1959 (11) TMI 43 - HC - VAT and Sales Tax

Summary

Issues:
1. Proper construction of section 12-A of the Madras General Sales Tax Act.
2. Constitutional validity of the proviso added to section 3(1)(b) of the Act.
3. Validity of the demand for refund under Madras Act XV of 1956.

Analysis:
1. The judgment addresses the common question of the proper construction of section 12-A of the Madras General Sales Tax Act and sections 3 and 17 of Madras Act XV of 1956. It discusses the historical context of amendments made to the Act and the implications of these changes on tax calculations for articles of food and drink sold in various establishments.

2. The constitutional validity of the proviso added to section 3(1)(b) of the Madras General Sales Tax Act was challenged before the Court. The initial proviso, which enhanced the tax rate for articles of food and drink sold in hotels, was declared void due to unreasonable discrimination. However, an amendment in 1956 replaced the proviso with a different one, altering the tax calculation criteria for such articles. The judgment delves into the retrospective effect of this amendment and its impact on tax assessments.

3. The judgment specifically examines the validity of a demand for refund under Madras Act XV of 1956. It scrutinizes the provisions of section 17 of the Amending Act, which deemed taxes collected under the previous proviso as valid. The Court concludes that the demand for refund cannot be sustained under the terms of this section, especially when the refund was based on a lawful order of the Appellate Tribunal. It emphasizes that the retrospective enactment of the proviso does not render the earlier refund unlawful or made under a mistake of law, thus rejecting the demand for repayment.

In conclusion, the Court allows the petitions, making the rules nisi absolute and quashing the notices of demand for refund. The judgment clarifies the legal implications of the amendments to the tax provisions and upholds the petitioners' entitlement to the reliefs sought.