Holding

The requirement to furnish declaration forms under the Uttar Pradesh Sales Tax Act does not condition the entitlement to sales‑tax reimbursement under the Parmeshwaran Committee formula, and the petition is not barred by laches, with relief limited to three years prior to filing.

Summary

Lipton (India) Ltd., a vanaspati manufacturer, sought a refund of sales tax paid on imported oil purchased from the State Trading Corporation (STC) for the period Dec 1984‑May 1988. The refund claim was based on the Parmeshwaran Committee formula, which required reimbursement of tax "subject to furnishing necessary declaration forms" under the Uttar Pradesh Sales Tax Act. The petitioner argued that it could not furnish declarations for half of its purchases because that portion of oil was used to produce vanaspati sold outside Uttar Pradesh, and insisting on the declaration would defeat the formula. The STC contended that without the declaration the petitioner was ineligible for reimbursement and that the petition was barred by laches. The Court held that the declaration requirement under the Uttar Pradesh Act does not apply to claims under the Committee formula, which is an administrative scheme outside the State Act. The petition was not dismissed for laches, but the relief was limited to the three‑year period preceding the filing of the writ. Consequently, the writ petition was allowed with directions for the STC to assess and pay any due refund with interest.

Issues considered

The applicability of the declaration requirement under Section 4‑B of the Uttar Pradesh Sales Tax Act to a refund claim based on the Parmeshwaran Committee formula.
Whether the petition is barred by laches for delay in filing.
Whether the claim for sales‑tax refund arises under a statutory provision or an administrative formula.
The limitation period applicable to the refund claim.

Legislation cited

Uttar Pradesh Sales Tax Act, 1948s. 4-B
Uttar Pradesh Sales Tax Rules, 1948s. Rule 25-B

Subjects

sales taxrefunddeclaration formUttar Pradesh Sales Tax ActParmeshwaran Committeelacheslimitation perioduniform price controlvanaspatiState Trading Corporationadministrative formula

Judgment

A MIS LIPTON INDIA LTD. ETC. ETC.
v.
UNION OF INDIA AND ORS.

SEPTEMBER 16, 1994

B [M.N. VENKATACHALIAH, CJ AND B.P. JEEVAN REDDY, J.]

U.P. Sales Tax Act, 1948 : Section 4-B-Scope of.

U.P. Sales Tax Rules, 1948: Rule 25-B-Sales Tax Refund-Declara-
C tion fonn for.

Vanaspati Manufacture~'All India Voluntary Price Control
System '--Obligation to sell vanasapati at a unifonn J!!ice-Supply of Raw
Material 'Oil' to manufacturers at unifonn price-Variation in rates of sales
tax on oft-Appointment of Committee for equalisation of incidence of sales
D tax-Committee's recommendation for reimburesment of sales tax subject to
furnishing the necessary declaration f onns under the relevant statutes-Accep-
tance by Government-Claim for refund of sales tax without furnishing the
declaration fonn in respect of 50% of production sold outside Uttar Pradesh
held pemiissible-Held claim for reimbursement is not founded upon a
E Statutory provision but under the fomula suggested by a Committee-Held
writ for claim for refund of tax after 5 years does not suffer from /aches as to
merit dismissal on that ground.

With a view to ensuring supply of Vanaspati at uniform rate
throughout the country, the Government of India evolved 'All-India:Volun·
p tary Price Control System', wbereunder the manufacturers of vanaspati
were obliged to sell vanaspati at a uniform price throughout the country.
Consequently, the imported oil- raw material required by such manufac·
turer-was to be supplied to them at a uniform price. The import of oil
was canalised through State Trading Corporation which alone was supply-
G ing it to various manufacturers. However, the rates of sale tax on the sale
of oil were not uniform throughout the country and this variation brought
out differential treatment to vanaspati manufacturers. Complaining of
discrimination on this score a number of vanaspati manufacturers filed
petitions and pursuant to an order dated February 8, 1982 passed by this
Court, the Government of India constituted 'Parmeshwaran Committee'
H for evolving a formula to ensure that every manufacturer in the country
600
LIPTON (I) LID. v. U.0.1. 601

wherever he may be located and subject to whichever sales tax enactment A
shall get the oil at the same price. For this purpose, two alternate formula
were suggested to the Committee. The first was that the State Trading
Corporation should charge varying price for oils so that the price and the
sales tax on that price always sums ~o a uniform value throughout the
country while the second was that the State Trading Corporation should B
charge sales tax on release price and give discount of an amount equivalent
to the sales tax.

