S. Mohan, J.
1. Suit for refund of a sum of Rs. 51,954.36, being Rs. 43,659-15 with interest thereon at 6 per cent. per annum from 18th January, 1969.
2. The plaint allegations inter alia are as follows:
The plaintiff is a dealer in Engineering Equipments and act on behalf of their principals, Messrs. Alfred Herbert (India) Private Limited for goods imported under the Import Trade Control permit issued to various customers. As the plaintiff's principals were importing and supplying the goods, the Controller of Imports permitted the customers to authorise the plaintiff's principals to import the goods on their behalf. According to the terms arrived at between the parties , the plaintiff's principals are entitled to payment of the price of the goods supplied and the sales tax in full when they presented the invoice for the goods. All such transactions are sales effected in respect of goods imported on Actual Users' Licence obtained by the customers from the Chief Controller of Imports and Exports and letters of authority given to the plaintiff's principals to import the goods. The transactions were taxed by the first defendant as local sales for the assessment year upto 1966-67. For the said assessment year, the second defendant passed the assessment order MGST 431 of 1966-67 on 15th March, 1968, including a turnover of Rs. 17,46,368-59 as taxable under the provisions of the Tamil Nadu General Sales Tax Act. This turnover represents sales in the course of import, and it would be covered by the ratio of the decision laid down in K.G. Khosla and Company (Private) Limited v. Deputy Commissioner of Commercial Taxes : 3SCR352 . The Supreme Court delivered the judgment on 18th January, 1966, and it was actually reported on 1st May, 1966 in the Law Journals. On 14th October, 1968 the third defendant wrote to the plaintiff stating that these transactions would fall within the decision of the Supreme Court. Thereupon the plaintiff filed writ Petition No. 3544 of 1969 to direct the sales tax authorities to investigate the character of the transactions in the light of the Supreme Court decision and also to refund the sum of Rs. 43,659. On 23rd November, 1971 the Writ petition was dismissed. Consequently the present suit has been filed, claiming refund on the ground of mistake of fact and mistake of law.
3. The defence taken by the first defendant and the second defendant is that the suit is not maintainable in law and more so in view of the provisions of Section 51 of the Tamil Nadu General Sales Tax Act, 1959. This apart, the facts of this case differ from the facts of the decision in K.G. Khosla and Company (I) Limited v. Deputy Commissioner of Commercial Taxes : 3SCR352 . It is also submitted that the plaintiff preferred an appeal to the Appellate Assistant Commissioner, and in the appeal, it did not dispute the liability to tax on the turnover now in dispute. Nor were any materials placed before the concerned tax authorities to decide this question. Therefore, it cannot be contended that the plaintiff has committed any mistake. Nor can it be said that the assessment order is ultra vires. Inasmuch as the assessment order has become final, the same cannot be challenged in an indirect Way by filing the suit. Hence the suit is liable to be dismissed.
4. The defendants 3 and 4 have filed a common written statement, setting out the nature of the transactions. According to them, in view of the decision of the Supreme Court, the State is prohibited from imposing the sales tax on the sale or purchase of goods where such sales take place in the course of import of the goods into the territory of India. The plaintiff should contest the liability to sales tax only with the Tamil Nadu Government. These defendants do not admit that the plaintiff discovered the mistake only from the third defendant on 14th October, 1968. The plaintiff is barred from maintaining the suit, having already filed a writ petition. Inasmuch as no reservation has been made for any relief to be pursued against the defendants, the suit is barred.
5. On these pleadings, the following issues have been set down for trial:
1. Whether the transactions in question are in the course of import?
2. Whether the plaintiff is estopped from questioning the legality of the assessment order in so far as it relates to the disputed turnover?
3. Whether the plaintiff is entitled to refund of the tax levied and collected under the relevant provisions of the Tamil Nadu General Sales Tax Act, 1959, even though the plaintiff has allowed the assessment to become final by not challenging the same before the appropriate statutory authorities?
4. Whether plaintiff is entitled to any interest?
5. Whether the suit is not maintainable in law?
6. Whether this Court has no jurisdiction to try this suit?
7. Whether plaintiff has cause of action to file this suit?
8. Whether the suit is barred by limitation?
No oral evidence has been let in, and the parties were content in marking the documents. Exhibits P-1 to P-4 were marked on the side of the plaintiff, and Exhibit D-1 and D-2 were marked on the side of the defendants.
6. Issue No. 5: It is contended by the learned Government Pleader appearing for the defendants 1 and 2 that the suit is not maintainable in view of the express bar contained in Section 51 of the Tamil Nadu General Sales Tax Act, 1959. In support of this contention two decisions are cited before me. One is Kamala Mills Limited v. State of Bombay : 57ITR643(SC) , in which the Supreme Court in dealing with a similar case arising out of the Bombay Sales Tax Act, 1945, held:
Under the Bombay Sales Tax Act 1946, the appropriate authorities have been given power in express terms to examine the returns submitted by the dealers and to deal with the question as to whether the transactions entered into by the dealers are liable to be assessed to sales tax under the relevant provisions of the Act or not. All question 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.
