LexCORPORATION BANK versus M/S SARASWATI ABHARANSALA AND ANOTHER
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[2008) 16 S.C.R. 340 A CORPORATION BANK II. M/S. SARASWATI ABHARANSALA AND ANOTHER . , (Civil Appeal No. 6108 of 2008) B NOVEMBER 19, 2008 [S.B. SINHA AND CYR.IAC JOSEPH, JJ.]' KERALA GENERAL SALES TAX ACT, 1963: c s. 44 - Refund of excess tax collected - Notification SRO No. 1075199 dated 27.12.1999 reducing rate of sales tax with retrospective effect - Claim by assessee for refund of excess tax ~ollected - HELD: By the notification a legal fiction was created giving it a retrospective effect and D retrospective operation and if any tax has been paid in excess, the same must be refunded - If the substantive provision of a statute provides for refund, State, ordinarily, by a subordinate legislation could not have laid down that the tax paid even by mistake would not be refunded, save E and except in cases of involving principle of 'unjust enrichment', which is not applicable in the instant case - Principle of purposive construction should be applied in the case of this nature to find out the object of the Act - Administrative Law - Subordinate Legislation - Interpretation F of statute - Purposive construction - Legal fiction -- Repeal by necessary implication - Constitution of India, 1950 - Articles 14 and 265. Respondent no. 1, a dealer in bullion gold, purchased gold from the appellant Bank during the G period 6.4.1999 to December, 1999 and paid sales tax at the rate of 1 % as was prevailing at the relevant time. Thereafter, by Notification SRO No. 1075199 dated 27.12.1999 the rate of sales tax was reduced to 0.5% with "" H 340 CORPORATION BANK v. SARASWATI ABHARANSALA 341 ANDANR. -\ retrospective effect from 1.4.1999. The request of A respondent no. 1 for refund of excess amount of sales tax collected from it was rejected by the Assistant Commissioner, Sales Tax on the ground that the Original Notification No. SRO No. 1728/93 stipulated that the tax collected at the higher rate and paid to the Government B was not to be refunded. The writ petition filed by r respondent no. 1 was dis111i!?~~~ by the single Judge of the High Court. But, on appeal, the Division Bench directed.the Bank to refund the excess amount collected from respondept no. 1, and granted liberty to the Bank c to file its claim before sales tax authorities. Aggrieved, the Bank filed the appeal. Allowing the appeal, the· court HELD: 1.1. Article 265 of the Constitution of India D mandates that no tax shall be levied or collected except by authority of law. In terms of the said provision, f- therefore, all acts relating to imposition of tax providing, inter alia, for the point at which the tax is to be collected, the rate of tax as also its recovery must be carried out E strictly in accordance with law. Sales tax is leviable on sale of goods. It must be collected by the dealer as an agent of the State at such rate as may be specified. Neither the State nor the agent is entitled to collect tax at a rate higher than specified. [Para 18 and 21) [348-F; 349- E] F .. ~ - 1.2. If the substantive provision of a statute provides for refund, the ~Jate ordinarily by a subordinate legislation c_ou.!d ·11ufnave laid down that the tax paid even by mistake-would not be refunded. If a tax has been G paid in excess of the tax specified, save and except the cases involving the principle of ·unjust enrichment', excess tax realized must be refunded. In the instant case, the doctrine of unjust enrichment has no application as it is not the case of the respondent/State that the buyer has passed on the excess amount of tax collected by it H 342 SUPREME COURT REPORTS [2008] 16 S.C.R. A to the purchasers. The State, furthermore is bound to act J- reasonably having regard to t~e equality clause contained in Article 14 .of the Constitution of India. [P~ra 22 and·~23J [~49:-f;-H; 350-A] : .. ,· ._ '-? ... , . • . . . -' 1 ~3. 'It ·j5 ttue' that'the· original Notification SR·o 1728/ B 1993 contafned 'a provision for not refun'ding the amount of tax· collected at a higher rate: But the subsequent Notification SOR No. 301/1999 reduced the rate;' arid by SRO No. 1075/1999, a legal fiction was created giving it retrospective effect and retroactive operation on or frorri C 1st April, 1999. The effect of a legal fiction is well known: It must be given full effect. The condition of non-refund of the excess amount must be held to have been repealed by necessary implication as the rate of ta
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