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Gill & Co. (P) Ltd. v. Commercial Tax Officer & Others
Structured Summary of the Opinion (Jagannatha Shetty, J.)
Factual and Procedural Background
The Court was asked to decide three referred questions of law because of a conflict between two Bench decisions of the High Court (Harakchand Rugchand v. State of Mysore and Misrimal Jain & Co. v. State of Mysore). The immediate factual matrix concerns a private limited company (the common petitioner) engaged in the sale of cotton which had paid sales tax for assessment years 1959-60 to 1963-64. Following the decision in Yadalam Lakshminarasimhiah Setty & Sons (referred to as "Yadalam's case"), the petitioner obtained relief in writ petitions (allowed on 28-3-1967) that quashed its assessment orders and resulted in refunds of tax previously paid.
Parliament subsequently intervened by promulgating an Ordinance and then enacting the Central Sales Tax (Amendment) Act, 1969 (the Amending Act), which inserted sub‑section (1A) into section 6 of the Central Sales Tax Act, 1956 and included section 9 validating prior assessments. After the Amending Act came into force, the assessing authority issued notices to the petitioner (dated 15-10-1969) calling upon the company to repay tax refunded pursuant to the High Court orders, invoking section 9 of the Amending Act. The petitioner challenged those notices by filing the present writ petitions, leading to the reference of three legal questions to the Court.
Legal Issues Presented
- Does Sec. 9 of the Central Sales Tax (Amendment) Act, 1969, operate to set aside the order of this Court in writ petition Nos. 550 to 554 of 1967 quashing the assessment orders and directing refund of the tax collected and to revive the original assessment orders by this Court?
- Does Sec. 9 of the Central Sales Tax (Amendment) Act, 1969, operate to automatically revive the original assessment orders that had been set aside on appeal or revision following the decision in Yadalam's case (16 STC 231)?
- Is there any machinery provision in the Mysore Sales Tax Act, 1957 read with S. 9 of the Central Sales Tax Act, 1956, for effecting recovery of the amount of tax refunded on the basis of Yadalam's case (16 STC 231), without making rectification or revision of final assessment orders?
Arguments of the Parties
Petitioner's Arguments (as advanced by Mr. Srinivasan)
- The assessment orders quashed by this Court in the earlier writ petitions had become non est in law and could not be revived by the passing of the Amending Act.
- Section 9 of the Amending Act does not automatically revive original assessment orders that had been set aside on appeal or revision following the decision in Yadalam's case.
State's / Respondent's Arguments
- Mr. Byra Reddy, the Advocate-General, contended to the contrary (i.e., that the Amending Act and s.9 operate to validate and make effective prior assessments and related actions).
Arguments and Contentions from Prior Cases (as narrated)
- In Harakchand's case the petitioner had contended (1) that the refund was itself validated by the amending provision (S.34 of the Mysore amending Act) so it could not be reclaimed, and (2) that the assessing authority could not demand repayment without rectifying the assessment under Rule 38 of the Mysore Sales Tax Rules, 1957. The Harakchand Bench rejected these contentions and held that validation of assessments empowered the authority to call for repayment.
