1. MUHAMMAD AFZAL ZULLAH, J.--This certificated appeal is directed against judgment, dated 1-11- 1966 of the West Pakistan High Court (Karachi Bench); whereby a Civil Reference under section 17(1)
2. Sales Tax Act, 1951 was answered in favour of the respondent-assessee Company. The question referred was "whether on the facts and in the circumstances of the case a refund was at all allowable either under section 27 or 27(A) of the Sales Tax Act, 1951."
3. The statement of the cases as a result of which the above-quoted question was referred for decision is reproduced below:----- "The three applications are made by the Commissioner of Sales Tax, Karachi under section 17(1) of the Sales Tax Act, 1951. The questions which the Tribunal has been asked to refer to the Hon'ble High Court are as under:
(1) "Whether on the facts and in the circumstances of the case, refund was due to the assessee and whether the Tribunal was legally justified in issuing directions for refund of the sales tax to the assessee?
(2) Whether on the facts and in the circumstances of the case, the provisions of subsection (2) of' section 27 of the Sales Tax Act are applicable when the tax deposited by the assessee was in fact collected from his customers?
(3) Whether on the facts and in the circumstances of the cases the Tribunal was legally justified in ordering the refund of sales-tax where regular application under section 27 of the sales tax was not filed?
(4) Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the provisions of section 27-A of the Sales Tax Act were applicable in this case and that the amount of refund could be set of under the said subsection?
(5) Whether the provisions of section 27 and section 27-A of the Sales Tax Act are conflicting and irreconcilable as held by the Tribunal and that the section last enacted would prevail in this case?
4. We are concerned with the sales tax years 1952-53, 1953-54 and 1954-55. The amount of total tax determined by the Sales Tax Officer and that actually paid by the assessee, a limited company running a hotel, will appear from the following table: Sales tax Amount of Amount Excess Year tax actually Determined Payment paid Rs. a.p. Rs. a.p. Rs. a. p.
5. 1952-53 9,872-4-6 5,751-9-0 4,120-11-6 1953-5414,052-0-0 7,665-0-06, 389- 0-0 1954-5517,813-0-0 8,509-0-0 9,504- 0-0 It is common ground that the assessee had realized the tax paid from its customers. The liability was, however, on the assessee which was responsible for payment of the sales tax to the Exchequer. In the amended returns for all the three years under review the assessee showed the amount of "tax refundable." For the tax year 1952-53 the assessee made an application for refund of the tax paid in excess. This application, though made within the, was not in the prescribed form.
6. The alternative prayer made in the application was to the following effect "If however, because of our ignorance of this, you cannot find it convenient to refund (as per section 27(2) of the Sales Tax Act) the excess tax already paid by us, then we request you that this, together with all other dues to us, may please be adjusted against sales tax, under the Act of 1951, that may be due from us to the Government of Pakistan from today onwards."
7. In respect of the charge year 1953-54 there was no application either for refund or for set-of. In respect of the tax year 1954-55 the assessee, however, made an application for refund in the prescribed form and within the period of limitation.
8. Before the assessm ents for the relevant years were completed, the assessee pressed its claim for a refund of the tax paid in excess. While making the assessment for 1952-53, the Sales Tax Officer refused to concede the claim on the following ground: "The assessee through ignorance charges sales tax nearly on 100$ turnover and as such no refund or adjustment can be granted as the tax had been charged from the customers and paid to the Government."
9. For the tax year 1953-54 the claim was turned down by the Sales Tax Officer on precisely the same ground. In his opinion, since the assessee collected the tax and paid it, the excess payment was not refundable. For the tax year 1954-55 the assessee's claim met with the same fate for identical reasons: The matter concerning the tax years 1952-53 and 1953-54 came before Mr. E. Rehman, Appellate Assistant Commissioner of Sales Tax. He in effect pointed out that the ground given by the Sales Tax Officer for refusing the claim was untenable. All the same he affirmed the decision of the Sales Tax Officer on a different ground which will appear from the following excerpt taken from his order: "The Sales Tax Officer can allow refund of the sales tax under section 27(2) of the Sales Tax Act, 1951 if the assessee can satisfy the Sales Tax Officer that the excess amount was paid by him provided he makes an application under section 27(3) of the Sales Tax Act, 1951. As no such application was made by the appellant in these to years in question, in my view, the Sales Tax Officer was right in not allowing refund of the excess amount paid by the appellant."
