1. The petitioner in this case is a dealer in jaggery. The State in exercise of its powers under Section 6 of the Madras General Sales Tax Act issued a notification exempting the sale of jaggery from sales tax with effect from 1st April, 1958. Though the publication of this notification was on 23rd April, 1958, it was to take effect from 1st April, 1958. The petitioner, however, collected sales tax on jaggery sold to its customers from 1st April, 1958, till it became aware of the Government notification granting exemption from sales tax in the case of jaggery a week later than the date of publication of the notification. That, it did bona fide as but for the notification of the Government, the petitioner was entitled to collect tax on the sales effected and to pay the amount so collected to the State. After the publication of the notification, finding that the tax so far collected from its purchasers was not properly leviable, the petitioner refunded the amounts collected to its purchasers. The sum collected and later on refunded amounted to Rs. 2,994-7-8. The question for consideration relating to the year of assessment 1958-59, was whether the petitioner was liable to pay the State this amount of tax which it had initially collected from its purchasers but subsequently refunded to them. The Deputy Commercial Tax Officer (Assessment) held that the petitioner was liable to pay the amount to the State irrespective of the question whether the amount had been refunded to the purchasers or not. The Appellate Assistant Commissioner, however, took a different view and held that inasmuch as the petitioner had not with it the amount of tax collected from its purchasers, it was not liable to pay the amount to the State. The Board of Revenue in exercise of its powers of revision suo motu has reversed the decision of the Appellate Assistant Commissioner after due notice to the petitioner, holding that there was no provision in the Sales Tax Act which would enable the petitioner to refund the tax to its purchasers which it had already collected as properly leviable and due. In our opinion, the Board of Revenue was in error in reversing the decision of the Appellate Assistant Commissioner. Admittedly, on the finding of the Appellate Assistant Commissioner which has not been differed from, there is no amount of tax in the hands of the petitioner collected from its purchasers in respect of sale of jaggery from 1st April, 1958, till the date on which it became aware of the Government notification exempting jaggery from sales tax. Thus the fact of repayment of the tax collected by the petitioner to its purchasers has been proved beyond doubt. The position, therefore, is that the petitioner has no amount in its hands which could come within the provisions of Section 8-B(2) of the Act in which case alone the State would be entitled to call upon the petitioner to pay the amount of tax collected. The effect of the refund of the amount of tax collected by the petitioner from its purchasers, is as if the petitioner had not made the initial collection of sales tax. The view of the Board of Revenue that there is no provision in the Madras General Sales Tax Act enabling the petitioner to make a refund of the tax already collected is wholly irrelevant as the question for consideration is not under what right the petitioner paid back the tax it had collected from its purchasers. Undoubtedly the tax collected by the petitioner had been refunded in view of the Government notification exempting sale of jaggery from tax and this it was entitled to do as it was not bound to keep the amount of tax illegally collected. After the issue of the notification by the Government which took effect from 1st April, 1958, the petitioner had no right to collect tax from its purchasers in respect of the sale of jaggery. We are unable to uphold the decision of the Board of Revenue which seems to be erroneous both on facts and in law.
2. The revision petition is allowed and the department will pay the costs of the petitioner. The order of the Appellate Assistant Commissioner is hereby restored.