COMMISSIONER, SALES TAX Vs. AURAIYA CHAMBERS OF COMMERCE

JUDGEMENT

(1.) THE dealer was assessed to sales tax for the assessment year 1948 -49 under the U.P. Sales Tax Act, in respect of forward contract transactions by an assessment order dated 5th April, 1950. Before the assessment order he had already deposited a sum of Rs. 3,535 -3 -0 towards the tax liability, and after the assessment order he deposited, a further sum of Rs. 1,083 -3 -0 as tax. Shortly, thereafter, the Supreme Court held in Sales Tax Officer, Pilibhit v.Budh Prakash Jai Prakash : A.I.R. 1954 S.C. 459, that the levy of sales tax on forward contracts was ultra vires. On 19th April, 1955, the dealer filed a revision application against the aforesaid assessment order, but the revision application was dismissed on 10th September, 1958, as barred by limitation. On 24th May, 1959, the dealer applied for refund of sales tax paid in respect of forward contract transactions. The refund application was rejected on 19th May, 1960, by the Sales Tax Officer. Thereafter, on 9th July, 1960, he applied to the Commissioner of Sales Tax for refund of the tax, and the application was forwarded by the Commissioner to the Sales Tax Officer who rejected that application also by his order dated 23rd September, 1960. The Sales Tax Officer took the view that the refund application should have been made within three years from the last day of August, 1954, the month in which the Supreme Court judgment in Budh Prakash Jai Prakash : A.I.R. 1954 S.C. 459, was published in the Supreme Court Journal. The period ofthree years was considered as the period of limitation by reference to Section 96 of the First Schedule to the Indian Limitation Act, 1908. The dealer then filed a revision application before the Judge (Revisions), Sales Tax, challenging the orders dated 19th May, 1960, and 20th September, 1960, rejecting the refund applications. The revision application was allowed by the Additional Judge (Revisions) by his order dated 13th November, 1962. The Additional Judge (Revisions) has held, relying on the decision of the Supreme Court in the Sales Tax Officer, Banaras, and Ors. v. Kanhaiya Lal Mukund Lal Saraf : A.I.R. 1959 S.C. 135, and on the decision of this court in Sales Tax Commissioner, U. P. v. Sada Sukh Vyopar Mandal [1959] 10 S.T.C. 57, that the refund of sales tax deposited in respect of forward contracts could be claimed under Section 72 of the Indian Contract' Act as both parties were acting under a mistake of law. The Additional Judge (Revisions) observed that the period of limitation mentioned in Section 29 of the U.P. Sales Tax Act, which provision came into effect from 1st April, 1959, was not attracted, and that there was no period of limitation for applying for refund of tax under the U. P. Sales Tax Act. He also held that Section 96 of the First Schedule to the Indian Limitation Act could not be applied. Accordingly, he allowed the revision application and made an order directing the refund of the tax paid by the dealer. At the instance of the Commissioner of Sales Tax, the Additional Judge (Revisions) has referred the following questions :

(2.) IT will be seen at once that the first question has been framed in the abstract without relevance to the facts of the present case, and, therefore, need not be answered.

(3.) THE second question raises the point whether article 96 of the First Schedule to the Indian Limitation Act can be resorted to for ascertaining the period of limitation for the refund applications on the principle embodied in Section 72 of the Indian Contract Act. Now, the U. P. Sales Tax Act contains a number of provisions contemplating the refund of tax to the dealer. There is Section 9(5) of the Act providing that if the appellate authority reduces the amount of tax by an appellate order it shall direct the excess amount of tax to be refunded. Section 10(5) of the Act provides that if the amount of tax is reduced by the revising authority by an order disposing of the revision application, it shall direct the excess amount of tax \o be refunded. Then, Section 11(8) provides that if the amount of tax is reduced as a result of reference decided by the High Court, the excess amount of tax paid shall be refunded with interest. Finally, Section 29 requires an assessing authority to refund to a dealer applying in this behalf the amount of tax, fees or other dues paid in excess of the amount due from the dealer under the Act except to the extent that he is liable to deposit it under Sub -section (4), or Sub -section (5), as the case may be,of Section 8A. The proviso to Section 29 prescribes the limitation within which the claim to refund must be made. All these provisions of the Act proceed on the principle that an amount paid by a dealer as tax in excess of the amount truly due must be repaid or returned to him. Section 72 of the Indian Contract Act declares :