Allahabad High Court
Vishwa Nath Jagdish Prasad And Company ... vs State Of Uttar Pradesh And Ors. on 13 August, 1986
Equivalent citations: [1987]66STC121(ALL)
JUDGMENT H.N. Seth, C.J.
1. The applicants who were respondents in Civil Misc. Writ Petition No. 436 (Tax) of 1978 and Civil Misc. Writ Petition No. 438 (Tax) of 1978 pray that the order passed by this Court on the two petitions on 9th of August, 1982, directing them to refund certain amounts to the petitioners soon after 27th of September, 1982, be reviewed.
2. Certain consignments of soyabean oil belonging to the petitioners in Writ Petition No. 436 (Tax) of 1978 and Writ Petition No. 438 (Tax) of 1978 were seized by the sales tax authorities in exercise of the powers under Section 28-A of the U.P. Sales Tax Act as it stood on 12th of August, 1978. The petitioners furnished cash securities amounting to Rs. 16,800 and Rs. 5,600 and got the seized goods released. They then filed the two writ petitions before this Court claiming, inter alia, that the provisions of Section 28-A of the U.P. Sales Tax Act were ultra vires. According to them seizure of their goods and the entire proceedings following it were invalid. They, therefore, prayed that the respondents be directed to refund the amounts of cash securities furnished by them.
3. The court accepted the plea of the petitioners that Section 28-A, as it then stood, was unconstitutional. It held that seizure of the petitioners' goods was illegal and that the respondents were bound to refund the security amounts to them. It, however, noticed the provisions of Section 6(1)(b) of U.P. Act No. 33 of 1979 as amended by U.P. Act No. 4 of 1982, according to which any amount deposited as security for release of goods seized under Section 28-A of the U.P. Sales Tax Act, as it originally stood, was not to be refunded till expiration of three years from the commencement of U.P. Act No. 33 of 1979 (27th September, 1979),. In the result, it allowed the two petitions and by this order dated 9th of August, 1982, directed the respondents to refund the security amounts deposited by the petitioners soon after 27th of September, 1982.
4. The State Legislature intervened once again and promulgated the U.P. Sales Tax (Second Amendment and Validation) Ordinance, 1982 (Ordinance No. 37 of 1982) making amendment in Section 6 of the Act with retrospective effect. The effect of the amendment was that the security furnished by the two petitioners ceased to be refundable up to 27th of September, 1983 and the direction made by the High Court in its judgment dated 9th of August, 1982, to the effect that the security was to be refunded soon after 27th of September, 1982, apparently became erroneous and inconsistent with statutory provisions. The respondents, therefore, filed these two applications and prayed that the order dated 9th of August, 1982, made in the two petitions be reviewed and they may be directed to refund the security amounts to the petitioners only after the period provided in that regard as per Ordinance No. 37 of 1982, i.e., after 27th of September, 1983. We understand that by means of subsequent enactments the embargo imposed by U.P. Act No. 33 of 1979 still continues to be operative and the security amounts deposited by the petitioners in the two writ petitions have not become refundable to them as yet.
5. Learned counsel appearing for the petitioners in the two petitions opposed the aforementioned prayer for review mainly on the ground that on the date when the order was made, it was absolutely in accordance with law as it then stood. The respondents were required to comply with the mandamus issued by the court soon after 27th of September, 1982. The change in law extending the embargo in respect of refund of security amount, by U.P. Ordinance No. 37 of 1982 was made much later and only in the month of November, 1982. According to the learned counsel the mandamus issued by the court stood complied with in the meantime inasmuch as the amounts to which the respondents were entitled stood automatically adjusted as against other sales tax dues of the petitioners. He urged that in the circumstances, the prayer made by the respondents for review of the order dated 9th of August, 1982 deserved to be rejected.