10. It may be recalled that so far as the tax year 1952-53 is concerned, there was an application for refund, though not in the prescribed form and an alternative prayer for "set-of" had been specifically made. And for the tax year 1954-55 there was an application for refund in the prescribed form. The matter concerning the tax year 1954-55 came to another Appellate Assistant Commissioner (Mr. Dilshad Nabi). He affirmed the decision' of the Sales Tax Officer on to grounds.
11. He observed as follows: "Sales Tax paid in excess was to be refunded if application for refund under section 27(2) of the Sales Tax Act, was submitted in the prescribed manner and within the prescribed the. But this was not done as required under section 27(3) of the Sales Tax Act, 1951. Moreover, no evidence was produced before the Sales Tax Officer or before me that the appellant had paid this sales Tax from his own pocket. If any sales tax is paid in excess which is collected from the customers no refund can be given to the appellant."
12. The assessee preferred second appeals to the Tribunal which allowed all the three appeals by a combined order, dated 9th August, 1981. The Tribunal held:
(1) A refund otherwise due could not be refused merely because the assessee had unauthorisedly collected the same from the customers. The Tribunal relied on the decision reported as Sugar Syndicate, Bahadargarh v. Excise and Taxation Commissioner, Punjab (1965) 7 S T C 536.
(2) Under section 27-A the assessee is entitled to a refund irrespective of the fact whether he makes an application or not in that the said section does not in the least require that there should be any application much less an application in the prescribed form.
(3) Section 27-A of the Sales Tax Act, 1951, must prevail as against section 27 in that the former section was inserted by Finance Act, 1957 while section 27 formed part of the Sales Tax Act,' 1951.
13. In coming to this conclusion the tribunal relied on an earlier decision of its own. In the result the Tribunal allowed the assessee's appeals and directed "that the refund 'claimed for should be allowed." Section 27 of the Sales Tax Act, 1951, provides as follows:--- "27. (1) Where partly manufactured goods are purchased by a licensed manufacturer and tax has been paid on these goods on importation on any previous sale, a refund of the amount of the tax so paid shall be made to the licensed manufacturer.
(2) If any person satisfies the Sales Tax Officer that the amount of tax paid by him exceeds the amount which he is properly chargeable under this Act, he shall be entitled to a refund of such excess, and the provisions of this Act in respect of appeal and revision shall apply to an order passed by the Sales Tax Officer under this subsection as they apply to an assessment.
(3) An application pursuant to subsection (1) or subsection (2) may be made in the prescribed manner within four years or the end of the year in which the tax in respect of which the refund is claimed was paid."
14. Section 27-A provides: "Where under the provisions of this Act, the Income Tax Act, 1922 (XI of 1922), the Excess Profits Tax Act, 1940 (XV of 1940), the Finance Act, 1942 (XII of 1942), the Excess Profits Tax Ordinance, 1943 (XVI of 1943) and the Business Profits Tax Act, 1947 (XXI of 1947) a refund or repayment is found to be due to any person, the Sales Tax- Officer, the Appellate Assistant Commissioner or the Commissioner as the case may be, may, in lieu of the payment of the refund or the repayment, set-of the amount to be refunded or repaid, or any part of that amount against the tax, if any, remaining payable by the person to whom the refund or repayment is due."
15. "It is the Department's case that the refund cannot be allowed unless the assessee has complied with all the provisions of section 27. It is also claimed by the Department that section 27-A envisages a different set of circumstances; in other words, it contemplates a set of "in lieu of the payment of refund or the repayment." The assessee has, however, endeavoured to explain that what the Tribunal has ordered is in effect the "refund through set-of."
16. "It is agreed that instead of referring all the questions, some of which are in argumentative form only one comprehensive question may be formulated and the other points emphasised by the Commissioner should be left out as being matters of detailed arguments."
17. A Division Bench of the High Court in its elaborate judgment, dated 1-11-1966, held as follows:-- "For these reasons, the answer to the question referred to this Court is that the refund of Rs.4,120/11/6 and Rs.9,304 as excess amount of tax paid by the company in respect of assessment years 1952-53 and 1954-55 are allowable under section 27 or adjustable under section 27-A of the Sales Tax Act, but the amount of Rs. 6,389 paid by the assessee could not be refunded to him".
18. 'The denial of relief regarding the amount of Rs. 6389 to the respondent was on the basis of a procedural defect in the claim to the effect that the assessee did not make the requisite application for the refund in respect of the relevant year i.e. 1953-54.