On the basis of the Committee's recommendation the second alter-
native on sales tax reimbursement by STC through credit notice facility
was accepted by Government of India. The sale tax as paid by the parties C
was to be reimbursed to them at actuals, subject to their furnishing
necessary declaration forms etc. as required under the relevant sales tax
acts. The petitioner filed a writ petition in this Court in June, 1988 .
claiming refund of tax for the period commencing from December, 1984 to
May, 1988. Its was that half of the vanaspati manufactured by it is sold D
within the State of Uttar Pradesh while the other half is taken out of Uttar
Pradesh to its depots for sale in different States. For this reason it used
to furnish certificates/declarations contemplated by Section 4-B of the U.P.
Sales Tax Act, and Rule 25-B of the Uttar Pradesh Rules, only to the extent
of half the quantity of oil purchased by it and not for the full quantity
purchased. Where it furnished the 'declaration',. the State Trading Cor- E
poration did not, charge tax to it. The petitioner claimed that it was
entitled to refund of the sales tax amount paid by it to State Trading
Corporation in respect of sales for which it did not furnish the 'declara-
tion' by virtue of the Parmeshwaran Committee formula and the insistence
upon furnishing of declaration as a condition for reimbursement, F
amounted in effect to denial of the benefit of the 'formula'.

On behalf of the State Trading Corporation it was contended that
(i) since the petitioner had not furnished the 'declaration' contemplated
by the Uttar Pradesh Act, it was not entitled to any reimbursement in
terms of the 'formula', and (ii) the writ petition was liable to be dismissed G
on the ground of laches inasmuch as while the formula was implemented
in 1983, the petitioner approached this Court five years later and that there
was no explanation for this delay.

Allowing the Writ Petition, this Court H
602 SUPREME COURT REPqRTS (1994) SUPP. 3 S.C.R.

A HELD : 1. The corporation is insisting upon literal compliance with
the formula without realising that by doing so, they are asking for the
impossible in cases governed by Uttar Pradesh Sales Tax Act. Where the
petitioner furnished the declaration, the State Trading Corporation could
not have, and as a matter of fact did not charge, or pass on the incidence
of, sales tax; no question of reimbursement would ever arise in such a case.
B Question of reimbursement arises only where tax is paid by - i.e. passed
on to the purchasing dealer - manufacturer - the petitioner, because did
not furnish lhe declaration. Since the purchaser-petitioner intended to sell
half of its manufactured product in other States, it did not - indeed, it
could not, furnish the declarations to the extent of half of its purchases of
c oil from the State Trading Corporation, If the petitioner could not furnish
the declarations at the time of purchase, it cannot also furnish them at the
time of claiming reimbursement. Indeed, the Act does not contemplate or
permit the furnishing of declarations for purposes other than the one
specified by it. [611-D-G]
D
2. The Sales Tax enactments do not prescribe any declaration forms
for claiming reimbursement in a case like the present one. The claim for
reimbursement in this case arises not under the Uttar Pradesh Sale41 Tax
Act but under the formula suggested by the Parmeshwaran Committee
E and. accepted and implemented by the Government of India. This is a
matter outside any of the State Sales Tax Enactments - certainly outside
the Uttar Pradesh Act. [612-B]

3. The question offurnishing the declaration forms prescribed by the
p Uttar Pradesh Act or Rules does not and cannot arise. Therefore, so far
as the State of Uttar Pradesh is concerned, the purchasing dealers-
manufacturers herein cannot be called upon to produce the. declaration
forms as a condition for claiming reimbursement. The words "subject to
this furnishing declaration forms, etc., has required under the relevant
Sales Tax Act" have no application to a purchaser in the State of Uttar
G Pradesh who could not have furnished such a declaration, according to
law, at the time of purchase of oil. If, however; it is established in a given
case that a particular purchaser could have furnished the declaration
according to law, but he did not do so on account· of his negligence or
otherwise, he may not be entitled to claim reimbursement under the said
H formula. [613-B-D]
LIPTON (I) LID. v. U.0.1. 603