- In Misrimal Jain's case the contention (before that Bench) was that S.34 maintained the status quo and did not disturb assessment orders and refunds; the Court in that case sustained an order of rectification, holding that authorities could not demand taxes refunded without such rectification. The Harakchand decision was not placed before the Bench in Misrimal Jain.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Harakchand Rugchand v. State of Mysore | Held that retrospective validation of assessments empowered the Commercial Tax Officer to call upon a taxpayer to repay tax previously refunded; liability to repay flows from retrospective validation. | The Court noted this decision as one side of an existing conflict; it described Harakchand's reasoning and that it was not brought to the notice of the Bench in Misrimal Jain. The decision was part of the background motivating the reference. |
| Misrimal Jain & Co. v. State of Mysore | Upheld a rectification by Commercial Tax authorities and held authorities could not demand refunded tax without such rectification; viewed S.34 as intended to maintain status quo (as argued before that Bench). | The Court treated this decision as the other side of the conflict; it recorded that Misrimal Jain was followed in a number of cases arising from S.9 validation but that Harakchand had not been cited to that Bench. |
| Yadalam Lakshminarasimhiah Setty & Sons v. State of Mysore ("Yadalam's case") | Declared that certain inter-State sales were not taxable under the then existing law; formed the basis for quashing assessment orders and obtaining refunds in several writ petitions. | The Court treated Yadalam's case as the decision whose effect Parliament sought to neutralize by inserting sub-sec. (1A) into s.6 and by s.9 of the Amending Act; the judgment was said to be rendered ineffective by the amendment because the law was altered retrospectively. |
| State of Mysore v. Yadalam Lakshminarasimhiah Setty & Sons (Supreme Court) | Appeal by State dismissed by the Supreme Court but on a different ground (as recorded in the opinion). | The Court recorded the Supreme Court's disposition of the appeal as background; it did not narrate further consequences beyond acknowledging that the Supreme Court dismissed the appeal on different grounds. |
| Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality | Sets out principles governing validating statutes: legislature may validate tax collections only if it can remove the grounds of illegality and possesses competence; merely declaring a court decision not binding is not sufficient unless the law is changed to remove the basis of the decision. | The Court relied on these principles to analyse S.9: it applied the principle that retrospective legislative change removing the legal defect which gave rise to the court decision can render previous collections valid. |
| Municipal Corporation of the City of Ahmedabad v. The New Shrock Spg. & Wvg. Co. Ltd. | Affirmation/adoption of the principles about validating statutes (as stated by Hidayatullah, CJ.). | The Court adopted and applied the same principles in interpreting the Amending Act and S.9's effect. |
| Sadasib Prakash Brakmachari, Trustee of Hariprakash Mutt v. State of Orissa | Explains how an amending provision (S.79A in that case) may revive previously invalid schemes by re‑enacting provisions and making them open to attack under the present law rather than trying to override constitutional invalidity. | The Court cited the case as authority for the proposition that the legislature may, by suitable re-enactment or alteration, supply the legal basis to sustain previously invalidated acts or schemes; it used this reasoning to support the view that Parliament altered the legal basis for assessing tax. |
| M.M. Muthukaruppan Chettiar v. Dy. Comml. Tax Officer | Madras High Court decision (cited by petitioner’s counsel). | The Court recorded that three Madras High Court decisions (including this) were cited by Mr. Srinivasan but expressly stated it would not discuss them and would not accept an argument giving them effect if it departed from Supreme Court principles. |
| T.V. Sundaram Iyengar & Sons, Pvt. Ltd. v. Dy. Comml. Tax Officer | Madras High Court decision (cited by petitioner’s counsel). | Same application as above: recorded as cited but the Court declined to discuss or apply them insofar as they would depart from the Supreme Court-declared principles. |
| Ceylon Thowfeck Hotel v. State of Madras | Madras High Court decision (cited by petitioner’s counsel). | Same application as above: cited but not discussed or accepted where it would conflict with Supreme Court-declared principles. |
Court's Reasoning and Analysis
The Court's analysis proceeds from general principles about validating statutes to the specific text and effect of the Amending Act.
- The Court began by recalling established principles on validating statutes (citing Shri Prithvi Cotton Mills and Ahmedabad decisions): a legislature may validate prior tax collections only if it has the competence to do so and actually removes the grounds of prior illegality; mere declarations that a court decision shall not bind are insufficient unless the law itself is changed so that the prior decision could not have been given in the altered circumstances.
- The Court then examined the specific amendments: sub‑section (1A) to section 6 of the Central Sales Tax Act was inserted retrospectively to make clear that certain inter‑State sales are taxable even if, under the sales tax law of the appropriate State, tax would not have been levied had the sale taken place inside that State. The Court concluded that by inserting sub‑sec. (1A) Parliament removed the defect on which Yadalam's case rested and thus fundamentally altered the conditions that led to that decision.
