1970 (8) TMI 78 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of Section 30-B of the Andhra Pradesh General Sales Tax Act, 1957.
2. Legislative competence of the State Legislature under Entry 54 of List II of the Seventh Schedule to the Constitution.
3. Legislative competence under Entry 64 of List II read with Article 246 of the Constitution.
4. Doctrine of Severability concerning the impugned sections.

Issue-wise Detailed Analysis:

1. Validity of Section 30-B of the Andhra Pradesh General Sales Tax Act, 1957
The court scrutinized Section 30-B, which imposes penalties and forfeitures on persons collecting tax in contravention of the Act. It was argued that the State Legislature lacks the competence to enact such a provision under Entry 54 of List II of the Seventh Schedule to the Constitution. The court referenced the case of Abdul Quader & Co. v. Sales Tax Officer, where the Supreme Court held that sums collected by way of tax, not exigible under the Act, cannot be legislated upon by the State Legislature under Entry 54. The court concluded that Section 30-B, which mandates forfeiture of such sums to the State Government, is ultra vires the Constitution.

2. Legislative Competence under Entry 54 of List II of the Seventh Schedule to the Constitution
The court analyzed whether the State Legislature could enact Section 30-B under Entry 54, which allows for laws taxing sales or purchases of goods. It was determined that Entry 54 does not permit the State Legislature to require dealers to hand over amounts collected without authority of law to the State Government. The court cited previous judgments, including the striking down of Section 11(2) of the Hyderabad General Sales Tax Act and Section 5-C of the Andhra Pradesh General Sales Tax Act, reinforcing that such provisions fall outside the legislative competence under Entry 54.

3. Legislative Competence under Entry 64 of List II read with Article 246 of the Constitution
The court examined whether Section 30-B could be justified under Entry 64, which empowers the State Legislature to enact laws relating to offences against laws with respect to matters in List II. It was held that for a law to be valid under Entry 64, it must be in relation to taxes on the sale or purchase of goods as per Entry 54. Since Section 30-B does not pertain to such taxes but rather to amounts collected unlawfully, it cannot be sustained under Entry 64. The court emphasized that the Legislature cannot indirectly achieve what it cannot directly legislate under Entry 54.

4. Doctrine of Severability concerning the Impugned Sections
The court considered whether the valid portions of Section 30-B could be severed from the invalid portions and still stand. It was noted that Sections 30-A and 30-B were part of a unified legislative scheme aimed at addressing the collection of unauthorized taxes. The court concluded that since the main object of the legislation was to target sums collected unlawfully, the invalidity of key provisions rendered the entire sections 30-A and 30-B void. The valid parts could not achieve the legislative purpose independently, leading to the declaration that both sections are ultra vires and void.

Conclusion:
The court declared Sections 30-A and 30-B of the Andhra Pradesh General Sales Tax Act, 1957, invalid and ultra vires of the Constitution. The writ petitions were allowed, and writs of prohibition were issued to prevent the enforcement of these sections against the petitioners. The petitioners were awarded costs, with an advocate's fee of Rs. 50 in each case.

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