Bhagwati, C. J. - (1.) This appeal by certificate raises a short question as to the constitutional validity of S. 29A of the U. P. Sales Tax Act, 1948. This section, which was introduced in the U. P. Sales Tax Act, 1948 by S. 17 of the U. P. Taxation Laws (Amendment) Act, 1969. has been held to be constitutionally valid by a Division Bench of the Allahabad High Court on 13th July 1970. The appellants question the correctness of this view taken by the High Court.
(2.) The appellants carry on business as dealers in coal and they are registered as ,such under U. P. Sales Tax Act, 1948. Prior to 1st October 1965, there was no sales tax levied on sale of coal and for the first time on 1st October 1965, coal became a taxable commodity under the U. P. Sales Tax Act, 1948. The appellants, proceeding on the footing that sales tax was payable by them on sale of coal from and after 1st October 1965, collected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965-66 after depositing a sum of Rs. 10,073.86 representing the amount of tax payable by them in accordance with their returns. It was, however, found as a result of the assessment Order made by the Sales Tax Officer on 28th March 1970 that no sales tax was payable by the appellants on sales of coal under the U. P. Sales Tax Act, 1948. The appellants thereupon claimed refund of the sum of Rs. 10,073.86 but the Sales Tax Officer rejected the claim made by the appellants on the ground that by reason of S. 29A, no refund was claimable by the appellants and the only persons entitled to claim refund were those from whom the appellants had collected the tax. This Order made by the Sales Tax Officer was challenged by the appellants by filing a writ petition in the High Court of Allahabad and the principal ground on which the correctness of this Order was challenged was that S. 29A was ultra vires as being outside the legislative competence of the State legislature. The High Court negatived this challenge and upheld the constitutional validity of S. 29A and on this view sustained the Order made by the Sales Tax Officer. The appellants thereupon preferred the present appeal after obtaining certificate of fitness from the High Court.
(3.) It is necessary at this stage to set out the relevant provisions of the U. P. Sales Tax Act, 1948 as they stood at the material time. Sub-section (4) of S. 8-A made the following provision: "(4) Without prejudice to the provisions of Cl. (f) of S. 14, the amount realised by any person as tax on sale of any goods shall, notwithstanding anything contained in any other provision of this Act, be deposited by him in a Government treasury within such period as may be prescribed. if the amount so realised exceeds the amount payable as tax in respect of that sale or if no tax is payable in respect thereof. Sub-section (5) was added in S. 8-A by S. 11 of the U. P. Taxation Laws (Amendment) Act, 1965 and it read as follows:- "(5) Where a dealer is found not liable to be assessed to tax by reason of his turnover being less than the amount specified in or under S. 3, or sub-sec. (1) or (2) of S. 18, but has realised any tax as such in respect of such turnover, he shall, notwithstanding anything contained in this Act, be liable to pay the same to the State Government and shall deposit it into the Treasury within 30 days of the date of the Order by which he was found not so liable, unless it has already been so deposited." Since, having regard to the judgment of this court in R. Abdul Quader and Co. v. Sales Tax Officer, Hyderabad, (1964) 6 SCR 867, it was doubtful whether sub-ss. (4) and (5) of S. 8A, standing by themselves, would fall within the legislative competence of the State legislature Section 29-A was inserted in the U. P. Sales Tax Act, 1948 by S. 17 of the Taxation Laws (Amendment) Act 1969: "29-A. Procedure for disbursement of amounts wrongly realised by dealer as tax. (1) Where any amount is realised from any person by any dealer purporting to do so by way of realisation of tax on the sale of any goods to such person, such dealer shall deposit the entire amount so realised into the Government Treasury, within such period as may be prescribed, notwithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act. (2) Any amount deposited by any dealer under sub-sec. (1) shall, to the extent it is not due as tax, be held by the State Government in trust for the person from whom it was realised by the dealer. or for his legal representatives, and the deposit shall discharge such dealer of the liability in respect thereof to the extent of the deposit. (3) Where any amount is deposited by any dealer under sub-sec. (1). such amount or any part thereof shall, on a claim being made in that behalf in such form as may be prescribed, be refunded. in the manner prescribed, to the person from whom such dealer had actually realised such amount or part, or to his legal representatives, and to no other person: Provided that no such claim shall be entertained after the expiry of three years from the date of the order of assessment or one year from the date of the final order on appeal, revision or reference. if any, in respect thereof, whichever is later. Explanation- The expression 'final order on appeal, revision or reference' includes an order passed by the Supreme Court under Art. 32, Art. 132 or Art. 137. or by the High Court under Art. 226 or Art. 227 of the Constitution." The question is whether this section. as it stood at the material time in the form in which it was introduced by S. 17 of the U. P. Taxation Laws (Amendment) Act, 1969, was within the legislative competence of the State Leigslature.;