vil Appeal No 1862 NT of 1971
From the Judgment  Order dated 1371970 of the High Court of Allahabad at Lucknow Bench in Writ Petition No 84970
Ms Lira Goswami and DN Mishra for the Appellants
AD Singh Mrs Ashok K Gupta Raj Singh Rana Mrs section Dikshit and B P
Maheshwari for the Respondents
The Judgment of the Court was delivered by BHAGWATI CJ
This appeal by certificate raises a short question as to the constitutional validity of section 29 A of the UP Sales Tax Act 1948
This section which was introduced in the UP Sales Tax Act 1948 by section 17 of the UP Taxation Laws Amendment Act 1969 has been held to be constitutionally valid by a Division Bench of the Allahabad High Court on 13th July 1970
The appellants question the correctness of this view taken by the High Court
The appellants carry on business as dealers in coal and they are 88 registered as such under the UP Sales Tax Act 1948
Prior to 1st October 1965 there was no sales tax levied on sale of coal and for the first time on 1st October 1965 coal became a taxable commodity under the UP Sales Tax Act 1948
The appellants proceeding on the footing that sales tax was payable by them on sale of coal from and after 1st October 1965 collected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965 66 after depositing a sum of Rs 1007386 repre senting the amount of tax payable by them in accordance with their returns
It was however found as a result of the assessment order made by the Sales Tax Officer on 28th March 1970 that no sales tax was payable by the appellants on sales of coal under the UP Sales Tax Act 1948
The appel lants thereupon claimed refund of the sum of Rs 1007386 but the Sales Tax Officer rejected the claim made by the appellants on the ground that by reason of section 29 A no refund was claimable by the appellants and the only persons entitled to claim refund were those from whom the appellants had collected the tax
This order made by the Sales Tax Officer was challenged by the appellants by filing a writ petition in the High Court of Allahabad and the principal ground on which the correctness of this order was challenged was that section 29 A was ultra vires as being outside the legislative competence of the State Legislature
The High Court negatived this challenge and upheld the constitutional validity of section 29 A and on this view sustained the order made by the Sales Tax Officer
The appellants there upon preferred the present appeal after obtaining certifi cate of fitness from the High Court
It is necessary at this stage to set out the relevant provisions of the UP Sales Tax Act 1948 as they stood at the material time
Subsection 4 of section 8 A made the following provision 4 Without prejudice to the provisions of clause f of section 14 the amount rea lised by any person as tax on sale of any goods shall notwithstanding anything con tained in any other provision of this Act be deposited by him in a Government treasury within such period as may be prescribed if the amount so realised exceeds the amount payable as tax in respect of that sale or if no tax is payable in respect thereof
 Sub section 5 was added in section 8 A by section 11 of the UP Taxation Laws Amendment Act 1965 and it read as follows 89 5 Where a dealer is found not liable to be assessed to tax by reason of his turnover being less than the amount specified in or under section 3 or sub section 1 or 2 of section 18 but has realised any tax as such in respect of such turnover he shall not withstanding anything contained in this Act be liable to pay the same to the State Govern ment and shall deposit it into the treasury within 30 days of the date of the order by which he was found not so liable unless it has already been so deposited Since having regard to the judgment of this Court in R Abdul Qader  Co vs Sales Tax Officer Hyderabad  it was doubtful whether sub sections 4 and 5 of section 8 A standing by themselves would fail within the legislative competence of the State Legislature
Section 29 A was inserted in the UP Sales Tax Act 1948 by section 17 of the Taxation Laws Amendment Act 1969 Refund in Special Cases Notwithstanding anything contained in this Act or in any other law for the time being in force or in any judgment decree or order of any court where any amount is either deposited or paid by any dealer or other person under sub section 4 or sub section 5 of section 8 A such amount or any part thereof shall on a claim being made in that behalf in such form and within such period as may be prescribed be refunded to the person from whom such dealer or the person had actually realised such amount or part and to no other person
 The question is whether this section as it stood at the material time in the form in which it was introduced by section 17 of the UP Taxation Laws Amendment Act 1969 was within the legislative competence of the State Legisla ture
The only entry under which section 29 A was sought to be brought was Entry 54 in List II of the Seventh Schedule to the Constitution
Clause 3 of Article 246 read with this entry empowers the State Legislature to make laws with respect to taxes on the sale or purchase of goods
