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V. Murugayya Chettiar and anr. Vs. the State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case Number Second Appeal Nos. 1855 of 1964 and 108 of 1965
Judge
Reported in[1969]23STC500(Mad)
AppellantV. Murugayya Chettiar and anr.
RespondentThe State of Madras
Appellant Advocate K.S. Naidu and ; R. Vijayan, Advs.
Respondent Advocate The Additional Government Pleader
DispositionAppeal allowed
Cases ReferredDhulabhai v. State of Madhya Pradesh
Excerpt:
- .....to return the licence fee for the earlier years. since the department refused to refund the licence fees which were not paid voluntarily by the appellants, they filed the suits after giving notice to the respondent. the defence to the suits is that the suits are not maintainable in the civil courts under the provisions of section 51 of the madras general sales tax act. the courts below accepted the contention of the department and dismissed the suits. it is against the dismissal of the suits, the plaintiffs have come up in second appeals.2. the lower appellate court has found that the suits are in time. therefore the only point for consideration in the second appeals is whether the suits are maintainable in the civil court.3. mr. k.s. naidu, learned counsel for the appellants,.....
Judgment:

Venkatadri, J.

1. These two second appeals arise out of suits instituted by two appellants for refund of licence fee of Rs. 3,300 and Rs. 4,600 respectively collected from them quite contrary to the provisions of the Sales Tax Act. The case of the appellants is that they are carrying on business in paddy and rice and that, from F953-54, they also carried on commission agency in the same business. They maintained separate accounts in respect of the two businesses. In respect of the commission agency business, the Sales Tax Authorities directed the appellants to take out agency licence, and accordingly the appellants had been taking out licence from the year 1953-54 till 1957-58. In 1958-59, the department discovered the mistake that they could not collect licence fee from the appellants, whereupon the appellants applied to the department for refund of the licence fee collected so far. The department refunded the licence fee collected for 1958-59, but refused to return the licence fee for the earlier years. Since the department refused to refund the licence fees which were not paid voluntarily by the appellants, they filed the suits after giving notice to the respondent. The defence to the suits is that the suits are not maintainable in the civil courts under the provisions of Section 51 of the Madras General Sales Tax Act. The courts below accepted the contention of the department and dismissed the suits. It is against the dismissal of the suits, the plaintiffs have come up in second appeals.

2. The lower appellate court has found that the suits are in time. Therefore the only point for consideration in the second appeals is whether the suits are maintainable in the civil court.

3. Mr. K.S. Naidu, learned counsel for the appellants, contended before me that the lower courts erred in coming to the conclusion that the suits are barred in the civil court under Section 51 of the Act. He cited in this connection the decision of the Supreme Court in Sales Tax Officer v. Kanhaiya Lal : [1959]1SCR1350 , where it was held that, if an assessee paid tax through mistake of law, he will be entitled to recover the money though the State has utilised the money so paid. Their Lordships of the Supreme Court observed :

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.... 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....

4. The Supreme Court further observed that merely because the State has not retained the moneys paid as sales tax by the assessee but has spent them away in the ordinary course of the business of the State will not make any difference to the position and under the plain terms of Section 72 of the Contract Act, the assessee will be entitled to recover back the moneys paid by it to the State under a mistake of law. In the present case, the payment of licence fee is not a voluntary payment. The B. Memo issued by the Assistant Commercial Tax Officer, Tiruvarur, to the plaintiff under exhibit B-2 stated that if the amount of the fee was not paid within 21 days from the date of receipt of the notice, action would be taken under the provisions of the Revenue Recovery Act. Learned counsel cited the decision in Venkataraman and Company v. State of Madras [1966] 17 S.T.C. 418, where the Supreme Court has observed that an authority created by the statute must act under the Act and not outside it, and if it acts on the basis of a provision of the statute which is ultra vires, to that extent it would be acting outside the Act and in that event, a suit to question lies in a civil court, and contended that in the instant case there is no provision in the Act to levy assessment on licence fees and when there is no provision to levy licence fees the levy is made without any jurisdiction and, where there is total want of jurisdiction, the levy can be questioned in a civil court. No doubt, learned counsel for the State contended that the principle laid down in the Supreme Court decision above cited would not be applicable to the facts of the present case because in that case, a provision of the Act was struck down by the Court as ultra vires and that in the present case the licence fees were collected during the course of assessment proceedings. But to my mind, there is hardly any difference between a case where a particular provision in the Act enabling assessment being declared ultra vires and a case where there is absolutely no provision in the Act to levy assessment of licence fees. In both the cases, the provision to levy assessment is non est.

5. Learned counsel for the respondent cited the decision in Firm of Illuri Subbayya Chetty and Sons v. State of Andhra Pradesh [1963] 14 S.T.C. 680 for the proposition that a suit is not maintainable once an assessee paid the licence fee. In that case, the assessee himself submitted voluntarily returns imagining himself to be liable for assessment and the Sales Tax Authorities acted on the basis of the return submitted by the assessee. Later it turned out that the transactions were sales and not purchases. It is a case of incorrect or wrong assessment under the Act which should be corrected by proceedings taken under the Act. But in the present case, there is no provision in the Act or the Rules to levy licence fees. Their Lordships of the Supreme Court have recently in the case of Dhulabhai v. State of Madhya Pradesh [1968] 22 S.T.C. 416 reviewed the entire case law on the subject and formulated the general principles. What is relevant for our purpose are these:

(1) Where the statute gives a finality to the orders of the special tribunals the civil courts' jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.

(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court.

(3) and (4)...

(5) Where the particular Act contains no machinery for refund of tax collected or illegally collected a suit lies.

(6) ...

(7) An exclusion of the jurisdiction of the civil court is not readily to be inferred unless the conditions above set down apply.

6. Applying the principles to the facts and circumstances of the present case, I am of the opinion that the provisions of the Act in question do not arm the Sales Tax Authorities to collect licence fees from the appellants. But they proceeded to issue notice to the appellants and threatened them with action under the Revenue Recovery Act. It is not a case of voluntary payment. The authorities compelled the appellants to pay the licence fee. They paid the fees under a mistake of law. They are, therefore, entitled to recover the same and a suit lies in the civil court for recovery of the amounts.

7. The second appeals are, therefore, allowed with costs and the suits will stand decreed. Leave granted.


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