Retrospective tax validation and writ discretion defeat refund claims based on alleged mistake of law.

Refund claims for Central sales tax paid on inter-State sales, including the component linked to excise duty, were treated as subject to writ discretion even where the levy had earlier been regarded as unsustainable for the relevant period. The court noted that Article 226 relief could be refused because alternative statutory remedies were available, the assessment orders had attained finality, the claims were stale, and the taxing statute had not been pursued. The 1969 validating ordinance and amendments retrospectively cured the defect relied on for refund, and the challenges based on free trade and property rights were rejected.

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Issues: (i) whether refund of Central sales tax paid on inter-State sales, including the component attributable to excise duty, could be granted on the footing that the payments were made under a mistake of law; (ii) whether the validating amendments and ordinance enacted in 1969 removed the basis of the refund claim and whether those measures were unconstitutional as offending free trade or property rights.

Issue (i): whether refund of Central sales tax paid on inter-State sales, including the component attributable to excise duty, could be granted on the footing that the payments were made under a mistake of law.

Analysis: The earlier legal position accepted that the levy on inter-State sales and the exclusion of excise duty were unsustainable for the relevant periods. Even so, relief under Article 226 was treated as discretionary. The availability of ordinary statutory remedies, the finality of the assessment orders, the long lapse of time, and the fact that the petitioners had not pursued the remedies under the taxing statute were treated as material factors against granting mandamus for refund. The court held that constitutional writ jurisdiction was not meant to be used to bypass other adequate remedies or to revive stale claims.

Conclusion: Refund was not to be granted on the ground of mistake of law.

Issue (ii): whether the validating amendments and ordinance enacted in 1969 removed the basis of the refund claim and whether those measures were unconstitutional as offending free trade or property rights.

Analysis: The Central Sales Tax (Amendment) Ordinance, 1969, the Central Sales Tax (Amendment) Act, 1969, and the corresponding Madras validating amendment were held to have retrospectively altered the levy and to have validated the earlier assessments and collections. Those provisions were treated as curing the defect on which the refund claim rested. The challenge under Article 301 was rejected because the scheme did not impose a heavier burden on inter-State trade in a manner that impeded free movement of goods. The challenge under Article 19(1)(f) was also rejected because the tax had in fact been collected from purchasers and the retrospective validation was not shown to be unreasonable or confiscatory.

Conclusion: The validating legislation was upheld and the refund claim failed.

Final Conclusion: The petitions for refund and ancillary relief were rejected, as both the discretionary grounds and the retrospective validating legislation defeated the claim.

Ratio Decidendi: A writ for refund of tax paid under a supposed mistake of law is discretionary and may be refused where alternative statutory remedies were not pursued, the claim is stale, and retrospective validating legislation has lawfully removed the basis of the challenge.

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