1968 (7) TMI 76 - HC - VAT and Sales Tax

Issues Involved:
1. Refund of tax paid under a mistake of law.
2. Applicability of Supreme Court decisions and principles under the Indian Contract Act.
3. Jurisdiction and discretion of High Courts under Article 226 of the Constitution.
4. Limitation period for filing writ petitions for refund.
5. Interpretation of Section 8(2) and Section 9 of the Central Sales Tax Act, 1956.
6. Applicability of amendments to Section 15 of the Central Sales Tax Act, 1956.
7. Distinction between declared and non-declared goods.

Detailed Analysis:

1. Refund of Tax Paid Under a Mistake of Law:
The petitioners, who are dealers in various goods, sought a refund of tax paid under a mistake of law. They argued that the assessments were made under the Andhra Pradesh General Sales Tax Act, 1957, and that the State had no power to exempt goods liable to tax under the Central Sales Tax Act, 1956. The court examined whether the tax paid under a mistaken interpretation of law could be recovered.

2. Applicability of Supreme Court Decisions and Principles Under the Indian Contract Act:
The petitioners relied on the Supreme Court decisions in *State of Madhya Pradesh v. Bhailal Bhai* and *State of Kerala v. Aluminium Industries Ltd.*, which held that relief for refund of tax paid under a mistake of law could be granted. The court also referred to *Sales Tax Officer v. Kanhaiya Lal Makund Lal Saraf*, which discussed the recovery of money paid under a mistake of law under Section 72 of the Indian Contract Act.

3. Jurisdiction and Discretion of High Courts Under Article 226 of the Constitution:
The court acknowledged that the High Courts have the power under Article 226 to order repayment of money paid under a mistake of law. However, it emphasized that this power is discretionary and should not supersede the modes of obtaining relief through civil courts. The court noted that the delay in seeking this special remedy and the nature of the controversy are crucial factors in exercising this discretion.

4. Limitation Period for Filing Writ Petitions for Refund:
The court recognized that while the Limitation Act does not apply to Article 226, the maximum period for filing a civil suit (three years) could be a reasonable standard for measuring delay in filing writ petitions. The court held that petitions filed beyond this period would generally be considered unreasonable.

5. Interpretation of Section 8(2) and Section 9 of the Central Sales Tax Act, 1956:
The court discussed the interpretation of Section 8(2) and Section 9 of the Central Sales Tax Act, 1956. It referred to the Supreme Court's decision in *State of Mysore v. Lakshminarasimhiah Setty & Sons*, which clarified that the expression "levied" in Section 9(1) refers to the manner of levy under the State Act. The court noted that this interpretation avoids anomalies in tax collection at different points.

6. Applicability of Amendments to Section 15 of the Central Sales Tax Act, 1956:
The court examined the impact of amendments to Section 15 of the Central Sales Tax Act, 1956. It noted that the amendments introduced restrictions and conditions on the tax payable on declared goods. The court agreed with the Madras High Court's view in *Khader & Co. v. State of Madras* that the amendments made the levy under the State Act subject to refund if the same goods were taxed under the Central Act.

7. Distinction Between Declared and Non-Declared Goods:
The court differentiated between declared and non-declared goods. For declared goods, it held that the tax levied under the State Act must be refunded if the same goods were taxed under the Central Act. For non-declared goods, the court referred to its earlier decision in *State of Andhra Pradesh v. Oruganti Venkateswarlu & Bros.*, which dealt with the determination of the rate of tax on inter-State sales.

Conclusion:
The court dismissed the writ petitions, holding that they were filed beyond a reasonable period and that there were no exceptional circumstances to condone the delay. The court emphasized that the tax paid under a mistaken interpretation of law could not be recovered unless the assessment orders were quashed within a reasonable time. The court also clarified that the amendments to the Central Sales Tax Act, 1956, and the interpretation of relevant statutory provisions must be considered in determining the applicability of the Supreme Court's decisions.

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