KANTILAL BABULAL Vs. H C PATEL SALES TAX OFFICER SURAT
LAWS(GJH)-1963-12-13
HIGH COURT OF GUJARAT
Decided on December 02,1963

KANTILAL BABULAL Appellant
VERSUS
H.C.PATEL, SALES TAX OFFICER, SURAT Respondents

JUDGEMENT

BHAGWATI, J. - (1.) THIS petition raises an interesting question relating to the construction of section 12A(4) of the Bombay Sales Tax Act. 1946, and in the event of the construction contended for on behalf of the State being accepted, challenges the validity of the section the ground of infraction of Article 19(1)(f) of the Constitution of India. In order to appreciate the various questions arising in the petition, it is necessary to briefly recapitulate the facts on which the petition is founded. The facts are few and for the most part undisputed and may be briefly stated as follows :- The petitioners are dealers carrying on business in art silk, cotton and handloom cloth and at all material times they held a certificate of registration under the Bombay Sales Tax Act, 1946 (hereinafter referred to as the Act). During the period 26th January, 1950, to 31st March, 1950, which we shall for the sake of convenience describe as the first period, the petitioners effected various sales outside the State of Bombay. Being sales outside the State of Bombay, these sales were not taxable under the Act by reason of Article 286(1) of the Constitution; but in the assessment of the petitioners for the period 1st April, 1949. to 31st March, 1950, they were included in the taxable turnover of the petitioners and a sum of Rs. 4,494-3-9 was paid by the petitioners as tax on such sales. The petitioners challenged the inclusion of these sales in their taxable turnover in the appeal filed by them before the Assistant Collector of Sales Tax but the appeal was unsuccessful. The matter was then carried in revision to the Additional Collector of Sales Tax, who by his order dated 30th April, 1958, excluded certain sales as outside State sales and made an order for refund of Rs. 2,238-0-6 being the amount of tax paid by the petitioners in respect of those sales. Pursuant to this order, a refund payment order was sent by the Sales Tax Officer to the petitioners on 11th June, 1958, and the amount of the refund was received by the petitioners. In the meanwhile, the Additional Collector of Sales Tax by his letter dated 17th May, 1958, gave notice to the petitioners that unless they furnished to the Sales Tax Officer proof of their having refunded the amount of Rs. 2,238-0-6 to the purchasers within a period of three months from the date of the order, the amount of the refund would be liable to be forfeited under section 21(4) of the Bombay Sales Tax Act, 1953. No action was, however, taken on this notice and no forfeiture of the amount of Rs. 2,238-0-6 was made until the filing of the petition. Resuming the narration, of the history of the assessment, the petitioners, not being content with the partial relief granted by the Additional Collector of Sales Tax, preferred a revision application before the Tribunal. The Tribunal held that all the sales in respect of which claim for exclusion was made by the petitioners were outside State sales and were, therefore, exempt from tax under Article 286(1) and consequently, they were not liable to be included in the taxable turnover of the petitioners. The Tribunal accordingly by an order dated 26th November, 1958, directed that the assessment of the petitioners be modified in accordance with this decision. The assessment of the petitioners was, however, not modified by the Sales Tax Officer pursuant to this order of the Tribunal and the consequential relief of refund of Rs. 2,256-2-6 which would have followed on such modification was not granted to the petitioners. The net summary of the position which obtained at the date of the petition in regard to the first period, therefore, was that out of the tax of Rs. 4,494-3-0 paid by the petitioners in respect of the outside State sales, a sum of Rs. 2,238-0-6 ordered to be refunded by the Additional Collector of Sales Tax was received by the petitioners, but there was a notice of forfeiture in respect of that amount issued by the Additional Collector of Sales Tax under section 21(4) of the Bombay Sales Tax Act, 1953, and that so far as the balance of Rs. 2,256-2-6 was concerned, there was the order of the Tribunal directing a modification of the assessment of the petitioners which would result in the granting of refund of the said amount to the petitioners, but that order remained unexecuted by the Sales Tax Officer.
