Discriminatory tax on imported goods violates Article 304(a) and supports refund under writ jurisdiction.

A State sales tax on imported tobacco was held unconstitutional because, in actual operation, it discriminated against imported goods while similar locally produced goods were not similarly taxed, contrary to Article 304(a). Tax paid under this ultra vires levy was recoverable as money paid under a mistake of law under section 72 of the Indian Contract Act, and the petitioners were entitled to refund because the payment was not voluntary and the statutory scheme did not defeat restitution. The Court also held that the existence of an ordinary civil remedy did not bar recourse to Article 226 where unconstitutional tax had been collected, so writ relief for refund was available.

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Issues: (i) Whether the levy of sales tax on sales by an importer of tobacco imported into Madhya Bharat was repugnant to Article 304(a) of the Constitution; (ii) whether, if the levy was illegal, the petitioners were entitled to recover the tax paid by them; (iii) whether the petitioners were bound to pursue the ordinary civil remedy or could seek relief under Article 226 of the Constitution.

Issue (i): Whether the levy of sales tax on sales by an importer of tobacco imported into Madhya Bharat was repugnant to Article 304(a) of the Constitution.

Analysis: Article 304(a) permits a State to tax imported goods only if similar locally manufactured or produced goods are also subject to a like tax, without discrimination. The relevant notification imposed tax only on sales by the importer of the specified tobacco, and the taxing authorities themselves treated the entries as excluding locally produced tobacco from the charge. A tax that is facially neutral but discriminatory in its actual application and operation falls within the mischief of Article 304(a). The levy, as administered, discriminated between imported tobacco and tobacco produced within the State.

Conclusion: The levy was repugnant to Article 304(a) and therefore illegal.

Issue (ii): Whether, if the levy was illegal, the petitioners were entitled to recover the tax paid by them.

Analysis: Money paid under a mistake of law, including payment of an ultra vires tax, is recoverable under section 72 of the Indian Contract Act, 1872. The petitioners paid the tax as a tax liability and not as a voluntary bounty, and they sought refund within the relevant period after the illegality became apparent. The statutory scheme did not show that the dealer collected the tax only as an agent of the State so as to defeat restitution.

Conclusion: The petitioners were entitled to recover the amount of tax paid by them.

Issue (iii): Whether the petitioners were bound to pursue the ordinary civil remedy or could seek relief under Article 226 of the Constitution.

Analysis: The existence of a civil remedy did not bar relief under Article 226 where an illegal tax had been collected in infringement of constitutional rights. The authorities cited on writ relief and refund showed that constitutional jurisdiction could be invoked in appropriate cases, and the Court found no principled bar in the present matter to issuing consequential refund relief in the writ proceedings.

Conclusion: The petitioners could invoke Article 226 for refund relief.

Final Conclusion: The impugned sales tax on imported tobacco was unconstitutional and refundable, and the petitioners were entitled to consequential relief in writ jurisdiction.

Ratio Decidendi: A State tax on imported goods is invalid under Article 304(a) if, in its actual operation, it discriminates against imported goods as compared with similar local goods, and tax paid under such an ultra vires levy is recoverable as money paid under a mistake of law.

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