Retrospective tax reduction requires refund of excess collection; inconsistent non-refund conditions cannot override the amended rate.

A retrospective tax-reducing notification must be given full effect, so collection at the higher earlier rate became tax collected in excess of the rate authorised by law and was refundable; the State could not retain the excess absent a proved bar such as unjust enrichment. The earlier non-refund condition could not survive once it conflicted with the later retrospective amendment and had to yield by necessary implication. Where the facts were admitted and refund had been refused, a writ petition was maintainable to secure repayment of tax collected without authority for the relevant period, and the refund direction with interest was upheld in principle.

---

---

Issues: (i) whether the assessee was entitled to refund of sales tax collected at 1% when the rate was retrospectively reduced to 0.5% from an earlier date; (ii) whether the condition in the earlier notification barring refund survived after the retrospective amendment; (iii) whether the writ petition for refund was maintainable in the circumstances.

Issue (i): whether the assessee was entitled to refund of sales tax collected at 1% when the rate was retrospectively reduced to 0.5% from an earlier date.

Analysis: The notification reducing the rate of tax was given retrospective effect from 1 April 1999, and the legal fiction created by that notification had to be given full effect. Once the applicable rate was 0.5% for the relevant period, collection at 1% was collection of tax in excess of the rate authorized by law. In such a situation, the State could not retain the excess collection, particularly when the doctrine of unjust enrichment was not shown to apply.

Conclusion: The assessee was entitled to refund of the excess tax collected.

Issue (ii): whether the condition in the earlier notification barring refund survived after the retrospective amendment.

Analysis: The earlier condition that excess tax collected would not be refunded could not be read in isolation after the later notification retrospectively altered the rate structure. The later notification was intended to operate from the back date and had to be construed to advance its object. A subordinate condition inconsistent with the substantive retrospective reduction in tax rate could not defeat the effect of the amended notification and had to yield by necessary implication.

Conclusion: The non-refund condition did not survive against the retrospective amendment.

Issue (iii): whether the writ petition for refund was maintainable in the circumstances.

Analysis: The facts were admitted and the State had already refused refund of the excess amount. Since the dispute concerned refund of tax collected without authority for the relevant period, the writ remedy was held to be maintainable rather than driving the assessee through a further round of administrative proceedings.

Conclusion: The writ petition was maintainable.

Final Conclusion: The State was required to refund the excess tax collected for the relevant period, and the direction for payment of refund with interest was upheld in principle.

Ratio Decidendi: A retrospective tax-reducing notification must be given full effect, and tax collected in excess of the rate legally applicable for that period cannot be retained by the State unless a valid and applicable bar such as unjust enrichment is established.

---