L.N.RAY - (1.) THESE are mostly applications under section 8 of the West Bengal Taxation Tribunal Act, 1987, numbered as RN-10 to 13, 15, 90, 259 and 282 to 285 of 1990. RN-213 (T) of 1990 was received upon transfer from the High Court under section 15 of the said Act. Except RN-90 and 213 (T), all other cases were heard analogously, as common constitutional questions are involved. Although not strictly analogously, RN-90 and 213 (T) of 1990 were also heard along with the other cases, since the questions involved in these cases are no different. During hearing of all the cases it was agreed and understood by the learned Advocates for the applicants and the learned State Representative that these applications will be decided by a common judgment. The points which arise for determination in all these applications are - whether the State Legislature was competent to enact clause (ii) of sub-section (6) of section 4 of the Bengal Finance (Sales Tax) Act, 1941, and clause (i) of sub-section (2) of section 4 of the West Bengal Sales Tax Act, 1954, as inserted by West Bengal Act 23 of 1977 with effect from October 10, 1977, and whether the said provisions in the said two Acts as amended by the West Bengal Taxation Laws (Amendment) Act, 1990 and also sub-sections (2a) and (2b) of section 26a of the 1941 Act and section 28 of the 1954 Act, inserted by the West Bengal Taxation Laws (Amendment) Act, 1990, are constitutionally valid. Vires of the relevant rules framed for carrying out the purpose of 1990 amendments is also under challenge.
(2.) THE case of the applicants may be summed up thus : In RN-10 of 1990, Rasoi Ltd. is the first applicant. The applicant No. 2 is the Managing Director of the company, who is also a shareholder. The company is a registered dealer under the West Bengal Sales Tax Act, 1954 and the Central Sales Tax Act, 1956. It carries on the business of manufacturing vanaspati, soap and allied products for sale. The company has a wide network of distributors of its products throughout India. It has also a large number of consignment agents and branches all over India. It despatches goods manufactured in the State of West Bengal to different places outside the State on consignment basis or on branch transfer basis. The company makes purchases of vegetable non-essential oils (briefly called V. N. E. oils) of various descriptions and other goods within and outside the State of West Bengal for use as raw materials in the manufacture of the said finished products in West Bengal. A purchase tax was levied under the amended provisions of the 1954 Act and the Bengal Finance (Sales Tax) Act, 1941, at the rates and for the periods mentioned below : (a) From October 10, 1977 to March 31, 1978 at 4 per cent. (b) From April 1, 1978 to March 31, 1983 at 2 per cent. (c) From April 1, 1983 till dated at 3 per cent. Vanaspati was brought under the purview of the 1954 Act with effect from 1977 to May 31, 1987, but was denotified and brought back within the scope of the 1941 Act for a brief period, i. e. , from June 1, 1987 to March 31, 1989. Again, since April 1, 1989 it has been restored to the 1954 Act. Among other provisions, clause (i) of section 4 (2) of the 1954 Act was inserted by way of an amendment under the West Bengal Act 23 of 1977, with effect from October 10, 1977. A similar provision, being section 4 (6) (ii) was inserted in the 1941 Act by the same Act 23 of 1977 and with effect from the same date. Under these provisions a registered dealer became liable to pay tax on all purchases of raw materials made within the State of West Bengal which were ultimately used in the manufacture of various products, when the manufactured products are transferred by him to a place outside West Bengal or disposed of by him otherwise than by way of sale in West Bengal. Vanaspati comprises the major share of the applicants' turnover. During the period from 1977 to 1988, vanaspati manufacturers had to use imported edible oils supplied by the State Trading Corporation of India for manufacture of vanaspati. As a condition for obtaining such edible oils the manufacturers had to agree to an arrangement with the Government of India that irrespective of the cost of manufacture of vanaspati and in spite of varying rates of taxes imposed by different States, the sale price of such vanaspati should be uniformly fixed within a specified ceiling. Allegedly, the position has become worse at the moment, because, compared to the State of West Bengal, indigenous oils are more easily available to the manufacturers of northern and western States of India because of their proximity to the oil-growing region in the country. Moreover, in some of those States, there is no levy of sales tax on transfer of goods on consignment basis. Applicant claims that the tax paid by it under the impugned provisions upon transfer of goods outside West Bengal on consignment basis is not taken into account in considering the price structure of vanaspati. Applicant never charged any tax envisaged under the impugned provisions in the price of the products, when those are transferred to consignment agents outside West Bengal. Applicant paid from time to time, commencing from 1977, a sum of Rs. 63,87,915. 27 as tax in accordance with the provisions of section 4 (2) (i) of the 1954 Act and section 4 (6) (ii) of the 1941 Act and the rules framed thereunder. It is complained that the State Legislature was not competent to impose any tax as done under section 4 (6) (ii) of the 1941 Act and under section 4 (2) (i) of the 1954 Act, which were brought into effect on October 10, 1977. The tax, whether paid on its own by the applicant or recovered upon assessment by the respondents, has been so paid or recovered out of mutual mistake, the mistake being discovered by the applicant on or about October 30, 1989, upon reading the judgment of the Supreme Court delivered on October 19, 1989, in the case of Goodyear India Ltd. v. State of Haryana reported in [1990] 76 STC 71 : AIR 1990 SC 781. The said common judgment was delivered also in respect of the cases of Wipro Products Ltd. v. State of Maharashtra and Hindustan Lever Ltd. v. State of Maharashtra. Wipro Products and Hindustan Levers are also manufacturers of vanaspati and they had to pay tax under the respective State Acts under similar circumstances on purchases of raw materials used in the manufacture of vanaspati when the same was sent on consignment basis outside the respective States. By referring to the case of Sales Tax Officer, Varanasi v. Kanhaiya Lal Makund Lal Saraf [1958] 9 STC 747 (SC); AIR 1959 SC 135, and the case of State of Kerala v. Aluminium Industries Ltd. [1965] 16 STC 689 (SC), it is claimed that a party who made payment by mistake of law is entitled to get refund of the amount in spite of the fact that the State might have spent the amount in the ordinary course of its business. Reference has also been made to the case of State of M. P. v. Bhailal Bhai [1964] 15 STC 450 (SC); AIR 1964 SC 1006 and the case of State of West Bengal v. Hindusthan Construction Co. Ltd. [1978] 41 STC 112; 78 CWN 168 (a decision of the Calcutta High Court) on the point that an order for refund may be made if mistake is proved and the claim for refund is made within the period of limitation of three years from the date when mistake becomes known to the person who made the payment by mistake.
(3.) THE further case of the applicant is that the ratio of the decision of the Supreme Court in the case of Goodyear India Ltd. [1990] 76 STC 71; AIR 1990 SC 781, is that the State Legislature has no competence to enact any law imposing sales tax if the goods are transferred on consignment basis outside the concerned State. The Supreme Court laid down the above law overruling the decisions of all other courts which had held otherwise and the decision is binding on all courts and authorities under article 141 of the Constitution of India. In view of the said decision, applicants realised that the amounts were paid or recovered out of mistake, and it is the respondents' duty to forthwith refund those amounts whether assessments have or have not been made. Applicants also claimed an interest at the rate of 2 per cent per month in respect of the amounts so paid. They wrote a letter to that effect to the respondents on January 20, 1990.;