SANTUKA AGENCIES Vs. STATE OF ORISSA

JUDGEMENT

(1.) IN this writ petition the petitioner has challenged the order (annexure-2) passed by opposite party No. 3 virtually refusing to direct refund of sales tax to the tune of Rs. 6,242. 26.

(2.) FACTS stated in the writ petition are as follows : The petitioner is a registered dealer under the Orissa Sales Tax Act (hereinafter referred to as the "act") and a wholesaler of drugs and medicines. On 31st December, 1977 he held stock of drugs and medicines worth Rs. 84,932. 46. For the assessment year 1977-78 he voluntarily deposited sales tax and additional sales tax amounting to Rs. 6,242. 26 on 27th March, 1978 because, prior to 31st December, 1977 drugs were exigible to tax at the last point of sale. By Notification No. 66237-CTA 35/77f dated 24th December, 1977 an amendment was brought to the Schedule and a new entry was inserted which was numbered as 93g by which drugs were subjected to tax at the first point in the series of sales with effect from 1st January, 1978. The assessment for the year 1977-78 was completed on 30th September, 1978 by the Sales Tax Officer (opposite party No. 4) in his orders (annexures-3 and 3a) but, he did not allow credit for the amount of Rs. 6,242. 26 which had been voluntarily paid by the dealer under mistake of law. Therefore, an application for refund of the amount of tax paid under mistaken notion of law was filed on 4th September, 1979 under section 14 of the Act within the prescribed period before opposite party No. 4, but he refused to allow the refund and rejected the application on 6th November, 1979. Thereupon a revision application was filed before the Commissioner of Sales Tax (opposite party No. 2) on 28th November, 1979. In the meanwhile the petitioner preferred appeal to the Assistant Commissioner against the assessment for the year 1977-78 and ultimately approached the Sales Tax Tribunal in second appeal. The Tribunal by order dated 1st August, 1980 (annexure-4) directed the Sales Tax Officer to hold an enquiry about the return of goods with reference to the books of account of the dealer with the observation quoted below :

(3.) IN [1986] 62 STC 327 (SC); AIR 1986 SC 1556 (Commissioner of Sales Tax, U. P. v. Auraiya Chamber of Commerce, Allahabad), sales tax was paid by the dealer in respect of forward contracts for the assessment year 1949-50 under the provisions of the U. P. Sales Tax Act. Reference was made to [1954] 5 STC 193 (SC); AIR 1954 SC 459 (Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash), in which the Supreme Court had interpreted section 2 (h) of the U. P. Sales Tax Act, 1948 and had held that enlarging the definition of "sale" so as to include forward contracts to that extent was ultra vires and declared it to be so. Relying upon the above decision, the dealer claimed refund of tax which had been deposited in accordance with the assessment order for the year and also for subsequent years for forward contracts under mistake. In that context it was held that in the scheme of the Act, sales tax was leviable only on valid transactions. Undoubtedly sales tax on forward contracts had been illegally recovered on a mistaken view of law. The same was lying with the Government. The assessee had claimed for refund of the taxes paid. It was specifically held as follows :