COMMNR. OF SALES TAX, U.P. vs. M/S. SWADESHI POLYTAX LTD., U.P

C.A. No.-003742-003742 - 2000Supreme Court28 September 2005Bench: S.N. VARIAVA TARUN CHATTERJEE4 pages

For Petitioner: KAMLENDRA MISHRAFor Respondent: ABHA R. SHARMA

AI SummaryAllowed

What did the Supreme Court hold?

The Supreme Court held that the unamended Section 29-A of the U.P. Trade Tax Act was within the legislative competence of the State Legislature. The Court noted that while the Allahabad High Court had previously declared Section 29-A unconstitutional, a subsequent appeal to the Supreme Court had declared the section to be within legislative competence. The Court found that this appeal was a continuation of the same proceeding, and the finality was given by the Supreme Court's judgment. Therefore, the unamended Section 29-A always remained on the statute book and required no re-enactment. The Court clarified that it was not agreeing with the submission that the amended Section 29-A would require re-enactment. Consequently, the Court set aside the impugned judgment of the High Court and the judgment of the Trade Tax Tribunal, restoring the order of the Commissioner (Appeals). The Court also held that even under the unamended Section 29-A, the excess amount could only be refunded to the party from whom it was wrongly collected, and since no such claim was made, directing the deposit into the Treasury was correct.

What were the facts?

The respondent, Swadeshi Polytax Ltd., a manufacturer and dealer of Polyester Staples Fiber, collected excess tax from its customers, which was deposited with the Government. The respondent challenged the assessment, and its appeal was allowed, leading to an order for refund. However, the concerned officer directed the refund amount to be deposited in the Treasury under Section 29-A of the U.P. Trade Tax Act. The Deputy Commissioner (Appeals) granted partial relief but confirmed the deposit order. The Trade Tax Tribunal directed the refund of the excess amount, disregarding Section 29-A. The High Court, in revision, dismissed the appeal filed by the Commissioner of Sales Tax, relying on its previous judgments that had struck down Section 29-A as unconstitutional. An appeal against one of these judgments was pending before the Supreme Court.

What were the issues?

1. Whether the amended Section 29-A of the U.P. Trade Tax Act, which mandates dealers to deposit excess tax collected into the Government Treasury, is within the legislative competence of the State Legislature. The assessee contended that the High Court correctly held Section 29-A to be unconstitutional, relying on Supreme Court judgments in M/s Annapurna Biscuit Manufacturing Co. and Abdul Quader & Co. The revenue argued that such a provision is within the implied powers of the State Legislature as a punitive measure to protect public interest in fiscal legislation, citing R.S. Joshi, Sales Tax Officer, Gujarat. The revenue also argued that even if the amended section was void, the unamended Section 29-A remained valid and did not require re-enactment. 2. Whether the amended Section 29-A, having been declared void, could revive without re-enactment. The assessee argued that a void provision cannot revive on its own and requires re-enactment. The revenue contended that the unamended Section 29-A always remained on the statute book and did not require re-enactment, and that the Supreme Court's judgment in the appeal related to the unamended section.

Which sections of the Income-tax Act were involved?

Section 29-A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4 CASE NO.: Appeal (civil) 3742 of 2000 PETITIONER: Commissioner of Sales Tax, U.P. RESPONDENT: Swadeshi Polytax Ltd., Ghaziabad DATE OF JUDGMENT: 28/09/2005 BENCH: S.N. Variava & Tarun Chatterjee

JUDGMENT: JUDGMENT S.N. VARIAVA, J.

This appeal is against the Judgment dated 13th October, 1998 passed by the Allahabad High Court.

Briefly stated the facts are as follows.

The Respondent is a manufacturer and dealer of Polyester Staples Fiber. It had collected, from its customers, tax in excess of what was prescribed. It is an admitted position that these amounts were deposited with the Government. The Respondent had challenged the assessment and its Appeal was allowed. As the tax liability was held to be lower, the concerned Officer passed an Order of refund but directed that the amount be deposited in the Treasury in view of Section 29-A of the U.P. Trade Tax Act.

In the Appeal, the Deputy Commissioner (Appeals) granted relief to the extent of Rs. 417 but confirmed the Order of the Assessing Authority directing deposit of the balance amount. The Respondent then filed an Appeal before the Trade Tax Tribunal who directed refund of

The order continues below.

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