A petition under Article 226 for a writ of mandamus directing the State to refund money alleged to have been illegally collected is maintainable, and it is the duty of the State to refund tax if levied by mistake of law.

The petitioner seeks by this proceeding to quash exhibits P-1 to P-5, the orders assessing the petitioner to sales tax in respect of his turnover as dealer in hill produce for the years 1959-60 to 1962-63 and 1965-66 and for refund of the tax already collected thereunder. Under the Schedule to the General Sales Tax Act, 1125, the turnover of hill produce is taxable only at the last purchase point within the State. The assessments here are under the Central Sales Tax Act, and section 9(1) of the Central Sales Tax Act provides :

"The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce whether such sales fall within clause (a) or clause (b) of section 3 shall be levied and collected by the Government of India in the manner provided in sub-section (3) in the State from which the movement of the goods commenced."

2. In State of Mysore v. Lakshminarasimhiah ([1965] 16 S.T.C. 231), it was held after referring to the relevant sections of that Act :

"The turnover of the respondents sought to be taxed arises out of transactions of sale of handloom and powerloom cloth effected by them in the course of inter-State trade or commerce. Under the Mysore Sales Tax Act, 1957, sale of these goods was liable to tax under section 5(3)(a) read with entry 7 in Schedule II of the Act, at a single point on sale by the first or the earliest of successive dealers in the State. It is common ground that the respondents are not the first or the earliest of successive dealers in the State in respect of the transactions sought to be taxed. Section 6 charges to tax sales in the course of inter-State trade or commerce of every dealer, but the Act does not prescribe the rates at which tax is to be levied, nor does it set up machinery for assessment, collection and enforcement of liability to pay tax, charged upon inter-State sales of dealers. By section 8(2) tax payable by the dealer in respect of his sales not falling within sub-section (1) - and the turnover in the present case is not in respect of sales falling within sub-section (1) - has to be calculated at the same rates and in the same manner as would have been calculated, if the sale had taken place inside the appropriate State. The clause in terms only deals with calculation of the tax - the rate at which and the manner in which the tax has to be calculated - under the State law; it does not attract any exemptions from tax prescribed by the State law."

See also the decisions of this Court reported in Laxmi Starch Factory Ltd. v. State ([1965] 16 S.T.C. 794; 1965 K.L.T. 862) and in Pothen Joseph & Sons v. State of Kerala ([1967] 19 S.T.C. 123; 1967 K.L.T. 657). The last purchaser within the State was the petitioner and he had already paid the tax when he purchased the goods. When, therefore, he sold the goods in inter-State sale, no tax can be levied on the turnover of the sales under the Central Sales Tax Act in the light of the ruling referred to above. That the tax was illegally levied is not disputed by the respondents.

3. What is contended for on behalf of the respondents is that no application under Article 226 of the Constitution for a writ of mandamus for refund of the tax already collected under these orders would lie. In support of this contention, reliance was placed on the ruling in Suganmal v. State of Madhya Pradesh ([1965] 56 I.T.R. 84). In that case, the Indore Industrial Tax Act, 1957, imposed industrial tax on cotton mills. The appellant before the Supreme Court was the managing proprietor of the Bhandari Iron and Steel Company, which carried on the business of mechanical engineers, founders and re-rollers. Although the Bhandari Iron and Steel Co. did not run any cotton mill, it submitted returns and deposited industrial tax to the tune of Rs. 1,75,722-5-2. Final assessments for the different years were made in 1951 and 1952. Appeals were filed against the assessment orders, and in June, 1955, the appellate