment in accordance with law.

57. The suits, out of which the revision petitions came up before Ramanujam and V. Ramaswami, JJ., in Venkatappa & Sons v. Ramalingam Pillai & Sons [1973]32S.T.C. 274 were filed by the respondents therein for recovery of amounts collected from them by the defendants as Central sales tax in respect of certain sales of arecanuts effected by the defendants to the plaintiffs who were dealers at Tiruvarur. The defendants were dealers in arecanuts at Shimoga. They have been selling arecanuts to the plaintiffs during the years 1961 to 1964. They have been charging and collecting Central sales tax from the plaintiffs on the sales of arecanuts, on the basis that the transactions were inter-State sales attracting the levy of sales tax under the Central Sales Tax Act, 1956. The tax thus collected has been shown separately in the various invoices issued by the defendants in each of the suits. The sales tax collected by the defendants from the plaintiffs had been originally remitted by the defendants to the Mysore sales tax authorities. Subsequently, the Supreme Court on 10th November, 1964, held in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons : [1965]2SCR129 that though section 6 of the Central Sales Tax Act is the charging section, the liability to pay tax is subject to the other provisions of the Act, that section 9(2) provides that tax shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State, that the tax under the Central Act shall be levied in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected and that, therefore, if no tax was exigible in respect of the same transactions under the Mysore Sales Tax Act, no tax was payable under the Central Act. Relying on the said decision, the sales tax authorities of the Mysore State refunded the tax collected on inter-State sales of arecanuts to the defendants in or about 1967. The plaintiffs who became aware of the said refund of the tax filed various suits in the year 1969 for recovery of the amounts paid by them as sales tax from the defendants, alleging that the Central sales tax has been paid by them under a mistaken impression that the Central sales tax was leviable on the inter-State sales of arecanuts by the Mysore dealers. However, with a view to get over the decision of the Supreme Court referred to above, the Central Sales Tax (Amendment) Act, 1969 (Central Act 28 of 1969), had been enacted by the Parliament whereby section 9 of the principal Act was amended with retrospective effect, so as to enable the levy of tax on inter-State sales whether such sales are exigible to tax in the concerned State or not, and all the assessments made already had been validated notwithstanding any decree or order of any court to the contrary. The learned Judges have observed :

'The fact that the sales tax authorities refunded the amount to the defendants cannot mean that they are entitled to the benefit of those amounts .........

Of course, the defendants can successfully resist the suit if it is shown that in enforcement of the provisions of the amending Act there has been a reassessment of the turnover in question in their hands and that the amounts refunded earlier had been paid back to the State towards the sales tax liability as reassessed. Unless the sales tax authorities at Mysore make a reassessment and recall the order of refund, the provisions of the amending Act will not entitle them to call back the amount which they had refunded to the defendants. The amending Act merely validates assessments, reassessments, levy or collection of tax already made and that will not enable the authorities to go behind the order of refund unless there has been a reassessment bringing to charge the inter-State transactions in question on the basis of the amending Act. In M. M. Muthukaruppan Chettiar v. Deputy Commercial Tax Officer [1960]11S.T.C.220 this Court, while construing a similar validating provision in section 17 of the Madras General Sales Tax (Third Amendment) Act, 1956, had expressed the view that the validating Act will not enable the collection of the refunded amount unless there are clear words to that effect in the amending Act. In that case a hotel proprietor was assessed to sales tax for 1953-54 at the enhanced rate of tax of 4 1/2 pies in the rupee under the proviso to section 3(1)(b) of the Madras General Sales Tax Act, 1939. Later, the said proviso to section 3(1)(b) was held to offend article 14 of the Constitution by the High Court. In view of the said decision, the Tribunal held that the assessee was liable to be taxed only at 3 pies in the rupee. On the basis of the order of the Tribunal which became final, a certain sum was refunded to the assessee in September, 1956. Subsequently, the proviso to section 3(1)(b) was replaced with retrospective effect by another proviso and the earlier assessments were validated. Thereafter the assessing authority issued a notice to the assessee requiring him to repay the sum refunded to him on the ground that by reason of the amendment made retrospectively the refund made was not proper. That demand was challenged by the assessee before this Court, and this Court expressed the view that :

