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TMI Blog1965 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... to dealers outside the State. The Supreme Court delivered judgment in State of Mysore v. Lakshminarasimhiah Setty and Sons(1), on 10th November, 1964. The first batch of petitions was filed in this Court on 21st June, 1965, on the ground that in that case, the Supreme Court held that under section 9 of the Central Sales Tax Act, the provisions of the State Act with regard to single point taxation and other exemptions will equally apply to Central sales tax assessments as well and where the local Act provides that assessments shall be made only on the first seller of particular goods, no tax shall be levied under the Central Sales Tax Act on the last seller of the said goods. The petitioners claim that they came to know of the mistake of law only after the judgment of the Supreme Court and that in spite of demand, the respondents have failed to refund the tax. In the second and third batches the petitioners are dealers in matches. The second batch covers the assessment years 1958-59 to 1962-63 and the third 1961-62 to 1963-64. Their inter-State sales were charged to Central sales tax on a turnover which included excise duty. There is a provision in the Madras Rules for deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Act made a departure in the manner of levy of tax on the specified goods which are taxed only at a single point under the State Act; if any such radical departure was intended, the Central Act would have expressly stated so. The Central Act was passed to levy and collect sales tax on inter-State sales to avoid confusion and conflict of jurisdictions; the tax is also collected only for the benefit of the States. Therefore, the construction we accept avoids the anomaly of the State collecting tax on powerloom textiles only at a single point and the Centre, through the agency of the State authorities, collecting the said tax for and on behalf of the State at multi-points." From the reasoning that underlies the construction what emerges is that the Supreme Court considered that when the policy of the State Legislature is to tax particular goods only at a single point in a succession of sales, it cannot be the intention of the Central Act to depart from that policy because the Central Act came to be enacted in view of certain historical reasons and difficulties involved in the construction of Article 286 of the Constitution and in placing the locus of inter-State sales for purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d compounding of offences, shall apply accordingly." There were two views on the scope of the expression "in the same manner" in section 8(2), namely, it meant only calculation of the rates and the other, that it included also the manner of levy of tax. To put it differently, according to one view only the rules relating to the process of assessment that were attracted by the expression and according to the other view, not merely that, but also the substantive charging provisions including provisions as to exemptions and deductions. But the Supreme Court construing the sections that we just referred to held: "But section 9(1) dispels the ambiguity for it says that the tax payable by any dealer under the Central Act shall be levied and collected in the appropriate State by the Government of India in the manner provided in sub-section (2); and sub-section (2) of section 9 empowers the appropriate State authorities to assess, collect and enforce payment of any tax payable by any dealer under the Central Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected. The expression 'levy' means 'impose' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely (a) ............ (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State." The effect of this provision, as it seems to us, is that where the same declared goods have been taxed under the State law as inside sales and have also been subjected to tax on their inter-State sales, the Central tax should prevail and the State tax levied should be refunded to the person entitled to it as provided by or under the State law. Obviously that meant a considerable change from section 15 as it stood originally. There was no indication in the old section that there could be two taxes levied one under the State law and the other under the Central Act and that in such a case the former should be refunded and the latter sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with the other provisions we have referred to themselves make it clear that in the case of declared goods the Central charge will prevail and the State tax should be refunded. This result is inherent in the provisions of the State Act itself. In this respect, the Mysore Sales Tax Act as it stood prior to 1958 was entirely different. That Act as it was before the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231. as far as we are able to see, did not make provisions like the proviso to section 4 and section 6. We are of the view, therefore, that taking that "levied" in section 9(1) and (2) of the Central Act is related to the levy under the State Act, the levy under the State Act, in the light of the provisions we have read is subject to the limitation that it is liable to be refunded in case there is a levy of Central tax on inter-State sales of the same goods. The result is, that applying the interpretation which found favour with the Supreme Court, we hold that, having regard to the special provisions under the Madras Ceneral Sales Tax Act, 1959, and section 15 as it is in force today in the Central Act, the charge under the Central Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides for deduction of excise duty. We are of the view, therefore, that it is not possible to uphold the contention for the assessees that in determining the aggregate turnover of inter-State sales, they are entitled to deduction of excise duty. For the respondents the learned Special Government Pleader contends that in any case the assessees having actually collected tax, they are liable irrespective of their liability to tax, to make over to the State Government the amounts so collected. He refers to section 9-A and also to rule 4-A(ii) of the Central Sales Tax (Madras) Rules, 1957. On the view we have expressed on the main contention for the assessees, it is not necessary for use to deal with this ground of the learned Special Government Pleader. He next argues that in the first batch of petitions it could not be said that the petitioners were under any mistake of law as they had been all along contending that they were not liable to tax under the Central Act. The further contention for the respondents is that even assuming that there was such a mistake of law, this Court in exercising its discretion under Article 226 of the Constitution should take note of the law of limita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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