Free-supplied items excluded from taxable turnover; refund or recovery must be pursued against the proper authority, not the Railways.

For sales tax purposes, the value of items supplied free of cost by the buyer is not includable in the sale price for computing taxable turnover under Section 2(1)(s) read with Section 5 of the A.P. General Sales Tax Act, 1957, so neither the contractor nor the Railways are liable to tax on that value. A writ petition under Article 226 cannot be used to direct the Railways not to recover such tax from running bills where the claim concerns amounts allegedly paid by the contractor under a mistaken impression. Any refund or recovery claim must be pursued in appropriate proceedings against the concerned authority.

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Issues: Whether a writ petition under Article 226 could be maintained to direct the Railways not to recover sales tax from the running bills and whether any relief could be granted against the Railways in respect of sales tax allegedly paid on free-supplied items.

Analysis: The dispute concerned the sales tax component relatable to the period anterior to 2001. The Court accepted that the value of items supplied free of cost by the buyer was not includable in the sale price for computing taxable turnover under Section 2(1)(s) read with Section 5 of the A.P. General Sales Tax Act, 1957. On that basis, it held that neither the petitioner nor the Railways were liable to pay sales tax on such value. The Court further recorded that the petitioner had paid amounts towards sales tax on its own accord under a mistaken impression, and that any claim for refund or recovery of those amounts had to be pursued in appropriate proceedings against the concerned authority.

Conclusion: No relief could be granted against the Railways in the writ petition, and the petitioner was left to pursue such remedies as may be available in law for refund or recovery of the amount, if advised.

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