- (1.) M. Katju, J. By means of this peti tion the petitioner has challenged the con stitutional validity of U. P. Ordinance No. 6 of 2001 by which a new Section 4-A has been inserted in the U. P. Tax on Entry of Goods Act, 2000 (hereinafter referred as to an Act) and also the Notification No. 508 da ted 24-2-2001 and Notification No. 636 dated 26-2-2001.
(2.) WE have heard learned Counsel for the parties. The petitioner Nos. 1,2 and 3 are Association of Sugar Mills and other petitioners are the individual Sugar Units, manufacturing sugar in U. P. Sugar is a Scheduled Industry' under the provisions of the Industrial Development and Regulation Act, 1951 and it comes under Item No. 25 of the First Schedule of the Act. Since the whole field in respect of sugar is occupied by the Central Legisla tion, it is only parliament that can levy any tax on sugar and the State Government is not empowered to do so. However, Entry 52 of List-II of the Seventh Schedule to the Constitution permits a tax by the Slate Legislature on entry of goods into a local area for consumption, use or sale therein. Acting under this entry the U. P. Govern ment issued Ordinance No. 21 of 1999 which came into force on 1-11-99 vide Notification dated 31-10-1999, copy of which has been annexed as Annexure-3 to the petition. Under Section 4 (1) of this Ordinance tax was levied on the entry of any goods specified in the Schedule into a local area within U. P. Under Section 4 (2) the Entry Tax was payable by a dealer who brings into a local any area and such goods. Under Section 5, every dealer is to get himself registered under the Trade Tax Act and Section 6 provides for penalty. By Notification dated 31-10-99 the Governor of U. P. imposed levy of Entry Tax on sugar at 2%. True copy of the Notification is annexed as Annexure-1 to the petition. However, soon after the promulgation of the Ordinance the State Government decided not to impose the same, and hence the Commissioner, Trade Tax issued a circular dated 18-9-99 convey ing the decision of the Cabinet that the collection of Entry Tax will be deferred till further orders. Copy of the Circular is annexed as Annexure-5 to the petition. Subsequently the Ordinance was con verted into an Act being No. 12 of 2000 after assent of the Governor. A copy of the Act has been annexed as Annexure-6 to the petition. Copy of the Rules framed under the Act are Annexure-7 to the petition.
(3.) THE U. P. Government by Notifica tion dated 23-8-2000 changed the word 'sugar' appearing at serial No. 11 of the Schedule to 'non-levy Sugar'. True copy of this Notification has been annexed as Annexure-8 to the petition. Immediately thereafter the licensed sugar dealers started an agitation against the levy and the entire sugar trade remained suspended for sometime. THEreafter, an agreement with the sugar traders was entered into by the Government and the Minister for In stitutional Finance announced that the Entry Tax would be charged from sugar mills owners and not from traders. After this announcement the traders called off their strike. True copies of the news item are annexed as-9 and 10 to the petition. THEreafter, the impugned Section 4-A was added to the Act which casts a liability on the manufacturer to collect the entry tax from dealers at the time of sale of sugar to them. Section 4-Areads as follows:- "4-A-Realisation of tax through manufacturer.- (1) Notwithstanding anything contained in any other provisions of this Act, any person who intends to bring into a local area from any area within the State, such goods specified in the schedule as may be notified by the State Government shall at the time of taking delivery of the goods from the manufacturer, pay to the manufacturer the tax payable on entry of such goods into the local area and the manufacturer shall receive the tax so paid. (2) THE manufacturer receiving the tax under sub-section (1) shall submit to the assess ing authority a return in respect of the goods supplied, and the tax received by him under sub- section (1) and deposit the tax so received in such manner and within such time as may be prescribed. (3) Where any manufacturer refuses to receive or fails to deposit the tax under this section he shall be liable to pay the tax alongwith the interest and penalty, if any, payable thereon which shall be recoverable as arrears of land revenue. (4) Where the assessing authority is satis fied that only goods referred to in sub-section (1) is lost of destroyed after its delivery by the manufacturers and before its entry into the local area, it shall direct that the tax paid in respect of such goods shall be refunded to the person who had paid the tax under sub-section (1): Provided that no claim for such refund shall be entertained after the expiry of six months from the date of the loss or distribution of the goods. (5) THE provisions of Section 5 shall not apply to a person making payment of the tax under sub-section (1) and such person shall not be assessed or required to submit under this Act. " Rule 7 inserted by U. P. Tax on-Entry of Goods (Amendment) Rules, 2001 read as follows:- "7. Realisation and deposit of tax by the manufacturer.- THE manufacturers in Uttar Pradesh responsible for selling, supplying or otherwise dispatching the goods notified by the State Government under Section 4-A to any dealer in Uttar Pradesh shall:- (a) Realise the amount of tax payable on the value of goods through a demand draft in the name of concerned Assessing Authority and shall deposit the same into the Government Treasury before the expiry of the next succeed ing month. (b) Submit to the Assessing Authority before the expiry of the next succeeding month. A monthly returns of such turnover in Form T' giving detailed information in the Annexure thereof, alongwith the treasury challan for proof of the deposit of the tax. (c) Issue a certificate to the dealer in Form G within two months of the realisation and within one month of the deposit of tax. No single certificate shall cover transactions of more than one month. " The U. P. Government vide Notification dated 20-2-2001 notified that non-levy sugar shall be the goods notified for the purpose of Section 4 A. A true copy of the same is annexed as Annexure-11 to the petition.;