Appearing for a tax payer who paid tax on items supplied free by Railways, this bench held writ petitions dismissible due to laches, failure to use statutory remedies, and delay exceeding limitation.
No relief granted; writ petitions dismissed without costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
HONOURABLE SRI JUSTICE GODA RAGHURAM
AND
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
W.P.Nos.292, 293, 294, 295, 296, 297, 298, 299 and 300 of 2007
%03.10.2012
#Raghavendra Presteress Products Private Limited, Secunderabad.
...APPELLANT
VERSUS
$Commissioner of Commercial Taxes, Hyderabad and two others. ...RESPONDENTS
< GIST: > HEAD NOTE:
!Senior Counsel for the Petitioner:- Sri S.R.Ashok
^ Standing Counsel for the Respondent:- Commercial Tax Department: Sri Balaji Varma
? Cases referred 1 50 VST 469 (KARNATAKA ) 2 (1983) 2 S.C.C. 433 3 (1997) 4 S.C.C. 82 4 AIR 1970 S.C. 898 5 (1998) 4 S.C.C. 100 6 (1970) 25 S.T.C. 256 (A.P.)
HONOURABLE SRI JUSTICE GODA RAGHURAM
AND
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
W.P.Nos.292, 293, 294, 295, 296, 297, 298, 299 and 300 of 2007
COMMON ORDER
(per Hon’ble Sri Justice M.S.Ramachandra Rao)
In these writ petitions, all filed by the same petitioner, substantially the same issues are raised and hence they are dealt with together and a common order is passed.
2. The petitioner is a Private Limited Company engaged in the business of manufacture and supply of Prestress Concrete Sleepers to the Indian Railways. It is a dealer registered with the Commercial Tax Department of the Government of Andhra Pradesh.
3. As per the terms of the contracts it had entered into with the Railways, it was obligated to use, in the course of manufacture of the said sleepers, certain components such as High Tensile Steel Wire and Malleable Cast Iron Inserts etc. supplied by the South Central Railway free of cost in order to ensure the quality of the ultimate product.
4. In its sale invoices, it had incorporated the value of the items supplied free of cost and was paying Excise Duty and Sales Tax on such components to the Union Government and the State Government respectively and the South Central Railway had been reimbursing the same to the petitioner for the assessment years 1997-1998, 1998-1999, 1999-2000, 2000-2001 and 2001-2002.
5. Assessment orders were passed by the
jurisdictional assessing officers on various dates from 1999 to 2005 for the above assessment years both under CST Act and APGST Act.
6. While so, on 25-04-2003, the C.T.O. addressed a letter to the South Central Railway stating that the items supplied free of cost by the South Central Railway to the petitioner were not exigible to Sales Tax in the hands of the petitioner and the petitioner was not entitled to collect Sales Tax thereon from the South Central Railway.
7. Thereupon the South Central Railway issued a notice 20-08-2003 to the petitioner proposing to recover a sum of Rs.74,98,420/- being the Sales Tax on the items supplied by it free of cost which had been wrongly paid to the petitioner by it for the assessment years 1997-98, 1998-99, 1999-2000, 2000-2001 under various agreements between the petitioner and the South Central Railway.
8. The petitioner thereafter filed W.P.No.19011 of 2003 and W.P.No.20117 of 2003 in the High Court against the South Central Railway and the Commercial Tax Officers concerned to quash the said notice dated 20-08-2003. By order dated 29-12-2003, the said writ petitions were disposed of directing the petitioner to file explanation to the said notice within two weeks and further directing the South Central Railway to take a decision as per law. Pending such decision, the South Central Railway was directed not to take
any coercive steps against the petitioner.
9. Thereafter the South Central Railway issued a letter dated 06-05-2005 to the petitioner stating that the Commercial Tax Department has not refunded the amount of Rs.74,98,420/- which was the excess remittance of Sales Tax by the petitioner on account of items supplied free during the period 1997 to 2001 and therefore it is proposing to adjust the said excess payment of Sales Tax by withholding the Sales Tax component payable to the petitioner from its running bills against the on going contracts.