'When the excess over three pies per rupee was refunded to the petitioner, it was an amount lawfully due to him and was properly paid. The only question is, whether the payment had become unlawful or could be deemed to have been made under a mistake of law. If ex hypothesi the refund was due it was due because of the judgment of this Court upholding the objection to the validity of the charging provision; there could be no mistake in law in making the refund and the mere fact that the proviso has been re-enacted with retrospective effect cannot have the effect of rendering the refund then made either illegal, unlawful or one under a mistake of law ....... I consider that the demand for the repayment of the amount refunded is not justified by law, and that the petitioners are entitled to the reliefs which they seek by these petitions.' A similar view has been taken in Sundaram Iyengar and Sons v. Deputy Commercial Tax Officer [1960]11S.T.C.443 in respect of amending Act 17 of 1954. We are, therefore, of the view that the validating Act 28 of 1969 will not enable the collection of the refunded amount straightaway.'

58. This decision appears to be against the defendants' contention that they cannot be compelled to repay the sales tax relatable to the excise duty portion of the turnover refunded to them, because they are not entitled to the same and it legally belongs to the plaintiff having regard to the effect of section 9(1) of the Central Sales Tax (Amendment) Act (28 of 1969). But it is in favour of the defendants in so far as it is observed there that the amending Act merely validates assessments, reassessments, levy or collection of tax already made and it will not enable the authorities to go behind the order of refund unless there has been a reassessment bringing to charge the inter-State transactions in question on the basis of the amending Act.

59. In Commercial Tax Officer v. Sri Venkateswara Oil Mills : [1973]3SCR742 , their Lordships of the Supreme Court have observed :

'Section 10 of the Amendment Act mitigates the rigour of the amendment made to section 6 of the principal Act. But for section 10 of the Amendment Act, every dealer would have had to pay tax on the turnovers in question whether he had collected tax or not. If the impact of section 10 is ignored, as the High Court has done, then the assessments in question are liable to be reopened whether the assessees had collected the tax or not. The assessees cannot have the benefit of section 10(1) but not the burden of proof placed on them under section 10(2). If the reasoning of the High Court is correct then it is the assessees who will be deprived of the benefit of section 10(1) of the Amendment Act because there could not have been any finding in the original assessment orders that the assessees had not collected tax. The legislative intention is clear and beyond doubt. The law gives a further opportunity to the assessees whose assessments are sought to be reopened to satisfy the assessing authorities that they had not collected tax in respect of the turnovers in question. Rule 38 of the Mysore Sales Tax Rules must be read with section 10 of the Amendment Act. If so read, it is clear that the assessing authorities before reassessing the dealers should afford them reasonable opportunity to satisfy them that they have not collected tax.'

60. This decision does not help the defendants in the present case, for, those observations were made having regard to the fact that in all cases except in one before the learned Judges of the Supreme Court which were dealt with separately, their Lordships were told that the assessees had not been given opportunity to show that they had not collected sales tax in respect of the turnover with which they were concerned, but according to the officers concerned, the assessees had failed to discharge their burden. There is no dispute about the collection of the Central sales tax by the assessees in the present cases over the excise duty portion of the turnover.

61. The goods dealt with in International Cotton Corporation (P.) Limited v. Commercial Tax Officer : [1975]2SCR345 were all declared goods which, under the Mysore Sales Tax Act, were liable to single point tax. The assessment periods were prior to 10th November, 1964. The assessing authority assessed all these transactions of inter-State sales to tax. The Supreme Court delivered judgment in Yaddalam's case : [1965]2SCR129 holding that where a certain transaction was not liable to sales tax if it were an intra-State sale under the sales tax law of the appropriate State, it would not be liable to sales tax if it were an inter-State sale. Following that decision the assessment orders were rectified giving effect to the judgment. To set aside the effect of that decision sub-section (1A) in section 6 was inserted and a consequential amendment was made in sub-section (2A) of section 8 of the Central Sales Tax Act. Subsequently, the assessing authorities again rectified the assessment orders and brought to tax the inter-State sales. Their Lordships of the Supreme Court have observed :

'Clearly when it is said that the effect of the Central Sales Tax (Amendment) Act, 1969, is to supersede the judgment of this court in Yaddalam's case : [1965]2SCR129 , the sales tax authorities were undoubtedly entitled to rectify their earlier rectification order which was made consequent on the decision in Yaddalam's case : [1965]2SCR129 . After the Central Sales Tax (Amendment) Act, 1969, and the decision of this court in Joseph's case ([1970] 25 S.T.C. 483 (S.C.).) there was no question about the error not being apparent on the face of the record.

