JUDGMENT

Sen, J.-Leukoplast (India) Limited, the assessee-company was granted a licence by the Drugs Controller under the Drugs and Cosmetics Act, 1940. It was amended on September 7, 1987. Under this licence, the assessee was entitled to produce inter alia Zinc Oxide Adhesive Plaster B.P.C. (Leukoplast), Surgical Wound Dressing (Handyplast); Balladona Plaster B.P.C.; Capsicum Plaster B.P.C. and Cotton Crape Bandages B.P.C. (Leukocrapes).

2. The aforesaid goods or products were liable to local sales tax as well as Central sales tax and prior to 1.11.1981, the rate of the local sales tax leviable on them was at the rate of 6 per cent and under Section 8(2A) of the Central Sales Tax Act, the rate of tax was 4 per cent. By the notification No. 14/41/81-Fin (R & C) dated 28.8.1981, drugs and medicines were exempted from the levy of local sales tax in excess of 3 per cent and thus, according to the assessee-company, as a result of this exemption, the Central Sales Tax leviable under Section 8(2-A) of the Central Sales Tax Act was also reduced to 3 per cent.

3. The assessee-company, however, had been paying Central Sales Tax at the rate of 4 per cent on the sale of the goods and also local sales tax at the rate of 6 per cent from 1.11.1981 to 1.4.1987.

4. By another notification No. 5/5/87 (R & C)-8, the State of Goa in exercise of the powers under Section 10 of the local Sales Tax Act, amended the Second Schedule to the local Sales Tax Act, inter alia, inserting Entry No. 77 which speaks of "drugs and medicines, including all I.V. Drips". By the said notification, the goods were totally exempted from levy of the local sales tax, and consequently. The Sales Tax Authorities, ceased to collect Central sales tax from 2.4.1987 on the above mentioned products or goods manufactured by the assessee-company.

Further, the case of the assessee is that the sales tax payable from 1.11.81 to 1.4.87 was at the rate of 3 per cent only and as such by two letters both dated 3.4.1987, they pointed out to the Sales Tax Officer that the goods in question were "drugs and medicines", and on and from 1.11.1981 to 1.4.1987 the said goods were liable to local and Central sales tax at the rate of 3 per cent. They further prayed for refund of the duty paid in excess of local and Central sales tax levied and collected as a result of the Sales tax assessment which had been completed. They also filed revised sales tax returns for the assessment periods, 1.1.1985 to 31.12.1985 and 1.1.1986 to 31.12.1986. However, despite these two letters, no action was taken by the State of Goa as regards the claim for refund of the Central and local sales tax collected in excess. They further prayed for the completion of the assessment proceedings which were still pending for the subsequent periods, that is, from 1.1.1983 to 31.12.1986.

They further contended that after the admission of the writ petition, the Assistant Sales Tax officer made orders dated December 24, 1987 for the period commencing on 1.1.1983 and ending on 31.12.1983. He rejected the claim for refund, applying the doctrine of unjust enrichment.

5. Thereupon, the assessee-company filed a writ petition challenging the decision of the Assistant Sales Tax Officer. The contention of the assessee was that the assessment orders should be set aside and it was entitled to the refund of the tax paid under mistake of law and collected by the State without the authority of law. On behalf of the State, however, it was contended that the products were not "drugs and medicines" and as such no question of refund of tax paid did arise. The Court formulated two questions which had to be decided in the writ petition. The questions were :

"(a) Whether the products manufactured by the petitioners and listed in the paragraphs 2 and 4 of the petition are drugs and medicines within the purview of the aforesaid Notification No. 14/41/81-Fin (R & C) and No. 5/5/87 (R & C)-8 and

(b) whether the petitioners are