(2.) DURING the period 1st April, 1950, to 31st March, 1951, also the petitioners effected various sales outside the State of Bombay. We shall, for the sake of convenience, describe this period as the second period. These sales being outside State sales were exempt from tax by reason of Article 286(1) of the Constitution, but in the mistaken belief that they were taxable, the petitioners initially paid a sum of Rs. 23,806-3-6 as tax in respect of such sales along with the quarterly returns at the time of the assessment. The petitioners thereafter, realising that these sales were not taxable, submitted revised returns excluding these sales from their taxable turnover and claimed refund of Rs. 23,806-3-6. This claim was negatived by the Sales Tax Officer on 31st March, 1957. The petitioners thereupon carried the matter in appeal and the Assistant Collector of Sales Tax by his order dated 10th April, 1958, excluded certain sales as outside State sales and granted refund of Rs. 12,154-15-0 to the petitioners. The Assistant Collector of Sales Tax by his letter dated 27th May, 1958, forwarded to the petitioners his order sanctioning refund of Rs. 12,154-15-0 and asked the petitioners to approach the Sales Tax Officer for refund payment order for the said amount. The Assistant Collector of Sales Tax by his said letter also gave notice to the petitioners that if the petitioners failed to refund the amount of Rs. 12,154-15-0 to the purchasers and to produce proof showing such payment before the Sales Tax Officer, the said amount would be forfeited under section 12A(4) of the Bombay Sales Tax Act, 1946. It is not clear from the petition whether pursuant to this order of the Assistant Collector of Sales Tax a refund payment order was obtained by the petitioners; but it is admitted that the petitioners received refund of the amount of Rs. 12,154-15-0 as directed by this order of the Assistant Collector of Sales Tax. The petitioners being aggrieved by the refusal of refund in respect of the balance of tax paid by them, preferred a revision application to the Additional Collector of Sales Tax. The Additional Collector of Sales Tax by his order dated 1st November, 1958, granted further relief by ordering refund of Rs. 3,588-1-9 to the petitioners. Though this order was made by the Additional Collector of Sales Tax as far back as 1st November, 1958, the Sales Tax Officer did not give effect to it and did not issue any refund payment order to the petitioners in obedience to it with the result that until the filing of the petition, the refund of this amount of Rs. 3,588-1-9 was not received by the petitioners. The petitioners, to continue the narration further, then preferred a revision application to the Tribunal claiming the balance of the refund which was refused to them by the Additional Collector of Sales Tax. The Tribunal in revision accepted the plea of the petitioners that all the sales claimed by the petitioners were outside State sales and accordingly by an order dated 4th May, 1959, asked the Sales Tax Officer to modify the assessment of the petitioners so as to exclude these sales from the assessment. The State thereupon applied to the Tribunal for a reference and Reference No. 2 of 1961 was accordingly made by the Tribunal to this Court. This reference was pending at the date of the petition. The net summary of the position which obtained in regard to the second period at the date of the petition, therefore, was that out of the tax of Rs. 23,806-3-6 paid by the petitioners in respect of outside State sales, a sum of Rs. 12,154-15-0 ordered to be refunded by the Assistant Collector of Sales Tax was received by the petitioners but a notice of forfeiture in respect of that amount issued by the Assistant Collector of Sales Tax under section 12A(4) was pending; a further sum of Rs. 3,588-1-9 was ordered to be refunded by the Additional Collector of Sales Tax but neither any refund payment order was issued nor was refund of the said amount given to the petitioners and so far as the balance of Rs. 8,063-2-9 was concerned, the Tribunal had by its order directed modification of the assessment of the petitioners which would result in the grant of refund of the said amount to the petitioners, but Reference No. 2 of 1961 directed against the order of the Tribunal was pending in this Court. This was broadly the position at the date when the petition came to be filed and, as will be seen from what is stated above, the petitioners had considerable grievance against the Sales Tax Authorities since they were not carrying out the orders of the superior Tribunals granting relief to the petitioners. But what precipitated the filing of the petition was the issue of a notice by the Sales Tax Officer on 27th June, 1962, by which the Sales Tax Officer called upon the petitioners to remain present in his office on 2nd July, 1962, with particulars of amount recovered by the petitioners by way of sales tax from purchasers in other States during the period 