Unconstitutional tax exclusion made post-notification turnover tax refundable, subject to proof that the burden was not passed on.

Turnover tax collected after the exemption notification took effect was refundable because the exclusion of branch transfer and consignment turnover from that exemption had been held unconstitutional. The court treated post-29-10-1992 recovery as illegal, while keeping pre-notification tax outside the refund because it had been lawfully levied. Refund was confined to the period of unlawful collection and was allowed only after the assessee established that the tax burden had not been passed on to customers; the record did not displace that assertion. The writ appeal succeeded to that extent, and the refund claim was granted for turnover tax collected after the exemption came into force.

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Issues: Whether turnover tax collected from the assessee after the date of the exemption notification was refundable, when the exclusion of branch transfer and consignment turnover from the exemption had been held unconstitutional.

Analysis: The exemption notification issued under Section 10 of the Kerala General Sales Tax Act operated from 29-10-1992, and dealers covered by it were not liable to pay turnover tax thereafter. The assessee had been excluded from the exemption and was therefore compelled to pay tax after that date. Once the exclusion was held unconstitutional, the post-notification collection from the assessee was treated as illegal. Refund was nevertheless confined to the period after 29-10-1992, because the tax collected prior to that date had been levied legally. Applying the principle that refund of an unconstitutional levy is maintainable only if the burden has not been passed on, the Court accepted the assessee's case that the tax had not been recovered from customers and that the material on record did not rebut that assertion.

Conclusion: The assessee was entitled to refund of the turnover tax paid after 29-10-1992.

Final Conclusion: The judgment under appeal was modified to grant refund of turnover tax paid after the exemption notification took effect, and the writ appeal succeeded to that extent.

Ratio Decidendi: Tax collected pursuant to an unconstitutional exclusion from an exemption is refundable for the period when the levy was unlawfully recovered, provided the claimant establishes that the burden was not passed on to others.

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