The Sales Tax Continuance Order, 1950, and the Sales Tax Laws Validation Act, 1956, had the effect of lifting the ban on the taxation of inter-state sales imposed by Article 286(2) of the Constitution for the period in question.

Ramaswami, J.

1. In Miscellaneous Judicial Case No. 330 of 1955 the petitioner is an incorporated Company, manufacturing cigarettes and tobacco and having one of its factories at Monghyr. For the - financial year 1950-51 the petitioner was assessed to sales tax by the Superintendent of Sales Tax pf Monghyr by his order dated the 7th of May, 1952. By this assessment order the petitioner was assessed to sales tax to the extent of Rs. 7,46,876/1/3. The petitioner claimed that the following sales were not liable to tax: (1) sale of goods outside Bihar and consumed in the State of first destination to the extent of Rs. 3,79,01,221/11/11, and (2) sale of goods despatched outside Bihar and consumed in States other than the State of first destination to the extent of Rs. 84, 78,260/-.

The petitioner claimed exemption under Article 286(2) of the Constitution. The claim was, however, rejected by the Superintendent of Sales Tax on the ground that the inter-state sales were taxable up to the 31st of March, 1951, by virtue of the Presidents Sales Tax Continuance Order, 1950. As a result, therefore, the petitioner was assessed to sales tax to the extent of Rs. 7,46,876/1/3. This amount included the tax of Rs. 7,10,185/12/-on the sale price of goods despatched outside Bihar and delivered for consumption in other States. The amount of sales tax was duly paid on behalf of the petitioner. An appeal was, however, taken on behalf of the petitioner to the Deputy Commissioner of Sales Tax against the order of assessment, but the appeal was dismissed. The petitioner filed an application in revision before the Board of Revenue, and on the 28th of August, 1953, the Board of Revenue allowed the revision application and held that the petitioner was entitled to exemption in respect of the sale price of goods despatched to places outside the State of Bihar. The relevant portion of the order of the Board of Revenue is to the following effect:-

- "As regards the admitted despatches of goods outside the State after the 26th January, 1960 when the Constitution came into force, the learned lower Court has been, guided by the decision of the Board in the Bengal Timber case (Case No. 61 of 1952). But this ruling of the Board stands superseded by the subsequent decision of the Supreme Court in State of Bombay V/s. United Motors Co. Ltd., 1953 SCR 1069: (AIR 1953 SC 252) (A), According to the decision of the Supreme Court, no tax can be levied on despatches to places outside the State after the 26th January, 1950, and on this point the petitions are allowed, and the Sales Tax officer directed to recalculate the amount of tax payable by the assessee."

On the 9th of October, 1953, the petitioner applied to the Superintendent of Sales Tax under sec. 15 of the statute for the refund of the amount of Rs. 7,10,185/12/-. Out of this amount a sum of Rs. 5,80,362/7/- was refunded to the petitioner by the respondents on the 21st of September. 1954. This amount was refunded by the respondents because they took the view that the petitioner was entitled to a refund of the amount of tax with regard to sales of goods consumed in the State of first destination; but the respondents did not refund the balance of Rs. 1,29,825/5/- because this amount of tax was with regard to goods consumed not in the State of first destination but in other States. On the 8th of December, 1953, the respondents filed an application for re view before the Board of Revenue, but the application was rejected by the Board of Revenue on the 25th of April, 1955, holding that in view of the judgment of the Supreme Court in 1953 SCR 1069: (AIR 1953 SC 252 (A) no further clarification was really required. The petitioner alleged that the amount of tax to the extent of Rs. l,29,823/5/- has been illegally realised and that there is a statutory obligation on the part of the respondents to refund this amount of tax to the petitioner. The petitioner has, therefore, prayed that a writ in the nature of mandamus