1968 (6) TMI 53 - HC - VAT and Sales Tax

Summary

Issues:
1. Quashing of sales tax assessment orders for hill produce turnover.
2. Refund of tax collected under Central Sales Tax Act.
3. Maintainability of Article 226 petition for refund of tax.
4. Applicability of principles regarding refund of tax paid under a mistake of law.

Analysis:

Issue 1: Quashing of sales tax assessment orders
The petitioner sought to quash exhibits P-1 to P-5, the sales tax assessment orders for hill produce turnover. The turnover of hill produce is taxable only at the last purchase point within the State under the General Sales Tax Act. The assessments were made under the Central Sales Tax Act, which provides for tax collection by the State from which the movement of goods commenced. The petitioner, as the last purchaser within the State, had already paid the tax at the time of purchase, making the levy of tax on the turnover of inter-State sales under the Central Sales Tax Act illegal.

Issue 2: Refund of tax collected under Central Sales Tax Act
The petitioner requested a refund of the tax already collected under the sales tax assessment orders. The court held that since the tax was illegally levied on the turnover of inter-State sales, the respondents were directed to refund the amount already paid by the petitioner under these orders. Additionally, any further collection of tax under the said orders was restrained.

Issue 3: Maintainability of Article 226 petition for refund of tax
The respondents contended that an Article 226 petition for a writ of mandamus for refund of tax collected would not lie. Citing a previous ruling, it was argued that a claim for refund of tax collected illegally could be made in a regular suit against the authority responsible for the collection. However, the court held that the writ petition was maintainable in this case.

Issue 4: Applicability of principles regarding refund of tax paid under a mistake of law
The court referred to various judgments to establish the principles regarding the refund of tax paid under a mistake of law. It was held that when tax is levied by a mistake of law, it is the duty of the State to refund the tax subject to any provisions in the law. The court emphasized that the duty to investigate and refund arises when the mistake is brought to the notice of the State, and the claim is made within the prescribed period of limitation.

In conclusion, the court allowed the petition, quashed the sales tax assessment orders, directed the refund of tax already paid, and restrained further tax collection under the said orders. The court also addressed the maintainability of the Article 226 petition for refund and highlighted the principles governing the refund of tax paid under a mistake of law.