LexKASTURJ LAL HARLAL versus STATE OF U.P. & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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KASTURJ LAL HARLAL
v.
STATE OF U.P. & ORS.
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OCTOBER 29, 1986
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[P.N. BHAGWATI, C.J. RANGANATH MISRA,
V. KHALID, G.L. OZA AND M.M. DUTT, JJ.]
U. P. Sales Tax Act, 1948: s.29-A-Provision for refund to buyers
of amount realised as tax by a dealer-Whether constitutionally valid.
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Section 29-A of the U.P. Sales Tax Act, 1948 Inserted hy s.17 of --{_
the U.P. Taxation Laws (Amendment) Act, 1969 provided for refund of
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the amount, realised by a dealer as tax on sale of goods and deposited
under sub-s.(4) or sub-s.(5) of s.8-A of the Act, to the person from
whom such dealer had actually realised the same, and to no other
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person.
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Coal became a taxable commodity under the U.P. Sales Tax Act
for the first time on !st October 1965. The appellants, _who were
registered as dealers in coal under the Act, on the assumption that sales
tax -?'as p_ayable by them on sale of coal from and after I st October
1965, collected amounts by way of sales tax from the purchasers and
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submitted their returns for the assessment year 1965-66 after depositing
a sum representing the amont of tax payable by them in accordance
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with their returns. The Sales Tax Officer, however, found that no sales
tax was payable by the appellants on sale of coal under the Act. The
appellants thereupon claimed refund of the amount deposited but the
Sales Tax Officer rejected their claim under s.29-A of the Act.
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A Writ Petition challenging the correctness of that order and the
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constitutional vires ofs.29-A was rejected by the High Court.
Dismissing the appeal by certificate, the Court,
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HELD: Section 29-A of the U.P. Sales Tax Act, 1948 introduced
by s.!'7 of the U.P. Taxation Laws (Amendment) Act, 1969 falls within
the legislative competence of the State Legislature and is constitution-
ally valid. [90F, 89F]
Clause (3) of Art.246 of the Constitution read with Entry 54 in
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List U of the Seventh Schedule thereto empowers the State Legislature
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KASTURI LAL HARLAL "- STATE OF U.P. (BHAGWATI. CJ.]
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to make laws with ~peel to taxes on the sale or purchase of goods. An
Entry in a Legislative List must he read in its widest amplitude and the
legislature must he held to have power not only to legislate with respect
to the subject matter of tile entry but also to make ancillary or inciden-
tal provision in aid of the main topic of legislation. Taking over of sums
collected by dealers from the public under guise of tax solely with a view
to returning them to the buyers so deprived is necessarily incidental to
tax on the sale and purchase of goods. The enactment of s.29-A can thus
he said to he justified as exercise of an ancillary or incidental power of
legislation under Entry 54. [89G, 900, 89H]
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R.S. Joshi v; Ajit Mills, (1978] 1SCR338, followed.
Ashoka Marketing Ltd. v. State of Bihar & Anr., [ 1970] 3 SCR
455, dissented from.
R. Abdul Qader & Co. v. Sales Tax Officer, Hyderabad, (1964] 6
SCR 867, Orient Paper Mills Ltd., v. State of Orissa & Ors., (1962] 1
SCR 549 and State of Orissa v. Orissa Cement Ltd. & Ors., (1985]
Suppl. SCC 608, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1862
(NT) of 1971.
From the Judgment & Order dated 13.7.1970 of the High Court
of Allahabad at L~cknow Bench in Writ Petition No. 849/70.
Ms. Lira Goswami and D.N. Mishra for the Appellants.
A.O. Singh, Mrs. Ashok K. Gupta, Raj Singh Rana, Mrs. S.
Dikshit and B.P. Maheshwari for the Respondents.
The Judgment of the Court was delivered by
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BHAGWATI, _CJ. This appeal by certificate raises a short ques-
tion as to the constitutional validity of section 29-A of the U.P. Sales
Tax Act, 1948. This sectio~. which was introduced in the U.P. Sales G
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' businef' as dealers in coal and they are
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SUPREME COURT REPORTS
(1987] l S.C.R.
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 taxabl~ commodity
under the U.P. Sales Tax Act, 1948. The appellants, proceeding on the
footing that sales tax was paExcerpt shown. Read the full judgment & AI analysis in Lexace.