Refund of wrongly collected tax before a retrospective amendment counts as non-collection for statutory exemption purposes.

Refund of tax wrongly collected before a retrospective amendment was treated as equivalent to non-collection for purposes of the statutory exemption under section 10. The court reasoned that, once the dealer had returned the amount before the Ordinance and Amendment Act came into force, the dealer no longer retained the tax and stood in the same position as one who had not collected it at all. The exemption was therefore read as protecting dealers who did not keep the collected tax when retrospective liability was introduced, and the contrary distinction between prior collection with refund and no collection was rejected.

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Issues: Whether refund of tax wrongly collected before the commencement of the Central Sales Tax (Amendment) Act, 1969 could be treated as a case where the dealer had not collected tax, so as to attract the exemption under section 10.

Analysis: The dealer had collected inter-State sales tax at a time when such levy was not permissible under the law as then declared, and the amount was returned before the Ordinance and the Amendment Act came into force. Section 10 exempted dealers who had not collected tax during the specified period. The Court held that an amount wrongly collected and then refunded stands in the same position as an amount never collected, because the refund rectifies the earlier error and leaves the dealer without the tax amount in hand. The provision was read as intended to exempt dealers who did not retain the collected amount when retrospective liability was introduced. A contrary distinction between a dealer who never collected tax and one who collected it but refunded it was rejected.

Conclusion: The petitioner was entitled to the exemption under section 10, and the demand based on the assessment order could not stand.

Final Conclusion: Refund of an unauthorisedly collected tax amount before the commencement of the retrospective amendment was treated as equivalent to non-collection for the purpose of the statutory exemption, so the writ petition succeeded.

Ratio Decidendi: Where a taxing provision grants exemption to dealers who have not collected tax during a specified period, money wrongly collected as tax but refunded before the amendment takes effect is treated as not having been collected for the purpose of the exemption.

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