4. However, any dealer-manufacturer claiming such reimbursements A
has to establish to the satisfaction of State Trading Corporation the follow-
ing facts, which constitute the basis • the underpinning • of the scheme, viz.,
(1) that the oil purchased by the purchasing dealer-manufacturer from the
Corporation was in fact utilised by the purchasing dealer- manufacturer
entirely and exclusively for the manufacture ofvanaspati, (2) that the entire B
vanaspati manufactured was in fact sold at the prescribed rate either within
the State ofUttar Pradesh or in any other State, as the case may be, and that
such sale was subjected to tax under the relevant sales tax enactment and
(3) that the non-furnishing of declaration contemplated by Section 4-B of
the Uttar Pradesh Sales Tax Act read with Rule 25- B of the Uttar Pradesh
Sales Tax Rules was because the purchasing dealer could not in law furnish C
such a declaration. Only where the above facts are established that the
purchasing dealer-manufacturer would be entitled to reimbursement con-
templated J>y the formula. (613-E-G]

5. Though the petitioner could have approached the court earlier yet D
it cannot be said that the writ petition suffers from such lacbes as to merit
dismissal on that ground. At the same time it must be remembered that
the claim for refund in the present case does not arise from or founded
upon a statutory provision • much less is this a case where a provision or
a notification having statutory force is struck down. The present claim is
one which ought to have been agitated in a Civil Court. The writ bas been E
entertained because a complaint of discrimination was made in implemen-
tation of a scheme of general application evolved by this court pursuant
to the observations of this Court in its order dated February 8, 1982. In
such a situation, the petitioner cannot claim a greater relief than be could
have claimed in the suit. Accordingly its claim will be limited to the period
of three years prior to the date of filing of this writ petition. [614-D-F]
F

Hotel Balaji v. State of Andhra Pradesh, (1933) 88 S.T.C. 98 and Devi
Das Gopal Krishan Pvt. Ltd. etc. etc. v. State of Punjab and Ors. etc. etc.,
(1994) 4 JT 239, referred to.
G
CIVIL ORIGINAL JURISDICTION : Writ Petition (C) No. 931 of
1988.

(Under Article 32 of the Constitution of India.)

WITH H
604 . SUPREME COURT REPORTS (1994) SUPP. 3 S.C.R.

A I.A.No ....... ./91 In T.C. (C) Nos. 7-10, 13-15/81, 18, 18N81 & 1/82.

Ashok H. Desai, S. Ganesh and Ms. Vijay Lakshmi Menon for the
Petitioners.

Mrs. K. Amreswari, A. Subba Rao, S.D. Sharma and D.S. Mehta for
B the Respondents.

The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. The petitioner is engaged in the manufac-
C tur inter alia of vanaspati. It has a plant at Ghaziabad in Uttar Pradesh.
With a view to ensure supply of vanaspati at an uniform. rate
throughout the country, the Government of India had evolved, in consult-
ation with the manufacturers of vanaspati, a scheme known as 'All-India
voluntary price control system', whereunder the manufacturers of vanaspati
' (
D were obliged to sell vanaspati at an uniform price throughout the country.
Oil is the main raw material for manufacturing vanaspati. Part of the oil so
required was being imported through the agency of State Trading Corpota-
tion and sold to various manufacturer all over the country. Very often, the
S.T.C. depot, nearest to the plant, was designated as the source from
E which the manufacturer was to draw the supply of imported oil. Since the
manufacturers were obliged to sell vanaspati at an uniform price, the
Government of India proposed to supply imported oil to all the manufac·
tures, wherever their plants are situated, at an uniform price. It is this
aspect which gave rise to certain problems. The rates of sales tax on the
F sale of oil were not uniform throughout the country. Some State enactments
did not levy any tax while others levied tax at rates ranging from 1% to
4%. Complaining of discrimination on this score, a number of vanaspati
manufacturers approached the High Courts by way of writ petitions which
were all transferred to this court and numbered as Transferred Case No.7
of 1981 etc. Some writ petitions were filed directly in this court under
G Article 32 of the Constitution. All these matters came to be disposed of by
this court by order dated February 8, 1982 which reads as follows :

"In these writ .petitions, counsel for the petitioners have expressed
a desire to withdraw the petitions, provided that the Central
H Government and the. State Trading Corporation are prepared to
LIPTON(l)LID. v. U.0.1.[JEEVANREDDY,J.] 605

consider the representations which they propose to make. The A
learned Attorney General agrees that any representation which the
petitioners and other manufacturers of vanaspati may make will be
considered carefully and objectively from all relevant points of
....... view, including the questions which are covered by the undertak-
ings given by the parties, which have now lapsed. B

We allow the petitioners to withdraw the writ petitions. We
hope that the Central Government and the State Trading Corpora-
tion will take a fair and final decision on the representations of
the petitioners and other manufacturers of vanaspati as ex-
peditiously as possible, prefe~ably before September 1, 1982. The C
petitioners agree that they will make their representations within
one month from today.

