CHALLA APPA RAO Vs. COMMERCIAL TAX OFFICER NARASAPUR

JUDGEMENT

(1.) THE writ petitioners in this batch are dealers in various goods, such as turmeric, ghee, paddy, groundnut, jaggery and rice, which are both non-declared as well as declared goods. In all these cases the petitioners claim a refund of tax paid under a mistake of law, because they allege that at the time when they were assessed the law was that under section 8 (2) of the Central Sales Tax Act, 1956, the position of a dealer could not be equated to a dealer governed by the provisions of the Andhra Pradesh General Sales Tax Act, 1957, for every purpose and that where exemption is granted by a notification, it is only in respect of the goods exigible under the Andhra Pradesh Act and the State has no power acting under section 9 (1) to exempt goods liable to tax under the Central Act.

(2.) IT was contended before a Bench of this court consisting of Chandra Reddy, C. J. , and Gopalakrishnan Nair, J. , in Surya Trading Firm v. State of Andhra Pradesh ([1963] 14 S. T. C. 720) that a dealer coming within the purview of section 8 (2) of the Central Sales Tax Act, 1956, should be regarded as a dealer governed by the provisions of the Andhra Pradesh General Sales Tax Act, 1957, for all purposes. It was founded on the clause "shall be calculated at the same rate and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State. " This contention was, however, rejected by the Bench which held that the position of a dealer under that section, viz. , section 8 (2), could not be equated to a dealer under the Andhra Pradesh General Sales Tax Act and that an assessee would be deemed to be a dealer under the State Act only for the limited purpose of calculating the rate and not for all purposes. The decision in Yaddalam Lakshminarasimhiah Setty and Sons v. State of Mysore ([1962] 13 S. T. C. 583) which took a different view was not brought to the notice of the Bench. In any case, the State of Mysore went in appeal to the Supreme Court in State of Mysore v. Lakshminarasimhiah Setty and Sons ([1965] 16 S. T. C. 231 ). Their Lordships of the Supreme Court by a majority (Subba Rao Sikri, JJ. ; Shah J. , dissenting) held that the expression "levied" meaning "imposed" in section 9 (1) of the Central Act referred to the expression "levied" in section 5 (3) (a) of the State Act, and therefore, the Central Act had not made a departure in the manner of levy of tax on the specified goods which were taxed only at a single point under the State Act. Dealing with the interpretation of section 8 (2), Sikri, J. , speaking for the majority said at page 239 :

(3.) IN support of this contention the petitioners rely upon two decisions in State of Madhya Pradesh v. Bhailal Bhai ([1964] 15 S. T. C. 450), and State of Kerala v. Aluminium Industries Ltd. ([1965] 16 S. T. C. 689), in which it was held that relief for refund of tax paid under a mistake of law could be granted. But before we deal with these two decisions, we would like to refer to another decision of the Supreme Court in Sales Tax Officer v. Kanhaiya Lal Makund Lal Saraf ([1958] 9 S. T. C. 747), which discussed comprehensively the question whether under section 72 of the Indian Contract Act the money paid under a mistake of law could be recovered. The position under the English law was that money paid under a mistake of law with the full knowledge of the facts was not recoverable and that even a promise to pay, upon a supposed liability, and in ignorance of the law, will bind the party. But under section 72 of the Indian Contract Act there had been a conflict of opinion which has been set at rest by the Privy Council in Shiba Prasad Singh v. Maharaja Srish Chandra Nandi ([1949] L. R. 76 I. A. 244 ). Their Lordships of the Supreme Court approved the interpretation placed by the Privy Council as correct. It was contended both before the Privy Council as well as before the Supreme Court that there is a conflict between section 72 on the one hand and sections 21 and 22 of the Indian Contract Act on the other, because if under section 72 mistake of law would entitle a person to obtain repayment, section 21 would have no meaning, as under that section a contract is not voidable on the ground that the parties contracted under a mistaken belief of the law existing in British India. That contention was negatived in these words :