Legislative competence limits invalidated a sales tax amendment that treated non-tax collections as enforceable levy.

Amended section 18(3) of the Mysore Sales Tax Act was described as beyond State legislative competence because it sought to treat collections as tax even where no tax was legally due on the transaction. The note states that a Legislature cannot convert, by statute, a collection that is not in substance tax into a valid levy. On that basis, the amended provision was held unconstitutional, and the imposts, demands, and collections made under it were liable to be quashed, with refund of amounts collected under the invalid demands.

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Issues: Whether the amended section 18(3) of the Mysore Sales Tax Act, 1957, enacted by Mysore Act No. 9 of 1964, was beyond the legislative competence of the State Legislature and, if so, whether the impugned imposts, demands, and collections made under that provision were liable to be quashed with refund of amounts collected.

Analysis: The amendment sought to bring within the provision collections made by a dealer even where no tax was legally due in respect of the transaction. The reasoning rested on the principle that a State Legislature cannot by statute convert into tax what is not in substance a tax. In light of the controlling Supreme Court authority, the amended provision was held to suffer from want of legislative competence. Once the provision itself was invalid, the imposts made under it and the related demands necessarily fell with it. Amounts collected pursuant to such invalid demands were also held refundable.

Conclusion: The amended section 18(3) was declared unconstitutional. The impugned imposts and demands under that provision were quashed, and refund was directed of amounts, if any, collected under the invalid demands.

Final Conclusion: The petitions succeeded in full, and the assessee obtained relief against the amended sales tax levy together with consequential refund and costs.

Ratio Decidendi: A State Legislature lacks competence to validate by legislation a collection treated as tax when, in substance, no tax is legally exigible; any demand founded on such an invalid provision is unenforceable.

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