JUDGMENT

RAJAGOPALA AYYANGAR, J. –

Civil Appeals 75 and 76 of 1957 have been filed by the State of Mysore and the Sales Tax Officer, Bangalore, while in Civil Appeals 355 and 356 of 1957 the Commissioner of Sales Tax in Mysore, Bangalore, is the appellant. Both the sets of appeals have been filed on certificates granted by the High Court of Mysore under Article 133(1)(c) of the Constitution. The question of law involved in all these appeals is as regards the proper construction of section 11 of the Mysore Sales Tax Act, 1948 (hereinafter referred to as the Act).

Civil Appeals 75 and 76 of 1957 arise out of a common judgment and order of the High Court of Mysore dated September 29, 1955, in Writ Petition No. 39 of 1954 and Civil Petition No. 111 of 1954 relating to the Mysore Spinning and Manufacturing Co., Ltd., Bangalore, and the Minerva Mills Ltd., Bangalore, respectively and these are the respondents in the respective appeals before us. The two companies are under common management. The Minerva Mills Ltd. - the appellants in Civil Appeal No. 76 of 1957 - deal inter alia in cotton yarn and cotton cloth. For the quarter ending December 31, 1951, the Sales Tax Officer, II Circle, Bangalore, assessed the company for sales tax on their turnover. There was no dispute about the turnover or the assessment, but the company who held a licence under section 5 of the Mysore Sales Tax Act for dealing in yarn, cloth etc. manufactured in their mills, were in doubt as to whether their licence would or would not cover their sales of waste cotton and dust. If the licence that the company held did not cover these sales, the sales would have been liable, by reason of the provision in rule 2(e) of the Schedule to the Act, read with section 5(ii) of the Act, to tax at an enhanced rate of Rs. 1-9-0 instead of Re. 0-8-0 for every Rs. 100 of their turnover. As the company did not wish to take any risk in the matter, they provisionally collected what they termed "deposits" from their purchasers, of sums representing the difference in the tax between the two rates, on the distinct understanding and condition that the excess amount collected would be refunded to the purchasers immediately it became clear that the sales of these items were covered by their licence. The total amount received by the company in this manner amounted, in the relevant quarter, to Rs. 130-15-5. The Sales Tax Officer, who dealt with the assessment of the company for the quarter, held that the licence which it held for dealing in cotton cloth and yarn did cover these sales of cotton-waste and dust, with the result that tax at the higher rate was not payable on the turnover represented by these sales. But he nevertheless held that the amount of Rs. 130-15-5 collected by the dealer in the circumstances narrated, was payable to the Government under section 11(2) of the Mysore Sales Tax Act, notwithstanding that the dealings in respect of which the amount was received were not liable to tax at that rate under the appropriate charging sections of the Sales Tax Act. Against the order of the Sales Tax Officer the company preferred an appeal to the Deputy Commissioner which was dismissed on the same reasoning and similarly a revision to the Commissioner of Sales Tax, but the latter officer referred on July 19, 1951, the question of law raised by the company to the High Court for determination by it under section 16 of the Act. The question referred was :

"Whether the sum of Rs. 130-15-5 collected by the petitioner company in the quarter ended December 1951 in its bills under the head 'deposit' at 3 pies per rupee on the above to cover sales tax subject to refund, if any, as stated in the revision petition in the circumstances set out therein attracts the provisions of section 11 of Mysore Sales Tax Act and therefore the petitioner company was liable to pay the said amount to the Government. If not whether the petitioner company is entitled to refund of the said amount of Rs. 130-15-5 al