If the appropriate authority, while exercising the jurisdiction and powers under the relevant provisions of the Act, holds erroneously that a transaction, which is an outside sale, is not an outside sale and proceeds to levy sales tax on it, it cannot be said that the decision of the appropriate authority is without jurisdiction.
In a case decided by this Court, in State of Madras v. Ramakrishna Mills (Coimbatore) Ltd. : AIR1970Mad316 , under similar circumstances, it was held as follows:
(1) The sales tax authority has jurisdiction to decide whether a transaction of sale or purchase takes place within the State of Madras. In the same category will fall a decision as to whether a sale or purchase takes place outside the State or in the course of inter-State trade or commerce or in the course of import or export attracting the bar under Article 286 of the Constitution. These questions involve a decision of fact as well as of law and they are within the exclusive jurisdiction of the sales tax authority. Even if the sales tax authority arrives at an erroneous decision on these points the remedy of the aggrieved party is the remedy provided in the Sales Tax Act, by way of appeal and revision to the High Court. The effect of Section 18-A of the Madras General Sales Tax Act, 1939, is that the aggrieved party cannot by-pass these provisions and seek remedy by way of suit under the common law, and urge that what has been paid by him is one paid under a mistake of fact and law and therefore refundable under the general principle stated in Section 72 of the Indian Contract Act.
(2) Under the scheme of the Sales Tax Act, the assessing authority is also given power to decide the jurisdictional question which arises in such cases, namely, whether a sale taxes place in, side the State, in which event alone the sales tax authority of the State has got jurisdiction to assess it; or whether a sale taxes place outside the State or in the course of inter-State trade or commerce or in the course of import or export, in which case, under Article 286 of the Constitution, the Sales Tax Officer of the State loses the power to assess the transaction. It is erroneous to hold that the moment a question of jurisdiction in this sense is raised, in assessment proceedings, the issue falls outside the province of the sales tax authority, and should be agitated in a separate suit.
I may only state that Section 18-A of the Madras General Sales Tax Act, 1939, Was similarly worded as Section 51 (1) of the present Act.
7. In meeting these contentions, the learned Counsel for the plaintiff firstly relies on Venkataraman and Company (P.) Limited v. State of Madras : 60ITR112(SC) and contends that the suit is the proper remedy. But, that is a case wherein it was clearly laid down that if a taxing authority 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 that in that event, the suit to question the validity of such an order made outside the Act would lie in a civil Court. In the instant case, there is no question of ultra vires at all, and consequently this decision has no application.
8. The next decision relied on is Arvind N. Mafatlal v. Union of India : 90ITR429(Bom) . In that case, it was held that if the assessment order was made when the law made no provision for assessment and suffered from want of jurisdiction, the order was a nullity, and, therefore, a claim for refund could be made under Article 226 of the Constitution of India. This decision again is not helpful to the plaintiff, since the Court in the earlier case held that the Wealth Tax Act did not contain a provision for assessing, therefore, the order was a nullity. In the present case, there is no question of the order being a nullity.
9. The decision in State of Kerala v. Aluminium Industries Limited (1965) 16 S.T.C. 689, is again pressed into service. Their Lordships of the Supreme Court held:
Money paid under a mistake of law comes within the word ' mistake ' in Section 72 of the Contract Act, and there is no question of estoppel when the mistake of law is common to both the assessee and the taxing authority. Where the assessee does not raise the question that the relevant sales were outside the taxing State and were therefore exempt under Article 286 (1) (a) of the Constitution (as it then was) the Sales Tax Officer has no occasion to consider it, and if sales tax is levied by mistake of law, it is ordinarily the duty of the State, subject to any provision of law relating to sales tax, to refund the tax.
Relying strongly on the decision, the learned Counsel for the plaintiff contends that the disputed turnover was not questioned before the Sales Tax Authorities, and, consequently, there was no occasion for them to consider the exemption available to the plaintiff under Article 286 of the Constitution, and he having discovered the mistake of fact and the mistake of law only now, the suit would be maintainable. I am unable to agree. The assessment orders having become final it is not open to him to challenge by way of a collateral suit for refund. In fact, in my view, Section 51 is intended only to prevent a collateral attack on the assessment orders by filing suit for refunds. This apart, from the facts of the case, it emerges that the plaintiff in its objection letter dated 14th March, 1968, relied upon the decision in K.G. Khosla and Company (Private) Limited v. Deputy Commissioner of Commercial Taxes (1966) 2 S.C.J. 703 : (1966) 17 S.T.C. 473, and contended that those transactions were not liable to tax. But on a perusal of the order of the Appellate Assistant Commissioner (the second defendant), I find no discussion at all relating to this aspect of the matter. Apparently, it was not raised before the Appellate Assistant Commissioner. Having failed to agitate the matter before the relevant authority, it is not now open to the plaintiff to contend that there is either a mistake of fact or mistake of law. Hence this decision is also not helpful to the plaintiff.