- The Court analysed section 9 of the Amending Act. It noted that s.9 includes a non‑obstante clause deeming prior assessments, re‑assessments, levies or collections (and actions taken in relation to them) valid and effective as if made under the Act as amended. The Court parsed the consequences of clauses (a) through (c) of s.9(1): clause (a) deems acts and proceedings done by government or officers to have always been in accordance with law; clause (b) bars suits or proceedings for refund of such tax; clause (c) bars enforcement of any decree or order directing such refund.
- The Court observed that sub‑section (2) of s.9 preserves the right to question such assessments in accordance with the Act as amended and to claim refund of tax paid in excess of what is due under the Act as amended.
- Applying the validating principles, the Court concluded that because sub‑sec. (1A) of s.6 removes the legal defect underlying Yadalam's case, s.9 operates to render prior assessments valid as if they had been made pursuant to the amended law. Consequently, orders of appellate or revisional authorities that had set aside assessments following Yadalam’s case are rendered ineffective for the same reason.
- The Court reasoned that since the assessments are thus validated retrospectively, further actions already taken pursuant to those assessments—including demand notices and collection—are also validated by the deeming language of s.9. Therefore refunds obtained under the earlier judicial orders cannot be retained and proceedings to recover such refunded amounts are supported by the existing recovery machinery of the Sales Tax Act.
- The Court addressed the competing line of authority (the Madras High Court decisions cited by petitioner) only to the extent of saying it would not discuss them or accept an argument that would run contrary to the Supreme Court‑declared principles applied above.
Holding and Implications
The Court answered the three referred questions as follows:
- S. 9 of the Central Sales Tax (Amendment) Act, 1969, operates to render ineffective the order of this Court in WPs. Nos. 550 to 554 of 1967 and to render effective and valid the original assessment orders as if they had been made under or pursuant to sub‑sec. (1A) of S. 6 of the Central Sales Tax Act, 1956.
- S. 9 renders ineffective any order made by an appellate or revisional authority under the Sales Tax Act following the decision in Yadalam's case and renders valid and effective the original assessment orders set aside by such authority for that reason as if those orders had been made pursuant to sub‑sec. (1A) of S. 6.
- Because demands made pursuant to the original assessment orders are rendered valid and effective by the Amending Act, recovery of tax pursuant to such demands does not require any machinery other than the recovery provisions already contained in the Mysore Sales Tax Act, 1957 read with the Central Sales Tax Act.
Direct Consequences for the Parties
- The notices issued to the petitioner calling for repayment of refunded tax are to be regarded as communications that, under the amended law, the original demand has become enforceable and that the petitioner can no longer retain money refunded pursuant to prior court orders.
- The petitioner cannot maintain proceedings for refund of the tax specified in s.9(1) and no Court can enforce any decree or order directing refund of such tax, subject to the preservation in s.9(2) of any remedies available under the Act as amended.
- Recovery of the refunded amounts may proceed under the existing recovery machinery contained in the Sales Tax legislation; no separate rectification or special machinery is required merely because the assessments had earlier been set aside.
Broader Implications
The Court’s reasoning is grounded in established principles about validating statutes and in the text of the Amending Act; the opinion explains that Parliament altered the legal conditions on which the earlier judicial decisions rested, thereby rendering those decisions ineffective in respect of the assessments validated by s.9. The Court declined to apply or follow conflicting Madras High Court decisions where doing so would depart from principles declared by the Supreme Court.
Jagannatha Shetty, J.:— In these writ petitions, the following three questions of law have been referred to us for decision, in view of the conflict in two Bench decisions of this Court, namely, Harakchand Rugchand v. State of Mysore(1) and Misrimal Jain & Co. v. State of Mysore(2):
(1) Does Sec. 9 of the Central Sales Tax (Amendment) Act, 1969, operate to set aside the order of this Court in writ petition Nos. 550 to 554 of 1967 quashing the assessment orders and directing refund of the tax collected and to revive the original assessment orders by this Court?
