Civil suit for tax refund remains maintainable when the levy loses its legal basis and statutory refund machinery is ineffective.

A civil suit for refund of sales tax was maintainable despite the exclusionary clause in the Andhra Pradesh General Sales Tax Act because the claim was for restitution after the legal basis of the levy had disappeared, not for reopening an assessment on the merits. The court held that where the Act provides no adequate or effective machinery for refund in such a supervening situation, civil court jurisdiction is not barred and the refund claim may proceed. Interest was also properly awarded as part of restitution, including for the period from refusal to refund, because no principle barred it on the facts.

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Issues: (i) whether a civil suit for refund of sales tax allegedly retained without legal basis was barred by the exclusionary provision in section 36 of the Andhra Pradesh General Sales Tax Act and by the availability of remedies under the Act; (ii) whether interest could be awarded on the amount directed to be refunded.

Issue (i): Whether a civil suit for refund of sales tax allegedly retained without legal basis was barred by section 36 of the Andhra Pradesh General Sales Tax Act and by the availability of remedies under the Act.

Analysis: The exclusionary clause did not bar the suit where the claim was not to set aside an assessment on its merits but to recover tax retained after a supervening legislative change had removed the legal foundation for the levy. The Act contained no machinery for refund in such a situation, and the appellate remedies under the Act were neither as of right nor efficacious for obtaining restitution. The court applied the principles governing civil court jurisdiction where the special statute provides no adequate or effective forum for refund of illegally collected tax.

Conclusion: The suits were maintainable and the civil court had jurisdiction to entertain the refund claims.

Issue (ii): Whether interest could be awarded on the amount directed to be refunded.

Analysis: The claim for interest was made from the date of refusal to make restitution and for a short pre-suit period. Restitution includes putting the claimant in the position that would have existed but for the illegal retention of money, and the record did not disclose any principle barring interest on the facts of these cases.

Conclusion: Interest was rightly awarded.

Final Conclusion: The levy had lost its legal basis in the circumstances proved, no adequate statutory refund machinery was available, and the decrees for refund with interest were upheld.

Ratio Decidendi: Where a taxing statute provides no effective machinery for refund of tax retained after the legal basis of the levy has disappeared, a civil suit for restitution is maintainable notwithstanding an exclusionary clause, and interest may be awarded as part of restitution.

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