26th January, 1950, to 31st March, 1951, and to show cause why the said amount should not be forfeited to the Government. On receipt of this notice, the petitioners filed the present petition against the Sales Tax Officer, the Commissioner of Sales Tax and the State of Gujarat as the respondents. The two main grounds set out in the petition were, first, that the respondents Were under a statutory obligation to carry out the orders of refund made by the Additional Collector of Sales Tax and the Tribunal and to refund to the petitioners a sum of Rs. 5,844-4-3 made up of Rs. 2,256-2-6 being the amount of refund claimed under the order of the Tribunal in respect of the first period and Rs. 3,588-1-9 being the amount of refund claimed under the order of the Additional Collector of Sales Tax in respect of the second period and that a writ of mandamus should, therefore, issue compelling the respondents to carry out this statutory obligation and, secondly, that the notice dated 27th June, 1962, issued by the Sales Tax Officer was not warranted by the terms of section 12A(4) and that in any event it was illegal and void since section 12A(4) was ultra vires and violative of Article 19(1)(f) of the Constitution and that a writ of mandamus should accordingly issue to quash and set aside the said notice and a writ of prohibition should issue prohibiting the respondents from acting upon the said notice or taking any proceedings in enforcement of it. On the petition being admitted, a rule was issued and in opposition to the rule an affidavit made by the first respondent was filed on behalf of the respondents. It is not necessary to refer to this affidavit in detail beyond stating that in effect and substance all that it said was that the grounds on which the petitioners claimed relief in the petition were unjustified and that the first respondent was entitled to proceed against the petitioners under section 12A(4) and to withhold payment of the amount of refund to the petitioners until the proceedings under section 12A(4) were concluded. Since the vires of section 12A(4) was challenged in the petition, a notice was issued to the Advocate-General, and the learned Advocate-General, therefore, appeared at the hearing of the petition not only on behalf of the respondents but also in response to the notice issued to him. When Mr. Kaji, learned Advocate appearing on behalf of the petitioners, opened his arguments, the first complaint that he made on behalf of the petitioners, was against the refusal of the Sales Tax Officer to carry out the order of the Tribunal directing the modification of the assessment of the petitioners in respect of the first period. Though the order was made by the Tribunal as far back as 26th November, 1958, the Sales Tax Officer had failed to carry it out by making the necessary modification in the assessment which would result in the granting of refund to the petitioners of the balance of Rs. 2,256-2-6. Mr. Kaji contended that the order of the Tribunal was final and binding on the parties and the Sales Tax Officer was, therefore, under a statutory obligation to carry it out and since the Sales Tax Officer had failed to comply with this statutory obligation and the petitioners had no other remedy to compel performance of it, the petitioners were entitled to have a writ of mandamus issued requiring the first respondent to carry out the order of the Tribunal by making modification in the assessment of the petitioners in accordance with such order and granting consequential refund of Rs. 2,256-2-6 to the petitioners. An identical contention was also advanced by Mr. Kaji in regard to the order of the Tribunal in respect of the second period. We may point out that, subsequent to the filing of the petition, Reference No. 2 of 1961 which was directed against the order of the Tribunal in respect of the second period was disposed of against the State and the order of the Tribunal, therefore, remained intact and unaffected. Mr. Kaji contended that the Sales Tax Officer was, therefore, bound to carry out the order of the Tribunal by making modification in the assessment of the petitioners and granting consequential refund of Rs. 8,063-2-9 to the petitioners and that a writ of mandamus should, therefore, issue compelling him to perform this statutory obligation. Mr. Kaji in support of this contention relied on a decision of the Supreme Court in Bhopal Sugar Industries Ltd. v. Income-tax Officer, Bhopal ([1960] 40 I.T.R. 618). Now it is undoubtedly true, as held by the Supreme Court in this case, that when an order is made by a superior Tribunal and it has become final and conclusive, there is a statutory obligation on the subordinate authority to carry out the order and that if the subordinate authority refuses to carry out the order, it can be compelled to do so by a writ under Article 226. It is equally true that in accordance with this principle the first respondent was under a statutory obligation to carry out the orders of