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1971 Supreme(SC) 683
SUPREME COURT OF INDIA
K.S. Hegde and A.N. Grover, JJ.
State of Bihar - Appellant
Versus
Oriental Coal co. Ltd. - Respondent
Civil Appeal No. 307 of 1970.
Decided On : 6-10-1971
For the Appellant :- M/s. D. P. Singh, V. J. Francis, S. C. Agrawal and Narayana Nettwar, Advocates.
For the Respondent:- Mr. S. T. Desai, Senior Advocate, (Miss Bhuvanesh Kumari, Advocate, and M/s. J. B. Dadachanji, O. C. Mathur and Ravinder Narain, Advocates of M/s. J. B. Dadachanji and Co.
Headnote:
Bihar Sales Tax Rules, 1949 – Rule 40 – Constitution of India, 1950 – Article 286 – Sales Tax Laws Validation Act – Section 2 – Assessment of Sales Tax – Assistant Superintendent of Sales-tax passed assessment orders – According to those orders, plaintiff was liable to pay sales tax – As seen earlier, it had already paid a sum – It paid balance of Rupees 1096/13/-; this again by a cheque on bank – This was also encashed at Calcutta. – Aggrieved by assessment orders made by assessing authority, plaintiff went up in appeal to Assistant Commissioner of Sales Tax –Appellate authority by its order allowed appeals and set aside orders of assessment – Court held that charging section of Act read with relevant definitions cannot operate to tax inter-State sales or purchases and as Parliament has not otherwise provided, Act, in so far as it purports to tax sales or purchases that take place in course of inter-State trade or commerce, is unconstitutional, illegal and void. – Evidently that decision was brought to notice of appellate authority at hearing of appeals and that authority purported to act on basis of that decision – Plaintiff filed an application before Superintendent of Sales Tax, for refund of tax paid by him. – This claim was made on basis of appellate order. – Judge held against plaintiff – He came to conclusion that in view of Section 2 of Sale Tax Laws Validation Act, levy and collection must be held to be valid despite order of appellate authority – Aggrieved by that decision plaintiff took up matter in appeal to a Division Bench of Calcutta High Court – Judges came to conclusion that whatever might be effect of the provisions of Sales Tax Laws Validation Act, in view of appellate authoritys order allowing appeals of plaintiff, whether that order was right or wrong, defendant was bound to refund amount – According to Division Bench, order of the appellate authority became final as it had not been appealed against nor altered in any manner – It held that provisions of Sales Tax Laws Validation Act did not override decision of appellate authority – Held, In view of these rules an application for refund could have been made only before Commissioner whose office is situated in Bihar and refund could have been made only in accordance with rules – As per rules amount to be refunded can be paid to a dealer only through one of Government treasuries. – Hence entire cause of action in respect of claim for refund on basis of appellate authoritys order arose only within State of Bihar and no part of that cause of action arose outside Bihar. – For same reasons no part of cause of action for claiming amount in question on basis of doctrine that debtor must seek his creditor and pay debt due could have arisen outside Bihar, in view of rules referred to earlier. – Fact that plaintiff based his claim on three alternative grounds, for one of which alone a part of cause of action can at best be said to have arisen in Calcutta but not for others, cannot confer jurisdiction on Calcutta High Court to try suit on basis of grounds in respect of which no part of the cause of action arose in Calcutta. – Cause of action, within contemplation of law is that which relates to a tenable plea. – Court is unable to agree with High Court that any part of cause of action for suit arose in Calcutta. – Court set aside judgment of Division Bench of Calcutta High Court and restore that of single judge but not on ground that found favour with judge – Appeal Allowed
JUDGMENT :
Hegde, J. - The respondent-original plaintiff (which will hereinafter be referred to as the 'plaintiff') is a company having its registered office at Calcutta. It was a registered dealer under the Bihar Sales Tax Act, 1947 (in brief the Act). On or about December 14, 1953, the plaintiff issued a cheque to the defendant-appellant for a sum of Rs. 10,000/- drawn on the Oriental Bank of Commerce Ltd., Calcutta towards the sales tax due from it for the years 1950-51. 1951-52 and 1952-53. That cheque was sent to Calcutta for encashment and encashed at that place. On September 25, 1954, the Assistant Superintendent of Sales-tax passed assessment orders in respect of the years mentioned earlier. According to those orders, the plaintiff was liable to pay sales tax amounting to Rs. 2803/2/- in respect of the year 1950-51; Rs. 3670/5/- for the year 1951-52; Rs. 4623/6/- for the year 1952-53, thus a total of Rs. 11,096 /-13/-. As seen earlier, it had already paid a sum of Rs. 10,000/- earlier. On July 23, 1955, it paid the balance of Rupees 1096/13/-; this again by a cheque on the bank mentioned earlier. This was also encashed at Calcutta.
2. Aggrieved by the assessment orders made by the assessing authority, the plaintiff went up in appeal to the Assistant Commissioner of Sales Tax, Chhotanagpur Division, Bihar. Those appeals were heard by the appellate authority at Calcutta. The appellate authority by its order of September 24, 1955 allowed the appeals and set aside the orders of assessment. Before that order was made, this Court had ruled in Bengal Immunity Co. Ltd. v. State of Bihar (1955) 2 SCR 603 that until Parliament by law made in exercise of the powers vested in it by clause (2) of Article 286 provides otherwise, no State can impose or authorise the imposition of any tax on sales or purchases of goods when such sales or purchases take place in the course of inter-State trade or commerce. On the basis of that conclusion this Court held that the charging section of the Act read with the relevant definitions cannot operate to tax inter-State sales or purchases and as the Parliament has not otherwise provided, the Act, in so far as it purports to tax sales or purchases that take place in the course of inter-State trade or commerce, is unconstitutional, illegal and void. Evidently that decision was brought to the notice of the appellate authority at the hearing of the appeals and that authority purported to act on the basis of that decision. The appeals in question were allowed with these observations :
"These three appeals are directed against assessment order for the years 1950-51, 1951-52 and 1952-53.
The only point pressed before me is that since this is a case of non-resident dealers, there should have been no assessment. The lower Court records show that the workshop of the plaintiff is situate in Barakar which is outside Bihar. From here he supplies goods to collieries in Bihar. In other words, he is a non-resident dealer and so, according to the latest decision of Supreme Court, he cannot be assessed to pay any tax in Bihar.
These appeal are accordingly allowed in full."
Sd/- M. Ahmad,
24-9-195,
Assistant Commissioner of Sales Tax."
3. It is rather difficult to understand this order. But before the High Court Counsel for both the parties agreed that the decision referred to in the order is the decision in the Bengal Immunity's case, (supra).
4. On October 12, 1955, the plaintiff filed an application before the Superintendent of Sales Tax, Dhanbad for refund of the tax paid by him. This claim was made on the basis of the appellate order. On January 30, 1956, Sales Tax Laws Validation Ordinance (No. 3 of 1956) was issued which was followed up by Sales Tax Laws Validation Act, 1956. The scope of this Act was considered by this Court in M. P. V. Sundararamier and Co. v. State of Andhra Pradesh (1958) SCR 1422. Therein this Court by majority held that the Sales Tax Laws Validation Act, 1956 is in substance one lifting the b
