Messrs. Burmah Construction Co. Vs.
The State of Orissa & Ors  INSC 308 (26 October 1961)
SINHA, BHUVNESHWAR P.(CJ) KAPUR, J.L.
CITATION: 1962 AIR 1320 1962 SCR Supl. (1)
CITATOR INFO :
RF 1965 SC1740 (8) RF 1973 SC1461 (218) RF
1976 SC2243 (89)
Sales Tax-Refund of-Limitation provided by
Statute-Validity applies to writ petition-Orissa Sales Tax Act, 1947 (Orissa
XIV of 1947), s. 14.
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 exercise of the right to claim refund
which was an ancillary or subsidiary matter was not beyond the competence of
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.
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
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
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
-------------------------------------------------- --- 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 directing 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 them. Orissa Sales Tax Act, 1947 on the
date of the filing of the application under Art. 226, as not refundable on two
(1) that s. 14 of the Act is ultra vires the
(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.
246 Section 14 of the Orissa Sales Tax Act,
"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 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. 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.