10. The petitioner thereafter filed W.P.No.15952 of 2005 in the High Court to declare the action of the South Central Railway in recovering the Sales Tax already paid by the petitioner to the Commercial Tax Department including the proposed recovery of Rs.74,98,420/- from the running bills of the petitioner as illegal and arbitrary and sought a consequential direction to the South Central Railway to refund the amounts already deducted forthwith together with interest at the rate of 24% per annum. On 05-10-2005, the said writ petition was dismissed holding that the petitioner had paid Sales Tax on the value of the items supplied free by the South Central Railway even though Sales Tax is not liable to be paid on them either by the petitioner or the Railways. The petitioner was granted liberty to avail such remedies as may be available to it in law to seek refund/recovery of the amounts said to have been paid by it to the Commercial Tax Department towards Sales Tax paid
under mistaken impression.
11. Thereafter, the petitioner filed applications under Rule 50 of the APGST Act, 1957 for rectification of the assessment orders passed by the concerned assessing officers contending that the turn over relating to the items supplied free by the Railways has to be deleted and the assessments have to be revised as taxes were paid by the petitioner under mistake. The said application was rejected on
31-08-2006 by the assessing officer holding that there was no clerical or arithmetical mistake apparent from the record and that the petitioner himself voluntarily declared and paid tax on the items freely supplied and had not objected to the levy of tax at any time.
12. Challenging the same, the petitioner has filed these writ petitions on 02-01-2007.
13. The details of the assessment years, dates of assessment, the authority who passed the assessment orders are given below writ petition wise:
| S.No. | W.P.No. | Assessment year |
Date | Assessment order passed by |
D a t e of filing writ |
|---|---|---|---|---|---|
| 1. | 292/2007 | 2001-2002 | 23-03- 2005 |
A C , LTU, Kurnool |
02-01- 2007 |
| 2. | 293/2007 | 1999-2000 | 19-01- 2002 |
CTO-1, Adoni | 02-01- 2007 |
| 3. | 294/2007 | 1998-1999 | 04-12- 2000 |
CTO-1, Adoni | 02-01- 2007 |
| 4. | 295/2007 | 2000- 2001(CST) |
17-03- 2004 |
CTO-1, Adoni | 02-01- 2007 |
| 5. 5. |
296/2007 | 1997-1998 (CST) |
20-08- 1999 |
CTO-1, Adoni | 02-01- 2007 |
| 6. 6. |
297/2007 | 1998-1999 (CST) |
27-03- 2001 |
CTO-1, Adoni | 02-01- 2007 |
| 7. 7. |
298/2007 | 2000-2001 (APGST) |
17-03- 2004 |
CTO-1, Adoni | 02-01- 2007 |
| 8. 8. |
299/2007 | 1999-2000 (CST) |
19-01- 2002 |
CTO-1, Adoni | 02-01- 2007 |
| 9. 9. |
300/2007 | 1997-1998 (APGST) |
18-08- 1999 |
CTO-1, Adoni | 02-01- 2007 |
14. Heard Sri S.R.Ashok, Senior Counsel representing the petitioner in these writ petitions and Sri Balaji Varma, Standing Counsel for the Commercial Tax Department.
15. The learned Senior Counsel for the petitioner contends that the collection of Sales Tax from the petitioner by the Commercial Tax Department on the items supplied free to the petitioner by the South Central Railway is illegal and therefore the petitioner is entitled to refund of the amounts collected by the Commercial Tax Department for the various assessment years by setting aside the order dated 31-08-2006 rejecting the application under Rule 50 of the Rules framed under the APGST Act, 1957. He also relied on
Commissioner of Central Excise (Appeals), Bangalore vs. KVR Construction[1] and contended that payment made to the State under mistake by an assessee which he is not liable to pay as per law has to be refunded to the assessee.
16. The Special Government Pleader for Commercial Taxes, however contended that the petitioner had filed monthly returns for the above assessment years disclosing the turnovers relating to High Tensile Steel Wire, Malleable Cast Iron Inserts etc, supplied free of cost by the South Central Railway without objecting to the levy of tax on them, that the petitioner in his returns had never mentioned the proportion of the turnover relating to the items which were supplied free of cost by the South Central Railway, that the claim of the petitioner for refund was rightly rejected in the order dated 31-08-2006 by the department as it would not fall within the scope of Rule 50 of the Rules framed under the APGST Act, 1957, that the petitioner on its own had paid tax on the turnovers and in any event, the writ petitions filed by the petitioner have to be rejected on the ground of laches. It was also contended that in the absence of any material evidence adduced by the petitioner in the assessment proceedings as to the portion of turnover relatable to the items supplied free of cost by the Railways, this Court under Article 226 of the Constitution of India cannot conduct an enquiry and determine the said issue and then grant relief of refund of tax thereon to the petitioner.