If the Central Government decides to appoint a Committee to
go into the various questions which arise in these Petitions the D
Committee, we are sure, will give a proper hearing to the manufac-

- turers of vanaspati, individually, if necessary.

The amounts payable towards inland freight equalisation char-
ges which the petitioners of some of them did not pay as a result E
of the stay orders passed by the various High Courts became
payable when the stay orders were vacated. These amounts shall
be paid, subject to such convenience as the State Trading Corpora-
tion may grant. We recommend that such of the petitioners who
are liable to pay the amounts as aforesaid, may be granted· the
facility of paying the same in four equal monthly instalments, with F
interest at 12% p.a. from the date of payment, with monthly rests.

There will be no order as to costs."

(The writ petitioner was not one of the petitioners in the aforesaid G
batch.) ·

Pursuant to the observations made in the above order, the Govern-
ment of India constituted a committee known as 'Parmeshwaran
Committee' (hereinafter referred to as 'Committee') with the following
~~~~: H
606 SUPREME COURT REPORTS (1994] SUPP. 3S.C.R.

A "l. To examine the representations submitted by individual
vanaspati manufacturers and their Associations to Government
before 7.3.82 (i.e. within the time limit fixed by the Supreme Court

B
by their order dated 8.2.82) against the existing STC's scheme
about freight equalisation charged included in the release price of
imported oils.
-
2. To consider various relevant issues such as equalisation of
incidence of Sales tax and other statutory duties like octroi etc. by
giving proper hearing to the vanaspati manufacturers individually,
if necessary. ·
c
3. To suggest a suitable formula of periodical revision of freight
equalisation charge as to neutralise the escalations in transporta-
tiOn charge of imported oil incurred by the vanaspati manufac-
turers from time to time.
D

-
4. To recommend measures necessary for achieving the objective
of uniform delivered cost of imported oils to vanaspati units as far
as possible so as to enable the Government to enforce a uniform
price of vanaspati throughout the country more effectively.

E 5. To make other recommendations as may be necessary to allay
the apprehensions of a Section of Vanaspati industry about the
alleged discriminatory treatment for fixation of release price of
imported oils. The Committee was required to submit its final
report to Government by the 15th June, 1982. The Committee had
F to give hearings to vanaspati manufacturers who submitted their
representations as required by this Hon'ble Court's order and to
discuss various points raised by them in their representations. Due
to various reasons, the Committee had to seek extension of time
upto 1st January, 1983 for finalisation and submission of its report
G to the government."

(Terms of reference Nos. 2 and 4 are relevant for the present
purposes.)

The Committee heard the manufacturers and other concerned par-
H ties and also obtained the opinion of Price Waterhouse, a reputed firm of
LIPTON (I) LID. v. U.0.1. [JEEVAN REDDY, J.] 607
'•

Chartered Accounts in India. Price Waterhouse recommended two alter- A
nate formulas for equalisation of incidence of sales tax. Paras 4.21 and 4.22
of the repoet contain the said two formulas :

4.21 .................. ..

(i) Alternative No.I : STC sh~uld· charge varying prices for B
oils so that the price and the sales tax on that price always
sums to a uniform value throughout the country. In other
words, the various prices charged, should be so linked to the
sales tax rates that in the end, the cost of imported edible oils
inclusive of sales tax is identical for all manufacturers. For C
example, in case where sales tax is nil with declaration form,
the basic price and end price would be - say Rs. 100. In case
of entire State sale, where sales tax rate is 4%, the basic price

-- would be Rs. 96-00 and 4% sales tax thereon, the end price
would be Rs. 100.
D
(ii) Alternative No.2 : STC should charge sales tax on release
price and give discount of an amount equivalent to the sales
tax.

4.22 In both the systems ·sales should be made ag~proper E
declaration forms which allow a concessional rate of tax. Where
declaration forms are not submitted, the manufacturers should be
charged higher rate of sales tax in States where a higher rate is
applicable."

After considering the said suggestions, the Committee recommended F
the acceptance of the second alternative. In para 6.3 of its report, the
_,. Committee observed thus :

j "(a) The second alternative on sales tax reimbursement by STC
through credit notice facility may be adopted. Sales tax as paid by G
the the parties be reimbursed to them at actuals, subject to their
furnishing necessary declaration forms etc. as required under the
relevant Sales Tax Acts. (para 5.18).