the Tribunal and to modify the assessment of the petitioners as directed by the said orders and since the first respondent admittedly failed to do so, a writ could justifiably issue against the first respondent requiring the first respondent to carry out the statutory obligation, but we are afraid this relief cannot be granted by us to the petitioners since no such relief is claimed in the petition. In regard to the order of the Tribunal in respect of the second period, no relief is claimed at all in the petition since at the date of the petition, Reference No. 2 of 1961 was pending in this Court and the order of the Tribunal had, therefore, not become final and conclusive. So far as the order of the Tribunal in respect of the first period is concerned, it had undoubtedly become final and conclusive at the date of the petition; but in respect of this order also, we find that no relief is claimed in the petition. Mr. Kaji drew our attention to prayer (a) of the petition, but that prayer is for compelling the respondents to comply with the order of refund and to refund to the petitioners the sums of Rs. 2,256-3-6 and Rs. 3,588-1-9. Of course the sum of Rs. 2,256-2-6 represented the amount of refund which the petitioners were entitled to get as a necessary consequence of the order of the Tribunal but as yet there was no order of refund in respect of that amount and unless such an order of refund was made by the first respondent as a result of modification of the assessment of the petitioners in pursuance of the order of the Tribunal, the petitioners could not claim any relief requiring the respondents to refund that amount to the petitioners. The only relief which the petitioners could claim in this connection was that the first respondent be required to modify the assessment of the petitioners in accordance with the direction contained in the order of the Tribunal. This relief was, however, not claimed in the petition and we cannot, therefore, grant it. Realizing this difficulty in his way on the petition as it is stands, Mr. Kaji at the fag-end of his argument applied for leave to amend the petition by adding paragraph 25A after paragraph 25 of the petition and prayer (bb) after prayer (b) of the petition. By this amendment, Mr. Kaji sought to include in the petition a prayer for revision of the assessment of the petitioners pursuant to the orders of the Tribunal in respect of both the periods and the necessary averments in support of such prayer. The amendment was opposed by the learned Advocate-General appearing on behalf of the respondents and the grounds which he urged against granting the amendment were : (1) that the petition was filed as far back as 8th August, 1962, whereas the amendment was applied for more than a year after the date of the filing of the petition, and (2) that the amendment was sought almost at the close of the arguments on behalf of the petitioners. These grounds were, in our opinion, valid grounds for refusing to grant the amendment and we, therefore, rejected the application for amendment.
(3.) THE only two contentions of Mr. Kaji which thus survived were, first, that the first respondent had failed to comply with the order of refund of Rs. 3,588-1-9 made by the Additional Collector of Sales Tax in respect of the second period and that a writ of mandamus should, therefore, issue to compel the first respondent to comply with the said order of refund and to refund to the petitioners the sum of Rs. 3,588-1-9 in compliance with the same and secondly, that the notice of forfeiture dated 27th June, 1962, issued by the first respondent was illegal and void and that a writ of mandamus should, therefore, issue to quash and set aside the said notice and a writ of prohibition should issue prohibiting the respondents from enforcing the same. Now, to these contentions, a preliminary objection was raised by the learned Advocate-General on behalf of the respondents. He pointed out that the relief under Article 226 was a discretionary relief and that unless justice of the case demanded, the Court should not grant it, even if there was an error of law committed by the subordinate Tribunal. He contended that in the present case the petitioners having unjustly enriched themselves by collecting from their purchasers amounts by way of sales tax, when no sales tax was payable by them to the State on those sales, were seeking to protect the spoils of such unjust enrichment and that the Court should not, therefore, interfere by way of granting relief under Article 226 even if the legal contentions raised by them were well-founded. THE argument was, to put it briefly, that justice was not on the side of the petitioners and that they should not, therefore, have relief under Article 226. THE learned Advocate-General relied on three decisions of the Supreme Court, namely, G. Veerappa Pillai, Proprietor Sathi Vilas Bus Service v. Raman and Raman Ltd. (A.I.R. 1952 S.C. 192) Sangram Singh v. Election Tribunal, Kotah and