VEERASWAMI, C.J. -
(1.) THESE are two batches of petitions for mandamus for refund of Central sale tax paid. The relief is sought on the ground that the payment had been made under a mistake of law. In three of the petitions, in which Mohamed Salam was the assessee, the tax paid related to the assessment years 1957-58 and 1958-59. In respect of the second year, there was a balance of Rs. 1, 400 in arrears. When this was sought to be collected by the revenue, the assessee served on it a lawyer's notice that, in view of Sate of Mysore v. Lakshminarasimhiah Setty and Sons the tax charged on inter-State sales was illegal, and followed it up by filing the petitions in this court for direction to refund the tax already paid and also for prohibition from collecting the balance. In the second batch, Ashok Leyland Ltd., which is the common petitioner, seeks refund of Central sales tax paid for the assessment years 1962-63 to 1965-66 on the quantum of excise duty included in the chargeable turnover in inter-State sales
(2.) THE ground in them is The State of Madras v. N. K. Natarajan Mudaliar in which the Supreme Court held that excise duty was entitled to deduction or exclusion from the taxable turnover of such sales, and the payment of tax on excise duty was, therefore, by mistake. In view of the subsequent legislative amendments and validation, it becomes unnecessary to deal with the ground of mistake at any great length. State of Mysore v. Lakshminarasimhiah Setty and Sons held on 10th November, 1964, that the use of the expression "levied" under section 9(1) of the Central Sales Tax Act and section 5(3)(a) of the Madras General Sales Tax Act implied that the former Act did not make any departure from the manner of levy of tax on the specified goods at a single point under the latter Act. At the relevant periods, the point at which intra-State sales of tanned hides and skins attracted local tax was the stage of first sales in the State. Due to the assimilation of the point of charge, the tax on inter-State sales at that stage was regarded as unauthorised.
In Khader & Co. v. State of Madras to which one of us was a party, in view was expressed that State of Mysore v. Lakshminarasimhiah Setty and Sons could not govern the period after 1st October, 1958, because of the substitution of section 15 in the Central Act by the Amending Act 31 of 1958 and introduction by Madras Act 6 of 1963 of section 4-A(1) in the Madras General Sales Tax Act, and it was held that the scheme of the amended section 15 of the General Act read with sections 4-A(1) and 6 of the State Act suggested that so far as the goods mentioned in Schedule I were concerned, their sales were liable to levy both under the State Act as well as under the Central Act but in the case of declared goods mentioned in Schedule II, though levies might be made under both the Acts, levy under the State Act was liable to be refunded. This point of view does not held the revenue for the period prior to 1st October, 1958, in respect of which State of Mysore v. Lakshminarasimhiah Setty and Sons would hold the field.As regards the excise duty, Khader & Co. v. State of Madras pointed out that whereas rule 6(f) of the Madras General Sales Tax Rules, 1959, directed deduction of excise duty from the taxable turnover, no such provision had been made in the Central Act or the rules made thereunder for such deduction and that, therefore, in determining the aggregate turnover of the inter-State sales, excise duty paid was not deductible. But applying the reasoning of State of Mysore v. Lakshminarasimhiah Setty and Sons the Supreme Court in State of Madras v. N. K. Nataraja Mudaliar held that the benefit of deduction available under the local rules would also be available in determining the chargeable turnover of inter-State sales.
(3.) IT follows, therefore, that when the assessment orders in these cases were made, there was no legal basis to tax the inter-State sales or to include the excise duty paid in the taxable turnover of such sales. But the question is whether on the ground of payment of tax by mistake of law, the petitioners are entitled to a direction for refund. Apart from the relief sought being discretionary and the exercise of the discretion will depend upon the facts and circumstances in each case, including undue delay in moving for the relief, we are of the view that the court, in considering the relief sought, should take into account the fact that the petitioners, if they were aggrieved against the assessment orders should have pursued their remedies provided under the Act, but they having not resorted to them, they have allowed them to become final, and also the further fact that, when they had a right of suit for recovery of refund on payment of court-fee therefor, they ought not, normally, to be allowed to by-pass it and to resort to the constitutional remedy.;