Sales Tax Officer, Special Circle, Ernakulam &amp; Anr Vs. Tata Oil Mills Co. Ltd
that the State legislature was directly legislating for the imposition of sales or purchase tax under entry 54 of List II when it made such a provision, for on the face of the provision. the amount, though collected by way of tax, was not exigible as tax under the law."An attempt was made on behalf of the State in that case to sustain the validity of section 11(2 ) of the Hyderabad Act on the ground that the Legislature had enacted that law as part of the incidental and ancillary power to make provision for the levy and collection of sales or purchase tax. This contention was repelled and it was observed that the ambit of ancillary or incidental power did not go to the extent of permitting the legislature to provide that though the amount collected-may be wrongly-by way of tax is not exigible under the law. as made under the relevant taxing entry, it shall s till be paid over to Government, as if it were a tax.10. The question again arose in this Court before a Bench consisting of six Judges in the case of Ashoka Marketing Ltd. v. State of Bihar &Anr.([1970] 1 S. C. R. 455.). In that case in determining the appellants turnover for assessment to sales tax for the year 1956-57, the Superintendent of Sales Tax included an amount representing Railway freight in the appellants 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 20-A of the Bihar Sales Tax Act the Assistant Commissioner issued a notice under section 20-A(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 appellants contention that section 20-A 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 20-A were ultra vires the State legislature. As a corollary thereto, sub-sections (6) and (7) of that section were also held to be invalid. Subsection (3) of section 20-A of the Bihar Sales Tax Act read as under:"(3)(a) Notwithstanding anything to the contrary contained in any law or contract or any judgment, decree or order of any Tribunal, Court or authority, if the prescribed authority has reason to believe that any dealer has or had, at any time, whether before or after the commencement of this Act, collected any such amount, in a case in which or to an extent to which the said dealer was or is not liable to pay such amount, it shall serve on such dealer a notice in the prescribed manner requiring him on a date and at a time and place to be specified therein neither to attend in person or through authorised representative to show cause why he should not deposit into the Government treasury the amount so collected by him.(b) On the day specified in the notice under clause (a) or as soon thereafter as may be, the prescribed authority may. after giving the dealer or his authorised representative a reason able opportunity of being heard and examining such accounts and other evidence as may be produced by or on behalf of the dealer and making such further enquiry as it may deem necessary, order that the dealer shall deposit forthwith into the Government treasury, the amount found to have been so collected by the dealer and not refunded prior to the receipt of the, notice aforesaid to the person from whom it had been collected."In holding sub-section (3) and other impugned provisions of section 20-A to be beyond the legislative competence of the State Legislature, this Court in the case of Ashoka Marketing Ltd. (supra) relied upon the decision of this Court in Abdul Qadars case (supra).11. Dr. Muhammad has, however, tried to distinguish the above two cases on the ground that the present case relates to an amount realised in excess of the tax leviable under the Act and not to an amount which was not payable at all as tax under the Act. This fact, in our opinion, would not prevent the applicability of the principle laid down in the cases of Abdul Qadar and Ashoka Marketing Ltd. (supra). Any amount realised by a dealer in excess of the tax leviable under the Act stands, for the purpose of determining the legislative competence under entry 54, on the same footing as an amount not due as tax under the Act. Dr. Muhammads argument involves inventing a category of a "deemed tax" which is not there in the Act. T he provisions of the Act contain a definition of "tax". This necessarily means that every thing 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 be 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, eve n though the same could not be recovered as tax under the Act.
0[ds]After hearing the learned counsel, we are of the opinion that there is no merit in these twoState Legislature is competent to make a law under entry 54 of List II in Seventh Schedule to the Constitution in respect of "taxes on the sale or purchase of goods other than newspapers subject to the provisions of entry 92A of List I". Entry 92A of List I relates to taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce, and we are not concerned with thisanswer to such a question has to be in the negative. The matter indeed is not res integra and is concluded by two decisions of thisfact, in our opinion, would not prevent the applicability of the principle laid down in the cases of Abdul Qadar and Ashoka Marketing Ltd. (supra). Any amount realised by a dealer in excess of the tax leviable under the Act stands, for the purpose of determining the legislative competence under entry 54, on the same footing as an amount not due as tax under the Act. Dr. Muhammads argument involves inventing a category of a "deemed tax" which is not there in the Act. T he provisions of the Act contain a definition of "tax". This necessarily means that every thing 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 be 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, eve n though the same could not be recovered as tax under the Act.
