Supreme Court: Rule 39-A of Mysore Sales Tax Act, 1957, Ultra Vires

The Supreme Court upheld the High Court's decision, ruling that Rule 39-A under the Mysore Sales Tax Act, 1957, was ultra vires and that the time limitation and form requirements for refund applications were unreasonable. The Court emphasized that the right to a refund under Section 5(4) of the Act was absolute and could not be negated by procedural rules. The Commercial Tax Officer's orders were quashed, and refunds were directed to be made to the petitioners, with no costs awarded due to lack of representation by the respondents.

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Issues: Whether rule 39-A of the Mysore Sales Tax Rules, insofar as it prescribed a time limit and a prescribed form for claiming refund of tax on declared goods subsequently sold in inter-State trade or commerce, was within the rule-making power under section 5(4) of the Mysore Sales Tax Act, 1957, and whether refund could be denied for non-compliance with those requirements.

Analysis: Section 15(b) of the Central Sales Tax Act, 1956 and the proviso to section 5(4) of the Mysore Sales Tax Act, 1957 created an entitlement to refund where tax had been paid on declared goods inside the State and the goods were later sold in inter-State trade or commerce. The statutory language authorised prescription only of the manner and conditions of making the refund, not conditions that extinguished the right itself. A rule fixing the application to be made within the return period and in a particular form was held to go beyond regulatory procedure and to operate as a fetter on an accrued statutory right. The prescribed form was treated as directory, not mandatory, and the time-limit provision was held unreasonable and beyond the competence of the rule-making authority.

Conclusion: Rule 39-A, to the extent it imposed a mandatory time limit for claiming refund and enabled rejection for want of timely application, was held invalid. Refund could not be refused merely because the claim was not filed within the prescribed time or in the prescribed form.

Final Conclusion: The dealers remained entitled to refund of the tax paid on the declared goods, and the State's challenge to the High Court's view failed.

Ratio Decidendi: Where the statute creates an absolute right to refund and authorises rules only as to the manner and conditions of payment, delegated legislation cannot impose procedural requirements that destroy or substantially defeat that right; such requirements are directory unless the statute clearly makes them mandatory.

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