ORDER

Civil Appeal No. 4347 of 2004 1. The respondent sells vanaspati in the State of Jammu and Kashmir. In respect of the period 2-9-1981 to 31-8-1986 assessment orders were passed under the Jammu and Kashmir General Sales Tax Act, 1962 (for short "the Act"). Being aggrieved by the assessment orders, the respondent along with others similarly situated filed writ petitions in the High Court claiming that they were exempt from payment of sales tax, The writ petitions were dismissed. The appeals filed by the sellers were filed before this Court. The appeals were heard and disposed of by a judgment on 16-1-1992. In Pine Chemicals Ltd. v. Assessing Authority. This Court considered the facts of the case as well as law applicable and came to the conclusion that the appellant assessees were entitled to exemption under the Act. Before this Court it was contended that the assessees were liable to deposit the amounts which they had realized by way of tax under Section 8-B of the Act. This Court in Pine Chemicals Ltd. v. Assessing Authority held that since neither the High Court had any occasion to decide the question of applicability of Section 8-B of the Act on the basis that the sales turnover was exempt from payment of tax nor the assessing authorities had any opportunity to decide or make any order under Section 8-B of the Act, therefore "the entire question relating to the applicability of Section 8-B of the local Act and even the question whether there was any collection of sales tax will have to be left open". Since the assessment order had proceeded on the basis that the assessees were not entitled to exemption, their appeals were allowed. In the light of this finding, as this Court observed in the judgment, the question then arose whether the assessee had collected any tax and whether the amount was collected by way of tax and whether any element of sales tax has merged in the fixation of the price and whether those amounted to collection of sales tax. These questions were directed to be decided if the State considered that the assessees had collected sales tax in separate proceedings that may have to be initiated under Section 8-B of the local Act or when the State demanded payment of money under Section 8-B of the local Act. Consequent upon the allowing of appeal the assessees' demand for refund of the sales tax levied by the State was stayed until the determination of the proceedings under Section 8-B. It was made clear that the stay of the refund of money collected by the State would be only for a period of six months by which time the Department should initiate proceedings if any under Section 8-B, if so advised.

2. Accordingly, notices were issued on 7-4-1992 relating to the Revenue's claim to the tax under Section 8-B of the Act. The respondents replied to the notices. The assessing authorities, however, did not accept the case of the respondents and held that sales tax had indeed been collected by the respondent for the relevant period and not deposited under Section 8-B of the Act. Various grounds were given in support of this conclusion. The plea of the respondent that what had been collected from the customers of the respondent was merely distribution charges was held to be mere misnomer for the levy of sales tax.

3. The order which is dated 14-7-1992 could have been challenged by way of an appeal under Section 11 of the Act. Instead of preferring an appeal the respondent filed a writ petition before the High Court. The High Court went into the evidence and came to the conclusion that what the respondent had collected was indeed distribution charges and not sales tax and therefore there was no question of the respondent depositing the same with the State Government under Section 8-B. It was further held that since it was distribution charges no tax was leviable thereon. Finally, it was held that the determination of liability of the respondent for the demand under Section 8-B could only be made under Section 7. Section