(b) In addition to sales tax, other statutory local levies such as
octroi etc., if any, may be reimbursed at actuals on production of H
608 SUPREME COURT REPORTS (1994) SUPP. 3 S.C.R.

A necessary documentary evidence by the manufacturers. (para.
5.19)"

The Government of India accepted the aforesaid recommendation
and issued instructions accordingly. It is the interpretation of the said
B formula that falls for consideration in this writ petition. But before we set
out how the controversy has arisen, it would be appropriate to refer to
certain p~ovisions of the Uttar Pradesh Sales Tax Act.

Section 4-B of the Uttar Pradesh Act provides for special relief to
C certain manufacturers. Sub-section (2) provides that "where a dealer re-
quires any goods, referred to in sub-section (1), for use in the manufacture
by him, in the State, of any notified goods, or in the packing of such notified
goods manufactured or processed by him, and such notified goods are
intended to be sold by him in the State or in the course of inter-State trade
or commence or in the course of export out of India, he may apply to the
D assessing authority in such form and manner and within such period, as
may be prescribed, for the grant of a recognition certificate in respect
thereof; and if the applicant satisfies such requirements and conditions, as
may be prescribed, the assessing authority shall grant to him in respect of
such goods a recognition certificate in such form, and subject to such
E conditions, as may be prescribed." The explanation appended to sub-sec-
tion (2) says that the goods required for use in manufacture shall mean raw
material and processing material among others and that the expression
"notified goods" means such goods. as may from time to time be notified by
the State Government in that behalf. Sub-section (1) of Section 4-B -which
F opens with a non-obstante clause, "notwithstanding anything contained in
Sections 3, 3A, 3AAAA and 3B" - contains three clauses, viz., (a) (a-1) and
(b). Clauses (a) and (a-1) refer to goods taxable at purchase point, while
clause (b) refers to all other goods taxable under the Act. Since clauses
(a) and (a-1) are not relevant for our purposes, it is not necessary to refer
to their contents. Clause (b) covers all goods other than those mentioned
G iii. clauses (a) and (a-1) taxable under any of the proivisions of the Act. It
says that where such goods are sold by a dealer to another dealer and such
other dealer furnishes to the selling dealer a certificate in the prescribed
form and manner, to the effect that he holds a recognition certificate issued
under sub-section (2), the selling dealer shall charge either such such
H concessional rate as may be notified or shall not charge any tax, if the
LIPTON (I) LTD. v. U.0.1. [JEEVAN REDDY, J.] 609

no~ification says so. Notification means a notification issued by the State A
Government under the Act.

Oil is taxable at the sale point and, therefore, falls under Section
4-B(l)(b), which means that if the purchasing dealer, holding a recognition
certificate, furnishes the relevant certificate - called a 'declaration' by Rule B
25-B of the Uttar Pradesh Rules - to the selling dealer, the selling dealer
is obliged not to charge any tax on such sale. During the relevant period,
the notification issued by the State Government provided for full examption
in such a case.

It is necessary to emphasise a feature of sub-section (2) of Section
c
4-B. A recognition certificate can be issued only to such dealer-manufac-
turer who intendes to sell the goods manufactured by him either within the
State or in the course of inter-state trade or commerce or in the course of
export out of India. The reason for such exemption - a common feature in
almost all the State Sales Tax enactments - is well-known and has been D
explained by this Court in Hotel Balaji v. State of Andhra Pradesh, (1993)
88 S.T.C. 98 and Devi Das Gopal Krishan Pvt. Ltd. etc. etc. v. State of Punjab
& Ors, etc. etc., (1994) 3 J.T. 239. The State.does not wish, in the interest
of consuming public and of trade, to tax both the raw material and
manufactured goods. If the manufactured goods are sold within the State E
or sold in the course of inter-state trade or commerce, the State gets the
tax. So far as the export out of India is concerned, though the State does
not get the tax, it serves the national interest by promoting exports. It is
for reason that the purchase of raw material required for the manufacture
of such goods is exempted from tax. But where the manufactured goods F
are taken out of State without selling them in any of the ~hove three modes,
the State says, it will tax the sale/purchase of raw materials. This is for the
reason that where the manufactured goods are taken out of the State
without selling them in any of the above three modes (sale within State,
sale in the course of inter-state trade or commerce and export sale), neither
