KATHAN NADAR COMPANY Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE petitioner in this case is a dealer in jaggery. THE State in exercise of its powers under section 6 of the Madras General Sales Tax Act issued a notification exempting the sale of jaggery from sales tax with effect from 1st April, 1958. Though the publication of this notification was on 23rd April, 1958, it was to take effect from 1st April, 1958. THE petitioner, however, collected sales tax on jaggery sold to its customers from 1st April, 1958, till it became aware of the Government notification granting exemption from sales tax in the case of jaggery a week later than the date of publication of the notification.

(2.) THAT, it did bona fide as but for the notification of the Government, the petitioner was entitled to collect tax on the sales effected and to pay the amount so collected to the State. After the publication of the notification, finding that the tax so far collected from its purchasers was not properly leviable, the petitioner refunded the amounts collected to its purchasers. The sum collected and later on refunded amounted to Rs. 2, 994-7-8. The question for consideration relating to the year of assessment 1958-59, was whether the petitioner was liable to pay the State this amount of the which it had initially collected from its purchasers but subsequently refunded to them. The Deputy Commercial Tax Officer (Assessment) held that the petitioner was liable to pay the amount to the State irrespective of the question whether the amount had been refunded to the purchasers or not. The Appellate Assistant Commissioner, however, took a different view and held that inasmuch as the petitioner had not with it the amount of tax collected from its purchasers, it was not liable to pay the amount to the State.

(3.) THE position, therefore, is that the petitioner has no amount in its hands which could come within the provisions of section 8-B(2) of the Act in which case alone the State would be entitled to call upon the petitioner to pay the amount of tax collected. THE effect of the refund of the amount of tax collected by the petitioner from its purchasers, is as if the petitioner had not made the initial collection of sales tax. THE view of the Board of Revenue that there is no provision in the Madras General Sales Tax Act enabling the petitioner to make a refund of the tax already collected is wholly irrelevant as the question for consideration is not under what right the petitioner paid back the tax it had collected from its purchasers.