il Appeals Nos
273 to 277 of 1960
Appeals by special leave granted by the Supreme Court by its order dated December 15 1958 from the judgment and order dated February 4 1957 of the High Court of Orissa in O J C Nos
184 to 188 of 1955
H N Sanyal Additional Solicitor General of India and B P Maheshwari for appellants In C As
Nos 273 and 274 of 1960 and respondents In C As
275 277 of 1960
C K Daphtary Solicitor General of India B R L Iyengar and T M Sen for respondents In  J As
Nos 273 and 274 of 1960 and appellants In C As
275 277 of 1960
March 24
The Judgment of the Court was delivered by SHAH J
The Orient Paper Mills Ltd thereinafter called the assessees are a public limited company having their registered office at Brajrajnagar in the 551 district of Sambalpur Orissa State
The assessees are manufacturers of paper and paper boards and are registered as dealers under the Orissa Sales Tax Act 1947 hereinafter referred to as the Act
The assessees used to collect tax from the purchasers on all sales effected by them including sales to dealers in other States
For the quarters ending March 31 1950 June 30 1950 September 30 1950 December 31 1950 and March 31 195 1 the assessees paid Sales tax which they were assessed by the Assistant Collector of Sales tax to pay on their turnover which included sales outside the State of Orissa
After this court delivered the judgment in The State of Bombay and Another vs The United Motors India Ltd and Others 1 the assessees applied for refund under section 14 of the Act of tax paid in respect of goods despatched for consumption outside the State of Orissa contending that according to the law expounded by this court the transactions of sales outside the State were not taxable under the Act because of the prohibition imposed by article 2861 a of the Constitution read with the Explanation
Refund was refused by the Assistant Sales Tax Officer and the order was confirmed by the Board of Revenue
In the view of the taxing authorities the orders of assessment in respect of the five periods had become final on the diverse dates on which they were made and were not liable to be reopened merely because the law applicable to the transactions was not correctly appreciated by the taxing authorities
In petitions moved by the assessees for writs of certiorari and mandamus against the orders of the Board of Revenue the High Court of Orissa held that the only restriction upon the right of a dealer to apply for refund which is found within the four corners of section 14 of the Act being the law of limitation prescribed by the proviso to than section transactions in question not being liable to tax as they were interstate transactions the tax collected must be refunded on applications submitted within the period prescribed
The High Court then proceeded to hold that the recovery of tax paid for the first two 1  552 quarters was barred by limitation but not recovery of tax paid for the remaining three quarters and issued id
an order in the nature of mandamus directing refund of tax in respect of the last three quarters
The State of Orissa and the assessees have appealed with special leave against the judgment of the High Court by these five appeals
Counsel for the State of Orissa contends that no refund could be granted because the orders of assessment had become final and section 14 of the Act applied only to cases of refund in which a superior taxing authority in appeal or revision against the order of assessment directs or declares that the tax has not been properly collected and it does not apply to cases of assessment which have become final even if made on an erroneous view of the law
The assessees support the view of the High Court that section 14 applies to all claims for refund and also contend that the recovery of tax paid for the first two quarters was not barred by the law of limitation
It is unnecessary for the purposes of these appeals to consider the respective contentions of the parties
In our view the claim of the assesses must fail because of the retrospective amendment of the Act by the Orissa Legislature
By section 14A which was incorporated by the Orissa Sales Tax Amendment Act 28 of 1958 it was provided Notwithstanding anything contained in this Act where any amount is either deposited by any person under sub section 3 of section 9B or paid as tax by a dealer and where such amount or any part thereof is not payable by such person or dealer a refund of such amount or any part thereof can be claimed only by the person from whom such person or dealer has actually realised such amounts whether by way of sales tax or otherwise and the period of limitation provided in the proviso to section 14 shall apply to the aforesaid claims
 In terms the section provides that refund of tax id which the dealer was not liable to pay can  only be claimed by the person from whom the dealer has actually realised it whether as sales tax or otherwise
553 The section therefore deprives the assessees of the common law right to claim refund of the amounts paid as tax under an error of law that it was recoverable by the taxing authority
Counsel for the assessees does not dispute that by the amending provision the right to obtain refund of tax is denied to him by the Legislature
He contends that the Act is beyond the competence of the State Legislature and in any event it is void because it imposes an unreasonable restriction upon the assessees  fundamental right guaranteed under article 191f of the Constitution
By item 54 of List II of Schedule 7 to the Constitution the State Legislature was indisputably competent to legislate with respect to taxes on sale or purchase of papers and paper boards
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 matter of granting refund of tax improperly or illegally collected and the competence of the Legislature in this behalf is not canvassed by counsel for the assessees
If competence to legislate for granting refund of sales tax improperly collected be granted is there any reason to exclude the power to declare that refund shall be claimable only by the person from whom the dealer has actually realised the amounts by way of sales tax or otherwise We see none
The question is one of legislative competence and there is no restriction either express or implied imposed upon the power of the Legislature in that behalf
