State of Maharashtra Vs. M/s. Kamla Mills Limited and Others.
EmailAppeal: Civil Appeal No. 1412 of 1976
Petitioner: State of Maharashtra
Respondent: M/s. Kamla Mills Limited and Others.
Apeal: Civil Appeal No. 1412 of 1976
Judges: B.P. JEEVAN REDDY & B.L. HANSARIA, JJ.
Date of Judgment: Feb 17, 1994
Head Note:
SALES TAX
Practice and Procedure
Sales tax – Tax paid under mistake – Claim of refund – Authori ties filing counter affidavit not denying specifically material facts – However second affidavit fact-by-fact denial made – High Court held the respondent entitled to refund on merely because the first affidavit did not contain fact-by-fact denial – Held that such an approach was not reasonable when there was a controversy as to relevant facts – Matter remitted to ap pellate authority for disposal afresh.
JUDGEMENT:
O R D E R
1. This appeal is preferred against the judgment of the Bombay High Court allowing a writ petition by its order dated 23/24.6.1975.
2. The respondent-Mills was a dealer registered under the Bombay Sales Tax Act. In respect of certain sales effected by it, it was found liable to pay sales tax under the said Act as determined by the assessment order dated May 18, 1954. The respondent did not question the order of assessment by way of an appeal but instituted a suit on December 20, 1955 being O.S. No. 402 of 1956 on the original side of the Bombay High Court claiming refund of a sum of Rs. 65,187/- on the basis that the said amount was paid by him under a mistake of law. The respondent relied upon the decision of this Court in 1955 (2) SCR 703 titled The Bengal Immunity Co. Ltd. v. The State of Bihar and others as furnishing the cause of action for the suit, since it is from the said decision that it claimed to have discovered the mistake in paying the said tax. The suit was dismissed on August 11, 1960 as not maintainable in view of the bar contained in Section 20 of the Bombay Act. An appeal was preferred by the respondent to the Division Bench was dismissed. The matter ultimately came to this Court. This Court affirmed the judgment of the High Court on August 23, 1955.
3. On May 24, 1965, the respondent says, it filed an application for refund before the Commissioner of Sales Tax, which was rejected on June 10, 1965. The respondent thereupon, filed a Writ Petition in the Bombay High Court being Miscellaneous Petition No.363/65. However, the respondent withdrew the said writ petition stating that it wishes to pursue the remedies provided by the statute. The respondent then filed an appeal, on May 3, 1966, against the order of assessment dated May 18, 1954 before the Assistant Commissioner, Sales Tax with an application for condoning the delay. The said authority refused to condone the delay and dismissed the appeal. The respondent filed a writ petition in the Bombay High Court questioning the appellate order on August 17, 1966. This Writ Petition remained pending in the High Court for nine years. The Sales Tax authorities (respondents in the Writ Petition) filed two counter-affidavits. In the first counter-affidavit filed on March 21, 1969, the authorities generally denied the contentions as well as the factual basis of the contentions raised in the Writ Petition but without specifically denying each averment individually. However, before the Writ Petition came up for hearing, a detailed counter-affidavit was filed denying each and every fact on the basis of which the respondent claimed the relief of refund in the said Writ Petition. The Division Bench which heard the Writ Petition observed that the authorities did not specifically deny the several material facts contained in the Writ Petition in their first counter and that they chose to do so only after nine years when the Writ Petition came up for hearing. On that basis, the Division Bench held that there was no real controversy as to the material facts and therefore the respondent is entitled to relief claimed.
4. In this appeal, Mr. K. Madhava Reddy, learned counsel for the State of Maharashtra, assailed the correctness of the approach adopted by the High Court. Learned counsel submitted that the order of assessment was made on May 18, 1954, whereas the appeal before the appellate authority was filed on May 3, 1966 i.e. after a period of 12 years and that in the circumstances, the appellate authority was right in refusing to condone the delay. Learned counsel submitted further that the High Court ought not have exercised its extra-ordinary jurisdiction under Article 226 in the facts of the case, both on the ground of laches as well as on merits. In particular, learned counsel submitted that the decision of this Court in Bengal Immunity has no relevance to the claim for refund and that the claim for refund is really based upon facts particular to this case. Learned counsel also submitted that the High Court ought not to have recorded a finding of fact in favour of the writ petitioner merely because the facts in the writ petition were not specifically denied in the first counter-affidavit filed in the High Court.