(2) Does Sec. 9 of the Central Sales Tax (Amendment) Act, 1969, operate to automatically revive the original assessment orders that had been set aside on appeal or revision following the decision in Yadalam's case (16 STC 231), and
(3) Is there any machinery provision in the Mysore Sales Tax Act, 1957 read with S. 9 of the Central Sales Tax Act, 1956, for effecting recovery of the amount of tax refunded on the basis of Yadalam's case (16 STC 231), without making rectification or revision of final assessment orders?
2. In Harakchand's case, the facts are these: In respect of the assessment year ??? Commercial Tax Officer made an order of assessment by which the ??? of the petitioner therein relating to the sale of ??? held by ??? on 14th December, 1957, was included in the assessment. In WP. No. ?? of 1962, this Court held that S. 5 of the Mysore Sales ??? did not charge that part of the turnover with sales tax and set aside ??? of the assessment. On the strength of the order of this Court the petitioner applied for a refund which was accordingly ??? to him. Subsequently, the Mysore Sales Tax (Amendment) Act (9 of 1961) amended S. 5(5A) retrospectively and validated all assessments notwithstanding any judgment, decree or order of any Court. Thereupon, the Commercial Tax Officer called upon the petitioner to pay back the amount refunded to him. The petitioner challenged the demand on two grounds: (1) The refund made by the Commercial Tax Officer also stood validated under S. 34 of the amending Act and it was impossible for the Commercial Tax Officer to demand the payment of what was refunded; (2) The demand could be made only after there was a rectification, under Rule 38 of the Mysore Sales Tax Rules, 1957, of the order of assessment which the Commercial Tax Officer had previously made. Rejecting those contentions, it was held therein that on the validation of the assessments, the Commercial Tax Officer had the power to call upon the petitioner therein to repay the amount which had been refunded to him and that the liability to pay back that amount was a consequence which plainly flowed from the retrospective validation.
3. In Misrimal Jain's case no specific contention was urged before the Bench to the effect that on the enactment of S. 34 of the Mysore Sales Tax (Amendment) Act, 1963 (Mysore Act No. 9 of 1964), the original assessment orders levying tax on the stock of cloth were revived automatically and that it was not necessary to make a rectification of the assessment order before demanding the payment of tax. The contention, urged there was that the object of Sec. 34 was to maintain the status quo and not to disturb the orders of assessment and refunds made pursuant to the decision of this Court.
4. In that case, this Court sustained the order of rectification made by the Commercial Tax authorities holding that the authorities could not have demanded the tax refunded without such rectification. The said decision has been followed in a number of cases arising out of the validation of assessments made by S. 9 of the Central Sales Tax (Amendment) Act, 1969. The decision in Harkchand's case was not brought to the notice of the Division Bench which decided the Misrimal Jain's case.
5. Before we go to the questions of law, let us see the facts leading to the petitions before us.
6. The common petitioner is a private limited company carrying on the business of selling cotton. This is the second time that the company has approached this Court for relief under Art. 226 of the Constitution. For the assessment years 1959-1960 to 1963-1964 the Company's turnover in respect of sale of cotton in ??? sales were ??? to tax under the Central Sales Tax Act, 1956, hereinafter ??? the Act. The Company paid quite a large sum, a little ??? as tax but fortune appears to have smiled on it. Some dealers in Mysore State were then contending that if no sales-tax would be ??? under the Mys. Sales Tax Act, if the sales in the course of inter-State sale or commerce are deemed to have taken place inside the State then no tax is chargeable under the Act. In a sales tax revision petition preferred by one Yadalam Lakshminarasimih Setty, this Court upheld the contention. (See Yadalam Lakshminarasimhiah Setty & Sons v. State Of Mysore(3). The appeal preferred by the State of Mysore against the decision of this Court was dismissed by the Supreme Court but on a different ground (See State of Mysore v. Yadalam Lakshminarasimhiah Setty & Sons(4).
