TMI Blog1964 (2) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate, with him), for the respondent. -------------------------------------------------- The Judgment of the Court was delivered by WANCHOO, J. -This is an appeal by special leave against the order of the Andhra Pradesh High Court. The appellant filed a writ petition in the High Court questioning the validity of section 11(2) of the Hyderabad General Sales Tax Act, No. XIV of 1950, (hereinafter referred to as the Act). The material facts on which the petition was based were these. The appellant acted as agent in the then State of Hyderabad to both resident and non-resident principals in regard to sale of betel leaves. Under the Act betel leaves were taxable at the purchase point from May 1, 1953, by virtue of a notification in that behalf. We are here concerned with the assessment period from May 1, 1953 to March 31, 1954, covered by the assessment year 1953-54. The appellant collected sales tax from the purchasers in connection with the sales made by it on the basis that the incident of the tax lay on the sellers and assured the purchasers that after paying the tax to the appellant, there would be no further liability on them. After realising the tax, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant obtained special leave and that is how the matter has come up before us. It is necessary to read section 11 of the Act in order to appreciate the point urged on behalf of the appellant. Section 11 is in these terms: "11. (1) No person who is not registered as a dealer shall collect any amount by way of tax under this Act nor shall a registered dealer make any such collection before the 1st day of May, 1950, except in accordance with such conditions and restrictions, if any, as may be prescribed: Provided that Government may exempt persons who are not registered dealers from the provisions of this sub-section until such date, not being later than the 1st day of June, 1950, as Government may direct. (2) Notwithstanding anything to the contrary contained in any order of an officer or tribunal or the judgment, decree or order of a Court, every person who has collected or collects on or after 1st May, 1950, any amount by way of tax otherwise than in accordance with the provisions of this Act, shall pay over to the Government, within such time and in such manner as may be prescribed the amount so collected by him, and in default of such payment the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t exigible as tax under the law. The provision however is attempted to be justified on the ground that though it may not be open to a State Legislature to make provision for the recovery of an amount which is not a tax under Entry 54 of List II in a law made for that purpose, it would still be open to the Legislature to provide for paying over all the amounts collected by way of tax by persons, even though they really are not exigible as tax, as part of the incidental and ancillary power to make provision for the levy and collection of such tax. Now there is no dispute that the heads of legislation in the various lists in the Seventh Schedule should be interpreted widely so as to take in all matters which are of a character incidental to the topics mentioned therein. Even so, there is a limit to such incidental or ancillary power flowing from the legislative entries in the various lists in the Seventh Schedule. These incidental and ancillary powers have to be exercised in aid of the main topic of legislation, which in the present case, is a tax on sale or purchase of goods. All powers necessary for the levy and collection of the tax concerned and for seeing that the tax is not evad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty on the dealer. Actually section 20 makes provision in clause (b) for penalty in case of breach of section 11(1) and makes the person committing a breach of that provision liable, on conviction by a Magistrate of the first class, to a fine. We are therefore of opinion that section 11(2) cannot be justified under Entry 54 of List II either as a provision for levying the tax or as an incidental or ancillary provision relating to the collection of tax. In this connection we may refer to clause (c) of section 20, which pro- vides that any person who fails "to pay the amounts specified in sub- section (2) of section 11 within the prescribed time" shall on a conviction by a Magistrate be liable to fine. It is remarkable that this provision makes the person punishable for his failure to pay the amount which is not authorised as a tax at all under the law, to Government. It does not provide for a penalty for collecting the amount wrongly by way of tax from purchasers which may have been justified as a penalty for the purpose of carrying out the objects of the taxing legislation. If a dealer has collected anything from a purchaser which is not authorised by the taxing law, that is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid to the Government. This situation in our opinion is entirely different from the situation in the Orient Paper Mills Limited's case [1962] 1 S.C.R. 549; 12 S.T.C. 357. The respondent further relies on a decision of the Madras High Court in Indian Aluminium Co. v. The State of Madras [1962] 13 S.T.C. 967. That decision was with respect to section 8-B of the Madras General Sales Tax Act of 1939 as amended by Madras Act I of 1957. Though the words in section 8-B(2) were not exactly the same as the words in section 11(2), with which we are concerned here, the provision in substance was to the same effect as section 11(2). In view of what we have said above, that decision must be held to be incorrect. Lastly, we come to the contention of the respondent that section 11(2) is within the legislative competence of the State Legislature in view of Entry 26 of List II. That entry deals with "trade and commerce within the State subject to the provisions of Entry 33 of List III". It is well settled that taxing entries in the Legislative Lists I and II of the Seventh Schedule are entirely separate from other entries. Entry 26 of List II deals with trade and commerce and has nothing to d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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