STATE OF BIHAR Vs. NEW INDIA SUGAR MILLS LTD

JUDGEMENT

(1.) This appeal by the defendant State of Bihar is against a judgment and decree passed by the Court below. The plaintiff-respondent M/s. New India Sugar Mills Ltd., filed a suit for realisation of Rupees 12,387.68 on account of principal, interest and cost of notice under Section 80 of the Code of Civil Procedure, as per account given at the foot of the plaint.

(2.) The case of the plaintiff was that the defendant State of Bihar realised a sum of Rs. 10,468.44 on account of sales-tax on the sale of sugar by the plaintiff-mill outside the State of Bihar through the authorised agents of the purchasing State. The plaintiff mill during the 1st April, 1947, to 31st March, 1948, had despatched sugar worth Rs. 6,89,482/- to the authorised agents of the State of Madras under the direction of the Controller exercising powers under the Sugar and Sugar Products Control Order 1946. The Superintendent of Sales Tax held that the plaintiff was liable to be taxed under the Sales Tax Act. The plaintiffs appeal to the Deputy Commissioner, Sales tax, was rejected, The Board of Revenue remanded the case to the Deputy Commissioner who again rejected the plea of the plaintiff. The Board of Revenue by its order dated the 23rd March, 1956, held that the plaintiff was not liable to be assessed to sales-tax on the value of the sugar despatched to the State of Madras. The State of Bihar took up the matter to the High Court and the order of the Board of Revenue was set aside. The plaintiff went up to the Supreme Court and the Supreme court held that the sale outside the State of Bihar was not taxable under the Bihar Sales Tax Act. In the meanwhile, a demand notice had been served upon the plaintiff to pay a sum of Rs. 10,468.44 and the plaintiff deposited the said amount. After the decision of the Supreme Court, the plaintiff filed an application before the Additional Superintendent of Sales Tax, Samastipur, for refund of the sum of Rs. 10,468.44, but the refund was not made. The plaintiff took up this matter with the Commissioner of Commercial Taxes but nothing was done. Ultimately, a notice under Section 80 of the Code of Civil Procedure was served upon the Collector and others and the suit was filed on 25-11-65 for the principal amount with interest at 6 per cent per annum from 26-12-62 till the date of filing of the suit, being a sum of Rs. 1,884.24, plus Rs. 35/- as cost of the notice.

(3.) The defendant State of Bihar contested the suit. Their main defence was that the plaintiff was not entitled to claim any interest for the period prior to the filing of the refund application as also for the period the refund application was pending with the authorities. Their further plea was that the payment order was made on 24-1-66 for the principal amount and the plaintiff was informed but they did not come to receive it, Therefore, no interest could be charged after that date. The defendant, however, accepted the liability to pay the principal amount of Rs. 10,468-44, but stated that the plaintiff applied for refund without the certified copy of the Supreme Court judgment and when the matter was still under consideration of the department, the suit was filed.