Case: State Of Madhya Pradesh Vs. Bhailal Bhai &amp; Ors

1. These 31 appeals by the State of Madhya Pradesh are against the orders made by the High Court of Madhya Pradesh in 31 applications under Art. 226 of the Constitution by dealers in tobacco. All these petitioners carried on business in Madhya Bharat which later became part of the State of Madhya Pradesh. They were assessed to sales tax on their sales of tobacco in accordance with the notification issued by the State Government in exercise of powers under S. 5 of the State Sales Tax Act and large amounts were collected by the Madhya Bharat Government and later by the Madhya Pradesh Government. The petitioners contended that the taxing provision under which the tax was assessed and collected from them was unconstitutional as it infringed Art. 301 of the Constitution and did not come within the special provisions of Art. 304 (a). Accordingly they prayed for appropriate writs or orders for refund of all the taxes that has been collected from them. In resisting these applications the Madhya Pradesh Government contended, first, that the taxing provisions did not offend Art. 301 of the Constitution and that in any case, they satisfied the requirements of Art. 304 (a). It was further contended that even if the taxing provision was unconstitutional and the assessment and collection of tax had been without any legal authority the petitioners were not entitled to the order for refund prayed for.2. The High Court was of opinion on a consideration of the notification under which the tax was assessed that it imposed a tax only on imported tobacco and not on home grown tobacco and so it did not come within the special provisions of Art. 304 (a) of the Constitution and consequently the infringement of Art. 301 of the Constitution which resulted from the imposition of a tax on import of goods made the provisions void in law. The prayer for refund was allowed in the applications out of which C. A. Nos. 362-377, C. A. Nos. 861-867 of 1962 and C. A. No. 25 of 1963 have arisen. The prayer was rejected in the remaining applications.3. In the present appeals the State of Madhya Pradesh challenges the correctness of the High Courts decision that the taxing provisions was unconstitutional and void and also the orders for refund made in some of the petitions mentioned above.

Reasoning:
10. The tax could still be good if even though it contravened the provisions of Art. 301 it came within the saving provisions of Art. 304(a) of the Constitution. That Article provides in its cl. (a) that notwithstanding anything in Article 301 or Art. 303 the Legislature of a State may by law impose on goods imported from other States any tax to which similar goods manufactured or produced if that State are subject so however as not to discriminate between goods so imported and goods so manufactured or produced. An attempt was made on behalf of the State before the High Court and also before us to construe the notification mentioned above to mean that not only the tobacco imported from other States but also similar goods manufactured or produced in Madhya Bharat were subject to this tax and at the same rate. It was argued that a dealer in these goods who was an importer and so sold goods imported by him into Madhya Bharat would also be selling goods not so imported but manufactured and produced in the State. We are prepared to agree that that may well be so. What we are unable to see however is that in respect of sales of such other goods this person would be liable to any tax under thedo not think so. In our opinion, the only reasonable interpretation of the notification as it stands, viz., that tax on tobacco leaves, manufactured tobacco and tobacco used for Bidi manufacturing would be payable at the point of sale by the importer, is that only the sale of goods which the importer had imported would be liable to 0 tax and not sale of any other goods by him. If the intention had been as suggested by the learned Advocate-General that though the tax is payable at the point of sale by an importer the sale by the same person of goods manufactured or produced in Madhya Bharat would also be liable to tax. The word "importer" would not have been used in Column 3 but the word "dealer" would have been used and the point of sale would have been indicated by some other words as the "first sale in Madhya Bharat" or "the sale to the retailer in Madhya Bharat" as the rule-making authority chose.There can therefore be no escape from the conclusion that similar goods manufactured or produced in the State of Madhya Bharat have not been subjected to the tax which tobacco leaves, manufactured tobacco and tobacco used for Bidi manufacturing, imported from other States have to pay on sale by the importer. This tax is therefore not within the saving provisions of Art. 304(a). As already pointed out it contravenes the provisions of Art. 301 of the Constitution. The tax, has therefore been rightly held by the High Court to be invalid. It is clear that the assessment of tax under these notifications was thus invalid in law.We see no reason to think that the High Courts have not got this power. If a right has been infringed - whether a fundamental right or a statutory right - and the aggrieved party comes to the Court for enforcement of the right it will not be giving complete relief if the Court merely declares the existence of such right or the fact that that existing right has been infringed. Where there has been only a threat to infringe the right, an order commanding the Government or other statutory authority not to take the action contemplated would be sufficient. It has been held by this Court that where there has been a threat only and the right has not been actually infringed an application under Art. 226 would lie and the courts would give necessary relief by making an order in the nature of injunction. It will hardly be reasonable to say that while the Court will grant relief by such command in the nature of an order of injunction where the invasion of a right has been merely threatened the court must still refuse, where the right has been actually invaded, to give the consequential relief and content itself with merely a declaration that the right exists and has been invaded or with merely quashing the illegal order made.16. For the reasons given above, we are clearly of opinion that the High Courts have power for the purpose of enforcement of fundamental rights and statutory rights to give consequential relief by ordering repayment of money realised by the Government without the authority of law.At the same time we cannot lose sight of the fact that the special remedy provided in Art. 226 is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defences legitimately open in such actions. It has been made clear more than once that the power to give relief under Art. 226 is a discretionary power. This is specially true in the case of power to issue writs in the nature of mandamus. Among the several matters which the High Courts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved party in seeking this special remedy and what excuse there is for it. Another is the nature of controversy of facts and law that may have to be decided as regards the availability of consequential relief. Thus, where, as in these cases, a person comes to the court for relief under Art. 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the Court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment. Whether repayment should be ordered in the exercise of this discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule for universal application. It may however be stated as a general rule that if there has been unreasonable delay the Court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus. Again, where even if there is not such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the Court should ordinarily refuse to issue the writ of mandamus for such payment. In both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a civil court and to refuse to exercise in his favour the extraordinary remedy under Art. 226 of theappears to us to be a second and judicial exercise of discretion with which this Court ought not to interfere. It may be added that no triable issue as regards the availability of this consequential relief was raised before the High Court nor has any been suggested before us. The order of refund made by the High Court in these cases cannot therefore beargued that assuming that the remedy of recovery by action in a civil court stood barred on the date these applications were made that would be no reason to refuse relief under Art. 226 of the Constitution. Learned Counsel is right in his submission that the provisions of the Limitation Act do not as such apply to the granting of relief under Art. 226. It appears to us however that the maximum period fixed by the legislature as the time within which the relief by a suit in a civil court must be brought may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under Art. 226 can be measured. This Court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it will almost always be proper for the Court to hold that it is unreasonable. The period of limitation prescribed for recovery of money paid by mistake under the Limitation Act is three years from the date when the mistake is known. If the mistake was known in these cases on or shortly after January 17, 1956 the delay in making these applications should be considered unreasonable. If, on the other hand, as Mr. Andley seems to argue, that the mistake discovered much later this would be a controversial fact which cannot conveniently be decided in writ proceedings. In either view of the matter we are of opinion the orders for refund made by the High Court in these seven cases cannot be sustained.22. The application out of which Civil Appeal No. 25 of 1963 has arisen was also made in 1958, that is, within less than three years from the date of the High Courts decision in AIR 1956 Madh-B. 214. The High Court was therefore right in stating in its judgment in this case that it is governed by Bhailal Bhais case, 1960 MPC 304. We see no reason to interfere with the order for refund made by the High Court in this case.