article 191f of the Constitution prescribes the right to freedom of citizens to acquire hold and dispose of property but the right is by cl
5 subject to tile 70 554 operation of any law existing or prospective in so far as it imposes reasonable restrictions on the exercise of that right in the interest of the general public
Assuming that by enacting that refund of tax shall only be made to the purchasers from whom the tax has been collected by the dealers and not to the dealers who have paid the tax the fundamental right under article 191f is restricted we are unable to hold that the restriction imposed by section 14A of the Act is not in the interest of the general public
The Legislature by section 9B1 of the Act authorised registered dealers to collect tax from the purchasers which they may have to pay on their turnover
The amounts collected by the assessees therefore primarily belonged not to the assesssees but to the purchasers
On an erroneous assumption that tax was payable tax was collected by the assessees and was paid over to the State
Under section 9B cl
3 of the Act as it stood at the material time the amounts realised by any person as tax on sale of any goods shall notwithstanding anything contained in any other provision of the Act be deposited by him in a Government treasury within such period as may be prescribed if the amount so realised exceeded the amount payable as tax in respect of that sale or if no tax is payable in respect thereof
As the tax collected by the assessees was not exigible in respect of the sales from the purchasers a statutory obligation arose to deposit it with the State and by paying that tax under the assessment the assessees must be deemed to have complied with this requirement
But the amount of tax remained under section 9B of the Act with the Government of Orissa as a deposit
If with a view to prevent the assessees who had no beneficial interest in those amounts from making a profit out of the tax collected the Legislature enacted that the amount so deposited shall be claimable only by the persons who had paid the amounts to the dealer and not by the dealer it must be held that the restriction on the right of the assessees to obtain refund was lawfully circumscribed in the interest of the general public
Counsel for the assessees contended that they stood 555 in danger of being compelled at the instance of the purchasers to repay the amount collected as tax even after it is deposited with or paid by them to the State Government and a statutory provision which deprives them of their right to claim refund amounts to an unreasonable restriction because they are under an obligation to pay the amount to purchasers but they cannot reimburse themselves by recourse to the State which holds the amounts
But by section 9B the assessees were liable to deposit the amount in excess of what was lawfully recoverable from the purchasers as tax  When under the orders of assessment they paid amounts to the State requirements of section 9B were complied with and the amount remained with the State in deposit subject to the obligation if a demand was made within the period prescribed to restore the same to the persons from whom the assessees had recovered it
We do not think that there is any reason to hold that the assessees would be exposed to any enforceable claims at the instance of the purchasers to refund the tax collected by them if they have deposited it with the State in discharge of the statutory obligation incurred by them
Appeals Nos 273 and 274 of 1960 will therefore be dismissed and Appeals Nos
275 to 277 of 1960 will be allowed
As the State succeeds relying upon a statute enacted after the judgment was pronounced by the High Court we direct that there shall be no order as to costs of the appeals in this court
Appeals Nos 273 and 274 of 1960 dismissed
Appeals Nos 275 to 277 of 1960 allowed


Summary:
The appellants who were registered as dealers under the Orissa Sales Tax Act 1947 used to collect sales tax from the purchasers on all sales effected by them including sales to dealers in other states
They were assessed to and paid tax on their turnover which included sales outside the State of Orissa but after the decision of this Court in State of Bombay vs The United Motors India Ltd   they applied under section 14 of the Act for refund of tax paid on the ground that sales outside the State were not taxable under cl
1a of article 286 of the Constitution read with the Explanation
Refund was refused by the Sales Tax Authorities and the Board of Revenue
In petitions moved by the appellants for writs of certiorari and Mandamus against the orders of the Board of Revenue the High Court ordered refund of tax paid for certain periods and refused it in regard to other periods
The Orissa Sales Tax Act was however amended in 1958 with retrospective effect incorporating section 14 A which provided that refund could be claimed only by the person from whom the dealer had realised the amount by way of sales tax or otherwise
550 Held that under section 14 A of the Orissa Sales Tax Amendment Act 1958 refund of tax which the dealer was not liable to pay could be claimed by the person from whom the dealer had actually realised it whether as sales tax or otherwise and not by the dealer
The legislature was competent to legislate for granting IS refund of sales tax improperly collected there is no reason to exclude the power to declare that refund shall be claimable only by the person from whom the dealer has realised the amount as sales tax or otherwise
Under section 9B cl 3 of the Act if the amount realised by the assessee exceeded the amount payable as tax such amount must be deposited in the Government treasury and the assessee having no beneficial interest in such amount the enactment that the amount shall be claimable only by the persons who paid the amounts to the dealers as sales tax is a reasonable restriction imposed on the right of the assessee to obtain refund in the interest of the general public and does not infringe the provisions of article 191f of the Constitution
If the assessees discharge their statutory obligation to deposit the amount collected by them as sale tax in the Government treasury they cannot be exposed to any claim for refund by the persons from whom the tax is collected even though such persons were in the first instance not liable to pay the tax