STATE OF UTTAR PRADESH Vs. ANNAPURNA BISCUIT MANUFACTURING CO

JUDGEMENT

(1.) This appeal by certificate is directed against the judgment of Allahabad High Court whereby that court held that provisions of Section 29-A of the U. P sales Tax Act (Act 15 of 1948) (hereinafter referred to as the principal Act) inserted by Section 15 of the U. P. Sales-tax (Amendment and Validation) Act, 1971 (Amendment Act of 1971) (hereinafter referred to as the Amending Act) as well as Section 17 of the Amending Act to be unconstitutional.

(2.) The dispute relates to the amount which a dealer wrongly realises as sales-tax from the customer and the question which arises for consideration is whether a State legislature has the legislative competence to pass a law for the deposit of that amount in the Government Treasury. In other words, is there any entry in List II or List III of the Seventh Schedule to the Constitution under which the State Legislature could make such a law So far as Section 17 of the amending Act is concerned, the High Court observed that this section was dependent upon and interrelated with Section 15 of the Amending Act. Section 17 provides that the amount already deposited under Section 8-A (4) of the principal Act shall be deemed to be under Section 29-A as substituted by Section 15 of the Amending Act. Section 15 is the principal provision, while Section 17 is an ancillary provision. If Section 15 was unconstitutional, Section 17 would also share the same fate and would have to be struck down as unconstitutional because it is linked with S. 15 and cannot exist independently of that section. Learned Advocate General appearing for the appellant State has not, and in our opinion, rightly challenged the correctness of the view taken by the High Court in this respect.

(3.) We may now deal with the provisions of Section 15 of the Amending Act as a result of which S. 29-A was substituted in lieu of the old Section 29-A in the principal Act. Section 29-A deals with the amount wrongly realised by a dealer on sale of goods to any person. Sub-section (1) of Section 29-A of the principal Act makes it obligatory on the part of the dealer to deposit such amount into the Government Treasury "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." Sub-section (2) provides that the amount so deposited by a dealer shall to the extent it is not due as tax from him be held by the State Government in trust for the person from whom it was realised by the dealer or for his legal representatives. It further provides that when a dealer has deposited the amount into the Treasury, he shall no longer be liable to the person from whom he has realised the amount. According to sub-section (3) of the section, the amount deposited into the Government Treasury by the dealer or any part thereof shall, on a claim being made in that behalf in such manner and form as may be prescribed, be refunded to the person from whom the dealer had actually realised the amount or part, or to his legal representatives. Section 29-A thus seeks to ensure the deposit into the Government Treasury of the amount by a dealer as has been wrongly realised by him as sales tax. As the said amount does not constitute sales-tax, it is not covered by entry 54 in List II of the Seventh Schedule to the Constitution which relates to taxes on sale or purchase of goods other than newspapers subject to the provisions of entry 92A of List I.