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TMI Blog1966 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ported to regularise the provisions of the said ordinance. Subsequent to this, the U. P. Sales Tax (Amendment) Act, 1957, was passed on 30th September, 1957, the main purpose of which was to hold that the amendment brought by the U. P. Ordinance of 31st March, 1956, was valid on and from 31st March, 1956. The validity of these enactments was challenged by certain assessees and also ultimately by the assessee by a writ petition in 1957. This court by its order dated the 5th May, 1957, declared Ordinance No. IX of 1956, issued on 31st March, 1956, to be ultra vires on a writ petition filed by another assessee. This decision of a Full Bench of this court is reported in Adarsh Bhandar of Aligarh v. Sales Tax Officer. The further amendment made in the Act by the U. P. Sales Tax (Amendment) Act, purporting to rectify the defects, was also declared to be ultra vires by a Full Bench of this court on 14th February, 1958, in Firm Bengali Mal Satish Chandra Jain v. Sales Tax Officer, Agra. After the decision in Firm Bengali Mal Satish Chandra Jain's case was given, the Act was further amended by the U. P. Government by the U. P. Sales Tax (Validation) Act (XV of 1958). This Act was published ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute, it cannot be said to be ascertained and it cannot be allowed as a deduction, as according to the mercantile system of accounting the liability will be allowed only if it is ascertained." On appeal, the Appellate Assistant Commissioner and the Tribunal endorsed this view. Hence, this reference at the instance of the assessee. The liability to sales tax arises under the charging section 3 of the Act which lays down that "subject to the provisions of this Act every dealer shall for each assessment year pay a tax at the rate of..." The quantification thereof is made under section 7 of the Act which provides for determination of turnover and assessment of tax. Section 8A(2)(b) of the Act gives the dealer the authority to recover, if he so likes, an amount equal to the amount of sales tax payable from the person to whom the goods are sold by him. Section 3, the charging section, however, fixes the liability of the dealer to pay the sales tax whether he has realised the tax from the customer or he chooses to pay it from his own pocket. The liability is finally and irrevocably fixed by section 3 of the Act. Rule 41 of the U. P. Sales Tax Rules (hereinafter referred to as the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Shephard v. Wheeling: "The court does not annul or repeal the statute if it finds it in conflict with the Constitution. It simply refuses to recognise it, and determines the rights of the parties just as if such statute had no application. The court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only and there is no judgment against the statute. " There are, however, reproduced on the same page, observations by Mr. Justice Field in Norton v. Shelby Co. , wherein he held: " An unconstitutional Act is not a law, it confers no rights, it imposes no duties, it affords no protection, it creates no office ; it is, in legal contemplation, as inoperative as if it had never been passed ". This, as pointed out by the learned author, is a proposition which is dependent on the law having been "declared unconstitutional by a competent court of last resort ". It is, however, unnecessary for us to pursue this question any further. As already observed, the Supreme Court, which is the court of ultimate resort, in J. K. Jute Mills v. State of U. P. has held the U. P. Sales Tax Validation Act (No. XV of 1958) to be intra vires and to have val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the estimation thereof did not convert the accrued liability into a conditional one, because it was always open to the income-tax authorities concerned to arrive at a proper estimate thereof having regard to all the circumstances of the case. " If a mere estimated liability could be said to accrue on the basis of a contract which had to be performed in the future, there can be no justification for saying that the statutory liability in the instant case was not an accrued liability or that it was an unascertained liability. If, as pointed out by the Supreme Court, the estimate was wrong, the department could have substituted its own estimate but that will not make the statutory ascertained liability into an unascertained one, particularly, in a case where admittedly the sales and purchases are duly vouched and the accounts are properly maintained. Some support for the view we are taking is to be found in two cases, one from Andhra Pradesh and the other from Madras. In S.R.V.G. Press Co. v. Commissioner of Excess Profits Tax, at page 589, Subba Rao C. J. (as he then was) and Viswanatha Sastri J. observed: " Now, sales tax is levied on sales or purchases of goods by traders and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment could be said to accrue or arise. There the assessee had paid a sum of Rs. 1,08,325-9-3 by way of profit bonus to its employees for the calendar year 1947, in terms of an award made on January 13, 1949, under the Industrial Disputes Act. The assessee debited the amount in his profit and loss account for the year 1948 but in fact the bonus was paid to its employees in the year 1949. It was held that it was only in 1949 that the claim to profit bonus was settled by an award and the only year to which the liability under the award could be properly attributed was 1949, and, therefore, the sum of Rs. 108,325-9-3 had to be deducted in the calendar year 1949, relevant to the assessment year 1950-51. This case again has no application to a case such as the present one which depends not for determination of liability under a contract or an award of the Industrial Tribunal or an agreement between the parties but on a statutory liability imposed under the charging section 3 of the Act. This court, on a question of accrual of liability to pay bonus, in Commissioner of Income-tax v. Amrit Banaspati Co., following the aforesaid Supreme Court decision, held that as the employer followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability as contingent should be taken into account. A contingent liability is one which could arise on the happening of some event or the fulfilment of some condition in a case in which the happening of the event or the fulfilment of the condition itself are uncertain. A statutory liability, such as the liability to pay sales tax, under the U. P. Sales Tax Act, affixes itself automatically to income from sales as and when goods are sold. In the present case, the assessee appears to have treated the liability to pay sales tax as an automatic liability. The mere fact that he did not charge sales tax separately from his customers would not make his liability contingent. The assessee has, it appears, calculated his liability and appropriated an amount towards meeting that liability and thereby, the assessee has certainly treated his liability as ascertainable and has ascertained it. The next question which arose was whether the liability so ascertained and so treated by the assessee, on the assumption that the statutory liability exists, could be deemed to become a contingent liability merely because the existence of the law imposing the liability is doubtful. No case has been brough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive support for the contention, that the pronouncements of this court are binding only as between parties in such cases, from the provisions of the Indian Evidence Act relating to the relevance of judgments in personam and judgments in rent. These provisions have nothing to do with a question which arises when any authority or a citizen within a State wants to ascertain what the law on a particular matter is. The Indian Evidence Act is not applicable to income-tax authorities, but the doctrine deducible from the constitutional and other provisions relating to declarations of law by this court has to be accepted by all authorities and citizens within a State quite apart from it. Even in courts where the Evidence Act is applicable, the binding force of the law declared by this court is based upon considerations other than those contained in the doctrine of res judicata. The law applicable in a State can certainly be proved by producing the authorized reports of the highest court of that State. This principle is recognised by the Indian Evidence Act which enables courts to take judicial notice of law in force in the country. The Evidence Act enables courts of law to look at authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X
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