10. Lastly the decision in Dhulabhai v. State of Madhya Pradesh : 3SCR662 is cited, and it is contended that the case of the plaintiff will come within the proposition No. 4 laid down in that case. I am extracting proposition No. 4 (occurring at page 434) for the proper appreciation of the contentions put forward on behalf of the plaintiff:
When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.
In the instant case, as seen above, there is no question of any provision being declared unconstitutional or the constitutionality of any provision was challenged before the Taxing Authority, which they could not decide. All that had to be decided was, whether, to the given set of facts and circumstances the ratio of the decision in K.G. Khosla and Company (Private) Limited v. Deputy Commissioner of Commercial Taxes (1960) 2 S.C.J. 703 : (1960) 17 S.T.C. 473, would apply and, therefore, the benefit of Article 286 of the Constitution of India could be availed of by the plaintiff. It has been laid down by the Supreme Court in Kamala Mills Limited v. State of Bombay (1966) 2 S.C.J. 591 : (1966) 16 S.T.C. 613, that the Taxing Authority alone could decide and the civil Court will have no jurisdiction at all to decide. I may even go to the extent of stating that it is the very purpose for which the heirarchy of authorities has been constituted under the Sales Tax Act. Properly speaking, the case would come under proposition No. 1 laid down in Dhulabhai v. State of Madhya Pradesh : 3SCR662 . Proposition No. 1 runs as follows:
Where the statute gives a finality to the orders of the special tribunals the civil Court's 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.
The Tamil Nadu General Sales Tax Act, 1959, provides adequate remedies. If the | plaintiff, for reasons best known to itself has not taken care to challenge the correctness or the validity of the assessment orders, or if it had given up its claim with reference to the disputed turnover, it is not open to it to come by way of a suit for refund, and thereby attack the validity of the order. Thus, I hold that the suit is not maintainable, and the issue No. 5 is answered against the plaintiff.
11. Issue No. 1.--In view of my above finding on issue No. 5, I cannot decide the nature of the transactions.
12. Issue No. 2.--Undoubtedly the plaintiff is estopped from questioning the legality of the assessment order by way of collateral proceedings, viz., the present suit. Thus, I find this issue against the plaintiff.
13. Issue No. 3.--The appellate order is elated 20th July, 1968. That having become final, it is not open to the plaintiff to claim a refund of the tax. Hence, I answer this issue against the plaintiff.
14. Issue No. 6.--In view of my finding on issue 5, I hold, that this Court has no jurisdiction to try the suit.
15. Issue No. 7.--The assessment order having become final and the plaintiff not having raised the same before the concerned taxing authority, it has no cause of action to file this suit.
16. Issue No. 8.--In paragraph 9 of the plaint, it is stated:
The said judgment was actually reported only on 1 st May, 1966 in the Law Journals. But the plaintiff as well as the 1st and 2nd defendants were not aware of the said judgment of the Supreme Court and the assessments were continued to be made by the 2nd defendant without reference to the judgment of the Supreme Court.
This is an incorrect statement. I say so because I find from the objection letter of the plaintiff dated 14th March, 1968 that it is stated:
We rely in support of our contention on the decision of Supreme Court in the case of Messrs. K.G. Khosla and Company Limited, and also on the decision of the Madras High Court in the case of Bengal Corporation.
The suit has been filed on 20th March, 1972 undoubtedly beyond three years period from the date of the knowledge of the decision of the Supreme Court, calculated from 14th March 1968, i.e., the objection letter. I do not find any averments in the plaint that since the plaintiff has been bona fide prosecuting writ proceedings, in computing the period of limitation the time taken for the writ proceedings should be calculated. It is a moot question whether the time taken in prosecuting the writ proceedings could be included for the purpose of computing the period of limitation, and I am not going into the same. All that is found in paragraph 16 of the plaint is:
The plaintiff submits that the suit has been filed in time since under Section 17 of the Limitation Act where the cause of action arises by reason of mistake, the limitation for the suit will begin only from the date of discovery of the mistake. In actual fact, the plaintiff discovered the mistake only on 14th October, 1968, when the 3rd defendant wrote to the plaintiff seeking refund of the amounts already paid.
The statement of the plaintiff has been specifically denied by the defendants 3 and 4 in their written statement in paragraph 9. It is stated therein:
These defendants do not admit that the plaintiffs discovered the mistake only from this defendant on 14th October, 1968. Even assuming without admitting for purposes of argument, the said plea is true, the suit is still out of time.
As seen above, if the plaintiff, in its objection letter dated 14th March, 1968, has chosen to rely upon the decision in Khosla's case (1966) 2 S.C.J. 703 : (1966) 17 S.T.C. 473, the statement that it discovered the mistake only on 14th October, 1968 is incorrect. I am unable to accept the said statement. In view of the above, I hold that the suit is barred by limitation. I answer the issue against the plaintiff.
17. Issue No 4: In as much as I have come to the conclusion that the plaintiff is not entitled to the main relief itself for several reasons stated above, there is no question of the plaintiff being entitled to any interest.
18. In the result, the suit will stand dismissed with costs of the defendants 1 and 2. There will be no order as to costs as regards defendants 3 and 4.