Khanna, J. - (1.) This appeal by special leave is against the judgment of the Madras High Court whereby the High Court dismissed the petition filed by the appellant under Section 38 of the Tamil Nadu General Sales tax Act, 1959 (hereinafter referred to as the State Act).
(2.) The matter relates to the assessment year 1960-61. The appellant firm is a dealer in cotton yarn. The appellant bought yarn from local dealers and manufacturers and, in turn, sold that yarn by way of inter-State sale. Sales tax under the State Act on the yarn purchased by the appellant had been paid by those manufacturers and dealers. The inter-State sales of yarn made by the appellant were assessed to tax under the Central Sales Tax Act (hereinafter referred to as the Central Act) in the hands of the appellant. The appellant claimed refund of the tax amounting to Rs. 16,769.96 paid under the State Act in respect of the yarn sold by it in the course of inter-State trade in accordance with Section 15 (b) of the Central Act and the proviso to Section 4 of the State Act read with Rule 23 of the Tamil Nadu General Sales Tax Rules, as these provisions stood at the relevant time. The Additional Commercial Taxation Officer admitted the claim of the appellant for refund of the tax only in respect of the sum of Rs. 5,562.59 and rejected the claim in respect of the balance. On appeal the Additional Appellate Assistant Commissioner allowed refund of a further sum of Rs. 3,204.73 and rejected the claim regarding the balance of Rs. 8,002.64. On second appeal the Appellate Tribunal relying upon the decision of the Madras High Court in M. A. Khader and Co. v. Deputy Commercial Taxation Officer, (1970) 25 STC 104 (Mad) rejected the claim of the appellant for the balance of Rupees 8,002.64. At the instance of the State representative, the Tribunal further held that the appellant was not entitled to get refund of the amount of Rs. 5,562.59 and 3,204.73 in respect of which relief had been granted by the Appellate Assistant Commissioner. The appellant therefore preferred revision petition to the Madras High Court under Section 38 of the State Act. The High Court dismissed the said petition after observing that the principle laid down in the case of M. A. Khader and Co. (supra) would apply to the facts of this case. The appellant thereafter came up in appeal to this Court by special leave.
(3.) Before dealing with the point of controversy it may be apposite to refer to the material provisions of law, as they stood at the relevant time. A number of goods have been declared under Section 14 of the Central Act to be of special importance in inter-State trade or commerce. Cotton yarn is one of those goods. Section 15 of the Central Act at the relevant time read as under: "15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State - Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely:- (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed two per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage. (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State." Section 4 of the State Act reads as under: "4. Tax in respect of declared goods.- Notwithstanding anythingcontained in Section 3, the tax under this Act shall be payable by a dealer on the sale or purchase inside the State of declared goods at the rate and only at the point specified against each in the Second Schedule on the turnover in such goods in each year, whatever be the quantum of turnover in that year: Provided that where a tax has been levied under this section in respect of the sale or purchase of declared goods and such goods are sold in the course of inter-State trade or commerce the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed." According to the Second Schedule to the State Act, the tax on cotton yarn but excluding cotton yarn waste shall be one per cent at the point of the first sale in the State.;