MESSRS BURMAH CONSTRUCTION CO. versus THE STATE OF ORISSA AND ORS.

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 bl'idges, as sale of goods, assessed the appellants to tax under t.he Orissa Sales Tsx Act. The t11-x 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. l,17,869-8-0as tax andRs .. 2,917-11-0aspenalty. 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

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No. paid. --- -- ----- -·---

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Rs. A. P. Rs. A. P. Rs. A. P. I. PU II 1755 35336 7 0 3JO 0 0 35686 7 0 2. BA. 1596 5:3990 6 6 310 0 0 54300 5 6 3. :BA 1596A 2719 30 . 2719 30 4. MB 806 3376 60 1352 40 4728 100 5. BP 1560 5349 10 5349 1 0 6. cum 1375 10913120 905 70 11819 30

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7. CU I 3940 6184 6 0 6184 6 0 ----- -

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--- -----

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117869 8 6 2917 II 0 120787 3 6

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Relying upon the judgment of the Madras High Court in GannonD11:nkerly & Co., Ltd. v. State of Madr08( the appellants applied on August 9, 1954, to the High Court of Judicature, Orissa for

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(a) a det>laration that the provisions ot the Orissa Sales Tax Act, 1947 authorising imposition of the sa.les tax on a turnover of works contracts and repair works were tdtra virea the State Legislature;

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(b) a declaration that the aeseesment made by the State Sales Tax Authorities on the appellant's works contracts which had resulted in payment of Re. 1,20,787·3·6 by way of eales tax and penalties for diff'erent quarters were without juriedktion and illegal and liable to .be quashed and that the appe~l- 11nt was entitled to get refund of the said amount;

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( c) a direction restraining the State and its Sales Tax Officers ]"rom taking any eteJlll in making any further a8eesement or complete the &88688mente pending before them in respect of the appellant's works contrat'te with the State Government and levying and collecting any sales tax from the appellant on works oontract.e; and

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(d) issue of appropriate writ or direotiona directing the State of Orissa and its Sales Tax Oflioera to refund the amount of sales tax and penalties realised from the appellant.

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Following the judement·of this Court in)he State of Madras v. Gannon Dunkerly Co., Lid.(') ,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 accorda11ce 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 s. 14 of the Orissa Sales Tax Act 194 7 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 s. 14 of the Orissa Sales Tax Act.

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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 s. 14 of the Orisaa Sales Tax Act, 194 7 on the date of the filing of the applieation under Art. 226, as not refundable on two grounds:

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( 1) that s. 14 •of the Act is ultra vires the State Legi1latilre;

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(2) that an application under s. 14. which imposes a statutory obligation upoli the Collector to refund the tax unlawfully ed subject to certain oonditions is not the only remedy open to the tax payer ·from whom tax h'\s been unlawfully recovered and the power of the High Court to direct refutid of tax illegally teoovered is not restricted by s. 14 of the Act. To the enforcement of'oth~ remedies the bar pre8Cribed by the· pro'tia<> to s. 14 does not apply.

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Section 14 of the OriBBa Sales Tax Act, 1947, provides: ·

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"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 amowit due from him under this Act, either by cash payment or, at the option of tho dealer, by deduction of such excess from the amount of tax due in respect of any other period:

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Provided that no claim to refund of any tax paid under this A<>t shall be allowed unleBB it is made within twenty-four months from the date on which the order of assc88mcnt was pa88Cd or within twelve months of the final order passed on appeal, revision, review or reference in respect of the order of

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assessment, whichever period is later." Hy the first paragraph, s. 14 imposes an obligation upon the Colleotor to refund to a dealer any amount paid by such dealer in excC88 of the amount due from him under the Act. But the obligation is restricted; refund is not to be made unlc88 an application is made within 24 months of the date on which the order of assess:aient was passed or within 12 months of the final order pasaed on appeal, revision, review or reference in respect of the order of aSBCBBment, whichever period is later. The Orissa Sales Tax Aet was enaoted by the Oriesa LE!gielature in exero.ise 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 s. 14A of the Oriss& Sales Tax Act, which was incorporated in the amended Act 28 of 1958 and wbioh sought to confer a right to claim refund by an application to the Collector upon the person from whom tax was colleo~ by the de:i.ler, this Court observed in The Stale of Orissa v. The Orient Paper Milla Ltd., that "The power to legislate with. respect to a tax 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 virea the State Legislature.

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It is not necessary to consider in this case whether s. 14 prescribes the only remedy for refund of tax unlawfully collected;, by th_e 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 .hie 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 contra.ct or a tort to pay an amount of money due to the claimant and leaves it to the aggrieved party to agitate the question in a civil suit filed for tha.t 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 officer of the State to enforce a statutory obligation. The petition in the present oase 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 ~tatutory right and to ignore the restrictions subject to which the right is made enforceable.

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We are therafore 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:

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"Th"t part of the sales tax which has been paid by Messrs. Burmah Construction Co. shall be refunded by the State of Orisaa to the Burman 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 deoiding whether the Burmah Constru~tion Co. has the right ~ recover the balance of the · amount of tile tax paid by other appropriate proceedings, the olaim to recover the balance of the tax paid is dismissed."

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The appeal substantially fails and is dismissed with costs.

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