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that the State legislature was directly legislating for the imposition of sales or purchase tax under entry 54 of List II when it made such a provision, for on the face of the provision. the amount, though collected by way of tax, was not exigible as tax under the law."An attempt was made on behalf of the State in that case to sustain the validity of section 11(2 ) of the Hyderabad Act on the ground that the Legislature had enacted that law as part of the incidental and ancillary power to make provision for the levy and collection of sales or purchase tax. This contention was repelled and it was observed that the ambit of ancillary or incidental power did not go to the extent of permitting the legislature to provide that though the amount collected-may be wrongly-by way of tax is not exigible under the law. as made under the relevant taxing entry, it shall s till be paid over to Government, as if it were a tax.10. The question again arose in this Court before a Bench consisting of six Judges in the case of Ashoka Marketing Ltd. v. State of Bihar &Anr.([1970] 1 S. C. R. 455.). In that case in determining the appellants turnover for assessment to sales tax for the year 1956-57, the Superintendent of Sales Tax included an amount representing Railway freight in the appellants 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 20-A of the Bihar Sales Tax Act the Assistant Commissioner issued a notice under section 20-A(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 appellants contention that section 20-A 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 20-A were ultra vires the State legislature. As a corollary thereto, sub-sections (6) and (7) of that section were also held to be invalid. Subsection (3) of section 20-A of the Bihar Sales Tax Act read as under:"(3)(a) Notwithstanding anything to the contrary contained in any law or contract or any judgment, decree or order of any Tribunal, Court or authority, if the prescribed authority has reason to believe that any dealer has or had, at any time, whether before or after the commencement of this Act, collected any such amount, in a case in which or to an extent to which the said dealer was or is not liable to pay such amount, it shall serve on such dealer a notice in the prescribed manner requiring him on a date and at a time and place to be specified therein neither to attend in person or through authorised representative to show cause why he should not deposit into the Government treasury the amount so collected by him.(b) On the day specified in the notice under clause (a) or as soon thereafter as may be, the prescribed authority may. after giving the dealer or his authorised representative a reason able opportunity of being heard and examining such accounts and other evidence as may be produced by or on behalf of the dealer and making such further enquiry as it may deem necessary, order that the dealer shall deposit forthwith into the Government treasury, the amount found to have been so collected by the dealer and not refunded prior to the receipt of the, notice aforesaid to the person from whom it had been collected."In holding sub-section (3) and other impugned provisions of section 20-A to be beyond the legislative competence of the State Legislature, this Court in the case of Ashoka Marketing Ltd. (supra) relied upon the decision of this Court in Abdul Qadars case (supra).11. Dr. Muhammad has, however, tried to distinguish the above two cases on the ground that the present case relates to an amount realised in excess of the tax leviable under the Act and not to an amount which was not payable at all as tax under the Act. This fact, in our opinion, would not prevent the applicability of the principle laid down in the cases of Abdul Qadar and Ashoka Marketing Ltd. (supra). Any amount realised by a dealer in excess of the tax leviable under the Act stands, for the purpose of determining the legislative competence under entry 54, on the same footing as an amount not due as tax under the Act. Dr. Muhammads argument involves inventing a category of a "deemed tax" which is not there in the Act. T he provisions of the Act contain a definition of "tax". This necessarily means that every thing 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 be 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, eve n though the same could not be recovered as tax under the Act.

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### Explanation:
After hearing the learned counsel, we are of the opinion that there is no merit in these twoState Legislature is competent to make a law under entry 54 of List II in Seventh Schedule to the Constitution in respect of "taxes on the sale or purchase of goods other than newspapers subject to the provisions of entry 92A of List I". Entry 92A of List I relates to taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce, and we are not concerned with thisanswer to such a question has to be in the negative. The matter indeed is not res integra and is concluded by two decisions of thisfact, in our opinion, would not prevent the applicability of the principle laid down in the cases of Abdul Qadar and Ashoka Marketing Ltd. (supra). Any amount realised by a dealer in excess of the tax leviable under the Act stands, for the purpose of determining the legislative competence under entry 54, on the same footing as an amount not due as tax under the Act. Dr. Muhammads argument involves inventing a category of a "deemed tax" which is not there in the Act. T he provisions of the Act contain a definition of "tax". This necessarily means that every thing 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 be 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, eve n though the same could not be recovered as tax under the Act.