6. There can be no manner of doubt that in view of the subsequent amendments made in Section 6 of U.P. Act No. 33 of 1979 with retrospective effect on 27th of September, 1979, the security amount deposited by a dealer in connection with seizures effected under Section 28-A of the U.P. Sales Tax Act as it originally stood, had not yet become refundable and the directions contained in our judgment dated 9th of August, 1982, is contrary to statutory provisions.
7. In the case of Shivdeo Singh v. State of Punjab AIR 1963 SC 1909, it has been observed thus :
It is sufficient to say that there is nothing in Article 226 of the Constitution to preclude a High Court from exercising the power of review which inheres in every court of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it.
8. It can, therefore, not be doubted that this Court has inherent jurisdiction to review its judgment dated 9th of August, 1982 and clearly that jurisdiction can be exercised if our judgment suffers from any error apparent on the face of the record.
9. In the case of Mohammad Azamat Azim Khan v. Raja Shatranji AIR 1963 All. 641, a Full Bench of this Court have ruled that a judgment based on the law as it stood on the day the judgment was pronounced may be correct. But where that law is altered subsequently by an amending Act, which is brought into force with retrospective effect, the judgment pronounced is rendered erroneous on the face of the record. Though the question is of correctness or otherwise of the judgment pronounced, as the application for review comes before the court on a date after the amendment with retrospective effect the application is to be decided in accordance with the law that exists on the day the application is made. Applying the ratio of the said Full Bench decision, by which we are bound, there is no escape from the conclusion that the direction contained in our judgment dated 9th of August, 1982, to the effect that the security amounts deposited by the petitioners should be refunded to them soon after 27th of September, 1982, suffers from an error apparent on the face of the record and deserves to be reviewed.
10. Learned counsel appearing for the petitioners in the two petitions then contended that U.P. Ordinance No. 37 of 1982 by which the provision by which the embargo created on the refund of the security amounts beyond 27th of September, 1982, was enacted sometimes in the month of November, 1982. There was thus a hiatus between the 27th of September, 1982, soon after which the mandamus issued by the court, vide our judgment dated 9th of August, 1982, was to be complied with and the time when that embargo was reintroduced with retrospective effect. During that period the respondents were bound to refund the amounts to the petitioners. Relying upon the decisions of this Court in the cases of Jyoti Prasad Kishan Lal v. Sales Tax Officer 1972 UPTC 411 and Dhingra Mechanical Works v. Commissioner of Sales Tax 1971 UPTC 821, learned counsel urged that once an amount becomes refundable, Section 29 of the U.P. Sales Tax Act makes it obligatory on the Sales Tax Officer to adjust the same as against any tax assessed or penalty levied and that such adjustment is automatic. He contended that inasmuch as soon after 27th of September, 1982, the amounts of cash security which was to be refundable to the petitioners stood automatically adjusted as against other dues of the petitioners under the Act and the said amounts had actually stood refunded to them. Any subsequent embargo placed on the refund of such amounts even with retrospective effect could not entitle the respondents to recover back the refunded amounts from the petitioners.
11. Having given our anxious consideration to the submission made by the learned counsel, we find no merit in it. Section 29(1) of the U.P. Sales Tax Act runs thus:
The assessing authority shall, in the manner prescribed, refund to a dealer any amount of tax, fees or other dues paid in excess of the amount due from him under this Act:
Provided that the amount found to be refundable shall first be adjusted towards the tax or any other amount outstanding against the dealer under this Act or under the Central Sales Tax Act, 1956 (Act 74 of 1956) and only the balance, if any, shall be refunded.
