1. The Commercial Tax Authorities issued an order demanding the payment to them of a sum of Rs. 8,027-03 which represents collections by way of sales tax by the petitioners. This demand was made under Rule 4-A(ii) of the Central Sales Tax (Madras) Rules, 1957. It is not in dispute that this sum was collected. But the petitioners claim that this collection represents excess collections which they are under a liability to refund. It was also contended by the petitioners that what the department can realise from the petitioners is only what is lawfully 'due by way of sales tax and not an amount which represents the excess collection. The authorities declined to accept this contention. An appeal to the Appellate Assistant Commissioner also failed.
2. The petitioners have now moved this Court in the exercise of its extraordinary jurisdiction. It is contended that the excess collection is in the nature of a contingent deposit which has to be refunded to the persons to whom the goods were sold. It was further stated that a sum of Rs. 2,791-71 had been so refunded by the petitioners, so that, in any event, the demand for the entire amount, inclusive of this amount which is no longer with the petitioners, is illegal. It is also claimed that neither the Central Sales Tax Act nor the rules confer any power upon the authorities to make a demand of this description. The demand being illegal, a writ of certiorari is prayed for to quash the order impugned.
3. In the counter-affidavit filed on behalf of the department, it is stated that though the petitioner sold the goods in the course of inter-State trade and the goods were declared goods which were liable to be taxed at a particular rate, the petitioners collected higher rates of sales tax. The explanation offered by the petitioners was that the Government departments to whom the goods were sold had not furnished the D Forms before the invoices were made out and the sales tax at the higher rate was charged. It is claimed in the counter-affidavit that the sum in question was actually collected from the buyers as Central sales tax, and that being so, the relevant rule requires that all the amounts so collected should be paid over to the State. The contention that the demand is illegal or it offends any provision either of the Act or of the Constitution is denied.
Section 9-A of the Central Sales Tax Act provides thus:
No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of inter-State trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the Rules made thereunder.
4. Section 13 of the Act confers the power to make Rules. Sub-section (1) confers such power upon the Central Government. Sub-sections (3) and (4) also confer a like power upon the State Government. But the rules made by the State Government shall not be inconsistent with the provisions of the Act or the Rules framed by the Central Government under Sub-section (1).
5. The argument of the learned Counsel is presented in the following manner. Since Section 9-A deals only with amounts collected by way of tax, it is urged that, on the basis of certain decisions, this cannot cover an amount which has been collected in excess of the prescribed rates of tax. In Tata Iron and Steel Company Ltd. v. State of Madras  5 S.T.C. 382, a similar question arose under the Madras General Sales Tax Act. Section 8-B(2) of the Madras General Sales Tax Act, which in its scope is identical with Section 9-A of the Central Sales Tax Act, had to be interpreted, and this Court held that where an amount has been collected unlawfully by the registered dealer, the registered dealer is not under an obligation to pay the amount to the Government. It may be noticed that Section 8-B(2) also employed the expression 'collected by way of tax.'
6. The Supreme Court had to consider in Abdul Quader and Co. v. Sales Tax Officer  15 S.T.C. 403, the validity of a provision in the Hyderabad General Sales Tax Act which laid down that any amount collected by way of tax otherwise than in accordance with the provisions of the Act must be paid over to the Government. It was held that it was not within the competence of the State Legislature to recover anything which was not due as tax. What was collected unlawfully was not tax within Entry 54 of List II and the State Legislature could not have either the incidental or ancillary power to do indirectly what it could not directly do. It is unnecessary to refer in greater detail to this decision. It would be noticed that the real question which their Lordships had to consider was the scope of the legislative power of a State in the context of Entry 54 of List II and to ascertain whether that power could enable the State Legislature to define something to be a tax when it did not lawfully bear that character.
7. It seems to me that these two decisions which interpreted the Act in the light of the powers of the Legislature of a State cannot in terms be made applicable to a Parliamentary enactment. The Central Sales Tax Act has been enacted in the exercise of the exclusive power which Parliament has with respect to matters enumerated in List I. Entry 92-A covers taxes on the sale or purchase of goods other than newspapers where such sale or purchase takes place in the course of inter-State trade or commerce. There is also a special residuary-Entry 97 which reads, 'Any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists.' The Central Government did not make any rule which would cover the power to recover amounts collected by the dealer, whether they were in excess of the tax lawfully collectable or not. But such a rule was made by the State Government, and that rule reads thus:
He (the registered dealer) shall pay in full the amount or amounts collected by him by way of tax to the Government....
8. Though the State Government has made this rule, it is really in virtue of a rule-making power which has been conferred upon that authority by a Central enactment, and the decision of the Supreme Court referred to earlier which invalidated the making of such a rule as being in excess of the legislative jurisdiction conferred by Entry 54 of List II, cannot apply to a rule made by an authority conferred by a Parliamentary enactment. The learned Counsel for the petitioners argued that the State Government have no power to make this rule.' I am unable to agree. This argument was also sought to be amplified by claiming that even this delegated power is required by Sub-section (3) of Section 13 of the Central Sales Tax Act to be not inconsistent with the provisions of the Act or the Rules framed by the Central Government. If the Central Government had framed a rule covering this aspect of the matter in one particular way, then the State Government cannot make a rule to cover the same matter in an inconsistent fashion. But, as I have stated already, the Central Government have not framed a rule in this regard. Learned Counsel argued that the Central Government had framed a rule with regard to the determination of turnover and that since turnover includes the amount collected by way of tax, inferentially the Central Government must be held to have made a rule in this regard. This argument is to my mind incorrect. Inclusion of the tax collected in a turnover has obviously nothing to do with a rule dealing with the recovery of the tax collected. It is with regard to the former that the Central Government has framed the rule while the State Government has dealt with the latter. There is thus no inconsistency in the rule framed by the State Government with any rule made by the Central Government. I am therefore unable to agree with either line of argument. The demand cannot be challenged as being in excess of the powers conferred by the Act, which derives legislative authority from Entries 92-A and 97 of List I.
9. On a question of fact, it may be noticed that the petitioners admit that at the time they collected the tax, the buyers had not supplied the D Forms; in the absence of these forms, the sale would not be eligible for the low rate of tax under Section 8(1), Central Sales Tax Act. Sales tax at the higher rate was therefore not unlawfully collected at the time the transaction was put through. This feature also saves to distinguish the present case from the decisions referred to.
10. It is not however denied that the petitioners have already refunded a sum of Rs. 2,791-71. Accordingly, the net collection by way of tax in the hands of the petitioners is the sum demanded less the amount specified above. On whatever footing the petitioners might have collected the tax they have refunded the amount to the buyers, and that amount is no longer available with them. The department must take note of the entire set of circumstances and not only the initial collection and refuse to recognise a proved fact, viz., that of refund. It would follow that the demand must be restricted only to the difference between the two amounts.
11. The petition is allowed to this extent only. There will be no order as to costs.
C.M.P. No. 6028 of 1964.
12. The petition is allowed.