Inter-State sales tax follows State taxability; assessments on arecanut sales were rectifiable and refundable.

Under section 9 of the Central Sales Tax Act, inter-State sales are taxable only where the corresponding intra-State transaction would attract tax under the relevant State sales tax law. The amendment to sections 8 and 9 did not alter that basic levy-and-collection scheme, so the earlier Supreme Court interpretation remained applicable. As arecanut was taxable under the Mysore Sales Tax Act only at the point of first purchase and not on sale, the petitioners would not have been liable if the transactions had been intra-State sales. The assessments were therefore inconsistent with the statute, and timely rectification applications were maintainable, entitling the assessees to refund of the tax collected.

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Issues: Whether, after the amendment of sections 8 and 9 of the Central Sales Tax Act, 1956, tax on inter-State sales of arecanut could be levied only if the same transaction would have attracted tax under the Mysore Sales Tax Act as an intra-State sale, and whether the assessees were entitled to rectification of the assessments and refund of the tax collected.

Analysis: The amended provisions of section 9 retained the essential scheme that tax payable under the Central Sales Tax Act is to be levied and collected in the manner provided by the State sales tax law. The earlier Supreme Court exposition, though rendered under the unamended provisions, remained applicable because the amendment did not alter the operative principle governing levy and collection; it only introduced limited changes, including penalty language. Since arecanut under the Mysore Sales Tax Act was taxable only at the point of purchase by the first dealer and not at the point of sale, the petitioners would not have been liable if the sales had been intra-State sales. The levy under the Central Sales Tax Act was therefore inconsistent with the governing statutory scheme, and the rectification applications filed within the prescribed period were maintainable.

Conclusion: The tax levied on the petitioners' inter-State sales was not legally payable, and they were entitled to rectification of the assessments and refund of the tax collected.

Ratio Decidendi: Under section 9 of the Central Sales Tax Act, inter-State sales are taxable only where the corresponding intra-State sale would have attracted tax under the State sales tax law, and an assessment made contrary to that principle is liable to rectification and refund.

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