5. We are of the opinion that the question whether the transactions were assessible to tax under the Act or not, is a question of fact which must be gone into by the appropriate authorities under the Act. It would have been a different matter if the High Court had discussed the facts and had recorded a finding thereon, in which situation we would not have been inclined to remit the matter back to the appellate authority as we are proposing to do. But in this case, the High Court has held the respondent entitled to refund merely because the first counter-affidavit filed by the authorities in the High Court did not contain fact-by-fact denial. This, in our opinion, was not reasonable thing to do in the circumstances when there was a controversy as to relevant facts. In any event, in the second counter-affidavit filed by the authorities in the High Court, there was a denial, fact-by-fact. We are, therefore, of the opinion that having regard to the facts and circumstances of this particular case and, having regard to the fact that no authority has so far gone into the question whether the transactions in question were exigible to tax or not under the Act, it is a proper case where the matters are remitted to the appellate authority viz. the Assistant Commissioner, Sales Tax, or the corresponding authority as may be obtaining today. We direct that the appellate authority shall entertain the appeal which was filed by the respondent on May 3, 1966 without raising an objection on the ground of limitation and dispose it of in accordance with law.
6. We may make it clear that we are making the above direction to the appellate authority to ignore the plea of limitation, in the facts and circumstances of this case, which we have set out hereinabove. Soon after the decision in Bengal Immunity, the respondent filed the said suit claiming refund of tax paid under a mistake, which suit was fought for many years and wherein it was held ultimately that the suit was not maintainable in law. It then filed a refund claim which too was rejected, against which he filed a writ petition. Soon after, it withdraw the writ petition it immediately filed the said appeal. In the circumstances, the principle of Section 14 of the Limitation Act must be said to have been attracted.
7. We must make it clear that we did not intend to, nor have we expressed any opinion on the merits of the respondents’ claim including his contention that the decision in Bengal Immunity put him on notice regarding his payment of tax being under a mistake and/or that the said decision furnishes a cause of action for his claim of refund.
8. The appeal is accordingly allowed, the judgment of the High Court is set aside, and the matter remitted to the appellate authority. The appellate authority shall dispose of the appeal as expeditiously as possible in the circumstances of the case. There will be no order as to costs.
1. This appeal is preferred against the judgment of the Bombay High Court allowing a writ petition by its order dated 23/24.6.1975.
2. The respondent-Mills was a dealer registered under the Bombay Sales Tax Act. In respect of certain sales effected by it, it was found liable to pay sales tax under the said Act as determined by the assessment order dated May 18, 1954. The respondent did not question the order of assessment by way of an appeal but instituted a suit on December 20, 1955 being O.S. No. 402 of 1956 on the original side of the Bombay High Court claiming refund of a sum of Rs. 65,187/- on the basis that the said amount was paid by him under a mistake of law. The respondent relied upon the decision of this Court in 1955 (2) SCR 703 titled The Bengal Immunity Co. Ltd. v. The State of Bihar and others as furnishing the cause of action for the suit, since it is from the said decision that it claimed to have discovered the mistake in paying the said tax. The suit was dismissed on August 11, 1960 as not maintainable in view of the bar contained in Section 20 of the Bombay Act. An appeal was preferred by the respondent to the Division Bench was dismissed. The matter ultimately came to this Court. This Court affirmed the judgment of the High Court on August 23, 1955.
