TMI Blog1970 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... for the appellant. Lal Narain Sinha, Advocate-General for the State of Bihar (U.P. Singh, Advocate, with him), for the respondents. -------------------------------------------------- The judgment 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 Tax Act, 1947, an amount of Rs. 2,46,67,517-1-6 as its turnover from the sale of cement and other commodities. The Superintendent of Sales Tax brought to tax an additional amount of Rs. 7,67,702-13-0 being the railway freight paid in respect of the goods supplied by the assessee. By order dated April 2, 1961, the appellate authority set aside the order directing inclusion of the railway freight in the turnover, and ordered that the assessment be revised. In the meantime the Bihar Sales Tax Act, 1947, was repealed and was replaced by the Bihar Sales Tax Act, 1959 (19 of 1959). By Act No. 20 of 1962 section 20A was introduced in the Bihar Sales Tax Act, 1959 (19 of 1959). The relevant provisions of section 20A were: "(1) No person who is not a registered dealer shall collect from any person any amount, by whatever n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (3)...... (7) Notwithstanding anything to the contrary contained in any law or contract, when any amount is deposited by a dealer in compliance with an order under sub-section (3) or sub-section (4) or is deemed, under sub-section (5), to have been so deposited, such deposit shall constitute a good and complete discharge of the liability of the dealer in respect of such amount to the person from whom it was collected. (8) The person from whom the dealer has collected the amount deposited in pursuance of an order under sub-section (3) or sub-section (4) or deemed, under sub-section (5), to have been so deposited shall be entitled to apply to the prescribed authority in the prescribed manner for refund of the amount to him and the said authority shall allow the refund if it is satisfied that the claim is in order: Provided that no such refund shall be allowed unless the application is made before the expiry of the period within which the applicant could have claimed the amount from the dealer by a civil suit had his liability not been discharged in accordance with the provisions of sub-section (7): Provided further that no claim for such refund shall be rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11(2) of the Hyderabad General Sales Tax Act, 1950 (14 of 1950). By section 11(2) it was provided: "Notwithstanding anything to the contrary contained in any order of an officer or tribunal or 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 shall be recovered from him as if it were arrears of land revenue." This court held that section 11(2) of the Hyderabad General Sales Tax Act provided for recovery of an amount collected by way of tax, as arrears of land revenue though the amount was not due as tax under the Act. In rejecting the contention that the provisions fell within entry 54, List II, the court observed (at page 872): "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the question whether the State by statute was competent to enact section 20A of the Bihar Sales Tax Act in exercise of the power under entry 54, List II, of the Seventh Schedule. In that case a registered dealer had collected, in respect of sales tax, from the purchasers amounts for recoupment of tax which he would have to pay to the State Government under the Orissa Sales Tax Act, 1947, in the belief that the tax was payable. The dealer was assessed to and paid tax on the turnover which included inter-State sales. After the decision of this court in State of Bombay v. United Motors (India) Ltd. [1953] 4 S.T.C. 133; [1953] S.C.R. 1069., the dealer applied under section 14 of the Act for refund of tax paid on the plea that the turnover from inter-State sales was not taxable. The High Court of Orissa issued writs directing the amount of tax collected by the State to be refunded. Thereafter by an amendment of the Act, the State Legislature incorporated section 14A providing that refund of tax may be claimed only by the person from whom the dealer had realised the amount by way of sales tax or otherwise. At the hearing of the petition, the taxpayer challenged the levy on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislature which he could not in law collect. Counsel argued that entry 54, List II, authorises the State Legislature to legislate for collection of an amount which has been improperly collected by a registered dealer as tax on behalf of the State and for refunding the amount to the person from whom it has been improperly collected. This argument proceeds upon two assumptions: (1) that under the Bihar Sales Tax Act the purchaser of goods is liable to pay sales tax to the State, and the registered dealer collects the tax from the purchaser as an agent of the State; and (2) that the amount recovered from the registered dealer under section 20A is intended only to be refunded to the person from whom it has been collected by the registered dealer, and the State is merely an agency for enforcing the obligation of the dealer. The first assumption is plainly contrary to the scheme of the Bihar Sales Tax Act, 1959. By section 3 charge of tax lies upon every dealer whose gross turnover during a period not exceeding twelve months Immediately preceding exceeds the specified amount. The expression "gross turnover" is defined in section 2(k) as meaning "the aggregate of the amounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale to the State. A provision which enables the dealer to pass on the liability for payment of tax is incidental to legislation for sales tax. But we are unable to hold that a provision under which a dealer is called upon to pay to the State an amount which has been collected by him on a representation-express or implied that an equal amount is payable by him under the Bihar Sales Tax Act, is a provision incidental to the power to levy "tax on sale or purchase of goods" within the meaning of entry 54, List II, of the Seventh Schedule. Entry 54, List II, of the Seventh Schedule comprehends the power to impose tax, to prescribe machinery for collecting the tax, to designate officers by whom the liability may be imposed and to prescribe the authority, obligation and indemnity of the officers. The State Legislature may under entry 54, List II, be competent to enact a law in respect of matters necessarily incidental to "tax on the sale and purchase of goods". But a provision compelling a dealer who has deliberately or erroneously recovered an amount from the purchaser on a representation that he is entitled to recover it to recoup himself for payment of tax, to pay over that amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t entitled to levy and to appropriate it to itself except in the very rare cases in which the purchaser may approach the State and be able to satisfy that he has a claim, that the claim is in order, and that it is within limitation. Notwithstanding the addition of sub-section (8), in our judgment, the amount received by the State or appropriated by the State continues to have the character of a tax collected which the State is not entitled to collect. The learned Advocate-General contended that assuming that the first proviso of sub-section (8) of section 20A which prescribes the period of limitation is indicative of the nature of the claim, that proviso alone may be declared ultra vires, and the remaining provisions declared valid. But the first proviso to sub-section (8) does not invest the recovery with the character of tax: the provisions of sub-sections (3), (4) and (5) invest the recovery with the nature of a levy of tax which the State is not entitled to collect, and sub-section (8) is merely an attempt to disguise the true nature of the claim. We are, therefore, unable to accede to the contention of the learned Advocate-General. It was then contended that the power to l ..... 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