Mysore Cements Ltd. vs Indian Oil Corporation Ltd. and Others

R. Gururajan, J.—The petitioner is seeking for a writ of mandamus by way of a direction in addition to various other directions in terms of the various prayers made in para 12 of the petition. The petitioner, a registered company, has a cement manufacturing plant at Ammasandra in Tumkur District. The company purchases petroleum products from respondent Nos. 1 to 3. They have collected the tax from time to time from the petitioner. The petitioner in somewhat identical circumstances had approached the Karnataka Appellate Tribunal in the matter of levy of entry tax on the petitioner-factory, Ammasandra. The Tribunal, by a detailed order allowed the petition and accepted the contention of the petitioner. According to the petition averments, the petitioner is therefore not liable to pay the entry tax for entry of goods in the petitioner-factory. In the light of the subsequent Tribunal''s order, the petitioner made a refund claim on the Oil Corporation and the Oil Corporation in turn made a demand of refund on the Government. The Government rejected the same in terms of annexure B.

Pursuant to notice, the respondents have entered appearance. Indian Oil Corporation-the first respondent has stated in the objection that they have collected the entry tax from the petitioner. They say that the collection was in terms of the circular instructions of the Commissioner. They assert that at no point of time, the petitioner questioned the liability to pay the entry tax to the respondents. The assessment of the first respondent was completed and the details of the assessments are shown as under :

Year

Date of completion assessment

1985-86

20-9-1989

1986-87

1990

1987-88

28-2-1990

1988-89

16-3-1990

1989-90

27-3-1991

1990-91

26-3-1992

1991-92

19-3-1993

After completion of the assessment year and that too after several long years the petitioner approached the first respondent claiming refund in the light of the Tribunal''s order. Thereafter, according to the objection statement, the petitioner without the consent of the first respondent has chosen to adjust the entire entry tax it had made over to the first respondent to the subsequent supply made by it. They oppose the petition. Respondent No. 2 has filed a statement of objection and it has stated therein that in terms of the petitioner''s request the respondents sought for rectification of the assessment orders and the same came to be rejected in terms of annexures R1 and R2.

The State Government has filed a very detailed statement of objection. They say that the petitioner is not entitled for any relief in the given set of circumstances. They refer to various notifications to contend that what has been collected is proper and legal. They further say that in the absence of any averment with regard to passing over all the tax, no refund claim is permissible in law.

Sri Sarangan, learned Senior Counsel appears for the petitioner. He invites my attention to Section 3BB and Section 18A of the relevant tax laws to contend that the petitioner is entitled for relief at the hands of this Court. According to him, in the light of the Tribunal''s order the collection of entry tax is unsustainable in law. He wants a refund by the Government.

Sri K.P. Kumar, learned counsel appearing for the respondents says that at no point of time, the petitioner made any grievance, whatsoever in the matter of collection. It is only after the decision of the Tribunal, they whisper about the refund in the matter. He further complains that the petitioner-company unilaterally has chosen to adjust the refund claim towards the subsequent supplies made by this respondent to the petitioner.

The learned Government Pleader supports the action of the Government.

After hearing the learned counsel, I have carefully perused the material on record. Admittedly, the entire case is based on Section 3BB of the Entry Tax Act. The said section reads as under :

"3-BB. Payment and disbursement of amounts wrongly collected by dealer as tax.--(1) Where any amount is collected by way of tax or purporting to be by way of tax from any person by any dealer in contravention of Section 3A, whether knowingly or not, such dealer shall pay the entire amount so collected, to the assessing authority within twenty days after the close of the month in which such amount was collected, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act.

(2) If default is made in payment of the amount in accordance with Sub-section (1),--

(i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the dealer;

(ii) the dealer liable to pay the amount shall pay interest at the rate of two and one half per cent of such amount for each month of default; and

(iii) the whole of the amount remaining unpaid along with the interest calculated under Clause (ii) of this sub-section shall be recoverable in the manner specified in Section 8.

(3) Notwithstanding anything contained in this Act, or in any other law for the time being in force, any amount paid or payable by any dealer under Sub-section (1) shall, to the extent it is not due as tax be forfeited to the State Government and be recovered from him and such payment or recovery shall discharge him of the liability to refund the amount to the person from whom it was collected.

(4) Where any amount is paid or recovered by or from any dealer under Sub-section (1) or (3), a refund of such amount or any part thereof can be claimed from the State Government by the person from whom it was realised by way of tax provided an application in writing in the prescribed form is made to the Commissioner, within two years from the date of the order of forfeiture. On receipt of any such application, the Commissioner shall hold such inquiry as he deems fit and if the Commissioner is satisfied that the claim is valid and admissible and that amount as claimed as refund is actually paid or recovered, he shall refund the amount or any part thereof, which is found due to the persons concerned.

(5) Where any amount is collected by way of tax or purporting to be by way of tax in contravention of Section 3A at any time before the commencement of the Karnataka Taxation Laws (Amendment) Act, 1994, the provisions of Sub-sections (3) and (4) shall apply to such amount collected."

Section 3BB provides for a prohibition against the dealer from collecting a levy not approved in terms of the laws that govern the levy. On coming to know of such non-approved collection, forfeiture power is available to the Government in terms of the said provision. Forfeiture can be challenged in terms of Sub-section (4) of Section 3BB. This is the scheme of non-approved collection and subsequent forfeiture. In the case on hand, admittedly no forfeiture order has been passed by the Government on the ground of non-approved collection. There is a prescribed procedure in the matter of wrong collection and subsequent refund in the case on hand. In the absence of any forfeiture and in the absence of any order by the Government, the petitioner cannot base his prayers in terms of Section 3BB of the Act. It is also seen from the material on record that the petitioner unilaterally has chosen to adjust certain sum insofar as Indian Oil Corporation is concerned. The respondent in the light of refund application has chosen to approach the department and the department has chosen to reject the same on the ground of limitation. Those orders are not challenged as on date. In these circumstances, it is not possible for this Court to issue a writ of mandamus on the peculiar facts of this case. A writ of mandamus cannot be issued to unsettle an unchallenged assessment/rectification order in the case on hand. Writ of mandamus can be issued to the authority to perform its public duty in terms of the laws governing such circumstances. In the case on hand, no such facts are forthcoming warranting any mandamus that could be issued against the authorities; In these circumstances, I do not find any justifiable grounds to exercise my discretion in the absence of any legal foundation for a direction. However, I deem it proper to observe that the rejection of the writ petition should not come in the way of the petitioner getting the refund application settled in accordance with law and if available to them in law.

Petition stands rejected with the above observations. No costs.