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1992 Supreme(Ori) 154
IN THE HIGH COURT OF ORISSA
R.K. Patra, A. Pasayat, JJ.
TANGUDU GOPALAN AND SONS - APPELLANT
Versus
STATE OF ORISSA AND OTHERS - RESPONDENT
Tax Appeal No. 1 of 1985
Decided On : 16-12-1992
B.K. Mohanty, Bibek Mohanty and S. Udgata, for the Appellant; S.K. Patnaik, A.S.C. (C.T.), for the Respondent
Section 9-B(3) of the Orissa Sales-tax Act, 1947 is not applicable where a registered dealer realizes any amount by way of tax in accordance with the notification which was in force at the time.
Headnote:
TAXATION - ORISSA SALES-TAX ACT, 1947 - SECTION 9-B(3) - APPLICABILITY - EXCESS COLLECTION OF TAX - REFUND - UNJUST ENRICHMENT.
Fact of the Case:
The appellant, a registered dealer under the Orissa Sales-tax Act, 1947, collected sales tax on dry cell batteries at 12% during the assessment years 1974-75 and 1975-76. Subsequently, the Orissa High Court held that dry cell batteries were taxable at 5%, not 12%. The appellant refunded the excess tax collected to the customers and claimed a refund from the State Government. The Sales-tax Officer dropped the proceeding to impose a penalty on the appellant under Section 9-B(3) of the Act, but the Commissioner set aside the order. The appellant challenged the Commissioner's order.
Finding of the Court:
The Court held that Section 9-B(3) of the Act was not applicable to the facts of the case because the appellant had collected the tax in accordance with the notification which was in force at the time. The Court also held that the appellant was not entitled to retain the excess tax collected as it would amount to unjust enrichment.
Issues: 1. Whether Section 9-B(3) of the Orissa Sales-tax Act, 1947 is applicable to the facts of the case? 2. Whether the appellant is entitled to retain the excess tax collected?
Ratio Decidendi: 1. Section 9-B(3) of the Act is only attracted where a registered dealer realizes any amount by way of tax in excess of the amount payable by him as tax under the Act. In the present case, the appellant had collected the tax in accordance with the notification which was in force at the time. Therefore, Section 9-B(3) was not applicable. 2. The appellant was not entitled to retain the excess tax collected as it would amount to unjust enrichment. The State Government had a duty to refund the excess tax collected to the customers, and the appellant could not enrich itself at the expense of the customers.
Final Decision: The appeal was disposed of accordingly, with no costs.
JUDGMENT :
A. Pasayat, J. - Legality of order passed by the Commissioner of Sales-tax, Orissa (respondent No, 2) setting aside the order of Sales-tax Officer, Ganjam-I Circle, Barhampur holding that no penalty u/s S-B,(3)of the Orissa Sales-tax Act, 1947 (in short, the'Act') was leviable, is the subject-matter of this appeal.
2. Background facts shorn of unnecessary details are as follows :
The appellant is a dealer registered under the Act. During the assessment year 1974-75 and 1975-76, the appellant had collected sale-tax on the sale of dry cell batteries 12%.A writ application bearing OJC No. 928 of 1973 was filed in this Court for a direction that dry cell batteries were taxable 5%,and not 12% as luxury goods. By judgment dated 8 7-1975 this Court held that the dry cell batteries are taxable at the rate of 5% and not at 12% as luxury goods. The validity of Finance Department Notification No, 23710 dated 16-6-1991 notifying the rate of tax on the sale of dry cell batteries at 12% with effect from 17-1971 was the subject-matter of challenge. Undisputedly, the appellant had collected sales-tax on dry cell batteries ' 12 % and had deposited it. Keeping in view the decision of this Court, the Assessing Officer by his order dated 31-12-1977 for the assessment year 1974-75 assessed sale of dry cell batteries to tax'5% and allowed refund of Rs. 16,388.00. The amount was refunded to the dealer. During the year 1975-76, the dealer collected tax 12% from 8-7-1975 i.e. date of judgment of this Court arid thereafter by way of contingent deposit differential amount'7% was charged from the purchasers with a declaration that the same shall be refunded in case of non-success. The Assessing Officer assessed the sale of dry cell batteries'5%,and allowed refund of Rs.12,285,00. After refund of the aforesaid amounts to the appellant, the Sales-tax Officer by his letter No. 13883 dated 13-8-1992 required appellant to show cause as to why penalty u/s 9-B (3) of the Act for excess collection of tax for the two periods shall not be imposed. The said letter notice was issued on the basis of objection raised by Auditor General, In response to notice, appellant appeared and furnished show cause reply and contended that there was no mens tea in collecting the excess amount and therefore, question of levy of penalty did not arise. So far as collection of tax for the assessment years 1975-76 is concerned, it was urged that out of the amount of refund a sum of Rs. 12,285/-, a sum of Rs. 12,002/-retated to collection before the date of judgment of this Court and Rs. 283/- related to collection as contingent deposit. After judgment of this Court, the State Government had moved the Apex Court by filing a SLP and therefore, contingent deposits were made. Appellant's stand was that provisions of Section 9-B (3) of the Act have no application, because when collections were made. Notification No. 23714-OTA-57/79/F dated 16-6-1971 operating from 1-7-1971 was in force. Subsequently, this Court gave its verdict on 8-7-1973 and consequentially question of refund arose. The Sales-tax Officer was of the view that payment was made under a mistake and Government was duty-bound to return the amount of. tax, irrespective of the consideration whether money had been paid voluntarily or not. In R. S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Limited and Anr.. (1977) 40 STC 497 on which the Auditor General had placed reliance to find fault was held to be distinguishable. It was held that the said case related to forfeiture and essence of judgment was principles of mens rea have no application to the case of excess amount collected within the purview of Bombay Sales-tax Act. On facts, it was concluded that there was no Criminal intention, the conduct did not reflect contumacy and therefore, penal provisions of Section 9-B (,3) were not applicable. The Commissioner exercised powers u/s 23 of the Act read with Rule 80 of the Orissa Sales-tax Rules, 1947 (in short, the "Rule
