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High Court Of Calcutta
SABYASACHI MUKHERJI
SURESH CHANDRA BOSE - Appellant
Versus
THE STATE OF WEST BENGAL - Respondent
C. R. 1107 (W) Of 1973
Decided On : 11/11/1975
SALES TAX - REFUND - VOID ASSESSMENT - RIGHT TO REFUND - LIMITATION - DISCRETION OF COURT - BENGAL FINANCE (SALES TAX) ACT, 1941, SECTION 12.
Fact of the Case:
Petitioner, a sanitary engineer, paid sales tax under a mistaken belief that he was a dealer liable to pay tax under the Bengal Finance (Sales Tax) Act, 1941. After the relevant rule was declared ultra vires, the petitioner sought a refund of the tax paid. The Commercial Tax Officer rejected the refund application, and the petitioner filed a writ petition in the High Court.
Finding of the Court:
The High Court held that the petitioner was entitled to a refund of the tax paid. The court found that the assessments under which the tax was paid were void ab initio since the rule under which they were made was ultra vires. The court also held that the petitioner's delay in seeking a refund was not fatal, considering the facts and circumstances of the case.
Issues: 1. Whether the petitioner is entitled to a refund of the sales tax paid under a void assessment? 2. Whether the petitioner's delay in seeking a refund bars his claim?
Ratio Decidendi: 1. The court held that the petitioner was entitled to a refund of the sales tax paid under a void assessment. The court reasoned that the assessments were void ab initio since the rule under which they were made was ultra vires. Therefore, the petitioner was not liable to pay the tax, and the amounts paid were in excess of the amount due from him under the Act. 2. The court held that the petitioner's delay in seeking a refund was not fatal. The court considered the facts and circumstances of the case, including the petitioner's attempts to obtain a refund from the assessing authorities and the subsequent rejection of his refund application. The court found that the petitioner had not been inexplicably insouciant or unduly belated due to laches.
Final Decision: The High Court allowed the writ petition and directed the Commercial Tax Officer to refund the tax paid by the petitioner. The court also restrained the respondents from enforcing the certificate mentioned in the petition.
( 1 ) THE petitioner is a Sanitary Engineer and works as the Sanitary Contractor under the name and style of "m/s. S. C. Bose" at No. 309, Bowbazar Street, Calcutta. In the year 1950 the petitioner filed an application under Section 7 (2) of the Bengal Finance (Sales Tax) Act, 1941 for making himself registered as a registered dealer under the said Act. The petitioner states that the petitioner got himself registered under a mistaken impression that the petitioner was a dealer under the said Act and was liable to pay the tax under the provisions of the said Act and the Rules made thereunder. On that basis the petitioner duly filed returns from 1951 to 1958 and along with the returns paid a sum of Rs. 18,812. 45 p. on account of sales tax. The petitioner states that the same was paid on a mistaken notion of law. As a result of the decision in the case of Dukhineswar Sarkar and Brothers v. Commercial Tax Officer, (1957) 8 STC 478 = (AIR 1957 Cal 238) and the decision of the Supreme Court in the case of State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd. , ft became apparent that the petitioner was not a dealer and the Rule 2 (ii) (c) of the Bengal Sales Tax Rules, 1941 under which the petitioner was assessed was declared to be void and ultra vires. In the premises, the petitioner became entitled to refund of the Sales Tax already paid and was entitled to have his registration certificate cancelled. The petitioner stated that the petitioner, thereafter, submitted for the years 1959, 1960 and 1961 returns declaring no sales or turn over. On the 10th of April, 1962 the petitioner wrote a letter to the Commercial Tax Officer, Colootolla Charge requesting him to cancel the certificate of registration on the ground that the petitioner was a Contractor and not a Dealer within the meaning of the said Bengal Finance (Sales Tax) Act, 1941 and as such his registration should be cancelled. The petitioner was informed in reply by the Commercial Tax Officer on the 26th of May, 1962 that the said question of cancellation of the certificate of registration would be considered on completion of pending assessments. The petitioner states that the petitioner made a further representation to the said Commercial Tax Officer stating that the said Rule 2 (ii) (c) of the Bengal Sales Tax Rules, 1941 having been declared ultra vires by the Supreme Court, the said officer was acting in excess of and/or without jurisdiction in proceeding to assess the petitioner under the said Act. The petitioner states that the said representation proved abortive and the Commercial Tax Officer issued a notice in Form VII A under Rule 55 (A) of the Bengal Rules calling upon the petitioner to show cause as to why penalties should not be imposed upon the petitioner for non-payment of the arrears of tax for the years 1955, 1956 and 1957, ending on the 31st of March of each year. Then on the 15th of June, 1962, the petitioner submitted an application before the Commercial Tax Officer stating that the assessments made under Rule 2 (ii) (c) of the Bengal Sales Tax Rules, 1941 were ultra vires and as such the assessments were without jurisdiction and requested Commercial Tax Officer to withdraw the said notices. The Commercial Tax Officer did not accede to the request made by the petitioner, the petitioner moved an application under Article 226 of the Constitution of India and obtained a rule nisi being Rule No. 388 (W) of 1962. The said rule was ultimately discharged by this Court on the 6th of January, 1965 by the learned Single Judge.
( 2 ) BEING aggrieved with the said decision the petitioner preferred an appeal and the appeal came up for hearing and was disposed of by the bench decision of this Court on the 6th of January, 1962. The Division Bench observed, inter alia, as follows :--"rule 2 (ii) (1) of the Rule framed under the Act having been declared to be ultra vires, the tax imposed on the appellant under the assessment orders for the year
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