3. On May 24, 1965, the respondent says, it filed an application for refund before the Commissioner of Sales Tax, which was rejected on June 10, 1965. The respondent thereupon, filed a Writ Petition in the Bombay High Court being Miscellaneous Petition No.363/65. However, the respondent withdrew the said writ petition stating that it wishes to pursue the remedies provided by the statute. The respondent then filed an appeal, on May 3, 1966, against the order of assessment dated May 18, 1954 before the Assistant Commissioner, Sales Tax with an application for condoning the delay. The said authority refused to condone the delay and dismissed the appeal. The respondent filed a writ petition in the Bombay High Court questioning the appellate order on August 17, 1966. This Writ Petition remained pending in the High Court for nine years. The Sales Tax authorities (respondents in the Writ Petition) filed two counter-affidavits. In the first counter-affidavit filed on March 21, 1969, the authorities generally denied the contentions as well as the factual basis of the contentions raised in the Writ Petition but without specifically denying each averment individually. However, before the Writ Petition came up for hearing, a detailed counter-affidavit was filed denying each and every fact on the basis of which the respondent claimed the relief of refund in the said Writ Petition. The Division Bench which heard the Writ Petition observed that the authorities did not specifically deny the several material facts contained in the Writ Petition in their first counter and that they chose to do so only after nine years when the Writ Petition came up for hearing. On that basis, the Division Bench held that there was no real controversy as to the material facts and therefore the respondent is entitled to relief claimed.
4. In this appeal, Mr. K. Madhava Reddy, learned counsel for the State of Maharashtra, assailed the correctness of the approach adopted by the High Court. Learned counsel submitted that the order of assessment was made on May 18, 1954, whereas the appeal before the appellate authority was filed on May 3, 1966 i.e. after a period of 12 years and that in the circumstances, the appellate authority was right in refusing to condone the delay. Learned counsel submitted further that the High Court ought not have exercised its extra-ordinary jurisdiction under Article 226 in the facts of the case, both on the ground of laches as well as on merits. In particular, learned counsel submitted that the decision of this Court in Bengal Immunity has no relevance to the claim for refund and that the claim for refund is really based upon facts particular to this case. Learned counsel also submitted that the High Court ought not to have recorded a finding of fact in favour of the writ petitioner merely because the facts in the writ petition were not specifically denied in the first counter-affidavit filed in the High Court.
5. We are of the opinion that the question whether the transactions were assessible to tax under the Act or not, is a question of fact which must be gone into by the appropriate authorities under the Act. It would have been a different matter if the High Court had discussed the facts and had recorded a finding thereon, in which situation we would not have been inclined to remit the matter back to the appellate authority as we are proposing to do. But in this case, the High Court has held the respondent entitled to refund merely because the first counter-affidavit filed by the authorities in the High Court did not contain fact-by-fact denial. This, in our opinion, was not reasonable thing to do in the circumstances when there was a controversy as to relevant facts. In any event, in the second counter-affidavit filed by the authorities in the High Court, there was a denial, fact-by-fact. We are, therefore, of the opinion that having regard to the facts and circumstances of this particular case and, having regard to the fact that no authority has so far gone into the question whether the transactions in question were exigible to tax or not under the Act, it is a proper case where the matters are remitted to the appellate authority viz. the Assistant Commissioner, Sales Tax, or the corresponding authority as may be obtaining today. We direct that the appellate authority shall entertain the appeal which was filed by the respondent on May 3, 1966 without raising an objection on the ground of limitation and dispose it of in accordance with law.
6. We may make it clear that we are making the above direction to the appellate authority to ignore the plea of limitation, in the facts and circumstances of this case, which we have set out hereinabove. Soon after the decision in Bengal Immunity, the respondent filed the said suit claiming refund of tax paid under a mistake, which suit was fought for many years and wherein it was held ultimately that the suit was not maintainable in law. It then filed a refund claim which too was rejected, against which he filed a writ petition. Soon after, it withdraw the writ petition it immediately filed the said appeal. In the circumstances, the principle of Section 14 of the Limitation Act must be said to have been attracted.
7. We must make it clear that we did not intend to, nor have we expressed any opinion on the merits of the respondents’ claim including his contention that the decision in Bengal Immunity put him on notice regarding his payment of tax being under a mistake and/or that the said decision furnishes a cause of action for his claim of refund.
8. The appeal is accordingly allowed, the judgment of the High Court is set aside, and the matter remitted to the appellate authority. The appellate authority shall dispose of the appeal as expeditiously as possible in the circumstances of the case. There will be no order as to costs.
