Tax recovery from non-liable persons barred where sales tax provision cannot be stretched beyond legal liability.

Section 8-B(2) of the Madras General Sales Tax Act, 1939 was construed as not authorising recovery of tax improperly collected from a person who was not legally liable to pay sales tax. Applying the same interpretation used for a materially similar provision in the Hyderabad General Sales Tax Act, 1950, the Court held that the State Legislature could not be taken to have conferred power to recover such tax from a non-liable person. The High Court's order was therefore set aside and the Tribunal's order restored.

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Issues: Whether section 8-B(2) of the Madras General Sales Tax Act, 1939 authorised recovery of tax improperly collected from a person not liable to pay sales tax.

Analysis: The provision was construed in the light of the earlier decision on the materially similar provision in the Hyderabad General Sales Tax Act, 1950. The controlling principle applied was that the State Legislature has no power to enact a provision for recovering tax improperly collected from a person who is not liable under the sales tax law. Since the language of the two provisions was substantially the same, the same interpretation governed the present case.

Conclusion: Section 8-B(2) did not authorise recovery from a person who was not liable to pay the tax, and the High Court's order could not stand.

Final Conclusion: The appellant succeeded, the High Court's order was set aside, and the Tribunal's order was restored.

Ratio Decidendi: A provision for recovery of tax improperly collected cannot be construed to permit recovery from a person who was not legally liable to pay the tax.

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