Refund on declared goods sold inter-State cannot be denied by adding a payment-condition not found in the statute.

Article 286(3) of the Constitution of India and section 15(b) of the Central Sales Tax Act, 1956 require State law to provide refund where tax has been levied on declared goods and those goods are later sold in inter-State trade. The Mysore Sales Tax Act, 1957 and rule 39-A contemplated refund to the dealer making the inter-State sale, subject to the statutory conditions that tax had been collected on the declared goods and that the goods were subsequently sold inter-State. No further requirement could be implied that the same dealer must have personally paid the State tax. On that construction, refusal of refund merely because the assessee had not itself paid the tax was unsustainable.

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Issues: Whether refund of tax collected on declared goods sold in inter-State trade could be denied on the ground that the claimant, being a second purchaser, had not personally paid the tax under the State Act.

Analysis: Article 286(3) of the Constitution of India and section 15(b) of the Central Sales Tax Act, 1956 require the State law to provide for refund where tax has been levied on declared goods and those goods are subsequently sold in inter-State trade or commerce. The first proviso to section 5(4) of the Mysore Sales Tax Act, 1957 and rule 39-A of the Mysore Sales Tax Rules contemplate refund to the dealer who has made the inter-State sale, subject only to the statutory conditions that tax has been collected on the declared goods and that the goods are later sold in inter-State trade. No additional requirement can be read into the rule that the same dealer must have been the person who originally paid the tax under the State Act.

Conclusion: The denial of refund on the ground that the assessee had not itself paid the tax was unsustainable, and the assessee was entitled to refund.

Final Conclusion: The revision petitions succeeded and the assessee obtained the refund claimed under the State sales tax scheme as harmonised with the central law governing declared goods.

Ratio Decidendi: Where declared goods taxed under the State law are subsequently sold in inter-State trade, refund cannot be refused by imposing a condition not found in the governing statute or rule, and the refund must be granted to the dealer satisfying the statutory requirements.

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