the State gets the tax nor the national interest in export promotion is G
served. The petitioner says that half of its manufactured product, vanaspati,
is sold within the State of Uttar Pradesh while the other half is taken out
of Uttar Pradesh to its depots outside Uttar Pradesh for sale in different
States. For this reason, says the petitioner, it ·used to furnish certifi-
cates/declarations (contemplated by Section 4-B and Rule 25-B) only to H
610 SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A the extent of half the quantity of oil purchased by it and not for the full
quanJjty purchased. Where it furnished the 'declaration', the State Trading
Corporation could not, and did not, charge - and pass on - the tax to it.
But where it did not furnish such a 'declaration', the State Trading Cor-
poration was entitled to and did charge and pass on the sales tax burden
to the petitioner-purchaser. The petitioner says that it is entitled to refund
B
of the sales tax amount paid by it to State Trading Corporation in respect
of sales for which it did not furnish the 'declaration' by virtue of the
Parmeshwaran Committee formula accepted by the Government of India
and implemented by the State Trading Corporation. The State Trading
Corporation denies this claim on the ground that since the petitioner did
C not furnish the 'declaration' contemplated by the Uttar Pradesh Act, it is
not entitled to any reimbursement in terms of the 'formula'. And thereby

-
hangs the controversy.

The second alternative suggested by the Committee and accepted by
D the Government of India says that "sales tax as paid by the ·parties be
reimbursed to them at actuals, subject to their furnishing necessary decla-
ration forms etc. as required under the relevant Sales Tax Acts". The State
Trading Corporation says that unless declaration forms, as provided. by the
Uttar Pradesh Sales Tax Act, are furnished by the petitioner to it, it is not
entitled to or bound to reimburse the sales tax to the petitioner. By
E declaration forms, the Corporation means the declaration forms provided
by Section 4-B of the Uttar Pradesh Sales Tax Act read with Rules 25-B
of the Uttar Pradesh Sales Tax Rules. The petitioner, however, says that this
is asking for an impossibility. It says that if it had furnished a declaration
as it did, as a fact, in respect of half of its purchases of oil; no tax could
F have been levied or collected by the Corporation (Selling dealer); in such
a case, there is no question of reimbursement of sales tax. Only where the
declaration was not furnished by the petitioner (purchasing dealer) that the
Corporation charged and collected (i.e., passed on the burder of) the sales
tax. Inasmuch as 50% of its produce is taken out of the State of Uttar
G Pradesh and sold in some other State in India, the petitioner could not and
did not furnish any declaration forms with respect to 50% of its purchases.
Furnishing of a declaration for purchase of raw material required for
manufacturing goods which are intended to be taken out of the State of
Uttar Pradesh and sold in other States, says the petitioner, would have
exposed it to penalty and pros~cution besides the liability to pay the tax
H
LIPTON(l)LTD. v. U.0.1.[JEEVANREDDY,J.) 611

due. Insistence upon furnishing of declarations as a condition for reimbur- A
sement, says the petitioner, amounts in effect to denial of the benefit of the
'formula' accepted and enforcement by the Government of India. Sri
Ganesh, learned counsel for the writ petitioner seeks to explain the words
"subject to their furnishing necessary declaration forms etc., as required
under the relevant Sales Tax Act" in the formula thus : Under some State B
enactments, furnishing of a declaration does not lead to full exemption
from sales tax but only a partial exemption or to a concessional rate of tax,
as the case may be; declaration forms are, therefore, necessary to know
and ascertain the amount of tax charged by the Corporation and passed
on to the purchasing dealer-manufacturer; they are not necessary in case
of total exemption. C
We do recognise that the language of the formula does present some
difficulty. The Corporation is insisting upon literal compliance with the

- formula without realising that by doing so, they are aksing for the impos-
sible in cases governed by Uttar Pradesh Sales Tax Act. (We may say that
we wish to confine our decision to a case arising under the Uttar Pradesh
D
Act; we do not wish to generalise.) As rightly pointed out by Sri Ganesan,
where the petitioner furnished the declaration - these declarations, it must
be noted, have to be furnished at the time of purchase to the selling dealer
- the selling dealer, State Trading Corporation in this case, could not have,
and as a matter of fact, did not charge, or pass on the incidence of, sales E
tax; no question of reimbursement would ever arise in such a case. Ques-