...... What was sought to be rectified was the assessment order rectified as a consequence of this court's decision in Yaddalam's case : [1965]2SCR129 . After such rectification the original assessment order was no longer in force and that was not the order sought to be rectified ..... Rule 38 itself speaks of 'any order' and there is no doubt that the rectified order is also 'any order' which can be rectified under rule 38.'

62. The learned counsel for the respondent relied upon the decisions in Harakchand Rugchand v. State of Mysore [1969]23S.T.C.197, Hira Lal Rattan Lal v. Sales Tax Officer : [1973]2SCR502 , Gill and Co. (P.) Limited v. Commercial Tax Officer, II Circle, Gadage [1973] 31 S.T.C. 336, State of Andhra Pradesh v. Shah Jamnadas Amichand [1975] 35 S.T.C.281 and State of Uttar Pradesh v. Modi Industries Limited : [1977]2SCR548 and contended that no reassessment is necessary.

63. In Harakchand Rugchand v. State of Mysore [1969]23 S.T.C.197, in respect of the assessment year 1957-58 the Commercial Tax Officer made an assessment order by which the turnover of the assessee relating to the sale of cloth held by him on 14th December, 1957, was also included in the assessment. But in the order made in the writ petition on 21st August. 1963, that part of the assessment was set aside, in the view that the relevant part of section 5 of the Mysore Sales Tax Act, 1957, did not charge that part of the turnover with sales tax. But, by the Mysore Sales Tax (Amendment) Act, 1963, section 5(5A) was amended retrospectively and in consequence, the turnover which had been included by the Commercial Tax Officer in the order of assessment stood properly included. Section 34 of the amending Act validated the assessment made under the principal Act notwithstanding any judgment, decree or order of any court or tribunal. So, the assessment made by the Commercial Tax Officer thus stood retrospectively validated. But, meanwhile, on the strength of the order in the said writ petition, the petitioner sought a revision of the tax attributable to the turnover, which in the opinion of the High Court, had been wrongly included in the assessment, and a refund was made to him. On the validation of the assessment by the amending Act, the Commercial Tax Officer called upon the petitioner to pay back the amount which has been refunded to him. The assessee contended that this demand was without competence on the ground that the refund made by the Commercial Tax Officer also stood validated under section 34 of the amending Act and that the impugned demand could be made only after there was a rectification under rule 38 of the Mysore Sales Tax Rules of the order of assessment of the Commercial Tax Officer as previously made. The learned Judges have rejected both the submissions, observing that the contention that the refund made by the Commercial Tax Officer also stood validated by section 34 of the amending Act is plainly groundless. They have observed :

'But, if a refund is made because this court directed a refund while it quashed some part of the order of assessment, it is not a refund made under the Act, but is one made in obedience to the direction of the court. If, as explained by this court, the assessment itself was not authorised by the Act, the collection of the tax made in enforcement of that order of assessment is not a collection made under the Act nor is its refund made under the orders of the court, a refund made under the Act.

So, the argument that there was legislative validation of the refund must be negatived.

The argument that the impugned demand had to be preceded by an order of rectification under rule 38 is, in our opinion, equally untenable. Section 34 of the amending Act validated an order of assessment notwithstanding the pronouncement of this court to the contrary. So, on such retrospective validation, it was a good assessment when it was made and, under that assessment, the petitioner was liable to pay the tax, which, however, had been by then refunded to him, under an order of this court. If the order of assessment was, therefore, a good assessment, the tax paid by the petitioner should not have been refunded to him and if it was nevertheless refunded, because this court directed the refund, the Commercial Tax Officer on the validation of the assessment, had the power to call upon the petitioner to repay the amount which had been refunded to him. The liability to pay back that amount was a consequence which plainly flowed from retrospective validation.

