Retrospective sales tax recovery barred after concessional notifications were quashed, protecting manufacturers who relied on the tax benefit.

Retrospective recovery of sales tax was disallowed where concessional notifications for locally manufactured television sets and components had been acted upon before being quashed. The Court held that, on grounds of justice and equity, the State could not demand the differential tax between the concessional rate and the normal rate after invalidation of the exemption or concession, because the manufacturers had altered their position in reliance on the notifications. Relief was granted against collection of the amounts that became payable only due to the quashing of the notifications, and the writ petitions were allowed.

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Issues: Whether the State could recover sales tax at the normal rate from the appellants after the notifications granting a concessional rate on television sets and components manufactured in Karnataka were quashed, and whether relief should be granted against collection of the differential amount.

Analysis: The notifications under section 8-A of the Karnataka Sales Tax Act, 1957 had reduced the tax payable under section 5 on locally manufactured television sets and components. After those notifications were struck down, the appellants were threatened with demands for the difference between the concessional rate and the normal rate. The Court followed earlier decisions where, on grounds of justice and equity, collection of the differential tax was disallowed because the local manufacturers had acted on the basis of the concessional notifications and should not be placed at a disadvantage by retrospective recovery after invalidation of the exemption or concession.

Conclusion: The State was not entitled to collect the amounts of sales tax that became payable only because the concessional notifications were quashed, and the writ petitions were allowed.

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