12. In Dhingra Mechanical Works v. Commissioner of Sales Tax 1971 UPTC 821, the question that arose for consideration was whether the assessee's appeal had been rightly entertained and decided by the appellate authority under the provisions of Section 9 of the U.P. Sales Tax Act which lays down that no appeal against an assessment can be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due. In that case the assessee had admitted the liability to tax to the extent of Rs. 2,583.56 but he deposited a sum of Rs. 2,583.53 only. Thus there was a shortage of 3 paise. The department, claimed that as the entire amount admitted to be due had not been deposited, the appeal was not maintainable. It was found that apart from the amount which had been deposited by the assessee as admitted tax, a sum of Rs. 620 was refundable to it from the department. Relying upon the obligation imposed by Section 29 of the U.P. Sales Tax Act, the court observed thus:
This proviso, in our opinion, clearly casts a duty upon the assessing authority to adjust the refund due to an assessee towards the outstanding liability of tax or penalty, etc. When a tax liability is to be discharged by an assessee, he can ask the Sales Tax Officer to adjust against such liability any amount which may be refundable to him. Under this proviso, there is a provision for an automatic adjustment so that in a case like the present one, there shall be deemed to have taken place an automatic adjustment of the amount refundable to the assessee against his liability of admitted tax.
13. This provision, in our opinion, obliges the sales tax authorities to actually refund to a dealer any amount of tax, fees or other dues, paid by him in excess of the amount due from him under the Act. Above quoted observations of the Division Bench merely mean that if and when a question arises with regard to an outstanding liability of tax or penalty, etc., the amount of tax, fees or other dues, etc., which had been paid by the assessee, in excess of the amount due from him on an earlier occasion, has got to be adjusted as against such outstanding automatically, i.e., without there being an application for the purpose followed by a formal order thereon and the observation of the Bench that, in such case, adjustment shall be deemed to have been made has to be understood in this sense.
14. Before, however, refundable amount can be adjusted against an outstanding of the nature specified by Section 29 of the U.P. Sales Tax Act, such outstanding has necessarily to be an ascertained liability. Accordingly, the adjustment contemplated by Section 29 of the U.P. Sales Tax Act can be made only when the liability, against which the refundable amount is sought to be adjusted, has been ascertained and quantified. The Division Bench decision relied upon by the learned counsel nowhere lays down anything to the contrary. All that it holds is that, in the circumstances of the case before it, the amount refundable to the assessee was adjustable against the admitted tax liability and that if such adjustment was given, the deposit of the tax by the assessee would be in order and the appeal filed by him was maintainable. In the case before us, the assessee did not, in his counter-affidavit, anywhere state that at any time, as between 27th September and the month of October, 1982, there was any ascertainment or determination of any tax liability against which the amount in question could have been adjusted. In the circumstances, no question of considering whether the refundable amount could be adjusted or had been adjusted arises. The assessee cannot, relying upon the observations made in the case of Dhingra Mechanical Works 1971 UPTC 821, claim that the amount stood refunded to it.
15. Apart from this, the observations made in the Division Bench decision that it would be deemed that' the excess amount stands automatically refunded is based only on a fiction. Accordingly if by the time the decision to apply such legal fiction arises, another legal fiction intervenes, according to which the amount which the assessee claims was refundable to it is made not refundable, the fiction regarding its automatic adjustment would also cease to be applicable. We are, therefore, of opinion that the Division Bench decision cited above does not help the case of the petitioners.
16. Coming now to the decision in the case of Jyoti Prasad Kishan Lal, Dehradun v. Sales Tax Officer, Dehradun 1972 UPTC 411 we find that this case also does not help the petitioners. All that has been laid down in this case is that in a case where sales tax on a turnover had already been paid by the commission agent, the dealer was entitled to adjust the same so as to save double taxation and the recovery could be made only after adjusting such payment by the commission agent. This decision also does not advance the case of the petitioners in any manner.
17. We, therefore, hold that in view of the retrospective amendment made in the law imposing an embargo on the refund of the security amounts deposited under Section 28-A of the U.P. Sales Tax Act as it stood at the relevant time, the direction contained in our judgment dated 9th of August, 1982, clearly deserves to be reviewed and modified.
18. In the result, the two review applications succeed and are allowed. The direction contained in our judgment dated 9th of August, 1982, is modified to the extent that the respondents are directed to refund the security amounts deposited by the two petitioners after the legislative embargo on the refund of the said amounts is eventually lifted.