- (1.) This is plaintiff's appeal by certificate from the judgment and decree of the Andhra Pradesh High Court reversing on appeal the judgment and decree dated February 23, 1963 of the First Additional Chief Judge, City Civil Court, Hyderabad, which had decreed the present appellant's suit for Rs. 1,14,960.86 ps. against the Union of India. The High Court allowed the appeal of the Union of India and dismissed the plaintiff's suit.
(2.) The defendant called for tenders for the supply of cigarettes on various occasions. The plaintiff-company carrying on the business of manufacturing cigarettes submitted its tenders which were accepted by the Chief Director of Purchases, Government of India, Ministry of Food and Agricultural Department of Food, Army Purchase Organisation, New Delhi. After acceptance of the tenders several contracts were entered into between the parties beginning with December 23, 1954 and ending July 11, 1957. They were all subject to the terms and the special instructions and conditions of contract in Schedules A and B to the contracts. Clause 7 of Schedule B relating to Price (with the Note) reads as under : " Schedule B ... ... ... ... 7. Price : The price quoted will be subject to clause 3 (b) of the General Conditions of Conduct (Supply Department Form W.S.B. 133). The price quoted will be deemed to be inclusive of the cost of packing, cigarettes excise duty, tobacco excise duty, Customs duty and all other charges (incidental to supply and incurred upto loading) but exclusive of sales tax which if payable should be shown as a separate item. Sales tax would be paid at the rates prescribed by the State Government concerned. But in the event of any rebate or refund or sales tax allowed by the State Government (on purchases for the Defence Services) subsequent to supplies, a corresponding credit will be afforded by the supplier to the Government, Sales tax where leviable and intended to be claimed from the purchaser should be distinctly shown along with the price quoted, where this is not done, no claim for sales tax will be admitted at any later stage or on any ground whatsoever. All claims for reimbursement of sales tax will be accompanied by the following certificate duly signed by the contractor : 'Certified that no rebate or exemption has, so far been allowed by the Sales Tax authorities retrospectively in respect of the reimbursement of sales tax so for claimed by us from the Central Government and if it is subsequently allowed the same will be refunded to the Chief Director of Purchase, Ministry of Food and Agriculture at once.' 'Certified that the goods on which sales tax has been charge have not been exempted under the State Sales Tax Act or the rules made thereunder and the charges on the account of sales tax on these goods are correct under the provisions of that Act or the rules made thereunder." Note : Under Article 286 (1) of the Constitution of India no sales tax is payable on supplies procured on Central Government account and despatched outside the State of origin."
(3.) In Exhibit B-4 (Tender No. A/3636 dated December 11, 1954) the plaintiff-company inserted in the column pertaining to "Price Per Unit" that it was "subject to sales-tax at the rate of 1 anna per rupee", but noted in the "Remarks" column, "No sales tax is leviable as per Schedule B". The quotations in this tender were also stated to be subject to the terms and conditions given in the F and A Ministry's letter dated July 6, 1954. That was the letter (B-1) inviting tenders with which were enclosed Schedules A and B. Supplies were duly made by the plaintiff in accordance with the terms of the tender. Both the parties were apparently under the belief that these sales were not subject to sales tax. The Commercial Tax Officer, however, taxed all the sales and levied a total tax of Rs. 1,14,960.36 Ps. for the four assessment years 1954-55 to 1957-58. The plaintiff took the matter on appeals but they were all rejected upto the Appellate Tribunal. Writ Petitions to the Andhra Pradesh High Court were also unsuccessful. The plaintiff demanded reimbursement by the Central Government to the extent of the amount of sales-tax actually paid. On rejection of this demand, after giving the statutory notice under S. 80 C. P. C., the plaintiff instituted the suit for the recovery of Rupees 1,14,960.36 which has given rise to the present appeal. The suit was resisted by the Union of India on various grounds, including even the bar of limitation. Defence on the merits was principally based on cl. 7 of the Special Instructions in Schedule B of the tender invitation. It was also pleaded in para 5 of the written statement that the mention of no sales-tax being leviable (made in the contract of December, 1954 and some others) was discontinued because it was considered redundant.;