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PETITIONER: MESSRS. BURMAH CONSTRUCTION CO.

       Vs.

RESPONDENT: THE STATE OF ORISSA AND ORS.

DATE OF JUDGMENT: 26/10/1961

BENCH: SHAH, J.C. BENCH: SHAH, J.C. SINHA, BHUVNESHWAR P.(CJ) KAPUR, J.L. HIDAYATULLAH, M. MUDHOLKAR, J.R.

CITATION:  1962 AIR 1320            1962 SCR  Supl. (1) 242  CITATOR INFO :  RF         1965 SC1740  (8)  RF         1973 SC1461  (218)  RF         1976 SC2243  (89)

ACT:      Sales Tax-Refund  of-Limitation  provided  by Statute-Validity applies  to writ  petition-Orissa Sales Tax Act, 1947 (Orissa XIV of 1947), s. 14.

HEADNOTE:      The appellant  who executed  works  contracts was assessed to sales tax for quarters ending June 30, 1949,  to March 31, 1954, and paid the tax. On August  9,   1954,  the  appellant  filed  a  writ petition before  the High  court for a declaration that the  provisions of  the orissa Sales Tax Act, 1947,  permitting  levy  of  sales  tax  on  works contracts were ultra vires, for a declaration that the assessments  were illegal  and for a refund of the amount  paid as  tax the  High court  declared that the  assessments were  not in accordance with the law  and directed  refund of  the tax paid, if recovery thereof was not barred under s. 14 of the Act  on  the  date  of  the  filing  of  the  writ petition. Section  14 provided that no claim for a refund shall be allowed by the Collector unless it was made  within 24  months from  the date  of the assessment order or within 12 months of that order passed on  appeal, revision,  review or reference. The appellant contended that s. 14 was ultra vires and that  the bar  of limitation  in s. 14 was not applicable to  the writ  petition before  the High Court for refund of tax illegally recovered. ^      Held, that  provisions of s. 14 of the orissa Sales Tax  Act, 1947,  were not  ultra  vires  the State  Legislature.  The  power  to  legislate  in respect of  refund of  tax improperly or illegally collected, and  imposition of  restrictions on the

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exercise of the right to claim refund which was an ancillary or  subsidiary matter was not beyond the competence of the legislature.      State of  Orissa v.  The orient  Paper  Mills Ltd., A. 1. R. (1961) S. C. 1438, relied on.      Held, further,  that the bar of limitation in s. 14  of the  Act was applicable to the case. The proceedings   before    the   High    Court   were substantially to compel the Collector to carry out his statutory  obligations under  s.  14,  and  it could only  be allowed subject to the restrictions imposed by  the statute.  it was  not open  to the appellant to  rely upon the statutory right and to ignore the restrictions subject to which the right was made enforceable. 243

JUDGMENT:      CIVIL APPELLATE  JURISDICTION:  Civil  Appeal No. 494 of 1960.      Appeal by special leave from the judgment and under dated  April 21,  1958 of  the Orissa,  High Court in O.J.C. No. 107 of 1954.      G. C. Mathur, for the appellants.      H. N. Sanyal, Additional Solicitor-General of India, R. N. Rajagopal Sastri, G. K. Mishra and T. M. Sen, for the respondents.      1961. October  26. The  Judgment of the Court was delivered by      SHAH,   J.-Messrs.    Buarmah    Construction Company-a firm  carrying on  business as  building and works  contractors-executed several  contracts in  the   State  of  Orissa  for  construction  of buildings  roads,   bridges  etc.  Messrs.  Burmah Construction Company, who are hereinafter referred to as the appellants, were registered as dealer in Orissa under  the Orissa  Sales Tax Act, 1947 from the quarters  ending June  30, 1949. The Sales Tax officers treating  the transfer  of the  materials used in  the construction  of the buildings, roads and  bridges,  as  sale  of  goods,  assessed  the appellants to  tax under the Orissa Sales Tax Act. The tax  so assessed  under the  diverse orders of assessment was  paid from  time to  time. For  the quarters ending  June 30, 1949, to March 31, 1954, the appellant  paid Rs. 1,17,869-80 as tax and Rs. 2,917-11-0 as  penalty. The  following table  sets out the  tax and  penalty paid  to the  Sales  Tax Authorities for the twenty quarters:- Srl. Circle Regist Tax   Penalty Total No.  Name.  ration paid. paid.   amount             No                    paid                    Rs.  A.P.Rs. A.P. Rs.  A.P. 1.   PU II  1755   35636 7 0 350 00  35686 70 2.   BA     1596   53990 6 6 310 00  54300 66 244 3.   BA      1596A 2719 30 ....       2719  30 4.   MB      806   3376 60 1352  40   4728 100 5    BP      1560  5349 10 ...........5349 10 6. CU III    1375 10913 120 905   70  11819 30 7. CU I      3940 6184  60 ...        6184  60 -------------------------------------------------- ---