17. We have considered the submissions of the
parties. There is no dispute that the petitioner had filed returns before the assessing officers for the relevant assessment years without indicating which portion of its turnover for a particular assessment year is attributable to the items supplied free of cost by the South Central Railway. The petitioner has not also contended during the assessment proceedings that it was not liable to pay tax on the items supplied free of cost by the South Central Railway. It thus allowed the orders of assessment to become final (except for assessment year 2001-02 for which an appeal was filed but this contention was not raised).
18. The petitioner in these writ petitions states that although the above issue has not been specifically raised in the assessment proceedings, this Court under Art.226 of the Constitution of India can go into the same by appreciating evidence and it can decide it. We are unable to agree with this submission. Issues of fact are ordinarily not adjudicated in writ proceedings and have to be agitated before the statutory authorities. This principle is well settled and has been reiterated by the Supreme Court in a number of cases.
19. In Titaghur Paper Mills Company Limited Vs. State of Orissa[2] the Supreme Court has held as follows:
“11. Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the Prescribed Authority under sub-section (1) of Section 23 of the Act. If
the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-section (3) of Section 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under Section 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution. It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Waterworks Co. v. Hawkesfor d4 in the following passage:
“There are three classes of cases in which a liability may be established founded upon statute. . . . But there is a third class, viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. . .the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to.”
The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspapers Ltd.5 and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordon Grant & Co. Ltd. and Secretary of State v. Mask & Co.7 It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine.”
20. In State of Goa Vs. Leuko Plast (India)
Limited[3] , the Supreme Court held that an assessee cannot contend in a writ petition bypassing the remedy under the Sales Tax Act of Goa, that goods produced by it are “drugs and medicines” exigible to lower tax and held as follows:
“15. In our view, whether the products manufactured by the assessee can be treated as “drugs or medicines” cannot be answered straightaway. The medicinal content of the products, if any, has to be ascertained. Its curative function has to be found out. Can the product be called a medicament at all? Is it used to cure or alleviate or to prevent disease or to restore health or to preserve health? Are these products treated as drugs or medicines in common parlance? These are basically questions of fact. There was no reason for the assessee-Company to bypass the statutory remedy and come to the court with a writ petition. These questions basically of fact should be agitated before the statutory appellate authority.”
21. Admittedly, except for the assessment year 2001-02, appeals had not been filed by the petitioner questioning the orders of assessment. Even in the appeal filed by the petitioner for the assessment year 2001-02, it is not disputed that the petitioner had not raised this issue. Therefore the petitioner cannot be permitted to agitate it in these writ petitions filed under Art.226 of the Constitution of India and invite this Court to decide the issue when it had not indicated in its returns which part of its turnover is attributable to the items supplied free by the South Central Railway.
22. The applications for rectification under Rule 50 of the Rules framed under APGST Act, 1957 were filed only on 16-01-2006 and the same were rightly rejected by endorsement dated 31-08-2006 on the ground that there is no clerical or arithmetical mistake apparent from record. The filing of these applications and their rejection will not give cause of action to the petitioner to seek refund of tax paid by it mistakenly to the Commercial Tax Department by filing these writ petitions when such tax was paid by it long prior to the filing of the writ petitions on 02-01-2007.
23. Also in W.Ps. 293 of 2007, 294 of 2007, 296 of 2007, 297 of 2007, 299 of 2007 and 300 of 2007 (six out of nine writ petitions decided by this common order), the assessment orders were passed on 19-01-2002 (Asst.year 1999-2000) , 04-12-2000 (Asst.year 1998-1999), 20-081999(Asst.year 1997-1998 CST), 27-03-2001 (Asst.year 1998-99 CST), 19-01-2002(Asst.year 1999-2000) and 1808-1999 (Asst.year 1997-1998 APGST) respectively. The petitioner has filed these writ petitions on 02-01-2007 seeking refund of tax paid by it i.e., more than the period of three years provided under the Limitation Act under Article 113 of the Limitation Act, 1963.
