1961 (3) TMI 106 - HC - VAT and Sales Tax

Summary

Issues:
- Suit for recovery of excess tax payment under Madras Entertainments Tax Act
- Whether appellant entitled to refund under mistake of law
- Whether claim barred by limitation under Section 18 of the Act

Analysis:
1. The appellant filed a suit seeking recovery of excess tax payment of &8377; 17,252-7-0 made under the Madras Entertainments Tax Act. The appellant, a cinema proprietor, collected tax on five annas tickets at the rate of one anna per ticket. However, it was later discovered that the tax due on a five annas ticket was only nine pies, not one anna. The suit was contested on grounds including that the payment was not the appellant's money, he couldn't claim a refund for voluntary payment made under a mistake of law, and the claim was barred by limitation under Section 18 of the Act.

2. The Court noted that the Act makes the cinema management the collecting agent for the tax, with the amount collected being due to the Government, not the proprietor. The appellant's collection method was not clearly established, but it was acknowledged that a representation was made to attendees that one anna out of five annas collected was for entertainment tax. The excess payment made by the appellant was not his property, but the individuals who paid the money. The agency relationship ceased once the amount was paid to the Government.

3. The appellant argued that the collected sum was consolidated, belonging to the management, and any excess payment should be recoverable. However, the Court disagreed, stating that the excess collected was not the appellant's money but belonged to the individuals who attended the cinema. Precedents under sales tax laws were cited to support the principle that amounts collected for the Government do not become the collector's property, entitling them to recover excess payments made.

4. Ultimately, the Court agreed with the lower court's decision, ruling that the excess tax payment was not the appellant's property, and he had no right to recover it from the Government. The appeal was dismissed with costs.