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              1178869  86  2917  110 120787 36 -------------------------------------------------- ----           Relying upon the judgment, of the Madras      High Court  in Gannon Dunkerly & Co. Ltd . v.      State of  Madras(1), the appellant applied on      August  9,   1954,  to   the  High  Court  of      Judicature, Orissa for                (a)   a    declaration   that   the      provision of  the Orissa  Sales Tax Act, 1947      authorising imposition  of the sales tax on a      turnover of  works contracts and repair works      were ultra vires the State Legislature;                (b)   a    declaration   that   the      assessment  made   by  the  State  Sales  Tax      Authorities   on    the   appellant’s   works      contracts which  had resulted  in payment  of      Rs. 1,20,787-3-6  by was  of  sales  tax  and      penalties for different quarters were without      jurisdiction and  illegal and  liable  to  be      quashed and  that the  appellant was entitled      to get refund of the said amount;                (c)   a direction  restraining  the      State and  its Sales Tax officers from taking      any steps in making any further assessment or      complete the  assessments pending before them      in respect of the appellant’s works contracts      with the  State Government  and  levying  and      collecting any  sales tax  from the appellant      on works contracts; and                (d) issue  of appropriate  writ  or      directions direting  the State of Orissa and      its Sales  Tax Officers  to refund the amount      of sales  tax and penalties realised from the      appellant.           (1)A.I.R. (1954)Mad.1130 245      Following the  judgment of  this Court in the State of Madras v. Gannon Dunkerly &, Co., Ltd.(1) which confirmed  the decision  of the  Madras High Court in  5 S.T.C.  216, the  High Court  declared that the  assessment  of  sales  tax  was  not  in accordance with  law and  directed that  no steps, either by  certificate  proceedings  or  otherwise should be  taken to  realise the  arrears of sales tax in  respect of those contracts. The High Court also directed  refund of  tax  paid,  if  recovery thereof was  not barred  under 8.14  of the Orissa Sales Tax  Act 1947  on the  date of the filing of the application.  The High Court also directed the Sales Tax;  Authorities to  revise the assessments made in the light of the decision of this Court in respect of  assessments made after the date of the petition. The  appellants have  appealed  to  this Court with  special leave challenging the order in so far  as their  claim for  refund  is  partially declared to  be barred  by the  rule of limitation prescribed by ff. 14 of the Orissa Sales Tax Act.      The appellants  challenge the  correctness of the Order  declaring that  the portion  of the tax paid  refund  whereof  is  beyond  the  period  of limitation under  B. 14  of the.  Orissa Sales Tax Act, 1947  on  the  date  of  the  filing  of  the application under  Art. 226,  as not refundable on two grounds:

