1971 (11) TMI 146 - HC - VAT and Sales Tax

Summary

Issues:
- Constitutionality of section 17 of the U.P. Sales Tax (Amendment and Validation) Act, 1971

Analysis:
The judgment of the court primarily revolves around the constitutionality of section 17 of the U.P. Sales Tax (Amendment and Validation) Act, 1971. The key question at hand is whether the State Legislature has the power to enact this provision. The background legal position is crucial for understanding this issue, particularly the evolution from section 8-A(4) to section 29-A in the principal Act. The petitioners sought refunds of excess tax realized and deposited, which led to a challenge of the constitutionality of section 29-A, subsequently referred to a larger Bench.

The enactment of the U.P. Sales Tax (Amendment and Validation) Act, 1971, introduced changes to section 29-A, notably emphasizing the deposit of realized amounts into the Government treasury. Section 17, the focal point of contention, deems payments made under the previous section as deposits under the new provision. The interdependence of sections 15 and 17 is highlighted, with section 17 being declared unconstitutional if section 15 is deemed so.

The court delves into the provisions of section 15, emphasizing the deposit of amounts not due as tax into the Government treasury for later refund to the payer. The constitutional validity of section 15 is scrutinized, with arguments based on entries in List III of the Seventh Schedule to the Constitution. Drawing parallels with a previous Supreme Court case, the court concludes that the State Legislature lacks the authority to enact section 29-A, rendering it unconstitutional. Consequently, section 17 is also declared unconstitutional due to its reliance on the invalidated section 15.

In conclusion, the court allows the petitions, declaring sections 15 and 17 of the U.P. Sales Tax (Amendment and Validation) Act, 1971, unconstitutional. It orders the respondents to refund the amounts due to the petitioners in accordance with the judgment, thereby resolving the issue of constitutionality surrounding the specified provisions.