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TMI Blog1970 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... side 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 In the meantime the Bihar Sales Tax Act, 1947, was repealed and was replaced by the Bihar Sales Tax Act, 1959 (19 of 1959).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 name or description it may be called, towards or purporting to be tax on sale of goods. (2) No registered dealer shall collect from any person any such amount, except in a case in which and to the extent to which such dealer is liable to pay tax under this Act. (3)(a) Notwithstanding anything to the contrary contained in any law or contract or any judgment, decree or order of any tribunal, court or authority, if the prescribed authority has reason to believe that any dealer has or had, at any time, whether before or after the commencement of this Act, collected any such amount, in a case in which or to an extent to which the said dealer was or is not liable to pay such amount, it shall serve on such dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 rejected without giving the applicant a reasonable opportunity of being heard..." On July 31, 1963, the Assistant Commissioner of Commercial Taxes, Shahabad Circle, issued a notice under section 20A(3) of the Bihar Sales Tax Act, 1959, requiring the assessee to show cause why an amount of Rs. 23,990-11-0 being the sales tax on the railway freight which had become refundable under the order of assessment be not forfeited. The assessee in reply contended, inter alia, that section 20A of the Bihar Sales Tax Act was ultra vires the State Legislature and that in any case it had no application to his case. The Assistant Commissioner of Commercial Taxes rejected the contention and passed an order directing that the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 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...... But where the legislation under the relevant entry proceeds on the basis that the amount concerned is not a tax exigible under the law made under that entry, but even so lays down that though it is not exigible under the law, it shall be paid over to Government, merely because some dealers by mistake or otherwise have collected it as tax, it is difficult to see how such a provision can be ancillary or incidental to the collection of tax legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that it infringed his fundamental right under article 19(1)(f) and did not press the contention that the State Legislature was incompetent to enact section 14A of the Orissa Sales Tax Act. This court observed that the power to legislate with respect to a tax comprehends the power to impose the tax, to prescribe machinery for collecting the tax, to designate the officers by whom the liability may be enforced and to prescribe the authority, obligation and indemnity of those officers. It was then observed: "The Legislature of the Orissa State was therefore competent to exercise power in respect of the subsidiary or ancillary matter of granting refund of tax improperly or illegally collected, and the competence of the Legislature in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered 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 sale-prices received and receivable by a dealer, during any given period, in respect of sale of goods..." and the expression "sale-price" is defined in section 2(q) as meaning "the amount payable to a dealer as valuable consideration in respect of the sale of goods". By sub-section (2) of section 3 tax is made payable by a dealer on sales made inside the State, and when the dealer sells goods, the price received by him for sale of goods forms a component of the gross turnover and the dealer is liable to pay tax on the turnover. The Act does not impose liability to pay tax upon the purchaser either directly or indirectly. Under section 7, it is true, the taxable turnover of a dealer is determined to be that part of the gross turnover whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be 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 amount to the State cannot, in our judgment, be regarded as necessarily incidental to entry 54, List II. In effect the provision is one for levying an amount as tax which the State is incompetent to levy. A mere device cannot be permitted to defeat the provisions of the Constitution by clothing the claim in the form of a demand for depositing the money with the State which the dealer has collected, but which he was not entitled to collect. The learned Advocate-General contended that sub-section (8) of section 20A authorises the person from whom the dealer has collected the amount deposited in pursuance of an order under sub-sections (3) and (4), or deemed to have been so deposited under sub-section (5), to apply to the prescribed authority f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 legislate in respect of recovery of the amount collected by a dealer which in law he is not entitled to collect, falls within entries 6, 7 and 13 of List III. These entries are in the Concurrent List and provide: "6. Transfer of property other than agricultural land; registration of deeds and documents. 7.. Contracts, including partnership, agency, contracts of carriage, and other special forms of contracts, but not including contracts relating to agricultural land. 13.. Civil procedure, including all matters included in the Code of Civil Procedure at the commencement of this Constitution, limitation and arbitration." We fail to appreciate how power to legislate in respect of entries 6, 7 and 13 would authorise the State Legislature to legi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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