STATE OF WEST BENGAL Vs. SURESH CHANDRA BOSE

JUDGEMENT

(1.) This appeal is at the instance of the authorities of the commercial taxes and it is directed against the judgment of Sabyasachi Mukharji, J., whereby his Lordship made the rule nisi, which was obtained by the respondent Suresh Chandra Bose on his application under Article 226 of the Constitution, absolute.

(2.) Bose is a qualified sanitary engineer and at the relevant time he had been working as a sanitary contractor. In 1950, Bose applied before the Commercial Tax Officer for being registered as a dealer under the Bengal Finance (Sales Tax) Act, 1941, under a mistaken impression that he was a dealer under the said Act and was liable to pay sales tax. Bose was registered as a dealer under the Act. He had submitted returns from 1951 to 1958 and paid a total sum of Rs. 18,812.45 on account of sales tax along with the returns. The case of the respondent was that the said sum was paid by him on a mistaken notion of the law. After the decision in Dukhineswar Sarkar and Brothers v. Commercial Tax Officer [1957] 8 S.T.C. 478, and the decision of the Supreme Court in State of Madras v. Gannon Dunkerley & Co [1958] 9 S.T.C. 353 (S.C.), the law came to be well-settled that in the case of works contract there was no sale of goods and it was beyond the competence of the State Legislature to impose tax on the supply of materials used in such a contract. Accordingly, the respondent was not a dealer and Rule 2(ii)(c) of the Bengal Sales Tax Rules, 1941, under which the respondent was assessed, was void and ultra v.ires. It was contended by the respondent that, in view of the said decisions, he became entitled to the refund of the amount of sales tax already paid by him and was entitled to have his registration certificate cancelled. The respondent submitted returns for the years 1959, 1960 and 1961 thereby declaring no sales or turnover. On 10th April, 1962, the respondent wrote a letter to the Commercial Tax Officer, Collootola Charge, stating, inter alia, that he was a sanitary contractor executing sanitary works. In the said letter, he requested the Commercial Tax Officer to cancel his registration as a dealer in view of the decisions of the Supreme Court in the Dukhineswar Sarkar's case [1957] 8 S.T.C. 478. Affirmed by the Supreme Court on appeal; see [1967] 19 S.T.C. 224 at 226 and the Gannon Dunkerley's case [1958] 9 S.T.C. 353 (S.C.), referred to above. In reply to the said letter, the Commercial Tax Officer by his letter dated 26th May, 1962, informed the respondent that the question of cancellation of his registration certificate would be considered on completion of the pending assessment. The respondent, therefore, made a further representation to the Commercial Tax Officer by his letter dated 7th June, 1962, regarding the cancellation of his registration certificate. He also stated that, in view of the fact that Rule 2(ii)(c) of the Bengal Sales Tax Rules, 1941, had been declared ultra vires by the Supreme Court, the Commercial Tax Officer was acting in excess of or without jurisdiction in proceeding to assess the respondent under the Act. The Commercial Tax Officer, however, did not take any action in the matter, but issued a notice in form VIIA under Rule 55A of the Bengal Sales Tax Rules calling upon the respondent to show cause why penalty should not be imposed upon him for non-payment of arrears of tax for the years 1955, 1956 and 1957 ending on the 31st March of each year. On 15th June, 1962, the respondent submitted an application before the Commercial Tax Officer stating that the assessments were made under Rule 2(ii)(c) of the Bengal Sales Tax Rules, 1941, which was ultra vires and, as such, the assessments were without jurisdiction. He requested the Commercial Tax Officer to withdraw the said notices. The Commercial Tax Officer, however, did not accede to the request made by the respondent. The respondent moved an application under Article 226 of the Constitution and obtained a rule nisi being C.R. No. 388(W) of 1962. The said rule was discharged by a learned single Judge of this Court, but, on appeal before the Division Bench, it succeeded. The appeal court observed, inter alia, as follows: Rule 2(ii)(c) of the Rules framed under the Act having been declared to be ultra vires, the tax imposed on the appellant under the assessment orders for the years mentioned above cannot be sustained. Secondly, if the imposition of tax itself was invalid, no proceedings can be taken against the appellant for imposing a penalty upon him for default in payment of the tax.

(3.) It was the case of the respondent that, after the said decision of the appeal court, he was advised that the assessments, having been made on the basis that the respondent was a dealer and not a contractor, were all invalid and the money paid by the respondent in respect of,the said assessments became refundable to him. Accordingly, the respondent wrote to the Secretary, Department of Finance, West Bengal, Calcutta, on 2nd May, 1972, claiming refund of the said sum of Rs. 18,812.45. The respondent did not receive any reply to the said letter. On the contrary, steps were taken for realisation of the dues on the basis of the assessments for the years 1963, 1964 and 1965 and certificate proceedings were started against the respondent. Thereafter, the respondent made an application for cancellation of the registration certificate which was cancelled by the Commercial Tax Officer with effect from 22nd August, 1972. On 1st September, 1972, the respondent made seven sets of applications before the Commercial Tax Officer, Collootola Charge, claiming refund of diverse amounts of taxes realised illegally and/or without any authority of law from him for the years 1951-52 to 1957-58. All the said applications for refund were rejected by the Commercial Tax Officer which will appear from his letters received by the respondent on 12th January, 1973, on the ground that no excess payment had been made by the respondent during the periods in question. Thereafter, the respondent moved a writ petition before this Court and obtained a rule nisi out of which this appeal arises. In the writ petition, the respondent challenged the failure of the appellants to refund to him the sum of Rs. 26,798.01. The respondent also prayed for a direction restraining the appellants from proceeding with the certificate cases started against him for the realisation of the said amount. The learned Judge, as stated already, made the rule nisi absolute directing refund to the respondent the sums of money which the respondent had paid for the various years for which due evidence would be produced by the respondent before the Commercial Tax Officer. Further, the learned Judge restrained the appellants from enforcing the certificate cases started against the respondent.