Discriminatory sales tax on imported tobacco violated trade freedom; refund under Article 226 was allowed only for timely claims.

A sales tax levied only on imported tobacco, while locally produced tobacco was not similarly burdened, directly impeded trade and created discriminatory treatment against imported goods; it was therefore not saved by Article 304(a) and was held invalid under Article 301. Money collected under the invalid levy was refundable in law, and the High Court could grant consequential relief under Article 226 by mandamus. That refund power remained discretionary: timely claims were sustained, but substantial delay ordinarily justified refusal of the extraordinary remedy and relegation to a civil action.

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Issues: (i) Whether the sales tax imposed on imported tobacco violated the freedom of trade and commerce under Article 301 and was outside the saving clause in Article 304(a) of the Constitution. (ii) Whether the High Court could order refund of tax collected under the invalid levy in exercise of jurisdiction under Article 226, and whether delay barred such relief in some cases.

Issue (i): Whether the sales tax imposed on imported tobacco violated the freedom of trade and commerce under Article 301 and was outside the saving clause in Article 304(a) of the Constitution.

Analysis: The levy operated at the point of sale by the importer and, on its true construction, applied only to imported tobacco while home-grown or locally produced tobacco was not subjected to the same burden. Such a levy directly impeded inter-State trade and commerce and created discrimination between imported goods and similar goods manufactured or produced in the State. It was not shown to be regulatory or compensatory, and therefore could not be saved by Article 304(a).

Conclusion: The tax contravened Article 301 and was not protected by Article 304(a); the levy was invalid.

Issue (ii): Whether the High Court could order refund of tax collected under the invalid levy in exercise of jurisdiction under Article 226, and whether delay barred such relief in some cases.

Analysis: Money paid under an invalid levy and under mistake is refundable in law, and the High Court may grant consequential relief under Article 226 by way of mandamus. However, the power is discretionary. In cases where the applications were filed within a reasonable time after the mistake became known, refund could be granted. Where there was substantial delay beyond the ordinary limitation period for recovery of money paid by mistake, the High Court ought ordinarily to decline the extraordinary remedy and leave the party to pursue the civil remedy.

Conclusion: Refund was properly sustained in the timely cases, but was rightly refused in the delayed cases.

Final Conclusion: The levy was held invalid, and refund relief was upheld only to the extent allowed by the High Court in the timely petitions, while the delayed refund orders were set aside.

Ratio Decidendi: A tax that discriminates against imported goods and directly impedes inter-State trade is invalid unless saved by Article 304(a), and refund of tax collected under such invalidity may be granted under Article 226 only as a discretionary consequential relief, ordinarily subject to a bar of unreasonable delay.

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