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TMI Blog1975 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... covered as tax under the Act. - Civil Appeal No. 1988, 1989 of 1970, W.P. No. 156 of 1967 - - - Dated:- 29-7-1975 - KHANNA H.R., BEG M.H. AND GUPTA A.C. JJ. K.M.K. Nair, Advocate, for the appellant in C.A. No.1989 of 1970. Dr. V.A. Seiyed Muhamad, Senior Advocate (K.M.K. Nair, Advocate with him), for the appellant in C.A. No. 1988 of 1970. G.B. Pai, Senior Advocate (A.G. Meneses, Advocate for M/s J.B. Dadachanji Co., with him), for the respondent. -------------------------------------------------- The judgment of the Court was delivered by KHANNA, J.- This judgment would dispose of Civil Appeals Nos. 1988 and 1989 of 1970, filed on certificate against the judgment of the Kerala High Court, whereby that court held that it was beyond the competence of the State Legislature to enact law contained in sub-section (3) of section 22 of the Kerala General Sales Tax Act, 1963 (Act 15 of 1963) (hereinafter referred to as the Act), in so far as it related to payment of an amount collected as tax on transactions not liable to tax under the Act or in excess of the tax leviable under the Act. We may now set out the facts giving rise to one of the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny amount collected by him as sales tax, even though that amount was not payable as tax, was unconstitutional. The learned single Judge dismissed the petition filed by the respondent. On appeal, however, the Division Bench held, as already mentioned earlier, that the impugned provision was beyond the legislative competence of the State Legislature. Sub-section (3) of section 22 of the Act reads as under "(3) If any dealer or person collects tax on transactions not liable to tax under this Act or in excess of the tax leviable under this Act, such dealer or person shall, unless it is established to the satisfaction of the assessing authority that the tax so collected has been refunded to the person who had originally paid tax, pay over to the Government, in addition to the tax payable, the amount so collected within such time and in such manner as may be prescribed." The learned Judges of the High Court in holding the above provision, in so far as it related to payment of an amount collected as tax on transactions not liable to tax under the Act or in excess of the tax leviable under the Act to be beyond the legislative competence of the State Legislature, referred to entry 54 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State of an amount, which though not exigible under the State law as sales tax or purchase tax was wrongly realised as such by a dealer. The answer to such a question has to be in the negative. The matter indeed is not res integra and is concluded by two decisions of this Court. A Constitution Bench of this Court examined in the case of R. Abdul Quader Co. v. Sales Tax Officer, Hyderabad [1964] 15 S.T.C. 403 (S.C.); [1964] 6 S.C.R. 867., the validity of section 11(2) of the Hyderabad Sales Tax Act, 1950, which reads as under: "(2) Notwithstanding anything to the contrary contained in any order of an officer or tribunal or the judgment, decree or order of a court, every person who has collected or collects on or before 1st May, 1950, any amount by way of tax otherwise than in accordance with the provisions of this Act, shall pay over to the Government, within such time and in such manner as may be prescribed, the amount so collected by him, and in default of such payment the said amount shall be recovered from him as if it were arrears of land revenue." The appellant in that case collected sales tax from the purchasers of betel leaves in connection with the sales made by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermining the appellant's turnover for assessment to sales tax for the year 1956-57, the Superintendent of Sales Tax included an amount representing railway freight in the appellant's sales of cement. The appellate authority set aside the orders directing the inclusion of the railway freight in the turnover. After the introduction of section 20A of the Bihar Sales Tax Act the Assistant Commissioner issued a notice under section 20A(3) of the Act requiring the appellant to show cause why an amount representing sales tax on the railway freight which became refundable under the orders of assessment be not forfeited. The appellant's contention that section 20A was ultra vires the State Legislature was rejected by the Assistant Commissioner as well as by the High Court in a writ petition under article 226 of the Constitution. On appeal filed by the assessee this court held that sub-sections (3), (4) and (5) of section 20A were ultra vires the State Legislature. As a corollary thereto, sub-sections (6) and (7) of that section were also held to be invalid. Sub-section (3) of section 20A of the Bihar Sales Tax Act read as under: "(3)(a) Notwithstanding anything to the contrary contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegory of a "deemed tax" which is not there in the Act. The provisions of the Act contain a definition of "tax". This necessarily means that everything outside it collected by the dealer would be an exaction not authorised by the Act. "Tax", according to section 2 (xxiv) of the Act, means the tax payable under the Act. The amount which was realised by the respondent in excess of what was due as tax cannot be held to be "tax", because such excess amount was not tax payable under the Act. If the State Legislature cannot make a law under entry 54 of List II of the Seventh Schedule to the Constitution directing the payment to the State of any amount collected as tax on transactions not liable to tax under the Act, it would likewise be incompetent to make a law directing payment to the State of an amount realised by a dealer in excess of the tax payable under the Act. The amount realised in excess of the tax leviable under the Act would not stand for this purpose on a footing different from that of the amount realised as tax, even though the same could not be recovered as tax under the Act. We would, therefore, dismiss the two appeals with costs. One hearing fee. Appeals dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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