7. After this decision which is popularly called the Yadalam's case, the petitioner preferred WP. Nos. to 554 of 1967, challenging the validity of the orders of assessment pursuant to which it had already paid the tax. Following the decision in Yadalam's case, this Court allowed the writ petitions on 28-3-1967 quashing the assessment orders. Pursuant to the orders of this Court, the assessing authority refunded to the petitioner the entire tax paid before.
8. But, fortune did not favour the petitioner much longer. The Parliament intervened to amend the Act by the Central Sales Tax (Amendment) Act, 1969 (Central Act 28 of 1969, which we will call as the Amending Act). Earlier to the Amending Act there was an Ordinance to the same effect promulgated by the President of India on 9-5-1969. The object of the Amending Act was obviously to render the decision of the Supreme Court in Yadalam's case ineffective and to validate the assessments of the type that were set aside by this Court in WP. Nos. 550 to 534 of 1967.
9. On the passing of the Amending Act, the assessing authority issued five notices to the petitioner-Company on 15-10-1969. The notices state as follows:
“In view of the direction issued by the Hon'ble High Court of Mysore in WP. No. 550/67 dt. 28-3-67 the amount of tax paid by you Rs. 31,006-71 (Rupees Thirty One Thousand and Six and Paise Seventy One only) under the Central Sales Tax Act, 1856, for the period from 1-4-1959 to 31-3-1960 was refunded to you on 3-7-1967.
But S. 9 of the Central Sales Tax Act (Amendment) Act, 1969, validates the order of assessment previously made. You are therefore called upon to pay back the amount of Rs. 31,006-71 (Rupees Thirty one thousand and six and paise seventy one only) forthwith failing which the amount, will be recovered as provided under the provisions of the Act.”
10. The petitioner-Company immediately challenged the notices in the writ petitions out of which the questions of law have arisen.
11. Mr. Srinivasan, learned Counsel for the petitioner urged that the assessment orders which were quashed by this Court in the previous batch of writ petitions have become non-est in law and could not be revived by the passing of the Amending Act. He further urged that in any event, S. 9 of the amending Act, does not automatically revive the original assessment orders that had been set aside on appeal or revision following the decision in Yadalam's case.
12. Mr. Byra Reddy, learned Advocate-General contended to the contrary.
13. Let us now come to the relevant provisions of the Amending Act. Sub-sec. (1A) of Sec. 6 of the Act, which was inserted retrospectively, provides:—
“6. Liability to tax on Inter-State sales—
******
(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of Inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate state if that sale had taken place inside that State.”
14. Section 9 provides:
“9. Validation of assessments, etc.— (1) Notwithstanding anything contained in any judgment, decree or order of any Court or other authority to the contrary, any assessment, re-assessment, levy or collection of any tax made or purporting to have been made, any action taken or thing done in relation to such assessment, re-assessment, levy or collection under the provisions of the principal Act before the 9th day of June, 1969, shall be deemed to be as valid and effective as if such assessment, re-assessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly:—
(a) all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any other authority in connection with the assessment, re-assessment, levy or collection of such tax shall for all purposes, be deemed to be, and to have always been, done or taken in accordance with law;
(b) no suit or other proceedings shall be maintained or continued in any Court or before any authority for the refund of any such tax; and
(c) no Court shall enforce any decree or order directing the refund of any such tax.
(2) For removal of doubts, it is hereby declared that nothing in sub-sec. (1) shall be construed as preventing any person—
(a) from questioning in accordance with the provisions of the principal Act, as amended by this Act any assessment, re-assessment, levy or collection of tax referred to in sub-sec. (1), or
(b) from claiming refund of any tax paid by him in excess of the amount due from him by way of tax under the principal Act as amended by this Act.”
15. Before we examine the scope and effect of S. 9 of the amending Act, it would be convenient to remember the power of legislature to enact validating statutes.
16. The principles of law as stated by Hidayatullah, CJ., in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality(5) and adopted by Hegde, J., in Municipal Corporation of the City of Ahmedabad v. The New Shrock Spg. & Wvg. Co. Ltd.(6), are as follows:
“When a legislature sets out to validate a tax declared by a Court to be illegally collected under ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a Court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law.”
