Govinda Bhat, J.
1. These writ petitions are directed against the orders of the Commercial Tax Officer, Bellary, dated 30th August, 1969. The petitioner, a dealer in cotton, collected sales tax on sales of cotton in inter-State transactions during the period 10th November, 1964, to 31st March, 1968. Tax was not legally leviable on such transactions according to the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons ( 16 S.T.C. 231). Subsequently the petitioner refunded the said amounts to its customers. The 1st respondent in paragraph 4 of his order has found that the petitioner-firm has actually refunded the tax collected to its buyers long before the date of the Central Sales Tax (Amendment) Ordinance, 1969. The 1st respondent, however, held that the petitioner is not entitled to exemption from tax under section 10 of the Ordinance. According to the 1st respondent the benefits of section 10 are not available when the dealer makes collection of tax initially though he refunds the same later before the enactment of the Ordinance. Aggrieved by the said order, the petitioner has preferred the above writ petition.
2. It was contended by Sri K. Srinivasan, the learned counsel for the petitioner, that the effect of the refund of the amount of tax collected by the petitioner is as if the petitioner had not made the initial collection of sales tax.
3. Section 10 of the Central Sales Tax (Amendment) Ordinance, 1969, which has been replaced by the Central Sales Tax (Amendment) Act, 1969, reads thus :
'10. Exemption from liability to pay tax in certain cases. - (1) Where any sale of goods in the course of inter-State trade or commerce has been effected during the period between the 10th day of November, 1964, and the 9th day of June, 1969, and the dealer effecting such sale has not collected any tax under the principal Act on the ground that no such tax could have been levied or collected in respect of such sale or any portion of the turnover relating to such sale and no such tax could have been levied or collected if the amendments made in the principal Act by this Ordinance had not been made, then, notwithstanding anything contained in section 9 or the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as amended by this Ordinance, in respect of such sale or such part of the turnover relating to such sale. (2) ..................................'
4. The view taken by the 1st respondent, in our opinion, is a too literal construction of sub-section (1) of section 10. The object of sub-section (1) of section 10 is that in respect of sale transactions effected between the 10th day of November, 1964, when the Supreme Court pronounced its judgment in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons ( 16 S.T.C. 231) and the 9th day of June, 1969, when the Central Sales Tax (Amendment) Ordinance, 1969, was passed, no tax should be collected notwithstanding the provisions of section 9 if the dealer has not collected the tax. After the 10th day of November, 1964, the petitioner could not have collected any amounts by way of sales tax from its customers on the transactions in question. Having collected certain amounts by way of tax, it refunded the said amounts since the transactions were not liable to tax. If the customer shad filed suits against the petitioner before the Ordinance, the petitioner could not have resisted the suits. Where the amounts were illegally collected but were refunded before the Ordinance, the position, to our mind, is not in any way different from the one where the dealer does not initially collect any amount by way of tax. The contention of the learned counsel, therefore, is well-founded. The 1st respondent was clearly in error in the view he has taken that where the dealer has collected the amounts but refunded the same before the Ordinance, the case does not fall under sub-section (1) of section 10. The petitioner, in our opinion, satisfies the requirements of sub-section (1) of section 10 and is not liable to sales tax on the turnover of inter-State sales of cotton during the period from 9th November, 1964, to 31st March, 1968. In that view, the demands impugned in W.Ps. No. 5178, 5180 and 5181 of 1969 are quashed. The demand made in W.P. No. 5179 of 1969 in respect of sales of cotton for the period from 10th November, 1964, to 31st March, 1965, is quashed. The objections raised in W.P. No. 5179 of 1969 against the levy of tax in respect of inter-State sales of cotton for the period from 1st April, 1964, to 9th November, 1964, have been considered and rejected by us in W.Ps. Nos. 2109 of 1968 and 5361 of 1969. No costs.
5. Petitions allowed.