It is difficult to understand the assertion that the impugned demand was not possible unless there was a rectification of the assessment. The assessment, on validation, no longer suffered from the infirmity of invalidity which constituted the foundation of the judgment of this court in Writ Petition No. 1235 of 1962. As the assessment order now stands after its validation, the amount refunded to the petitioner was tax properly payable by him. A rectification of the order of assessment was necessary only if without such rectification the amount refunded could not have been demanded as tax and it became necessary for the Commercial Tax Officer to clothe himself with the authority to demand it, to make a rectification of his own assessment. But, such rectification was obviously unnecessary in the present case.

The decision of the Supreme Court in M. K. Venkatachalam, Income-tax Officer, and Another v. Bombay Dyeing and Mfg. Co. Ltd. : [1958]34ITR143(SC) and of the High Court Madras in Ceylon Thowfeck Hotel v. State of Madras [1961] 12 S.T.C.238 have no resemblance to the case before us.

In the former case, the Income-tax Officer made a refund of interest on the advance tax paid by the assessee on the basis of statutory provisions which were subsequently retrospectively amended. The elucidation made by the Supreme Court was that the recovery of the interest could not be demanded unless such demand was preceded by rectification of the assessment.

In the latter case, the assessment made under the Madras General Sales Tax Act by the Deputy Commercial Tax Officer by which he made a demand of tax at a higher rate than that authorised by the Act, was modified by the Sales Tax Appellate Tribunal which substituted a tax computed at a lower rate which was what was charged by the Act. Here again, there was an amendment of the Sales Tax Act by which the higher rate was retrospectively substituted. The High Court of Madras reached the conclusion that since under the modified order of assessment made by the Sales Tax Appellate Tribunal, the tax was payable only at the lower rate, the rectification of that order of assessment was a condition precedent to the demand for the payment of the difference which had by then been refunded to the assessee.

But, in the case before us, unlike the assessments in the two cases on which Mr. Katageri depended, the order of assessment made by the Commercial Tax Officer required no rectification, and, as it stood, when the impugned demand was made it made the petitioner liable to pay the tax which was subsequently refunded to him. It would, therefore, be futile to suggest that there was any necessity for the rectification of that order of assessment.'

64. In Hira Lal Rattan Lal v. Sales Tax Officer : [1973]2SCR502 section 3 of the U.P. Sales Tax Act, 1948, provides for the levy of multi-point sales tax. Section 3-D provided for a single point tax at the stage of first purchase by a dealer in respect of foodgrains and certain other goods and certain the State Government to notify such goods. By notification dated 1st October, 1964. 'foodgrains' were specified under section 3-D for single point tax at the stage of first purchase. The sales tax authorities sought to bring to tax, oil the basis of section 3-D and the notification, the first purchases of processed or split foodgrains including dal on the ground that they constituted a separate item quite independent of the unprocessed or unsplit foodgrains. The Allahabad High Court in Tilok Chand Prasan Kumar v. Sales Tax Officer, Hathras, District Aligarh [1970] 25 S.T.C.118, held that such a levy was invalid. Subsequent to that decision, the U.P. Sales Tax (Amendment and Validation) Act, 1970, replacing an Ordinance, was passed and explanation II was added to section 3-D(1) providing that 'split or processed foodgrains ..... shall be deemed to be different from unsplit or unprocessed foodgrains' and nothing in sub-section (1) 'shall be construed to prevent the imposition, levy or collection of the tax in respect of the first purchases of split or processed foodgrains merely because tax had been imposed, levied or collected earlier in respect of the first purchases of those foodgrains in their unsplit or unprocessed form'. Section 7 of the amending Act also validated earlier levies and declared notifications issued under section 3-D to be deemed to have been issued under the Act as so amended. The appellants filed writ petitions in the High Court challenging the validity of the explanation and section 7 of the amending Act of 1970. The High Court dismissed the writ petitions. On appeal, the Supreme Court held that a fresh levy of tax could be imposed retrospectively and that the legislative power to impose tax also includes the power to tax retrospectively. Their Lordships of the Supreme Court have observed at page 185 :

'This court has pointed out in several cases the distinction between the encroachment on the judicial power and the nullification of the effect of a judicial decision by changing the law retrospectively. The former is outside the competence of the legislature but the latter is within its permissible limits .........

