# • STATE OF MADHYA PRADESH (NOW MAHARASHTRA) v. HAJI HASAN DADA

- **Citation:** [1966] 2 S.C.R. 854
- **Court:** Supreme Court of India
- **Decided:** 1965-12-02
- **Case number:** Civil Appeal No. 1007 of 1964
- **Bench:** K. Subba Rao, J. C. Shah, S. M. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madhya-pradesh-now-maharashtra-v-haji-hasan-dada-3759
- **Pages:** 5

## Headnote

C.P. and Berar Sales-tax Act (21 of 1947), s. 13-Claim for refundWhen can be ordered.
A
B
The respondent was assessed to tax by the Assistant Commissioner of
Sale»-tax under the C.P. and Berar Sales-tax Act, 1947 on the turnover
of his business and he paid the tax. After the order of assessment the Board. C
of Revenue gave a ruling that dyeing charges were not taxable under the
Act.
The respondent applied to the Assistant Commissioner, under s. 13
before its amendment in 1953 for refund, on the plea that the amount
claimed represented dyeing charges included in his turnover. The Assistant Commi.,ioner rejected the application,
but the Board of Revenue
ordered the case to be returned to the Commissionet for examination of
the claim for refund on merits. At the instance of the State, the Board
referred to the High Court, the question whether there was any bar to
the examination on merits of claims for refund under s. 13 as originally
enacted. The High Court held that there was no bar.
In appeal to this Court,
HELD : The application for refund
of tax was
not
maintainable
under the section as originally framed.
The Assistant Commissioner is, within the limits of his jurisdiction
and authority, competent to decide all questions which arise before him;
his orders are liable to be set aside in appeal or modified in revision.
, But under the Act, the
Assistant
Commissioner-who exercises
the
powers of the Commissioner-has no power to review his decision, and
so long as his order is not set aside or modified,. a dealer
cannot call
upon him to ignore the previous order and grant refund contrary to the
plain direction of his order. [857 C, HJ
CommisJioner of Income-tax v. Tribune
Trust
L.R. 74 I.A. 306
applied.
C1v1L APPELLATE JURISDICTION : Civil Appeal No. 1007 of
1964.
D
E
F
Appeal by special leave from the judgment and order dated
September 13, 1961, of the Bombay High Court
(Nagpur
G
Bench) in Civil Reference No. 1 of 1961.
T. V. R. Tatachari and B. R. G. K. Achar, for the appellant.
The respondent did not appear.