19. On an application under section 66-A(2) of the Income Tax Act, 1922, read with section 109 and Order XLV, rule 2, C.P.C. Filed by the Commissioner of Sales Tax, the appellant herein, the High Court granted a certificate of the fitness of the case for appeal to the Supreme Court. During the pendency of the appeal the Sales Tax Act was amended by addition of section 30-A which reads as follows: 30-A. Collection of excess tax etc.
(1) Every person who has collected at any the before the commencement of this section or collects at any the thereafter any amount by way of tax, whether for misapprehension of the provisions of this Act or otherwise, which is not payable as tax or which is in excess of the tax shall pay the amount so collected to the Central Government within such the and in such manner as may be prescribed, and in default of such payment shall also pay an additional amount calculated at the rate of fifty rupees for every day after the date before which he is required to pay the amount so calculated.
(2) Any amount payable to-the Central Government under subsection (1) shall be recoverable as arrears of land revenue."
20. Learned counsel for the appellant in the very outset, cited Commissioner of Sales Tax v. Messrs Kruddsons Ltd. PLD 1974 SC 180 to contend that section 30-A would be attracted to those cases also which were subject-matter of appeal before this Court. That being so, the relevant amounts of sales-tax could not be ordered to be refunded to the respondent-assessee. The facts and circumstances of Kruddsons' case are identical to those in the present case. It was held therein that "the pendency of the certificated appeal in this Court had destroyed the finality of the High Court's order, dated 11-10-1966, and therefore, was hit by the new dispensation in section 30-A of the Act." While reaching this conclusion reference was made to John Lemun v. Thomas Alexender Mitchell 1912 A C 400; Sugar Syndicate, Bahadargrah v. Excise & Taxation Commissioner Punjab AIR 1956 Pb. 222; The Province of East Pakistan v. Muhammad Mehdi Ali Khan and others PLD 1959 SC (Pak.) 387; Election Commissioner v . Sajid Ali Khan PLD 1960 SC 235; Mukarji v. Ram Narain 1963 I A 47; Badrul Haque Khan v. The Election Tribunal, Dacca and others PLD 1963 SC 704; Saeedur Rehman v. Chief Election Commissioner, Dacca and others PLD 1965 SC 157; Works Co-operative Housing Society v. Development Authority PLD 1969 SC 391 and Works Cooperative Housing Society v. Karachi Development Authority PLD 1969 SC 430.
21. The decision in Kruddson's case was rendered by the Court on Civil Appeal No. K-39 of 1972 on 30th January, 1974. That appeal was entertained soon after the present appeal. Both were not heard together. However there does not seem to be any reason for separate treatment. It is for this reason that an application was made by the A . O. R . Of the respondent on 18-5-1976 that on account of the decision in Civil Appeal No. K-39 of 1972 the assessee would not contest the present appeal. Notwithstanding this application the learned counsel now appearing for the respondent assessee has tried to raise some points for consideration; though ultimately he also conceded that the appeal would merit acceptance on the basis of the rule laid down by this Court in a later judgment in Messrs Sajjad Nabi Dar & Co. v . The Commissioner of Income-tax, Rawalpindi PLD 1977 SC 437. It, according to him, was in reality the re-affirmation of the general principle laid down in Messrs Abbasi Textile Mills Ltd. v. The Federation of Pakistan and others PLD 1958 SC (Pak.) 187.
22. The seemingly different view expressed by this Court when refusing grant of leave to appeal in The Commissioner of Sales ,Tax, Lahore v. Messrs Associated Hotels (India) Ltd., Lahore 1969 SCMR 281, was also referred to by the learned counsel for the respondent, in order to discover the true purport in the other to judgments of this Court in the cases of Messrs Abbasi Textile Mills Ltd. And Messrs Sajjad Nabi Dar & Co. In this behalf, he also submitted that the relevant provisions of Chapter XIV and Chapter XV of the Sales Tax Act relating to rectifications and refunds also needed to be given due meaning in the context of the newly introduced section 30-A of the Act.
23. As the present case is fully covered by the rule laid down in the case of Kruddsons Ltd. (1974) therefore this appeal in any case merits to be allowed. However short comment has become necessary on account of the submissions made by the learned counsel for the respondent- assessee prior to his ultimate concession that he would not contest the appeal. What he really meant was that the point raised by him regarding the case of Messrs Associated Hotels Ltd.