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         (1) that s. 14 of the Act is ultra vires      the State Legislature;           (2) that  an  application  under  B.  14      which imposes a statutory obligation upon the      Collector  to   refund  the   tax  unlawfully      recovered subject  to certain  conditions  is      not the  only remedy  open to  the tax  payer      from whom  tax has  been unlawfully recovered      and the  power of  the High  Court to  direct      refund of  tax  illegally  recovered  is  not      restricted by  s.  14  of  the  Act.  To  the      enforcement  of   other  remedies   the   bar      prescribed by  the proviso  to s. 14 does not      apply. [1959] S.C.R. 246      Section 14 of the Orissa Sales Tax Act, 1947, provides:           "14.  The   Collector  shall,   in   the      prescribed  manner,   refund  to   a   dealer      applying in  this behalf  any amount  of  tax      paid by  such dealer  in excess of the amount      from him  under  this  Act,  either  by  cash      payment or,  at the  option of the dealer, by      deduction of  such excess  from the amount of      tax due in respect of any other period:           Provided that  no claim to refund of any      tax paid  under this  Act  shall  be  allowed      unless it  is made  within twenty-four months      from  the   date  on   which  the   order  of      assessment was passed or within twelve months      of  the   final  order   passed  on   appeal,      revision, review  or reference  in respect of      the order  of assessment, whichever period is      later." By  the   first  paragraph,   8.  14   imposes  an obligation upon  the  Collector  to  refund  to  a dealer any amount paid by such dealer in excess of the amount  due from  him under  the Act. But- the obligation is restricted; refund is not to be made unless an  application is made within 24 months of the date  on which  the order  of  assessment  was passed or  within 12  months of  the  final  order passed on appeal, revision, review or reference in respect of  the  order  of  assessment,  whichever period is  later. ’the  orissa Sales  Tax Act  was enacted by  the Orissa  legislature in exercise of the Legislative  authority conferred  upon  it  by item 48  of List II of the Seventh Schedule of the Government of India Act, 1935. in dealing with the vires of 8. 14A of the orissa Sales Tax Act, which was incorporated in the amended Act 28 of 1958 and which sought  to confer a right to claim refund by an application  to the  collector upon  the person from whom  tax was  collected by  the dealer, this Court observed  in The  State  of  Orissa  v.  The Orient  Paper   Mills  Ltd"  that  ’The  power  to legislate with  respect to a tax. 247 comprehends  the  power  to  impose  the  tax,  to prescribe machinery  for collecting  the  tax,  to designate the  officers by  whom the liability may be  enforced   and  to  prescribe  the  authority, obligations and  indemnity of  those officers. The

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diverse heads  of legislation  in the  Schedule to the  constitution   demarcate  the   periphery  of legislative competence  and  include  all  matters which are  ancillary or  subsidiary to the primary head. The  Legislature of  the  Orissa  State  was therefore competent  to exercise  power in respect of the subsidiary or ancillary matters of granting refund of  tax improperly or illegally collected’. If the  power  to  legislate  in  respect  of  tax comprehends the  power to  legislate in respect of refund of  tax improperly  or illegally collected, imposition of  restrictions on the exercise of the right to  claim refund  will  not  be  beyond  the competence of  the Legislature. Granting refund of tax improperly  or  illegally  collected  and  the restriction on the exercise of that right are both ancillary or  subsidiary matters  relating to  the primary  head   of  tax  on  sale  of  goods.  The provisions of  s.14 of  the Act  are therefore not ultra vires the State Legislature.      It is  not necessary to consider in this case whether s.  14  prescribes  the  only  remedy  for refund of  tax unlawfully  collected by the State. The appellants have not filed any civil suit for a decree for refund of tax unlawfully collected from them. This appeal arises out of a proceeding filed in the  High Court  substantially  to  compel  the Collector to  carry out  his statutory obligations under s.  14 of  the Act.  The High Court normally does not  entertain a  petition under  Art. 226 of the constitution  to  enforce  a  civil  liability arising out  of a  breach of contract or a tort to pay and  amount of  money due  to the claimant and leaves it  to the  aggrieved party  to agitate the question in  a civil  suit filed for that purpose. But an order for payment of money may sometimes be made  in   a  petition   under  Art.  226  of  the constitution against the State or against an 248 officer  of  the  State  to  enforce  a  statutory obligation. The  petition in  the present  case is for enforcement  of the liability of the Collector imposed  by  statute  to  refund  a-tax  illegally collected and it was maintainable: but it can only be allowed  subject to the restrictions which have been imposed by the Legislature. It is not open to the claimant  to rely upon the statutory right and to ignore  the restrictions  subject to  which the right is made enforceable.      We are therefore of the opinion that the High Court was right in restricting the order of refund in  the   petition   under   Art.   226   of   the constitution. The  order of  refund passed  by the High  Court,  however,  requires  to  be  slightly modified and  we  direct  that  it  shall  run  as follows:           "That part  of the  sales tax  which has      been paid  by Messrs. Burmah Construction Co.      shall be  refunded by  the State of Orissa to      the Burmah  Construction company if the order      of assessment  pursuant to  which payment was      made was  within 24  months of  the  date  on      which the  petition was  filed  in  the  High      Court, namely,  9th of  August, 1954. Without      deciding whether  the Burmah Construction Co.

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    has the  right to  recover the balance of the      amount of’  the tax paid by other appropriate      proceedings, the claim to recover the balance      of the tax paid is dismissed.      The  appeal   substantially  fails   and   is dismissed with costs.                                  Appeal dismissed. 249