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1989 DIGILAW 223 (ORI)

S. C. SEN & CO. v. SALES TAX OFFICER

1989-07-26

J.DAS, S.C.MOHAPATRA

body1989
JUDGMENT S. C. MOHAPATRA, J. - Refusal to refund the security paid by the petitioner under the Orissa Sales Tax Act, 1947 (in short "the Act"), is the grievance of the petitioner in this application for issue of a writ under article 226 of the Constitution of India. 2. After retirement from service, the petitioner carried on business of purchase and sale of goods in Balasore town as a registered dealer. He deposited security amounting to Rs. 850 in shape of National Savings Certificates as provided in rule 7-A(2)(c) of the Rules made under the Act. While his certificate of registration for renewal submitted on April 6, 1979, was with the Sales Tax Officer, the petitioner wound up his business and made an application on April 29, 1980, for cancellation of registration certificate as provided in section 9(6)(a) of the Act read with rule 14(1)(b) of the Rules. After the assessment for the year 1979-80 and receipt of demand notice, the petitioner paid the tax and penalty demanded on December 22, 1980 and on the very day made an application for refund of his security deposit. On May 27, 1981, the Sales Tax Officer called upon him to show cause why the application for refund filed beyond six months of the cancellation of registration on June 6, 1980, shall not be rejected. Petitioner explained that cancellation of his registration was not intimated to him and after clearing the demands against him, he made the application for refund. There being delay as pointed out by the Sales Tax Officer he prayed for waiving the same in the circumstances indicated. This explanation did not satisfy the Sales Tax Officer who rejected the application for refund. Petitioner filed a revision against the order before the Commissioner which was heard by the Additional Commissioner who also did not find any merit in the petition for directing refund and dismissed the same. Accordingly, the petitioner, has prayed for issue of a writ in the nature of certiorari quashing the order of the Sales Tax Officer communicated in annexure 7 and revisional order (annexure 8) and to issue a writ in the nature of mandamus directing the Sales Tax Officer to refund the National Savings Certificates pledged with him with interest. 3. Accordingly, the petitioner, has prayed for issue of a writ in the nature of certiorari quashing the order of the Sales Tax Officer communicated in annexure 7 and revisional order (annexure 8) and to issue a writ in the nature of mandamus directing the Sales Tax Officer to refund the National Savings Certificates pledged with him with interest. 3. The Sales Tax Officer has relied upon section 9(6)(a) of the Act to reject the application for refund of security on the only ground that the same has been filed beyond six months of the date of cancellation of registration of the dealer. Section 9(6) read as follows : "9. Registration of dealers. - (1) to (5) ................... (6) When - (a) any business in respect of which a certificate has been granted under this section has been discontinued or has been entirely transferred by the owners of the business to other persons; or (b) the gross turnover of any such business has during each of the three consecutive years failed to exceed Rs. 50,000; or (c) there is any other sufficient reasons so to do, the Commissioner shall cancel the registration with effect from the prescribed date and on such cancellation the Commissioner may, on application in the prescribed form received within six months of the date of cancellation, refund in such manner and subject to such conditions as may be prescribed, the security, if any, paid under sub-section (3-a)." 4. The petitioner discontinued his business in respect of which certificate of registration was granted. Accordingly, Commissioner has power under section 9(6)(a) of the Act to cancel the registration. Under rule 15, the Sales Tax Officer in exercise of the powers of the Commissioner is required to cancel the registration with effect from the date of discontinuance which is the prescribed date. Under rule 18, dealer who seeks cancellation of his registration under rule 15, is to file the certificate of registration along with his application. Simultaneously with the order of cancellation, the certificate is to be cancelled as provided in rule 18. There is no provision in the rules for communication of the order of cancellation. Under rule 17, however, the Commissioner is to publish the same in the Orissa Commercial Taxes Gazette. Simultaneously with the order of cancellation, the certificate is to be cancelled as provided in rule 18. There is no provision in the rules for communication of the order of cancellation. Under rule 17, however, the Commissioner is to publish the same in the Orissa Commercial Taxes Gazette. Although there is no provision for communication of the order of cancellation, the same is an essential requirement since limitation of six months for application for refund of security has been provided for in section 9(6). 