COMMISSIONER OF SALES TAX, U.P. versus M/S SWADESHI POLYTAX LTD., GHAZIABAD

Citation: [2005] SUPP. 3 S.C.R. 663 · Decided: 28-09-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

COMMISSIONER OF SALES TAX, U.P. 
v. 
M/S SWADESHI POLYTAX LTD., GHAZIABAD 
SEPTEMBER 28, 2005. 
[S.N. VARIAVAANDTARUN CHATTERJEE,JJ.] 
Taxation: 
U.P. Trade Tax Act, 1948-Section 29A (prior to 1971 amendment): 
Tax collected in excess of prescribed limit by the dealer-Held: Required 
to be deposited in Government treasury-Order of refund of excess amount 
to the dealer is not correct-It could only be refimded to party from whom 
it was wrongly collected 
A 
B 
c 
Provision requiring the dealer lo deposit in Government treasury the D 
tax collected in excess of prescribed limit-Constitutionality of-Held: 
Constitutionally valid 
Constitution of India, 1950-Artic/e 141-Provision declared invalid 
by High Court-On appeal, Supreme Court declared it valid-Binding effect- E 
Held: Appeal is a continuation of same proceeding and the finality could 
only be given by judgment of Supreme Court-As the said provision is held 
valid, it always remained on the statute, hence need not again be legislated. 
In terms of Section 29-A ofU.P. Trade Tax Act, 1948, a dealer is required 
to deposit excess tax recovered from its customers in the Government Treasury. p 
Respondent, a dealer of Staples Fiber had collected tax in excess of prescribed 
limit. Assessing Officer ordered the amount to be deposited in Government 
treasury. Appellate authority upheld the same. On appeal, Trade Tax Tribunal 
directed the refund of excess amount to the respondent. In an earlier decision, 
Allahabad High Court had struck down Section 29-A as invalid. High Court 
relied upon the said earlier decision and dismissed the revision. 
G 
In appeal to this Court, Revenue challenged the constitutionality of 
Section 29A of U.P. Trade Tax Act and legislative competence of the State 
Legislature to make a provision directing the dealer to deposit the amount of 
663 
H 
664 
SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R. 
A tax collected by him from a customer in excess of the prescribed tax. 
Allowing the appeal, the Court 
HELD: Even though the High Court had held Section 29A of U.P. Trade 
Tax Act to be unconstitutional, in the Appeal carried to this Court it was 
B declared that the Section was within the legislative competence of the State 
Legislature. The Appeal is a continuation of the same proceeding and the 
finality could only be given by the Judgment of this Court. Thus unamended 
Section 29-A always remained on the statute book and required no re-
enactment. Under the unamended Section 29-A the amount cannot be refunded 
C to the Respondent. It could only be refunded to the party from whom it was 
wrongly collected. No such party has made such a claim for refund. Therefore, 
directing this amount to be deposited in the Treasury was correct. 
[669-D-E-Ff 
Assistant Commissioner (Judicial), Sales Tax and Ors. v. Kheria 
D Brothers and Anr., [19991 8 sec 137, relied on. 
State a/UP. and Anr. v. Annapurna Biscuit Manufacturing Co., (1974( 
3 SCC 121, Overruled. 
Abdul Quader & Co. v. Sales Tax Officer, Hyderabad, (1964( 6 SCR 
E 867; Ashoka Marketing Ltd. v. State o/Bihar and Anr., (1970) 1SCC354; R. 
F 
S. Joshi, Sales Tax Officer, Gujarat and Ors. v. Ajit Mills Limited and Anr., 
etc., (1977( 4 SCC 98; Mis Kasturi Lal Har/al v. State o/U P. and Ors., (1986) 
4 SCC 704; Orient Paper Mills Ltd. v. State of Orissa, (1962( 1 SCR 549; 
State of Orissa v. Orissa Cement Ltd., [1985) Supp. SCC 608; Behram 
Khurshed Pesikaka· v. The State of Bombay, 11955) 1 SCR 613; Saghir Ahmad 
v. The State o/U P. and Ors. (1955) l SCR 707; Deep Chandv. State of UP. 
and Ors. AIR (1959) SC 648; Mahendra Lal Jaini v. The State of VIiar 
Pradesh and Ors., (19631 Supp. l SCR 912 and B. Shama Rao v. The Union 
I 
Territory of Pondicherry, (196712 SCR 650, referred to. 
G 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3742 of2000. 
From the Juqgment and Order dated 13.10.98 of the Allahabad High 
Court in S.T.R. No1 I I I 7 of I 990. 
Ms. Shobha Dikshit, Rajeev Kumar Dubey and Kamlendra Mishra for 
H the Appellant. 
COMMISSIONER OF SALES TAX, U.P. v. SWADESHI POL YTAX LTD. [VARIA VA,J.] 665 
Manoj Goel, Shuvodeep Roy and Ms. Abha R. Sharma for the A 
Respondent. 
The Judgment of the Court was delivered by 
S.N. V ARIA VA, J. This appeal is against the Judgment dated 13th 
October, 1998 passed by the Allahabad High Court. 
B 
Briefly stated the facts are as follows. 
The Respondent is a manufacturer and dealer of Polyester Staples Fiber. 
It had collected, from its customers, tax in
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