tion of reimbursement arises only where tax is paid by - i.e., passed on to
the purchasing dealer-manufacturer - the petitioner, because it did not
furnish the declaration. Since the purchaser-petitioner intended to sell half
of its manufactured product in other States, it did not - indeed, it could F
not - furnish the declaration to the extent of half of its purchases of oil
from the State Trading Corporation. If the petitioner could not furnish the
declarations at the time of purchase, it cannot also furnish them at the time
of claiming reimbursement. Indeed, the Act does not contemplate or
permit ·the furnishing of declarations for purposes other than the one G
specified by it. This is how the problem arises - problem of interpretation
of the formula - and it is real. But before we proceed to deal with the
problem, we must say that explanation offered by Sri Ganesan for the
words "subject to their furnishing necessary declaration forms etc., as
required under the relevant Sales Tax Acts" is no explanation in cases
H
612 SUPREME COURT REPORTS (1994] SUPP. 3 S.C.R.

A arising under the Uttar Pradesh Sales Tax Act. Whether it is total exemp-
tion or partial ,exemption (or a case of concessional rate of interest), a
declaration is necessary to claim it - and such declaration has to be
furnished at the time of purchase/sale and not at a later point of time, and
certainly not for claiming reimbursement of tax. The Sales Tax enactments
do not prescribe any declaration forms for claiming reimbursement in a
B
case like the present one. The claim for reimbursement in this case arises
not under the Uttar Pradesh Sales Tax Act but under the formula sug-
gested by the Parmeshwaran Committee and accepted and implemented
by the Government of India. This is a matter outside any of State Sale Tax
enactments - certainly outside the Uttar Pradesh Act.
c
Having regard to the difficulty created by the language employed in
this formula - the formula, it may be noted is not statutory but only an
administrative decision, no doubt of general application - one has to turn
to the objed and purpose underlying the formula. It was simply this: since
D the manufacturers were obliged under the scheme to sell vanaspati at a
-
uniform price all over the country, the imported oil - raw material required
for such manufacture - was to be sftpplied to them at an uniform price.
The import of oil was canalised at that time. Only the State Trading
Corporation could and did import the oil and State Trading Corporation
alone was supplying it to various manufacturers through its own depots.
E But variation in the rates of sales tax on sale of oil brought about a
differential treatment. For example, a purchaser in State 'A' where there
is no tax on sale of oil was getting oil at a cheaper rate than the purchaser
in State 'B' where the rate of tax was 4%. Rates of tax, even where it was
levied, were not uniform. Hence, the Parmeshwaran Committee sought to
F evolve a formula to off-set this incidence to ensure that every manufacturer
in the country, wherever he may be located and subject to whichever sales
t~ enactment, shall get the oil at the same price. For this purpose, two
alternate formulas were suggested to the Committee. The first was that the
"Stat~Trading Corporation should charge varying prices for oil so that the
G price and sales tax on that price always sums to a uniform value for oil',
while the second was that "State Trading Corporation should charge sales
tax on release price and give discount of an amount equivalent to the
amount of sales tax". Both the formulas were intended to and did achieve
the same objective - only the method adopted was different. The Govern-
ment of India accepted the second alternative. According to this formula,
H
LIPTON (I) LID. v. U.0.1. [JEEVAN REDDY,J.] 613

the purchaser first pays - i.e., the State Trading Corporation passes on the A
burden to him - the tax and then claims reimbursement. When the claim
for reimbursement is made, State Trading Corporation has to look to the
Bills of Sales and ascertain the amount of sale tax collected from the
purchaser and refund the same. The question of furnishing the declaration
forms prescribed by the Uttar Pradesh Act or Rules does not and cannot B
arise for the reasons explained hereinbefore. It must, therefore, be held
that so Jar as the State of Uttar Pradesh is concerned, the purchasing
dealers-manufacturers therein cannot be called upon to produce the dec-
laration forms as a condition for claiming reimbursement. The words
"subject to their furnishing declaration forms etc., as required under the
relevant Sales Tax Act" have no application to a purchaser in the State of C
Uttar Pradesh who could not have furnished such a declaration, according
to law, at the time of purchase of oil. If, however, it is established in a
given case that a particular purchaser could have furnished the declaration
