V MURUGAYYA CHETTIAR Vs. STATE OF MADRAS

JUDGEMENT

(1.) THESE two second appeals arise out of suits instituted by two appellants for refund of licence fee of Rs. 3, 300 and Rs. 4, 600 respectively collected from them quite contrary to the provisions of the Sales Tax Act. The case of the appellants is that they are carrying on business in paddy and rice and that, from 1953-54, they also carried on commission agency in the same business. They maintained separate accounts in respect of the two businesses. In respect of the commission agency business, the Sales Tax Authorities directed the appellants to take out agency licence, and accordingly the appellants had been taking out licence from the year 1955-54 till 1957-58. In 1958-59, the department discovered the mistake that they could not collect licence fee from the appellants, whereupon the appellants applied to the department for refund of the licence fee collected so far. The department refunded the licence fee collected for 1958-59, but refused to return the licence fee for the earlier years. Since the department refused to refund the licence fees which were not paid voluntarily by the appellants, they filed the suits after giving notice to the respondent. The defence to the suits is that the suits are not maintainable in the civil courts under the provisions of section 51 of the Madras General Sales Tax Act. The courts below accepted the contention of the department and dismissed the suits. It is against the dismissal of the suits, the plaintiffs have come up in second appeals.

(2.) THE lower appellate court has found that the suits are in time. THErefore the only point for consideration in the second appeals is whether the suits are maintainable in the civil court. Mr. K. S. Naidu, learned counsel for the appellants, contended before me that the lower courts erred in coming to the conclusion that the suits are barred in the civil court under section 51 of the Act. He cited in this connection the decision of the Supreme Court in Sales Tax Officer v. Kanhaiya Lal where it was held that, if an assessee paid tax through mistake of law, he will be entitled to recover the money though the State has utilised the money so paid. THEir Lordships of the Supreme Court observed : "Voluntary payment of such tax liability was not by itself enough to preclude the respondent from recovering the said amounts, once it was established that the payments were made under a mistake of law ............ If mistake either of law or of fact is established, he is entitled to recover the moneys and the party receiving the same is bound to repay or return them irrespective of any consideration ......"