24. I n M/s.Tilokchand Motichand Vs.
H.B.Munsh i[4] , the Supreme Court held at para 9, 10 and 11 as follows:
“9. In India we have the Limitation Act which
prescribes different periods of limitation for suits, petitions or applications. There are also residuary articles which prescribe limitation in those cases where no express period is provided. If it were a matter of a suit or application, either an appropriate article or the residuary article would have applied. But a petition under Article 32 is not a suit and it is also not a petition or an application to which the Limitation Act applies. To put curbs in the way of enforcement of Fundamental Rights through legislative action might well be questioned under Article 13(3). The reason is also quite clear. If a short period of limitation were prescribed the Fundamental Right might well be frustrated. Prescribing too long a period might enable stale claims to be made to the detriment of other rights which might emerge.
10. If then there is no period prescribed what is the standard for this Court to follow? I should say that utmost expedition is the sine qua non for such claims. The party aggrieved must move the Court at the earliest possible time and explain satisfactorily all semblance of delay. I am not indicating any period which may be regarded as the ultimate limit of action for that would be taking upon myself legislative functions. In England a period of 6 months has been provided statutorily, but that could be because there is no guaranteed remedy and the matter is one entirely of discretion. In India I will only say that each case will have to be considered on its own facts. Where there is appearance of avoidable delay and this delay affects the merits of the claim, this Court will consider it and in a proper case hold the party disentitled to invoke the extraordinary jurisdiction.
11. Therefore, the question is one of discretion for this Court to follow from case to case. There is no lower limit and there is no upper limit. A case may be brought within Limitation Act by reason of some article but this Court need not
necessarily give the total time to the litigant to move this Court under Article 32. Similarly in a suitable case this Court may entertain such a petition even after a lapse of time. It will all depend on what the breach of the Fundamental Right and the remedy claimed are when and how the delay arose.”
25. In Municipal Corporation of Greater Bombay
Vs. Bombay Tyres International Limited[5] also, the Supreme Court held that in ascertaining what is the reasonable time for claiming refund, the Courts have often taken note of the period of limitation prescribed under the general law of Limitation for filing of suits for recovery of amount due to them.
26. I n Challa Apparao Vs. Commercial Tax
Office r[6] , a Division Bench of Andhra Pradesh High Court held as follows:
“12. What, in our view, emerges from these cases is that (1) where a suit under Section 72 of the Indian Contract Act will lie to recover moneys paid under mistake, a writ petition for refund of tax within the period of limitation prescribed under Article 96 of the Limitation Act, 1908, i.e., within 3 years, would also lie. But for filing of a writ petition to recover the money, unlike in a suit, the Supreme Court has restricted the starting point of limitation of 3 years to be from the date on which the judgment, declaring as void the particular law under which the tax was collected was rendered, and if any writ petition was filed beyond 3 years after that date, it will, the Supreme Court said, almost always be proper for the court to consider that it is unreasonable to entertain that petition for refund, though, even in cases where it was filed
within 3 years, the court has a discretion, having regard to the facts and circumstances of each case, not to entertain such application; and (2) in all the cases in which their Lordships of the Supreme Court had given relief the levy, assessment and collection had been made either under a law which was made without legislative competence or that there was some constitutional inhibition or certain terms specified in the Constitution for levying the tax had not been complied with. In both these cases, it will be observed that the orders levying the tax themselves being void, the money paid thereunder would be money paid under a mistake of law, because both the parties did not know until the final decision was given that the tax was not recoverable or payable. In such cases, civil suits were not barred to recover moneys and consequently writ petitions also could be filed to recover them.
16. It is, therefore, evident that where an order is passed by the Sales Tax authorities in exercise of the jurisdiction vested in them under the Act, no suit can be filed; but if an order is passed under the provisions which are ultra vires, illegal or void, the Sales Tax authorities not having jurisdiction to determine the question of vires, a civil suit will lie. It is only in respect of such matters that a suit to recover tax paid under a mistake of law can be filed; and because a suit can be filed, their Lordships of the Supreme Court have held that a writ of mandamus in like circumstances, to direct refund of the money paid under a mistake of law, can be filed ordinarily within a period of 3 years from the date of declaration of the provisions to be ultra vires. It follows that if no suit can be filed, a writ of mandamus cannot be filed to recover money within the period of 3 years, analogous to the period fixed in Article 96 of the Limitation Act, 1908. As long as the order of assessment stands, the amount paid cannot be said to be an amount
paid under a mistake of law. The only remedy is to have that order set aside or quashed either by the ordinary procedure prescribed in the statute itself, or by recourse to a petition under Article 226, to quash it by a writ of certiorari.