according to law, but he did not so on account ·of his negligence or
otherwise, he may not be entitled to claim reimbursement under the said D
formula. Ordinarily, it must be noted, no dealer-purchaser would fail to
furnish the declaration if he is· entitled to do so but the possibility of such
failure cannot be ruled out altogether.

At the same time, we must point out that any dealer-manufacturer
claiming such reimbursements has to established to the satisfaction of State E
Trading Corporation the following facts, which constitute the basis - the
underpinning - of the scheme, viz., (1) that the oil purchased by the
purchasing dealer- manufacturer from the Corporation was in fact utilised
by the purchasing dealer-manufacturer entirely and exclusively for the
manufacture of vanaspati, (2) that the entire vanaspati manufactured was, F
in fact sold at the prescribed rate either within the State of Uttar Pradesh
or in any other State, as the case may be, and that such sale was subjected
to tax under the relevant Sales tax enactment and (3) that the non-furnish-
ing of declaration contemplated by Section 4-B of the Uttar Pradesh Sales
Tax Act read with Rules 25-B of the Uttar Pradesh Sales Tax Rules was G
because the purchasing dealer could not in law furnish such a declaration.
Only where the above facts are established that the purchasing dealer-
manufacturer would be entitled to reimbursement contemplated by the
formula.

Sri A. Subba Rao, learned counsel for the Corporation contended H
614 SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A that the Corporation is entitled to only 1% commission on the sale of
imported oil and if the Corporation is now made liable to reimburse the
sales tax to the purchasers of such oil, it would suffer grave loss inasmuch
as the amount of tax to be reimbursed would be far above the commission
amount to which the State Trading Corporation is entitled. May be, it is
so. But this only means perhaps that the Government of India, which had
B
evolved the aforesaid scheme, has to subsidies - provide subvention - to the
State Trading Corporation to the extent of the tax to be reimbursed.

The period for which the relief of refund is claimed is the period
commencing from December, 1984 to May, 1988. The writ petition was
C filed in June, 1988. In the reply affidavit, relief is claimed upto November,
1988. Sri A Subba Rao, learned counsel for the State Trading Corporation
submitted that the writ petition is liable to be dismissed on the ground of
laches. Learned Counsel submitted that while the aforesaid formula was
implemented as far back as 1983, the petitioner approached this court only
D in the year 1988 - five years later and that there is no explanation for this
delay. While we agree that the petitioner could have approached the court
earlier, it cannot be said that the writ petition suffers from such laches as
to merit dismissal on that ground. At the same, it must be remembered
that the claim for refund in the present case does not arise from or founded
upon 9 statutory provision - much less is this a case where a provision or
E a notification having statutory force is struck down. The present claim is
one which ought to have been agitated in a civil court. We have entertained
the writ petition because a complaint of discrimination was made in
implementation of a scheme of general application evolved by this court
pursuant to the observations of this court in its order dated February 8,
F 1982. In such a situation the petitioner cannot claim a greater relief than
he could have claimed in the suit. Accordingly, we direct that the
petitioner's claim will be limited to the period of three years prior to the
date of filing of this writ petition. Insofar as the period subsequent to the
filing of the writ petition, i.e., upto November, 1988, is concerned, the
petitioner shall be entitled to it on the same basis as the claim for the
G period anterior to the filing of writ petition. The respondent- State Trading
Corporation shall examine the petitiorier's claim in the light of this judg-
ment, with notice to the petitioner and determine the amount, if any,
payable to it. The petitioner . shall be entitled to interest on the amount
found due at the rate of 6% per annum from the date of this judgment
H upto the date of realisation.
LIPTON (I) LID. v. U.0.1. [JEEVAN REDDY, J.) 615

The writ petition is accordingly allowed with the above directions. A
No costs.

IA... ./91 IN T.C. (C) NOS. 7-10, 13-15/81,
T.C. (C) NOS. 18, 18A/81AND1/82.

This Interlocutory Application is misconceived. The petitioner was B
. not a party to any of the writ petitions which were· disposed of by this Court
by its order dated February 8, 1982. Moreover - and this is more important
- the claim made by the petitioner does not arise from the judgment
aforesaid. It is an independent claim. The Interlocutory Application is
accordingly dismissed. No costs.
c
T.N.A. Petition Allowed.