RALLIS INDIA LTD Vs. COMMERCIAL TAX OFFICER BELLARY

JUDGEMENT

(1.) These writ petitions are directed against the orders of the Commercial Tax Officer. Bellary, dated 30th August 1969. The petitioner, a dealer in cotton, collected sales tax on sales of cotton in inter-State transactions during the period 10-11-1964 to 31-3-1968. Tax was not legally leviable on such transactions according to the decision of the Supreme Court in State of Mysore v. Yadalam Lakshminarasimhiah Setty & Sons , 16 STC. 231, SC. Subsequently the petitioner refunded the said amounts to its customers The 1st respondent in paragraph 4 of his order has found that the petitioner-firm has actually refunded the tax collected to its buyers long before the date of the Central Sales Tax (Amendment) Ordinance, 1969. The 1st respondent, however, held that the petitioner is not entitled to exemption from tax under S. 10 of the Ordinance According to the 1st respondent the benefits of S.10 are not available when the dealer makes collection of tax initially though he refunds the same later be-fore the enactment of the Ordinance. Aggrieved by the said order, the petitioner has preferred the above writ petition.

(2.) It was contended by Sri K. Srinivasan, the learned Counsel for the petitioner that the effect of the refund of the amount of tax collected by the petitioner is as if the petitioner had not made the initial collection of sales tax. S.10 of the Central Sales Tax (Amendment) Ordnance, 1969 which has been replaced by the Central Sales Tax (Amendment) Act, 1969, reads thus:

(3.) The view taken by the 1st respondent, in our opinion, is a too literal construction of sub-sec. (1) of S.10. The object of sub-sec. (1) of S.10 is that in respect of sale transactions effected between the 10th day of Noember 1964 when the Supreme Court pronounced its judgment in State of Mysore v. Yadalam Lakshminarasimhiah Setty & Sons (1), and the 9th day of June 1969 when the Central Sales Tax (Amendment) Ordiance, 1969 was passed, no tax should be collected notwithstanding the provisions of S.9 if the dealer has not collected the tax. After the 10th day of November 1964, the petitioner could not have collected any amounts by way of sales tax from its customers on the transactions in question. Having collected certain amounts by way of tax, it refunded the said amounts since the transactions were not liable to tax. If the customers had filed suits against the petitioner before the Ordinance, the petitioner could not hare resisted the suits. Where the amounts were illegally collected but were refunded before the Ordinance the position, to our mind, is not in any way different from the one where the dealer does not initially collect finy amount by way of tax. The contention of the learned Counsel, therefore, is well founded. The 1st respondent was clearly in error in the view he has taken that where the dealer has collected the amounts but refunded the samp before the Ordinance, the case does not fall under sub-sec. (1) of S.10. The petitioner, in our opinion, satisfies the requirements of sub-sec. (1) of S.10. and is not liable to sales tax on the turnover of inter-State sales of cotton during the period from 9th November 1964 to 31st March 1968 In that view, the demands impugned in W.Ps Nos.51 5180 and 5181 of 1969 are quashed. The demand made in W.P. No. 5179 of 1969 in respect of sales of cotton for the period from 10th November 1964 to 31st March 1965 is quashed The obiertions raised in W.P. No 5179 of 1969 against the levy of tax in respect of inter-State sales of cotton for the period from 1/4/1964 to 9/11/1964 have been considered and rejected by us in W.Ps. Nos. 2109 of 1968 and 5361 of 1969. No costs.