1986 (10) TMI 307

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....cate raises a short question as to the constitutional validity of section 29-A of the U.P. Sales Tax Act, 1948. This section, which was introduced in the U.P. Sales Tax Act, 1948, by section 17 of the U.P. Taxation Laws Amendment Act, 1969, has been held to be constitutionally valid by a Division Bench of the Allahabad High Court on 13th July, 1970. The appellants question the correctness of this view taken by the High Court. The appellants carry on business as dealers in coal and they are registered as such under the U.P. Sales Tax Act, 1948. Prior to 1st October, 1965, there was no sales tax levied on sale of coal and for the first time on 1st October, 1965, coal became a taxable commodity under the U.P. Sales Tax Act, 1948. The appella....

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....cessary at this stage to set out the relevant provisions of the U.P. Sales Tax Act, 1948, as they stood at the material time. Sub-section (4) of section 8-A made the following provision: "(4) Without prejudice to the provisions of clause (f) of section 14, the amount realised by any person as tax on sale of any goods, shall, notwithstanding anything contained in any other provision of this Act, be deposited by him in a Government treasury within such period as may be prescribed, if the amount so realised exceeds the amount payable as tax in respect of that sale or if no tax is payable in respect thereof." Sub-section (5) was added in section 8-A by section 11 of the U.P. Taxation Laws (Amendment) Act, 1956, and it read as follows: "(5) W....

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....er person." The question is whether this section, as it stood at the material time in the form in which it was introduced by section 17 of the U.P. Taxation Laws Amendment Act, 1969, was within the legislative competence of the State Legislature. The only entry under which section 29-A was sought to be brought was entry 54 in List II of the Seventh Schedule to the Constitution. Clause (3) of article 246 read with this entry empowers the State Legislature to make laws with respect to taxes on the sale or purchase of goods. It is now well-settled that an entry in a legislative list must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject-matter of the entry but als....

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....of the decision in Ashoka Marketing Company's case [1970] 26 STC 254 (SC); [1970] 3 SCR 455 and reaffirmed the view taken in Orient Paper Mills' case [1961] 12 STC 357 (SC); [1962] 1 SCR 549. The court held that the taking over of sums collected by dealers from the public under guise of tax solely with a view to return them to the buyers so deprived is necessarily incidental to "tax on the sale or purchase of goods". Such a provision is manifestly a consumer-protection measure since "while suits against dealers to recover paltry sums by a large number of customers would lead to endless and expensive litigation, a simpler process of returning those sums on application by the relevant purchasers would protect the common buyer while depriving ....