## Text

•
STATE OF MADHYA PRADESH
(NOW MAHARASHTRA)
v.
HAJI HASAN DADA
December 2, 1965
[K. SUBBA RAO, J. C. SHAH AND S. M. SIKRI, JJ.]
C.P. and Berar Sales-tax Act (21 of 1947), s. 13-Claim for refundWhen can be ordered.
A
B
The respondent was assessed to tax by the Assistant Commissioner of
Sale»-tax under the C.P. and Berar Sales-tax Act, 1947 on the turnover
of his business and he paid the tax. After the order of assessment the Board. C
of Revenue gave a ruling that dyeing charges were not taxable under the
Act.
The respondent applied to the Assistant Commissioner, under s. 13
before its amendment in 1953 for refund, on the plea that the amount
claimed represented dyeing charges included in his turnover. The Assistant Commi.,ioner rejected the application,
but the Board of Revenue
ordered the case to be returned to the Commissionet for examination of
the claim for refund on merits. At the instance of the State, the Board
referred to the High Court, the question whether there was any bar to
the examination on merits of claims for refund under s. 13 as originally
enacted. The High Court held that there was no bar.
In appeal to this Court,
HELD : The application for refund
of tax was
not
maintainable
under the section as originally framed.
The Assistant Commissioner is, within the limits of his jurisdiction
and authority, competent to decide all questions which arise before him;
his orders are liable to be set aside in appeal or modified in revision.
, But under the Act, the
Assistant
Commissioner-who exercises
the
powers of the Commissioner-has no power to review his decision, and
so long as his order is not set aside or modified,. a dealer
cannot call
upon him to ignore the previous order and grant refund contrary to the
plain direction of his order. [857 C, HJ
CommisJioner of Income-tax v. Tribune
Trust
L.R. 74 I.A. 306
applied.
C1v1L APPELLATE JURISDICTION : Civil Appeal No. 1007 of
1964.
D
E
F
Appeal by special leave from the judgment and order dated
September 13, 1961, of the Bombay High Court
(Nagpur
G
Bench) in Civil Reference No. 1 of 1961.
T. V. R. Tatachari and B. R. G. K. Achar, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by
Shah, J. By order dated April 17, 1952, the respondent
Haji Hasan Dada was assessed by the Assistant Commissioner of
Sales Tax, Nagpur Region, to pay tax under the Central ProH
'
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•
•
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M. P. STATE V. HASAN DADA (Shah, /.)
855
A vinces & Berar Sales Tax Act 21 of 1947 on the turnover from
his business in yarn for the period November 13, 1947 to November 1, 1948. The respondent paid the amount of tax assessed on
July 8, 1952. Thereafter relying upon s. 13 of the C.P. & Berar
Sales Tax Act, 1947 he applied on November 20, 1952 to the
Assistant Commissioner of Sales Tax for an order refunding
B Rs. 873/10/- on the plea that in the turnover of his business were
included dyeing charges which were not taxable under the Act,
and which since the order of assessment were held by the Board
of Revenue to be not taxable.
The Assistant Commissioner
rejected the
application, and the order was confirmed by the
Commissioner of Sales Tax in appeal.
The Board of Revenue,
C Madhya Pradesh, however, set aside the order and ordered that
the case be returned to the Commissioner "for disposal afresh in
the light of the legal principles explained in Sheikh Gauhar Sheikh
Nazir of Balaghat v. The Stale(')".
During the pendency of the proceedings before the
taxing
D authorities, s. 13 of the Act was amended with retrospective effect.
It is claimed by the State that under the amended section the right
to obtain refund in cases similar to those under examination was
taken away retrospectively.
The State of Madhya Pradesh moved the Board of Revenue
E for a reference under s. 23 of the Act to the High Court, and the
Board of Revenue referred the following three questions :
F
G
H
"l. Is ruling 57 (in Sheikh Gauhar's case-3
S.T.C. 331) good law? In other words, was the Board
right in holding that the Privy Council's decision in
Commissioner of Income-tax v. Tribune Trust ( A.I.R.
1948 P.C. 102) constituted no bar to the examination
on merits of claims for refund made under the original
section 13 of the Sales Tax Act XXI of 194 7 within
the time-limit mentioned in it?
2. Has section 24 of Act XX of 1953 been validly
enacted, in so far as it seeks to give retrospective effect
to th~ amended section 13 of Act XXI of 1947-as
from the very commencement of the latter on 1-6-47 1
and
3. If the answer to question No. 2 is in the affirmative, does sub-section (3) of the new section 13 constitute a car to the examination on merits of the claim for
refund made by the assessee in the present case ?"
(I) 3 S.T.C. 331.
LS Sup .Cl/66-8
856
SUPREME
COURT
REPORTS
[1966] 2 S.C.R.
The High Court held that by s. 13 of the Act as originally enacted,
A
the respondent had "a valuable right to ask for refund of the
amount of the tax paid by him in excess of the amount lawfully
due" and that "the right to obtain a refund being a substantive
right given to the respondent by the statute and not being a matter
of mere procedure", this right could not be taken away except
by clear and unambiguous words, and s. 13 as amended was not B
legislation which satisfied that test.
The High Court accordingly
answered the questions as follows :
"I. Ruling No. 57 is good law, and, in our opinion,
the Board was right.
2. Section 24 of Act XX of 1953 has been validly
C
enacted.
3. The new section 13 sub-section (3), does not
bar an examination on merits of the claim for refund