A feeble attempt was made to show that the retrospective levy made under the Act is violative of article 19(1)(f) and (g). But we see no substance in that contention .......... ........ If the legislature had not retrospectively validated the assessments made on the first purchases of split or processed foodgrains, what did section 7 seek to achieve That section says in plain words that notwithstanding any judgment, decree or order of any court or tribunal to the contrary, every notification issued or purporting to have been issued under section 3-D of the principal Act, before the commencement of the amending Act shall be deemed to have been issued under that section as amended by the amending Act and shall be so interpreted and be deemed to be and always to have been as valid as if the provisions of the amending Act were in force at all material times and accordingly, anything done or any action taken (including any order made, proceedings taken, jurisdiction exercised, assessment made, or tax levied, collected or paid, purporting to have been done or taken in pursuance of any such notification) shall be deemed to be, and always to have been validly and lawfully done or taken. ......... The contention that we should ignore section 7 of the amending Act is a contention difficult of acceptance.

......... Consequently the expression 'foodgrains' in the notification will also have to be read in the same manner. This, in our opinion, is the reasonable way of reading the notification in the light of section 3-D, explanation II to that section and section of the Act.'

65. In Gill and Co. (P.) Limited. v. Commercial Tax Officer, II Circle, Gadag [1973] 31 S.T.C. 336, after the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons : [1965]2SCR129 the petitioner filed writ petitions challenging the validity of the orders of assessment pursuant to which it had already paid the tax on inter-State sales which would not be liable to tax if they had been intra-State sales. The High Court alleged the writ petitions following the decision in Yaddalam's case : [1965]2SCR129 and quashed the assessment orders. Pursuant to the orders of the High Court the assessing authority refunded to the petitioner the entire tax paid by it. Subsequently, the Parliament passed the Central Sales Tax (Amendment) Act (28 of 1969) with the object of rendering the decision of the Supreme Court in Yaddalam's case : [1965]2SCR129 ineffective and thereupon the assessing authority issued notices calling upon the petitioner to pay back the amount refunded to it. The petitioner thereupon filed writ petitions and contended (1) that the assessment orders which were quashed by the High Court in the writ petitions had become non est in law and could not be revived by the passing of the amending Act, and (2) that in any event section 9 of the amending Act did not automatically revive the original assessment orders which had been set aside on appeal or revision, following the decision in Yaddalam's case : [1965]2SCR129 . The learned Judges of the Full Bench have held that,

(1) Section 9 of the amending Act operated to render ineffective the order of the High Court in the writ petitions and to render effective and valid the original assessment orders as if they had been made under or pursuant to section 6(1A) of the Central Sales Tax Act, 1956.

(2) Section 9 likewise rendered ineffective any order made by an appellate or revisional authority under the Sales Tax Act following the decision in Yaddalam's case : [1965]2SCR129 and rendered valid and effective the original assessment orders set aside by such authority for the said reason as if the same had been made under or pursuant to section 6(1A) of the Central Sales Tax Act.

(3) As the demand made pursuant to the original assessment orders were also rendered valid and effective, recovery of tax pursuant to such demand did not stand in need of any machinery other than or in addition to the machinery provisions contained in the Mysore Sales Tax Act, 1957, read with the Central Sales Tax Act, 1956.

(4) As the retention of the tax refunded to the petitioner was unlawful and the demand originally made became valid and enforceable, such demand attracted the entire machinery for recovery provided in the Sales Tax Act and the notices received by the petitioner must be regarded as mere reminders or communications to it that under the law as amended the original demand had become enforceable and that the petitioner could no longer retain the money refunded to it.

66. The learned Judges, after extracting a portion of the Supreme Court's observation in Sadasib Prakash Brahmchari, Trustee of Mahiparakash Muth v. State of Orissa : [1956]1SCR43 have observed :

'Next comes section 9, validating all assessments made before 9th June, 1969. It opens with a non obstante clause overriding anything contained in any judgment, decree or order of any court or other authority. What this section in effect says is that the assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action taken or any thing done in relation to such assessment, reassessment, levy or collection under the provisions of the Act, shall be deemed to be valid and effective as if they were made under the provisions of the Act which stood amended by the amending Act .........

