1972 (12) TMI 71 - HC - VAT and Sales Tax

Summary

Issues:
1. Refund of tax paid on local purchases of cotton subsequently sold inter-State.
2. Compliance with rule 23 of the Madras General Sales Tax Rules, 1959 for refund.
3. Validity of rule 23 and its requirement to pay Central sales tax for refund.
4. Prescription of time-limit for refund applications.
5. Interpretation of section 15(b) of the Central Sales Tax Act.
6. Effect of amendments to section 15(b) of the Central Sales Tax Act.

Analysis:
1. The petitioner, a dealer, sought a refund of tax paid on local purchases of cotton subsequently sold inter-State under the Madras General Sales Tax Act. The respondent did not grant the refund citing non-compliance with rule 23, which required payment of Central sales tax on inter-State sales. The petitioner argued that rule 23 was ultra vires and violated article 286(3) of the Constitution. The court considered whether the petitioner's right to refund under section 15(b) could be subject to paying Central sales tax.

2. The court examined precedents from the Mysore and Andhra Pradesh High Courts, which held that the right to refund arises when goods are sold inter-State, without requiring prior payment of Central sales tax. However, an amendment to section 15(b) imposed a new condition that Central sales tax must be paid before claiming a refund. This amendment superseded previous decisions, and the petitioner conceded that under the amended provision, they were not entitled to a refund due to non-payment of Central sales tax.

3. The court dismissed the writ petitions, stating that the amended section 15(b) now required prior payment of Central sales tax for claiming a refund of local taxes paid on inter-State sales. The effect of the amendment was to nullify previous interpretations and decisions. Consequently, the petitioner's claim for a refund was denied based on the new condition imposed by the amendment.

4. In conclusion, the court upheld the respondent's decision not to grant the refund due to non-payment of Central sales tax on inter-State sales. The court's judgment was based on the amended provision of section 15(b), which now mandated prior payment of Central sales tax as a condition for claiming a refund of local taxes paid on inter-State sales. The writ petitions were dismissed, and no costs were awarded in the circumstances.