17. Often we find the legislature passing an amending and validating Act, and, it comes for scrutiny before the Courts. Reference may be made to the decision of the Supreme Court in Sadasib Prakash Brakmachari, Trustee of Hariprakash Mutt v. State of Orissa(7). Therein, certain schemes framed in pursuance of Ss. 38 & 39 of Orissa Hindu Religious Endowments Act (No. 4 of 1939) were held invalid by the decision of the Supreme Court on the basis of the then existing law. Thereafter, the Orissa Legislature brought an amendment introducing S. 79A into the relevant Act purporting to revive the schemes which were pronounced to be invalid, by removing the defects noticed in the judgment of the Supreme Court. In dealing with a question similar to one before us, this is what Jagannadhadas, J., speaking for the Court, observed (at page 439):
“Section 79A in terms purports to revive the invalid scheme notwithstanding any judgment, decree or order of any Court which means that though a Court may have pronounced the scheme as void still that is deemed to be alive. It has been ??? that this is directly flouting the decision of this Court and that the legislature has no power to declare as valid and constitutional what was decided by this Court as invalid and unconstitutional
But it is to be observed that the legislature does not purport to do anything of the kind. What it does is not to deem the schemes previously settled as having been validly settled on those very dates, under the then existing law. This of course, is beyond legislative competence since the legislature has not the power to override unconstitutionality as such. But what the legislature has purported to do is to take up those very schemes and deem them to have been settled ‘under the provisions of the present Act’ and thereby to lay them open to any attack available under the present law.
Such a provision is not uncommon in legislative practice and is enacted in order to avoid the public inconvenience of having to re-do what has previously been done.”
18. With this background in view, we now proceed to deal with the rival, contentions by looking more closely at the relevant provisions of the Amending Act. The controversy appears to us to be simple. Mr. Srinivasan did not contend that the Amending Act was beyond the scope of the Parliament. He also did not say that the Amending Act was a mere declaration invalidating the judgment in Yadalam's case or the decision of this Court in the previous batch of writ petitions preferred by the petitioner, as he could not in view of the retrospective operation of the amendment to S. 6 of the Act. By inserting sub-sec. (1A) to S. 6, the Parliament removed the defect which the Courts had found in the then existing law, and supplied power to assess the transactions of the nature which the petitioner did during the re Want period of assessments. By the said provision, it is now made clear that even if no tax was leviable under the general sales tax law of any State, in respect of any inter-State transactions of sale, tax will be leviable on the sale of any goods effected by a dealer in the course of inter-State trade or commerce.
19. Next comes S. 9, validating all assessments made before 9th June 1969. It opens with a non-obstante clause overriding anything contained in any judgment, decree or order of any Court or other authority. What this section in effect says is that the assessment, re-assessment, levy or collection of any tax made or purporting to have been made, any action taken or anything done in relation to such assessment, re-assessment, levy or collection under the provisions of the Act, shall be deemed to be valid and effective as if they were made under the provisions of the Act which stood amended by the Amending Act. Certain consequences follow from these savings which are to be found in clauses (a) to (c). Clause (a), again a deeming clause, directs that all acts, proceedings or things done or taken by the Government or by any officer, in connection with the assessment, re-assessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been, done or taken in accordance with law. Clause (b) bars any suit or other proceedings for refund of tax so paid, and, clause (c) says that no Court shall enforce any decree or order directing the refund of any tax so paid. Sub-sec. (2) lays such assessment, collection of tax or claim for refund open to any attack available under the Act as amended by the provisions of the Amending Act.
