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Supreme Court Of India
COMMISSIONER OF SALES TAX,uttar PRADESH
Versus
GANGA SUGAR CORPORATION Limited,behari LAL RAM PRASAD,commissioner OF SALES TAX,uttar PRADESH
Decided On : September 10, 1968
Constitution of India, 1950 – Articles 19, 32 – Hyderabad General Sales Tax Act, 1950 – Section 11 – U. P. Sales Tax Act, 1948 – Section 8 – Assessment – Tax Liability – In Civil Appeal assessee-company manufactures and deals in sugar and its allied products – In the relevant assessment year 1950-51 the assessee had opted to submit its return on the basis of the turnover of the previous year 1949-50 for the period 1/04/1949, to 31/03/1950. – Sales Tax Officer assessed a sum of Rs. 96,974-5-8 as sales tax on the turnover for the aforesaid period. During the previous year the assessee had realised Rs. 1,20,000. 00 as sales tax from its customers and had deposited Rs. 63,487-2-10 towards its tax liability. – Assessee was asked to deposit the balance of Rs. 33,487-2-10 to meet the total tax liability of Rs. 96,974-5-8. – Sales Tax Officer also directed the assessee to deposit a sum of Rs. 23,025-10-4 in the government Treasury under section 8-A (4) of the U. P. Sales Tax Act, 1948, – Assessee filed an appeal against the regular assessment. – Held, State Legislature was perfectly competent to legislate about imposition of the tax under the corresponding entry in the government of India Act, 1935, on inter-State sales before the enactment of the Constitution in which article 286 created a bar to the imposition of tax on inter-State sales except in accordance with the provisions of that article. – A perusal of the orders made by the sales tax authorities in the present case and the judgments of the High court as also the section itself would show that section 8-A (4) of the Act was applicable only where an assessee had realised amounts of sales tax from his customers which were unauthorised in the sense that the amount realised exceeded the amount payable as tax or no tax was payable. – At any rate, it is perfectly clear that the tax liability of the assessee came to Rs. 14,621-9-4 only and therefore the excess which had been realised by him could not be regarded as having been realised lawfully. – It seems to us that the decision in R. Abdul Quaders case squarely applies and section 8-A (4) of the Act must be held to be ultra vires the competence of the State Legislature. – In Civil Appeal, where the facts were similar to the other appeal the point about the vires of section 8-A (4) of the Act wasspecifically raised and decided without any objection by the Commissioner of Sales Tax. – It has now been laid down by this court in M/s. Tikaram and Sons Ltd. v. The Commissioner of Sales Tax, U. P. , decided, that when the jurisdiction of the High court is not challenged to examine the question of law regarding constitutional validity of a taxing provision in a sales tax reference it is not open to the sales tax authorities to challenge the jurisdiction of the High court to examine such a question of law and to pronounce upon the constitutional validity of the impugned section. – Appeals Disposed of
Judgment
GROVER,, J.
( 1 ) THE two appeals, Civil Appeals Nos. 711 and 1284 of 1966, are by special leave from the judgments of the Allahabad High court. These appeals as also the writ petition shall stand disposed of by this judgment.
( 2 ) IN Civil Appeal No. 711 of 1966 the assessee-company manufactures and deals in sugar and its allied products. In the relevant assessment year 1950-51 the assessee had opted to submit its return on the basis of the turnover of the previous year 1949-50 for the period 1/04/1949, to 31/03/1950. The Sales Tax Officer assessed a sum of Rs. 96,974-5-8 as sales tax on the turnover for the aforesaid period. During the previous year the assessee had realised Rs. 1,20,000. 00 as sales tax from its customers and had deposited Rs. 63,487-2-10 towards its tax liability. The assessee was asked to deposit the balance of Rs. 33,487-2-10 to meet the total tax liability of Rs. 96,974-5-8. The Sales Tax Officer also directed the assessee to deposit a sum of Rs. 23,025-10-4 in the government Treasury under section 8-A (4) of the U. P. Sales Tax Act, 1948, hereinafter called the Act. The assessee filed an appeal against the regular assessment.
( 3 ) THE Judge (Appeals) redetermined the tax turnover and reduced the tax liability to Rs. 14,621-9-4. The assessee applied for refund of Rs. 48,965-9-6 being the difference between Rs. 63,487-2-10 deposited and Rs. 14,621-9-4 being the amount of tax as determined by the Judge (Appeals ). The Sales Tax Officer declined to give any refund on the ground that the assessee had in fact realised Rs. 1,20,000. 00 from its buyers on account of sales tax and it was liable to deposit the entire balance after excluding Rs. 14,621-9-4 and was therefore not entitled to any refund.
( 4 ) THE assessee filed a revision petition before the Judge (Revisions ). The Judge (Revisions) held that only tax realised after 25/01/1950, amounting to Rs. 11,952-7-10 was liable to be deposited under section 8-A (4 ). Consequently he directed the refund of Rs. 48,865-9-6 being the excess amount deposited by the assessee. He further ordered that a sum of Rs. 11,952-2-6 out of Rs. 23,025-10-4 after deducting the amount the assessee deposited under section 8-A (4) which came to Rs. 11,073-2-6 be also refunded. Thereupon the Commissioner of Sales Tax moved an application under section 11 of the Act for referring the following questions of law to the High court:"1. Whether in the circumstances of the case the amount paid by the assessees and recovered by assessees from April 1, 194 9/01/1950, is liable to be deposited in the government Treasury under section. 8-A (4) of the U. P. Sales Tax Act ? 2. What tax was chargeable from the assessees in respect of the assessment year 1950-51 on the basis of the turnover of the previous year 1949-50 and were they entitled to the refund of the deposit made by them as tax?" The reference came up before a division bench of the High court consisting of M. C. Desai, C. J. , and Pathak, J. The two learned Judges differed in their opinion and referred the following two questions for the opinion of a third Judge: "1. Whether in the circumstances of the case the amount paid by the assessees and recovered by the assessees from 1/04/1949, to 25/01/1950, is liable to be deposited in the government Treasury under section 8-A (4) of the U. P. Sales Tax Act ? 2. Were the assessees, the tax chargeable on whom in respect of the assessment year 1950-51 on the basis of the turnover of the previous year 1949-50 was Rs. 14,621-9-4, entitled in the circumstances of the case to the refund of the deposit made by them as tax?"
( 5 ) BEFORE the third Judge (Manchanda, J.) a question was mooted based on a decision of this court in R. Abdul Quader and Co. v. . Sales Tax Officer, Hyderabad , that section 8-A (4) of the Act was vltra vires the Constitution and therefore the sales tax authorities were not entitled to call upon the assessee to deposit any part of the amount of Rs. 1,20,000. 00 which
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