24. Needed to be resolved, in addition to what was held in the case of Kruddsons Ltd.
25. Three questions arise in this case:----
(a) What is the effect of the enactment of section 30-A on the present appeal?
(b) What is the effect of the refusal of leave to appeal by this Court in the case of Messrs Associated Hotels Ltd., on the principles laid down in the case of Messrs Sajjad Nabi Dar & Co. And also indirectly in Messrs Abbasi Textile Mills Ltd. And
(c) In case it is held that the last mentioned to cases of this Court cover the field in so far as the principle underlying the question of refund in cases similar to the present one is concerned and the case of Kruddsons Ltd. Covers the questions relating to interpretation of section 30-A, whether notwithstanding the same the relief claimed by the respondent for the refund of the excess/unrealizable tax, could be allowed in pursuance of any other provisions of the Act including section 27, read with section 30 thereof.
26. The first question does not need any supplemental comment in addition to what was observed and held in the case of Kruddsons Ltd. The second question is relatable to the principle underlying the present controversy namely, whether an assessee of sales tax after realization of the tax, which admittedly was not realizable or was in excess of the tax payable, could retain the same or claim refund thereof; notwith--standing his position of an agent only for deposit of the amount with the assessing authority. Prima facie he cannot claim any right over the same, on any principle. This also seemed to the learned counsel for the respondent as the ratio in the to judgments of this Court in the cases of Messrs Sajjad Nabi Dar & Co. And Messrs Abbasi Textile Mills Ltd. It is in this context that the refusal by this Court to grant leave to appeal in the case of Associated Hotels Ltd.
27. Is to be viewed. "Although the Commissioner of Sales Tax in that case had also opposed the refund to the assessee, but the grounds then canvassed, inter alia, included the submission that failure to deposit such tax may attract sections 406 and 407 of the Pakistan Penal Code for breach of trust."
28. It was held in Haji Kadir Bux v. Province of Sind and another 1982 SCMR 582 that the refusal to grant leave by this Court to appeal might depend upon several considerations the fitness of the case in a general sense, notwithstanding the legal questions involved, is to be one of the important considerations. In the case of Associated' Hotels Ltd. The grant of leave to appeal and ultimately its acceptance might have entailed consequences in criminal law. The Court refused to grant leave to appeal but that would not mean either that the law laid down in Messrs Abbasi Textile Mills Ltd. Was intended to be diluted or that the principle laid down in the case of Messrs Sajjad Nabi Dar & Co.
29. Would have no effect on account of the said refusal to grant leave to appeal. Moreover, that case was decided on 4th of April, 1969. It appears that the counsel appearing for the petitioner therein was notaware of the amendment in the Sales Tax Act made on 30-6-1967; therefore, section 30-A was not brought to the notice of the Court. Otherwise it is obvious the result would have been- different and the law, as subsequently declared in the case of Kruddson's Ltd. Would then have applied. For all these reasons it cannot be held that the observations made in the case of Associated Hotels Ltd. Would in any case adversely affect the law declared in the later cases of Messrs Kruddsons' Ltd. And Messrs Sajjad Nabi Dar & Co. Or for that matter the earlier case of Messrs Abbasi Textile Mills Ltd.
30. The last question regarding application of sections 27 and 30 to cases which are covered by the rule laid down in the case of Kruddsons' Ltd. And other cases, it suffices to observe that the provisions relied upon would have to be read subject to the later law contained in section 30-A of the Sales Tax Act added by the Finance Act, 1967. It was further amended through Finance Act, 1968 so as to apply the same with retrospective effect. The word "refund" of excess tax in subsection (2) of section 27 cannot be read in isolation of. The command of law contained in section 30-A namely, that whenever any such amount as is referred therein is collected by any person, it shall be paid to the Central Government within the prescribed the. Not only this, the default in such payment, it is further provided in section 30-A would incur liability to pay additional amount at the rate of fifty rupees for every day of delayed payment. Such amounts have also been made recoverable as arrears of land revenue under subsection (2) of section 30-A. Therefore it is on account of the amendments of 1967 and 1968 that the refund if any, for any reasons, would be subject to section 30-A. In other words it would be possible only in those cases which would not be covered by the said provision as interpreted in the case of Kruddsons' Ltd.
31. In the light of the foregoing discussion this appeal is allowed and the impugned judgment of the High Court is set aside. There shall, however, be no order as to costs.