ASHOKA MARKETING LTD. versus STATE OF BIHAR AND ANR.

Citation: [1970] 3 S.C.R. 455 · Decided: 30-01-1970 · Supreme Court of India · Bench: M. HIDAYATULLAH · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

455 
A 
ASHOKA MARKETING LTD. 
v. 
STATE OF BIHAR AND ANR. 
January 30, 1970 
B 
[M. HIDAYATULLAH, C.J., 
J. C. SHAH, 
K. S. HEGDE, 
A. N. GROVER, A. N. RAY AND I. D. DUA, JI.] 
c 
D 
E 
F 
G 
H 
Constitution of India Sch•dule VI/, Entry 54, List LI Entries 
6, 7 
and 
13, Lisi Ill-Scope of. Bihar Sales Tax A.ct 
1959' section 20-A 
(3), (4) and (5)-VaUdity of. 
' 
In determining 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. 
1bo 
ApP,ellate authority set aside the orders directing the inclusion of the 
Railway freight in the turnover. 
After the introduction of section 20-A 
in the Bihar Sales Tax Act 19 of 1959 by Act 20 of 1962, the Assistant 
Commissioner issued a notic~ to the· AppeHant un~er section 20-A (3) 
of the Act requiring the Appellant to show cause why an amount repre-
senting Sales tax on the Railway freight which became refundable under 
the orders of assessment, be not forfeited. 
The Appellant's contention 
that section 20-A was ultra vires the State Legislature was rejected bv the 
Assistant Commissioner, and by the High Court in a writ petition under 
Article 226 of the Constitution. 
On appeal to this Court, 
HELD : The appeal must be allowed and the petition of the assessee 
must be granted. 
Sub sections (3), (4) and (5) of section 20A are 
ultra vires the State Legislature. 
As a coro1tary the'reto, sub sections 6 
and 7 must also be deemed invalid. 
Sub-section (8) of s. 20A does not alter the true nature of the demand 
or appropriation which can be made under sub-ss. (3), (4) and (5) of 
s. 20-A. 
The intention underlying sub-ss. (3), (4) and (5) is to enable 
the State to collect from the dealer tax which the State is not entitled 
to levy and to appropriate it to itself except in the very rare cases in which 
the purchas·or may approach the State and be able to satisfy it that be 
has a claim, that the claim is in order, and that it is within limitation. 
Notwithstanding tl•e addition of sub-s. (8), the amount received by the 
State or appropriated bv the State continues to have th~ character of a 
tax collected which the State is not entitled to collect. 
A provision which 
enables the dealer to pass on the liability for payment of tax is incidental 
to legislation for sales-tax. 
But it cannot be held that a provision under 
which a dealer is called ui:;on to pay to t'.1c State an amount which has 
been collected by him Oil a representation-express or implied-that an 
equal amount i~. pay-able by him under the Bihar Sales Tax Act is a pro-
vision incid~ntal ·to the oower to levy "tax on sale or purchase of goods" 
within the meaning of Entry 64, List II, of the Seventh Schedule. 
In 
effect the provision is one for levying an amount as tax which the State 
is incompetent to levy. .A ~ere device ~annot be P:"rm!tted to defe~t the 
provi•ion• of the Constttuhon by cl~thmg the claim .m the form of a 
demand for deoositing the money with the State which the dealer has 
collected, but which he was not entitled to collect. (464 F, 463 E, H] 
456 
SUPREME COURT R'EPORTS 
[ 1970) 3 S.C.R. 
The power to legislate in respect of sub-ss. ( 3), ( 4) and ( 5) of s. 
20A doe3 not fall under Entries 6, 7 and 13. of List III expressly, nor is 
it necessarily incidental to the power contained in Entries 6, 7 and 13 
of List Ill. [465 E-F] 
The Orient Paper Mills Ltd, v. The State of Orissa and Ors. (1962] I 
S.C.R. 549 distinguished. 
R. Abdul Qade.- & Co. v. 
Sales Tax Officer, Hyderabad 
(1964] 
6 
S.C.R. 867 followed. 
State of Bombay v. United Motors (India) Ltd. 
[1953] S.C.R. 1069 
referred to. 
CIVIL AP PELLA TE JURISDICTION : Civil Appeal No. 2004 of 
1966. 
Appeal by special leave from the order dated 
March 
14, 
1966 of the Patna High Court in C.W.J.C. No. 143 of 1966. 
S. V. Gupte, H. K. Puri for K. K. Jain, for the appellant. 
Lal Narain Sinha, Advocate-General for the State of Bihar 
and U. P. Singh, for the respondents. 
The Judgmemt of the Court was delivered by 
Shah, J. 
Ashoka Marketing Ltd.-hereinafter called 
'the 
assessee'-returned for the year 1956-57 under the Bihar Sales 
A 
B 
c 
D 
Tax Act, 1947, an amount of Rs. 2,46,67,517-1-6 as its turnover 
from sale of cement and other commodities. The Superintendent 
E 
o.f Sales Tax brought to tax an additional amount of Rs. 7,67,702-
13-0 being the railway freight paid in respect of the g

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