1984 Supreme(Mad) 13

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE V RATNAM & THE HONOURABLE MR. JUSTICE G RAMANUJAM
Associated Cement Companies Limited - Appellant
Versus
State of Tamil Nadu and Another - Respondent
Case No : Writ Petitions Nos. 3364 and 3365 of 1979 and W.A. Nos. 489 to 491 of 1979 and Tax Cases (Revision) Nos. 1077 to 1081 of 1979
Decided On : 09 January 1984

The levy of surcharge on the company by the assessment proceedings for the years in question is clearly without the authority of law and would merit interference by this Court by quashing the assessments and directing a refund, unless the company had in any manner disabled itself from claiming such reliefs.

Headnote:

SALES TAX - SURCHARGE - LEVY - JURISDICTION - REFUND - WRIT OF CERTIORARIFIED MANDAMUS - Tamil Nadu Sales Tax (Surcharge) Act, 1971 (Act 24 of 1971), Ss. 1(3)(b)(iii), 2(c)(ii), 5 - Tamil Nadu General Sales Tax Act, 1959 - Constitution of India, Art. 226.

Fact of the Case:

The Associated Cement Companies Ltd. (the company) manufactures and sells cement at its factory in Madukkarai, a panchayat township, about 14 kilometres away from Coimbatore. The company sells the cement manufactured by it at its factory in Madukkarai to consumers as well as stockists in accordance with certain standard terms and conditions of sale prescribed by the company according to which supply of cement has to be made in jute bags of 50 kilograms nett weight each. In case of transport by rail, the cement should be delivered to the carrier at the works' railway siding, while, in the case of transport by road, the delivery will be at the works at the risk of the buyer on production of the identical copy of the order form issued by the company. The Tamil Nadu Sales Tax (Surcharge) Act, 1971, (Act 24 of 1971), was passed to levy surcharge on the sales tax on the sale or purchase of goods within the limits of the area where the Act was in force. That Act came into force in the then municipal town of Coimbatore on 29th June, 1971. Under section 1(3)(b)(iii) thereof, the Government was empowered to direct by notification that the Act shall come into force on such date as may be specified in suburban areas of the city of Madurai or the municipal towns of Salem, Coimbatore, Tiruchirappalli, or other municipal town or township. Section 2(c)(ii) of the Act defined a suburban area as an area within such distance not exceeding 32 kilometres of the municipal towns of Salem, Coimbatore or Tiruchirappalli or other municipal town or township. Section 5 of the Act provided that the sale or purchase of goods shall be deemed to have taken place in the area in which the Act is in force, wherever the contract of sale or purchase might have been made if the specific or ascertained goods are within such area at the time when the contract of sale or purchase is made, and in the case of unascertained or future goods, when such goods are appropriated to the contract of sale or purchase by the seller or purchaser.

Finding of the Court:

1. The levy of surcharge on the company by the assessment proceedings for the years in question is clearly without the authority of law and would merit interference by this Court by quashing the assessments and directing a refund, unless the company had in any manner disabled itself from claiming such reliefs. 2. No circumstance which would disentitle the company from claiming the relief of refund has been brought to out notice. 3. The demand for surcharge, in the circumstances of this case, was illegal and in such cases, as pointed out by the Supreme Court in Shiv Shanker Dal Mills v. State of Haryana there is no law of limitation especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs.

Issues: 1. Whether the company is entitled to a refund of the surcharge levied on it and admittedly paid by it? 2. Whether the Tribunal had jurisdiction to permit the raising of an additional ground with reference to a matter not raised earlier? 3. Whether the company is entitled to a refund of the surcharge by the issue of an appropriate writ?

Ratio Decidendi: 1. The Tribunal, while dealing with the appeals preferred by the company, though fit to dismiss them on the short ground that the freight had been properly included in the turnover under the Tamil Nadu General Sales Tax Act and the levy of surcharge thereon was, therefore, in order and that the subject-matter of the appeal sought to be introduced in C.T.M.P. Nos. 278 to 282 of 1978 by an amendment at the instance of the company was not agitated before the first appellate authority and, therefore, the Tribunal had no jurisdiction or even inherent power to entertain such a claim. Though it may be that this view was, to some extent, justified by the state of law, as it then stood, the width and the amplitude of the jurisdiction and powers of the Tribunal under the Tamil Nadu General Sales Tax Act, 1959, in dealing with the assessments appealed against before it, came to be considered by a Full Bench of this Court in State of Tamil Nadu v. Arulmurugan and Co. 2. The levy and collection of surcharge was by a process of application of statutory provisions which were inapplicable to the area in question and, therefore, the proceedings lacked jurisdiction as well as statutory authority to levy surcharge and the assessment proceeding would, therefore, be a nullity. 3. The company is well-founded in its complaint before this Court that the levy of surcharge made on it by the assessing authority for the assessment years in question on the sales of cement effected by it at its factory at Madukkarai is a nullity and that it is entitled to claim a refund of the surcharge so levied and paid by the company.

Final Decision: Writ petitions allowed.