Case: Messrs. Burmah Construction Co Vs. The State Of Orissa And Ors

1. Messrs. Burmah Construction Company- a firm carrying on business as building and works contractors executed sevral 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 bridges, as sale of goods, assessed the appellants to tax under the Orissa sales Tax Act. The tax 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. 1,17,869-8-0 as tax and Rs. 2,917-11-0 as penalty. The following table sets out the tax and penalty Paid to the sales Tax Authorities for the twenty. quarters :Srl. No. Circle Name Registration No. Tax paid Penalty paid Total Amount paid.Rs. A. P.Rs. A. P.Rs. A. P.1. PU II175535336 7 0350 0 035686 7 02. BA159653990 6 6310 0 054300 5 63. BA1596A2719 3 0...2719 3 04. MB8063376 6 01352 4 04728 10 05. BP15605349 1 0...5349 1 06. CU III137510913 12 0905 7 011819 3 07. CU I39406184 6 0. . . . . .6184 6 0117869 8 62917 11 0120787 3 62. Relying upon the judgment of the Madras High Court in Gannon Dunkerly and Co,, Ltd. v. State of Madras, 1954-5 STC 216: AIR 1954 Mad l130 the appellants applied on August 9, 1954 to the High Court of Judicature, Orissa for(a) a declaration that the provisions of the Orissa Sales Tax Act, 1947 authorising imposition of the sales tax on a turnover of works contracts and repair works were ultra virus the State Legislature;(b) a declaration that the assessment made by the State Sales Tax Authorities on the appellants works contracts which had resulted in payment of Rs. 1,20,787-3-6 by way of sales tax and penalties for different quarters were without jurisdiction and illegal and liable to be quashed and that the appellant was entitled to get refund of the said amount;(c) a direction restraining the state and its sales Tax Officers from taking any steps in making any further assessment or complete the assessments pending before them in respect of the appellant s works contracts with the state Government and levying and collecting any sales tax from the appellant on works contracts; and(d) issue of appropriate writ or directions directing the state of Orissa and its sales Tax Officers to refund the amount of sales tax and penalties realised from the appellant.3. Following the judgment of this Court in the State of Madras v. Gannon Dunkerly and Co., Ltd.,1959 SCR 379   ; (AIR 1958 SC 560  ) which confirmed the decision of the Madras High Court in 1954-5 STC 216 : AIR 1954 Mad l130 the High Court declared that the assessment of sales tax was not in accordance 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, 1947 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.

Court's reasoning:
This appeal arises out of a proceeding filed in the High Court substantially to compel the Collector to carry out his 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 contract 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 that 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 case 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 statutory right and to ignore the restrictions subject to which the right is made enforceable.7. We are therefore of the opinion that the High Court was right in restricting the order of refund in the petition under Art. 226 of the Constitution.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 vires the State Legislature.