JONNALA NARASIMHARAO & CO. & ORS. ETC. ETC versus STATE OF ANDHRA PRADESH & ORS.

Citation: [1971] SUPP. 1 S.C.R. 367 · Decided: 05-04-1971 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

367 
JONNALA NARASIMHARAO & CO. & ORS. ETC. ETC. 
A 
v. 
STATE OF ANDHRA PRADESH & ORS. 
April 5, 1971 
IS. M. SIKRI, C. J., G. K. MITTER, K. S. HEGDE, A. N. GROVER AND 
P. JAGANMOHAN REDDY, 1J.] 
Andhra Pradesh General Sales Tax Act, 1957 as amended by Act 9 of 
1910--Past assessments under invalid law validated-Agents selling jaggery 
on behalf of principals made liable under s. 11 as amended to pay the 
tax collected by them-Agents had no locus standi to challenge levy on 
the basis of discrimination between principals inter se-Validity of s. 9 of 
Amending A.ct-Classification between dealers who had collected tax and 
those who had not collected is reasonable. 
The appellan\s carried on the business of Commission Agents in Jag. 
gery in Andhra Pradesh. They arranged for the sale of jaggery charging 
a small commission for their service and rendering an account to their 
Principals in respect of those sales. Every buyer was fully appri•ed of 
the fact that he was purchasing jaggery of specified agriculturist Principals 
and not that of the appellants. Till about 1963 under s. 11 of the Andhra 
Pradesh General Sales Tax Act, 1957, commission agents were required to 
obtain and were bei~ issued licences and if they conformed to the condi-
tions of those licences} they were not subjected to tax. In 1963 the princi-
pal Act was amended by Andhra Pradesh General Sales Tax Amendment 
Act 16 of 1963. By the new s. 11 introduced by the Amending Act the 
Agents of resident Principals were made liable for assessment and col-
lection of tax though the liability of the Agent was made co-extensive with 
that of the principal. The High Court held that in assessing the Agent the 
turnover of those Principals whose turnover was below the taxable limit of 
Rs. 10,000 could not be taken into account. As a consequence of this decision 
the Andhra Pradesh General .Sales Tax 1\.mendment Act 5 of I %8 was 
enacted and a new s. 11 substitu"tCd for the existing section. This s. 11 
was given retrospective effect from 1st August 1963. The object of this 
amendment was to enable the taxing authorities to assess levy and collect 
tax or penalty under the Sales Tax Act from the Agent irrespective of the 
fact that the Principal was not liable to tax. This new section was also 
struck down by the High Court, on the ground that it was violative of Art. 
14 of the Constitution. In view of this judgment which restored the legal 
position to that prevailing before the Amendment. large sums of money 
which had been collected as tax from the Agents became refundable. To 
meet this situation the Andhra Pradesh Legislature enacted the Andhra 
Pradesh General Sales Tax Amendment Act 9 of 1970, Section 8 of 
which validated the assessments already made. Under s. 9 Agents who 
had not collected the tax from their Principals were exempted from tax. 
Under s. II Agents who had collected the tax were made liable to pay 
the same. 
In writ petitions under Art 226 filed by Agents it was con-
tended that s. I 1 as amended and s. 9 of the Amending Act were violative 
of Art. 14. The High Court held that s. 11 was valid but s. 9 violated 
Art. 14. In appeal filed against the High Court's judgment by certificate, 
HELD: (i) The appeals filed by the agents were not maintainable. 
What was sought to be recovered from the appellants was in respect of a 
tax collected on past dealings and not with respect to the future transac-
tions. Th• tax had alre~_dy been collected, no doubt at first illegally, but 
B 
c 
D 
E 
F 
G 
H 
368 
A 
B 
c 
D 
SUPREME COURT REPORTS 
[1971] SUPP. S.C R 
due to the Amendment Act, that collection had become legal and as dealers 
the appellants were liable to pay that amount to the State. As there wai-
nothing to show that what was sought to be recovered from the dealer was 
more tban what he had collected he had not suffered any loss nor any 
disadvantage which would entitle him to seek a remedy under Art. 226 of 
the Constitution [373B-C] 
(ii) Section 9 had been wrongly struck down 
by the High Court as 
invalid. 
This section was enacted by the legislature with the object of 
removing shortcomings in the principal Act which were found wantir1g 
by jud1cfa.I interpretation. 
The interregn_um between the declaration by 
the High Court of !=CTtain provisions of the Act as being unconstitutional 
and the attempt of the legislature to remedy the defects and to give retros· 
pectiv: effect thereto created two distinct. categories between th

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