It is indisputable that the introduction of sub-section (1A) of section 6 of the main Act has been given retrospective effect as if it has been in the original Act at the initial enactment itself. Such introduction of the said sub-section, therefore, in the words of the Supreme Court, has so fundamentally altered the conditions on which the decision in Yaddalam's case : [1965]2SCR129 was rendered that the said decision could not have been given in the altered circumstances. That means that the amendment has rendered the decision ineffective by removing the very basis of the decision. By the express language of section 9 of the amending Act, assessments made must be deemed to be as valid and effective as if the same had been made under the principal Act as amended, that is to say, as if they had been made in the light of or pursuant to sub-section (1A) of section 6 of the main Act and this deeming has to be made notwithstanding any judgment, decree or order of any court or other authority to the contrary. The expression 'authority' undoubtedly means any authority functioning under the Sales Tax Act itself. If, therefore, the order of any appellate or revisional authority functioning under the Sales Tax Act has, following the decision in Yaddalam's case : [1965]2SCR129 , set aside any assessments then the order or decision of such authority also is rendered ineffective for the same reason. The said result is brought about by the amending Act, not by a mere declaration that the decision in Yaddalam's case : [1965]2SCR129 or any judgment, decree or order of any court or authority shall not be binding without effecting any change in the state of law on the basis of which the decision in Yaddalam's case : [1965]2SCR129 was rendered, but by changing or altering the law and this conferring validity upon assessments already made and any further action or proceedings taken in connection with it or pursuant thereto.

...... As the assessment is valid and enforceable, the retention of money already refunded also necessarily becomes unlawful. If the retention of the tax refunded is unlawful and the demand originally made is effective, then it inevitably follows that the valid and enforceable demand attracts the entire machinery for recovery provided in the Sales Tax Act. In this view, the notices received by the petitioner in these cases which he impugns in the writ petitions must be regarded as mere reminders or communications to him, that under the law as amended, the original demand has become enforceable and that he can no longer retain the money refunded to him.

...... No question of rectification or correction or recalculation of the amount of tax arises.'

67. This decision will apply squarely to the facts of the present cases and will show that the refund of the excise duty portion of the tax made by the sales tax authorities to the defendants in all these suits is unlawful under the changed circumstances, that the retention of that portion of the tax by the defendants is also unlawful and that the demand originally made has become effective and there is no need for any reassessment.

68. In State of Andhra Pradesh v. Shah Jamnadas Amichand [1975] 35S.T.C.281, for the assessment year 1964-65 certain inter-State transactions of the petitioner in turmeric were taxed under the Central Sales Tax Act, 1956. But on appeal, following the decision in Yaddalam's case : [1965]2SCR129 , it was held that since such transactions were not amenable to local tax if they had taken place inside the State, they were also not liable to tax under the Central Act. Subsequently the Central Sales Tax (Amendment) Act (28 of 1969) was passed and thereupon the Commercial Tax Officer issued notices asking the petitioner to either claim exemption under section 10 of the Amendment Act or otherwise pay the amount as per the assessment validated by section 9 of that Act. The assessee filed a writ petition contending that a combined reading of sections 9 and 10 would mean that the assessments had to be reopened in order to determine the tax liability. The learned Judges held that section 9 of Act No. 28 of 1969 validated all assessments notwithstanding anything contained in any judgment, decree or order of any court or authority, and that even if the assessments were set aside in appeal or quashed in proceedings under article 226 of the Constitution the assessments would be valid. The validation was, however, subject to any remedy which the petitioner might adopt according to section 9(2). But as no such remedy was adopted by the petitioner, the assessments had become final and there is no question of reopening them or determining the turnover afresh. The main contention urged before the learned Judges was that a combined reading of sections 9 and 10 would mean that the assessments had to be reopened in order to determine the tax liability. That contention was repelled by the learned Judges who have observed that there is no question of reopening of the assessments, nor is there any question of determining afresh the turnover. This decision also applies to the facts of the present cases and shows that the contention that the assessment had to be reopened is not tenable. The defendants have not contended that they will have any remedy if the assessments are reopened. They have not contended that they had not collected the tax relatable to the excise duty portion of the turnover in these cases.

