1956 (12) TMI 32 - HC - VAT and Sales Tax

Summary

Issues:
Validity of an order under section 11(2) of the Travancore-Cochin Sales Tax Act questioned by Brilliant Traders Ltd., Quilon.

Analysis:
1. The petitioners disputed their liability to pay the collected sales tax under section 11(2) of the Act, arguing that it should only apply to legally collectible amounts. They also contended that the tax should have been collected under the Travancore-Cochin Sales Tax Act, not the Madras Act. The court examined the scope of section 11(2) and referred to previous judgments to determine the dealer's obligation to pay the tax collected, even if it was deemed illegal.

2. The court considered the interpretation of section 11(2) and discussed the obligation of a registered dealer to pay the State all amounts collected by way of tax, regardless of the legality of the levy. The court compared conflicting judgments from different High Courts and analyzed the reasoning behind the obligation imposed on dealers to pay over even illegal collections. The court held that the dealer is bound to account for all collections made during the exercise of their power, even if they were deemed illegal.

3. The court addressed the argument that the tax collections were not made under the Travancore-Cochin Act XI of 1125 but were considered as deposits. The court clarified that the authority to collect sales tax was derived from the registration under the Act, and the collections were made at rates provided by the Act. The court dismissed this ground, emphasizing that the collections were indeed made under the relevant Act.

4. The petitioners also raised a point regarding refunds already made, which was not pursued during the arguments. The court clarified that if refunds were made, the claimant would have a right against the Government, and any payment made by the dealer to the rightful claimant would be permissible. Ultimately, the court found no merit in the petition and rejected it with costs.

In conclusion, the court upheld the validity of the order under section 11(2) of the Travancore-Cochin Sales Tax Act and dismissed the petition filed by Brilliant Traders Ltd., Quilon, with costs.