5. The petitioner has asserted in his explanation that he had no knowledge of the order of cancellation of his registration. Neither the Sales Tax Officer nor the Commissioner gave a finding that the assertion is not correct. The same is asserted by the petitioner on affidavit in this Court which is neither controverted by counter-affidavit nor any document has been produced to come to a conclusion that the assertion is not correct. In such circumstances, without knowledge of the date of cancellation, when the petitioner applied for refund, the Sales Tax Officer did not exercise jurisdiction in accordance with law in rejecting the application. On the facts, it is to be held that the date of knowledge of cancellation of registration is the date for computing limitation under section 9(6) of the Act for making an application for refund. 6. Even assuming that there was delay, it was for about 15 days only. Lack of knowledge of cancellation of registration where there is no material that the order was communicated or published in the Orissa Commercial Taxes Gazette, is a sufficient cause for delay and the Sales Tax Officer ought not to have ignored the same. Additional Commissioner in revision has not also considered this fact specially when the petitioner had made a prayer to waive the same. Accordingly, the order of the Sales Tax Officer in annexure 7 and order in revision in annexure 8 are quashed. 7. Under section 9(6) of the Act, although it is provided that the application is to be made within six months of the date of cancellation of registration, there is no prohibition that the security deposited shall not be refunded if the application is made beyond the period fixed by law. It provides that refund shall be made in the manner and subject to such conditions as may be prescribed. It provides that refund shall be made in the manner and subject to such conditions as may be prescribed. Rule 42-B provides for refund of amount paid as security. It reads as follows : "42-B. Refund of the amount paid as security. - (1) The security paid shall be maintained in full so long as the registration certificate continues to be in force and in the event of the dealer's ceasing his liability to pay tax or discontinuance of the business or entire transfer of the business to other persons, shall be refunded by the Assistant Sales Tax Officer or Sales Tax Officer, as the case may be, after applying the said security for any amount of tax or composition money together with penalty, or interest, if any, payable under the Act, in respect of which the dealer is in default : Provided that the Commissioner on application by the dealer, may allow refund of the amount paid as security in part or full at any time before the dealer ceases his liability to pay tax or discontinues the business or entirely transfers the business to other persons. (2) The refund under this rule shall be made in form XIII." Petitioner made the application in form XIII on May 13, 1981, for which he made plain paper application on December 22, 1980. It is not the case of the Sales Tax Officer that the conditions of rule 42-B have not been satisfied. In the circumstances, the purpose for the security as provided in section 9(6) of the Act not being frustrated by the petitioner and the conditions under rule 42-B having been satisfied, the petitioner is entitled to his National Savings Certificates pledged to the Sales Tax Officer. 8. From the aforesaid analysis, we are satisfied that the petitioner is entitled to the refund of the National Savings Certificates which should have been made latest by end of 1981. On account of illegal refusal, petitioner was temporarily deprived of his property. Mr. Roy has brought to our notice that the National Savings Certificates were to mature in the year 1984. From 1984, till the date of return of the certificate, however, petitioner is deprived of the use of his property and is entitled to compensation. In the peculiar circumstances of the case, we are satisfied that grant of interest at 6 per cent per annum on Rs. From 1984, till the date of return of the certificate, however, petitioner is deprived of the use of his property and is entitled to compensation. In the peculiar circumstances of the case, we are satisfied that grant of interest at 6 per cent per annum on Rs. 850 from the date of maturity of the certificates till refund of the same, would adequately mitigate the prejudice of the petitioner. 9. In the result, writ application is allowed. Annexures 7 and 8 are quashed. The Sales Tax Officer is directed to refund the National Savings Certificates pledged with him with interest at the rate of 6 per cent per annum on the amount of security from the date of maturity of the certificates till the date of refund of the same. No costs. J. DAS, J. - I agree. Writ application allowed.