69. In State of Uttar Pradesh v. Modi Industries Limited : [1977]2SCR548 , the assessee, manufacturing sugar, oil, vanaspati and soap, exercised the option under section 7 of the U.P. Sales Tax Act, 1948 (as it stood prior to its amendment by section 7 of U.P. Act 19 of 1956), and submitted returns of sales tax on the basis of its turnover of previous two years ending 31st October, 1948. The rate of sales tax for certain commodities was enhanced from the assessment year 1948-49 with effect from June, 1948, and for some commodities with effect from 1st July, 1948. On the question whether the sales tax on the assessee's entire turnover of his previous years should be assessed at the old rates and not at the enhanced rates, on reference at the instance of the assessee to the High Court which, by its judgment dated 24th July, 1961, held that it was so liable to assessment on the entire turnover of the previous year at the rate prevailing on the first day of the assessment year and that any change in the rate of sales tax during the course of the assessment year could not be applied to that assessment. The assessee then filed an application under section 11(8) of the Act for a direction for the payment of interest on the amount which had become refundable as a result of that judgment. The High Court held by its order dated 22nd February, 1966, that the assessee was entitled to interest at 2 per cent on the refundable amount. The assessee accordingly made an application to the revising authority to pass an order for refund of a certain sum with interest at 2 per cent. The revising authority, however, dismissed the application by order dated 28th December, 1968, on the ground that section 31 inserted in the Act by the U.P. Bikiri Kar (Sanshodhan) Adhiniyam, 1962, with retrospective effect has provided that notwithstanding the option exercised by the assessee, the tax would have to be computed in the light of the rates prevailing in the assessment year as if they were projected upon the turnover of the previous year. The assessee then filed an application under article 226 of the Constitution and the High Court held that its judgment dated 24th July, 1961 might be said to have become erroneous as a result of the amendment, but so long as that judgment stood, it was binding upon the parties and the revising authority had no option except giving effect to it in its order passed under section 11(6). In the appeal, their Lordships of the Supreme Court have observed :

'It was at that stage that section 31, which was inserted by section 7 of the amending Act, was sought to be applied to the controversy. According to sub-section (2) of that section, the assessments made at the enhanced rates, in accordance with the notification dated April 9, 1948, were to be deemed to be good and valid as if they had been duly made, and as if the amendment made by the insertion of section 31 had been in force on all material dates. It was expressly provided by the sub-section that that was to be so notwithstanding any judgment, decree or order of any court. The order of the Additional Judge (Revisions) dated December 28, 1968, had, therefore, the effect of recognising the restoration of the orders of assessment which were made by the Sales Tax Officer at the enhanced rates, and sub-section (2) of section 31 had the effect of making them 'good and valid in law'. It cannot be said that the Additional Judge (Revisions) erred in taking that view, and in not passing an order for giving effect to the judgment of the High Court dated July 24, 1961, which had become unenforceable by the aforesaid section 31 ......

So when section 31 of the Act is clearly valid and is retroactive, and the legislature has shown the intention of restoring the assessments and orders made under the provisions of sub-section (1) of section 7 (as it stood prior to its amendment by section 7 of U.P. Act 19 of 1956) as good and valid assessments in law, as if they had been duly made, that was enough to set the controversy at rest and there is nothing wrong with the view which has been taken by the Additional Judge (Revisions) in his order dated December 28, 1968.'

70. This decision also would show that no reassessment is necessary as regards the sales tax levied on the excise duty portion of the turnover.