Another (A.I.R. 1955 S.C. 425), and A. M. Allison and Another v. B. L. Sen and Others (A.I.R. 1957 S.C. 227), and also referred to a decision of the Allahabad High Court in Lala Kailashpat Singhania v. Income-tax Officer, Kanpur ([1963] 47 I.T.R. 453). Now, it is true that as a general principle granting of relief under Article 226 is discretionary and that ordinarily a writ will not issue unless the justice of the case requires it; but there is no such hard and fast rule which limits the discretion of the Court in all cases and besides, different considerations prevail in case of different writs and particularly in the case of writ of prohibition. We shall examine that presently, but before we do so, we must point out that in the present case, if the legal contentions of the petitioners are correct, we do not see any reason why relief should be refused to them. THEre are no considerations of justice which should prevail with us in denying to the petitioners the relief which they claim. Let us see what is the relief claimed by them. In the first instance, what they claim is that the first respondent should carry out the order of refund passed by the Additional Collector of Sales Tax. THE refund claimed is a refund of tax paid by them in excess of the amount due under the Act. Is there any inequity if the taxpayer demands refund of the excess tax paid by him and if the order of refund is made in his favour, he asks the Court to compel the authorities to carry it out ? Can it be said that any injustice would result from granting such relief ? Do the basic principles of administration of justice not require that once an order is passed by a superior Tribunal and it has become final and conclusive, it must be carried out by the subordinate authorities ? If the subordinate authorities do not carry out the order for a period of about 3 1/2 years, should the court not interfere under Article 226 ? THE answer is clearly provided by the decision of the Supreme Court in Bhopal Sugar Industries Ltd. case ([1960] 40 I.T.R. 618) to which we have already referred. THE only argument put forward by the learned Advocate-General was that the petitioners had collected an amount equivalent to the amount of refund by way of tax from purchasers in respect of sales on which refund was granted and that the effect of carrying out the order of refund passed by the Additional Collector of Sales Tax would be to enable the petitioners to retain the benefit of the said amount improperly collected by them. But this argument overlooks the fact that the refund which is claimed by the petitioners is the refund of the excess tax paid by them and it has nothing to do with the amount, if any, collected by the petitioners from the purchasers by way of tax in respect of sales on which refund has been granted. If any such amount has been collected by the petitioners from the purchasers, the purchasers have their remedy against the petitioners and they can, if they so choose, claim to recover that amount from the petitioners and even the State may forfeit that amount if it has the power to do so under section 12A(4) but that can be no ground for refusing to carry out the order of refund made by the Additional Collector of Sales Tax for a period of about 3 1/2 years. We do not, therefore, see any reason why, if the petitioners are otherwise entitled to the relief claimed by them, they should not be granted relief in respect of the order of refund made by the Additional Collector of Sales Tax. So far as the relief in respect of the notice dated 27th June, 1962, is concerned, there are two reasons why such relief should not be refused to the petitioners. The first is that here what the petitioners complain of is a threatened infringement of their fundamental rights and they seek interposition of the Court with a view to protection of those rights. Where a citizen goes to the Court under Article 226 for protection of his fundamental rights guaranteed to him under the Constitution, there is a duty laid on the Court to protect such rights by issuing an appropriate writ and the Court will be failing in its duty if it refused to protect such rights on the ground that the petitioner had another remedy available to him or that he had acquiesced in the breach of such rights or that justice was not on his side. These are grounds which may legitimately be taken into account while deciding whether a writ under Article 226 should issue to enforce any other legal rights of the petitioner; but when it is a question of enforcement of fundamental rights, such considerations should not be allowed to influence the decision of the Court. The fundamental rights are, to quote the words of Mahajan, C.J., in Behram Khurshid Pesikaka v. The State of Bombay (A.I.R. 1955 S.C. 123 at page 146) : "...... a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for individual benefit though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy.";


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