20. It is indisputable that the introduction of sub-sec. (1A) of S. 6 of the main Act has been given retrospective effect as if it had been in the original Act at the initial enactment itself. Such introduction of the said sub-section therefore, in the words of the Supreme Court, has so fundamentally altered the conditions on which the decision in Yadalme'S case was rendered that me said decision could not have been given in the altered circumstances. That means that the amendment has rendered the decision ineffective by removing the very basis of the decision. By the express language of S. 9 of the amending Act assessments made must be deemed to be as valid and effective us if the same had been made under the principal Act as amended, that is to say, as if they had been made in the light of or pursuant to sub-sec. (1A) of S. 6 of the main Act and this deeming has to be made notwithstanding any judgment, decree or order of any Court or other authority to the contrary. The expression, ‘authority’ undoubtedly means any authority functioning under the Sales Tax Act itself. If therefore, the order of any appellate or revisional authority functioning under the Sales Tax Act has, following the decision in Yadalam's case, set aside any assessment, then the order or decision of such authority also is rendered ineffective for the same reason.
21. The said result is brought about by the amending Act, not by a mere declaration that the decision in Yadalam's case or any judgment decree or older of any Court or authority shall not be binding without effecting any change in the stats of law on the basis of which the decision in Yadalam's case was rendered, but by changing or altering the law and thus conferring validity upon assessments already made and any further action or proceeding taken in connection with it or pursuant thereto.
22. Hence it is no longer possible to cite the decision in Yadalam's case as declaring a rule of law invalidating the assessments. The assessments are now valid and effective as if made pursuant to sub-sec. (1A) of S. 6 of the main Act. The said S. 9 of the amending Act expressly states further that all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any authority in connection with the assessment shall be deemed to be and to have always been done or taken in accordance with law; it also prevents or prohibits the taking of any proceedings for refund of any tax collected or the enforcement of any decree or order directing refund of any such tax.
23. The result is that the assessment having been validated retrospectively further action thereon already taken is also validated; among other things a demand notice issued pursuant to an order of assessment is also validated. If the tax has already been collected, no refund thereof can be claimed. As the assessment is valid and enforceable” the retention of money already refunded also necessarily becomes unlawful. If the retention of tax refunded is unlawful and the demand originally made is effective” then it inevitably follows that the valid and enforceable demand attracts the entire machinery for recovery provided in the Sales Tax Act. In this view, the notices received by the petitioner in these cases which he impugns in the writ petitions must be regarded as mere reminders or communications to him, that under the law as amended the original, demand has becomes enforceable and that he can no longer retain the money refunded to him.
24. It only remains to be stated that the decision in Yadalam's case and the amendments of the Act intended to nullify its effect deal only with liability of a transaction of sale of a particular description to tax and do not involve any variation in the rate of tax. No question of rectification or correction or re-calculation of the amount of tax arises. As the view we have taken proceeds on the declaration of law made by the Supreme Court in the cases already cited, we do not feel called upon to discuss the three decisions of the Madras High Court cited by Mr. Srinivasan, viz., M.M Muthukaruppan Chettiar v. Dy. Comml. Tax Officer(8); T.V Sundaram Iyengar & Sons, Pvt. Ltd. v. Dy. Comml. Tax Officer(9) and Ceylon Thowfeck Hotel v. State of Madras(10) nor can we accept an argument which seeks to give effect to those decisions in such a way as to involve a departure from the principles as declared by the Supreme Court.
25. Our answers therefore, to the questions referred to us are,—
(1) S. 9 of the Central Sales Tax (Amendment) Act, 1969, operates to render ineffective the order of this Court in WPs. Nos. 550 to 554 of 1967 and to render effective and valid the original assessment orders as if they had been made under or pursuant to sub-sec. (1A) of S. 6 of the Central Sales Tax Act, 1956;
(2)) The said S. 9 ??? renders ??? any order made by an appellate or revisional authority under the Sales Tax Act following the decision in Yadalam's case and renders valid and effective the original assessment orders set aside by such authority for the said reason as if the same had been made under or pursuant to sub-sec. (1A) of S. 6 of the Central Sales Tax Act.
(3) As the demand made pursuant to the original assessment orders so rendered are also rendered valid and effective, recovery of tax pursuant to such demand does not stand in need of any machinery other than or in addition to the machinery provisions already contained in the Mysore Sales Tax Act, 1957, read with the Central Sales Tax Act.
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