71. The learned counsel for the plaintiff did not bring to our notice any decision in which it has been held that no reassessment is necessary even in a case where the tax had been refunded in pursuance of a decision of the High Court and that decision had been reversed on appeal by the Supreme Court. The cases relied upon by the learned counsel for the plaintiff relate to assessments which had been validated retrospectively by enactments in which it is stated that notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the Act which was in force prior to the date of the decision holding that the particular provision was invalid in law, shall be deemed to be valid and effective as if such assessment, reassessment, levy or collection had been made, or action or thing taken or done under the provisions of the Act which had been revalidated as amended by the Amendment Act. These enactments also say that all acts, proceedings or things done or taken by any Government or by any officer of the Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be and to have always been done or taken in accordance with law. Therefore, the original assessment has to be deemed to have been made in accordance with law, and the revision of assessment and refund have to be held to have been not in accordance with law and there is no necessity for any reassessment. We hold accordingly as regards the excise duty portion of the tax refunded to the defendants. In regard to the portion of the tax refunded to the defendants, relatable to the turnover less the excise duty portion thereof, we are of the opinion that there is no need to render any decision in this case on the question whether any reassessment is necessary, having regard to the fact that we have held in these appeals that so far as that portion of the tax refunded to the defendants is concerned, the decision of this Court in the writ petitions filed by the defendants has become final, no appeal having been filed against the same, and the decision of the Supreme Court that sub-sections (2), (2A) and (5) of section 8 of the Central Sales Tax Act, 1956, are intra vires Parliament has been rendered only in State of Madras v. Nataraja Mudaliar : [1968]3SCR829 which had been filed by the State against the decision in Larsen and Toubro Limited v. Joint Commercial Tax Officer [1967] 20 S.T.C.150 in so far as it related to one assessee, Nataraja Mudaliar.

72. No argument was advanced on the question of the liability to pay interest at 6 per cent on the amount of tax refunded to the defendants by their learned counsel. We find that the retention of the tax relatable to the excise duty portion of the turnover refunded to the defendants after the communication dated 2nd February, 1974, demanding payment of the amount is unlawful and that the defendants are liable to pay interest on that portion of the tax refunded to them at 6 per cent per annum from 2nd February, 1974.

73. In the result we find that the plaintiff is entitled to the principal amount claimed in all the suits except O.S. Nos. 31 and 41 of 1976, and also to interest thereon at 6 per cent per annum from 2nd February, 1974, till date of payment and to proportionate costs in those suits; that in O.S. No. 31 of 1976, the plaintiff is entitled to payment of that portion of the tax refunded to the defendants, namely, Rs. 1,37,040.88, which is relatable to the excise duty portion of the turnover in that case, and to interest on that amount at 6 per cent per annum from 2nd February, 1974, and proportionate costs; and that in O.S. No. 41 of 1976, the plaintiff is entitled to payment of that portion of the tax refunded to the defendants, namely, Rs. 90,628.67, which is attributable to the excise duty portion of the turnover in that case, and to interest thereon at 6 per cent per annum from 2nd February, 1974, and proportionate costs. The suits regarding the balance are dismissed but without costs, having regard to the fact that the liability to pay interest has not been seriously disputed and the claim of the plaintiff for a portion of the amount claimed in O.S. Nos. 31 and 41 of 1976, has been disallowed only on the ground that the decision in the writ petitions filed by the defendants in those suits constitutes res judicata. Therefore, we allow A.S. Nos. 612, 613 and 615 to 622 of 1978, in part, namely, regarding the interest allowed by the trial court on the principal amounts claimed in those suits from the date of refund up to 1st February, 1974, and we allow A.S. Nos. 614 and 623 of 1978, in part except regarding the excise duty portion of the tax refunded to the defendants in those suits and the interest thereon from 2nd February, 1974, without costs for the above reason, and we dismiss all the appeals in other respects with proportionate costs. The plaintiff shall have proportionate costs in the lower court as well. We think it unnecessary to remand O.S. Nos. 31 and 41 of 1976, for the purpose of ascertaining the excise duty portion of the tax refunded to the defendants in those two suits. The parties to the concerned appeals Nos. 614 and 623 of 1978 may file memos of calculation and we shall mention the amounts thereafter.

74. These appeals having been posted this day for being spoken to, the court delivered the following judgment.

75. The learned counsel for the parties in A.S. Nos. 614 and 623 of 1978, have agreed that there may be a decree in A.S. No. 614 of 1978, in favour of the plaintiff for a sum of Rs. 87,557.75 and in A.S. No. 623 of 1978, for a sum of Rs. 89,860.73 which are the amounts of tax refunded in respect of the excise duty portion of the turnover for the various years mentioned in the plaint.

76. There will be a decree in these two appeals for these amounts in terms of the judgment passed by us on 27th April, 1979.

77. Ordered accordingly.


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