21. ……….In our view, applications under Article 226 of the Constitution will be entertained only if they are filed within a reasonable time from the date of the making of the order. Ordinarily, a period of six months may be considered reasonable; but in extraordinary circumstances, this court may, in its discretion, excuse delay. Otherwise, while periods of limitation are fixed for every form of remedy available to a party, there will not be any time-limit for the exercise of the extraordinary jurisdiction of this court. The exercise of power under Article 226 by a court irrespective of any time lag will introduce complications and unsettle rights finally decided by authorities empowered to do so.”
27. In view of the judgments of the Supreme Court and the A.P.High Court mentioned above, we feel that no relief of refund can be granted to the petitioner in these six writ petitions even if it did make the payment of tax to the Sales Tax department under a mistake of law and even if it could by-pass the statutory remedy as it has approached this Court with laches.
28. In KVR Construction’s case (1 supra) relied upon by the counsel for the petitioner, a Division Bench of the Karnataka High Court confirmed the order of a learned Single Judge of that High Court who held that the assessee was entitled to refund of amounts paid by it to the Central Excise Department towards alleged dues of service tax on the
activity of building construction done by it to a non-profit organization for the period between February 2005 and February 2007 which was actually not exigible to service tax in view of a circular dated 17-09-2004 issued by the Department. It confirmed the view of the learned Single Judge that since service tax was exempted, what was paid by the petitioner under a mistaken notion would not be “service tax” payable in law and the department had no authority to retain the said amount. The Court also held that it will not amount to duty of excise to attract the period of limitation of one year in Section 11-B of the Act and that it would be outside the purview of Section 11-B of the Act. The said case however did not decide that refund of tax paid under mistake of law should be refunded even if the claim for refund is made beyond the period of three years from the date of assessment and where the statutory remedies have not been availed of by the assessee, like the present case. In fact in the said case, the writ jurisdiction was invoked only after the assessee failed to get a refund before the statutory authorities. In our view, the said decision is clearly distinguishable and would not apply to the facts of the present case.
29. Therefore we hold that the petitioner is not entitled to any relief in these writ petitions. Accordingly they are dismissed without costs.
___________________________ JUSTICE GODA RAGHURAM
__________________________________ JUSTICE M.S.RAMACHANDRA RAO Date: 03-10-2012 Note: Mark the L.R. copy. B/o. Kvr
HONOURABLE SRI JUSTICE GODA RAGHURAM
AND
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
W.P.Nos.292 of 2007 and batch
COMMON ORDER
(per Hon’ble Sri Justice M.S.Ramachandra Rao)
For kind perusal of Hon’ble Sri Justice Goda Raghuram.
HONOURABLE SRI JUSTICE GODA RAGHURAM
AND
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
W.P.Nos.292 of 2007 and batch
COMMON ORDER
(per Hon’ble Sri Justice M.S.Ramachandra Rao)
-9-2012
2 issues framed by the court
Whether the High Court can entertain a writ petition for refund of tax paid under mistake of law bypassing statutory remedies and outside the period of limitation.
Whether the petitioner is disentitled to relief due to laches and failure to avail statutory remedies within the time prescribed.
Colour shows how this judgement treated each authority
KVR ConstructionDistinguished¶73
(2012) 50 VST 469 (KARNATAKA)
Titaghur Paper Mills Company Limited Vs. State of OrissaRelied on¶45
(1983) 2 S.C.C. 433 · Who else cites this
State of Goa Vs. Leuko Plast (India) LimitedRelied on¶50
(1997) 4 S.C.C. 82 · Who else cites this
M/s. Tilokchand Motichand Vs. H.B. MunshiRelied on¶56
AIR 1970 S.C. 898 · Who else cites this
Municipal Corporation of Greater Bombay Vs. Bombay Tyres International LimitedRelied on¶63
(1998) 4 S.C.C. 100 · Who else cites this
Challa Apparao Vs. Commercial Tax OfficeRelied on¶65
(1970) 25 S.T.C. 256 (A.P.)
2 provisions across 2 enactments
Raghavendra Presteress Products Private Limited
Commissioner of Commercial Taxes, Hyderabad
South Central Railway
Goda Raghuram
M.S. Ramachandra Rao
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