made on 20-11-1952 by the assessee."
With special leave, the State of Maharashtra, upon whom the D
rights of the State of Madhya Pradesh have devolved by virtue
of the States Reorganisation Act, 1956, has appealed to this
Court.
We are of the view that the first question alone need be all5wered in this appeal, and on the answer we propose to record the E
claim made by the respondent must stand rejected. Section 13
of the Act, as originally enacted, and which applied during the
year of assessment, read as follows :
"The Commissioner shall, in the prescribed manner
and either by cash payment or, at the option of the
dealer, by deduction of such excess from the amount of
F
tax due in respect of any other period, refund to a registered dealer applying in this behalf any amount of tax
or penalty paid by such dealer in excess of the amount
due from him under this Act.
Provided that no claim for refund shall be allowed
unless it is made within twelve months from the date on
which the order of assessment with or without penalty
was passed or within six months from the date on which
the final order is passed on appeal, revision, review or
reference in respect of the order of assessment with or
without penalty."
The amendment to s. 13 by Act XX of 1953 need not, for reasons
already set out, be considered.
G
H
..
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I,
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>
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•
M, P. STATE V. HASAN DADA (Shah, J.)
857
A
Section 13, in terms authorised the Commissioner to grant
refund to a registered dealer applying in that behalf, of any amount
of tax or penalty paid by such dealer in excess of the amount
due from him under the Act. The section impl"es that refund
may be granted mtly of the amount which is not lawfully due,
and whether a certain amount is lawfully due or not, must be
B
determined by the Assistant Commissioner in making the order of
assessment or re-assessment. The order of the Assistant Commissioner is undoubtedly not final : it is liable to be s"t aside in
appeal or modified in a revision application under the provisions
of the Act.
But so long as the order passed by the Assistant
Commissioner is not so set aside or modified, a dealer cannot call
C
upon him to ignore the previous order, and grant refund contrary
to the plain direction of the order.
There is abundant authority for the view that until it is set
aside by appropriate proceedings under the Act which authorises
the levy of tax, full effect must be given to an order of asses"ment,
D
even if it be later found that the order was erroneous in law :
e,g. Commissioner of Income Tax, Punjab, North-West Frontier
and Delhi Provinces, Lahore v. Tribune Trust, Lahore('). In
that case the Trust which had been in previous years assessed to,
and had paid, income-tax, claimed in respect of its assessment for
the year 1932-33 that it was exempt from taxation.
In appeal
E which was carried to the Judicial Committee, the contention was
upheld.
Before the judgment of the Judicial Committee was pronounced, assessments to income-tax were made on the Trust for
the years 1933-34 to 1938-39. After the Board's decision, the
Trust applied to the Commissioner of Income-tax for an order for
refund of income-tax.
The High Court of Lahore held in a
F reference under s. 66 ( 3) of the Indian Income-tax Act that the
assessments made for the years 1933-34 to 1938-39 "were a
nullity", and that the Trust could not be denied the relief.
The
Judicial Committee reversed the order of the High Court and held
that the assessments which were duly made by the Income-tax
G Officer in the proper exercise of his duty were validly made and
were effective until they were set aside .
The Assistant Commissioner appointed under the Act is within
the limits of his jurisdiction and authority competent to decide all
the questions which arise before him : his orders, it is true are
liable to be set aside in appeal or modified in revision as pro~ded
H
by the Act.
But under the Act the Assistant Commissionerwho exercises the powers of the Commissioner-has no power to
(I) LR. 74 I,A, 306.
858
SUPREME
COURT
REPORTS
(1966] 2 S.C.R.
review his decision, nor is he authorised to ignore his previous
A I
order, and to pass an order for refund inconsistent with his pre-
~ious order which has not been set aside by appropriate proceedmgs.
It is somewhat unfortunate that a later decision of the Bombay
High Court in State of Bombay v. Purushottamdas Dwarkadas s
Patel(' )-a case arising under s. 13 of the Bombay Sales Tax
Act, 1946-which decided the identical question which arose in
this appeal, was not brought to the notice of the High Court. In
that case it was held by the High Court that an application for
refund of sales tax paid under an order of assessment cannot be
entertained by the Sales Tax Officer on the plea that the order c
was made on an erroneous view of the law, unless the order was
set aside in appropriate proceedings by way of appeal or revision.
The Court in that case in a reference made under the Bombay
Sales Tax Act disapproved of the view of the Board of Revenue
which had in arriving at its decision followed the precedent in
Sheikh Gauhar Sheikh Nazir's case(').
D
Application for refund of tax was, therefore, not maintainable
under s. 13 of the C.P. & Berar Sales Tax Act, 1947 as originally
framed.
The appeal must therefore be allowed.
The parties to bear
their own costs in thi~ Court and in the High Court.
Appeal allowed.
(1) 8 S.T.C. 379.
(2) 3 S.T.C. 331.
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