INDIAN STEEL AND WIRE PRODUCTS LTD Vs. SUPERINTENDENT OF COMMERCIAL TAXES

JUDGEMENT

(1.) In this case the petitioner has obtained a rule from the High Court calling upon the respondents to show cause why a writ in the nature of certiorari should not be issued to quash the order of assessment of sale-tax made on the 10th of September 1950, and also for a writ in the nature of mandamus directing the respondents to refund a sum of Rs. 69,478/8/- illegally realised as sales-tax.

(2.) Cause has been shown by the learned Government P leader on behalf of the State of Bihar and the other respondents to whom notice of the rule was ordered to be given.

(3.) The petitioner is an incorporated Company carrying on the business of manufacture and sale of M. S. rods, wires, wire products, nails, bolts etc. Its factory is situated at Indranagar in the district of Singhbhum. For the financial year 1949-50 the petitioner was assessed for the payment of tax of Rs. 2,94,131/- with regard to sales outside Bihar and of Rs. 9,01071/- with regard to sales inside the territory of Bihar. Out of this assessment a sum of Rs. 69,678/8/-was assessed as tax payable for sales outside Bihar for the period between the 26th of January, 1950, and the 31st of March, 1950. The taxable turnover for this period was Rs. 44,46,662/5/6. The assessment was made by the Superintendent of Commercial Taxes on the 10th of September, 1950. The petitioner duly paid the amount of tax assessed soon afterwards. On the 30th of March, 1953, the Supreme Court pronounced its Judgment in State of Bombay v. United Motors (India) Ltd., 1953 SCR 1069 : (AIR 1953 SC 252) (A), holding that Article 286(1) of the Constitution, read with the explanation thereto, prohibited the taxation of sales or purchases involving inter-State elements by all States except the State in which the goods are delivered for the purpose of consumption therein. The effect of this decision was the petitioner was not liable to pay sales-tax with regard to sales outside Bihar for the purpose of consumption in the other State with respect to period from the 26th of January, 1950, to 31st of March, 1950. On the 4th of September, 1953, the petitioner applied before the Commissioner of Sales Tax for a review of the assessment made on the 10th of September, 1950, and for the refund of the tax illegally collected. This application was rejected by the Commissioner of Sales-tax by his order dated the 18th of February, 1954. The contention of the petitioner is that the order of the Commissioner of Sales-tax is illegal and there is a statutory obligation on the part of the respondents to refund the tax illegally realised. It is argued on behalf of the petitioner that the imposition of tax was unconstitutional since there is a violation of the.provisions of Article 286 and Article 265 of the Constitution. It was submitted on behalf of the petitioner that the order of assessment of the Sales-tax Officer, dated the 10th of September, 1960, should therefore, be quashed by a writ in the nature of certiorari and there should be a further direction upon the respondents to refund the amount of tax realised for the period in question.