1970 (3) TMI 111 - HC - VAT and Sales Tax

Summary

Issues:
1. Mandamus for refund of Central sales tax paid under a mistake of law.
2. Validity of the legislative amendments and validation affecting the refund claim.
3. Constitutional validity of the Central Amending Act and the local Act.

Analysis:

Issue 1: Mandamus for refund of Central sales tax paid under a mistake of law
The petitioners sought mandamus for refund of Central sales tax paid, claiming it was done under a mistake of law. The court noted the grounds for refund included the illegality of tax charged on inter-State sales and the inclusion of excise duty in the chargeable turnover. However, the court highlighted that subsequent legislative amendments and validations impacted the grounds of mistake. The court emphasized that the discretion to grant refund depends on various factors, including undue delay in seeking relief and exhaustion of available remedies under the law. The court expressed reluctance to order refunds due to the delay in approaching the court and the availability of other legal remedies for challenging the assessment orders.

Issue 2: Validity of legislative amendments affecting the refund claim
The court discussed the impact of legislative amendments, such as the Central Sales Tax (Amendment) Act, 1969, and the Madras General Sales Tax (Second Amendment) Act, 1969, which validated the levies and affected the petitioners' claim of payment by mistake of law. The court highlighted that these amendments nullified the grounds for refund based on the earlier judicial decisions regarding the deduction of excise duty from the taxable turnover of inter-State sales. The court emphasized that the amendments retroactively validated assessments and eliminated the basis for claiming refunds due to mistakes of law. The court concluded that the petitioners were deprived of the plea of payment under a mistake of law due to the statutory provisions.

Issue 3: Constitutional validity of the Central Amending Act and the local Act
The court addressed the contention that the Central Amending Act violated Article 301 of the Constitution and that the local Act was confiscatory and infringed Article 19(1)(f) of the Constitution. The court dismissed these contentions, stating that the single point taxation scheme aimed to limit sales tax levy to one specified point for declared goods. The court rejected arguments of heavier burden on inter-State sales and impediments to free flow of goods. The court also dismissed claims of violation of Article 301 and confiscation, citing precedents and the retrospective validation of taxes collected. The court found no merit in the constitutional challenges raised by the petitioners.

In conclusion, the court dismissed the petitions for refund of Central sales tax, considering the legislative amendments, the availability of legal remedies, and the constitutional validity of the Acts involved. The court emphasized the impact of the amendments on the petitioners' claims and the lack of grounds for refund based on mistakes of law.