It is now well settled that an entry in a Legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry but also to make ancillary or incidental provision in aid of the main topic of legisla tion
Can section 29 A be justified as exercise of an ancil lary or incidental power of legislation under Entry 547 Now 90 this question is no longer res integra
It stands concluded by the decision of this Court in RS Joshi vs Ajit Mills  It is no doubt true that the decision of this Court in Ashoka Marketing Ltd vs State of Bihar  Anr  does seem to indicate that a provi sion such as section 29 A would not be justifiable as an exercise of incidental or ancillary power
There also the impugned legislative provision namely section 20 A of the Bihar Sales Tax Act was very similar to section 29 A and this Court held that it fell outside the legislative competence of the State Legislature
The Court in Ashoka Marketing Ltd s case supra did not follow the decision in Orient Paper Mills Ltd vs State of Orissa  Ors
  where a similar provision was attacked on the same ground but the attack was repelled by the Court
If the decision in Ashoka Marketing Ltd s case supra were to be regarded as good law lsection 29 A would have to be struck down as being outside the legislative competence of the State Legis lature
But this Court in RS Joshi s case supra clearly and categorically disapproved of the decision in Ashoka Marketing Company s case and reaffirmed the view taken in Orient Paper Mill s case supra
The Court held that the taking over of sums collected by dealers from the public under guise of tax solely with a view to return them to the buyers so deprived is necessarily incidental to tax on the sale and purchase of goods 
Such a provision is manifestly a consumer protection measure since while suits against dealers to recover paltry sums by a large number of custom ers would lead to endless and expensive litigation a sim pler process of returning those sums on application by the relevant purchasers would protect the common buyer while depriving the dealers of their unjust gains
 This Court in a subsequent decision in State of Orissa vs Orissa Cement Ltd  Ors also took the same view and pointed out that the decision in Ashoka Marketing Ltd s case supra was expressly dissented from by the decision in RS Joshi s case supra
The decision in RS Joshi s case supra must therefore be regarded as laying down the correct law on the subject and if that be so
it is obvious that section 29 A must be held to fall within the legislative competence of the State Legislature and its constitutional validity must be upheld
The appeal must therefore be dismissed
but since it was filed at a time when the position in law was nebulous and had not been finally settled by the decision in RS Joshi s case supra we would direct that there shall be no order as to costs
PSS Appeal dismissed


Summary:
Section 29 A of the UP Sales Tax Act 1948 inserted by section I7 of the UP Taxation Laws Amendment Act 1969 pro vided for refund of the amount realised by a dealer as tax on sale of goods and deposited under sub s4 or sub s5 of s8 A of the Act to the person from whom such dealer had actually realised the same and to no other Coal became a taxable commodity under the UP Sales Tax Act for the first time on 1st October 1965
The appellants who were registered as dealers in coal under the Act on the assumption that sales tax was payable by them on sale of coal from and after 1st October 1965 corrected amounts by way of sales tax from the purchasers and submitted their returns for the assessment year 1965 66 after depositing a sum representing the amount of tax payable by them in ac cordance with their returns
The Sales Tax Officer however found that no sales tax was payable by the appellants on sale of coal under the Act
The appellants thereupon claimed refund of the amount deposited but the Sales Tax Officer rejected their claim under s29 A of the Act
A Writ Petition challenging the correctness of that order and the constitutional vires of s29 A was rejected by the High Court
Dismissing the appeal by certificate the Court HELD Section 29 A of the UP Sales Tax Act 1948 introduced by section I7 of the UP Taxation Laws Amendment Act 1969 fails within the legislative competence of the State Legislature and is constitutionally valid
9OF 89F Clause 3 of Art246 of the Constitution read with Entry 54 in List H of the Seventh Schedule thereto empowers the State Legislature 87 to make laws with respect to taxes on the sale or purchase of goods
An Entry in a Legislative List must be read in its widest amplitude and the legislature must be held to have power not only to legislate with respect to the subject matter of the entry but also to make ancillary or incidental provision in aid of the main topic of legislation Taking over of sums collected by dealers from the public under guise of tax solely with a view to returning them to the buyers so deprived is necessarily incidental to tax on the sale and purchase of goods
The enactment of s29 A can thus he said to be justified as exercise of an ancillary or incidental power of legislation under Entry 54
89G 90D 89H RS Joshi v Ait Mills   followed
Ashoka Marketing Ltd vs State of Bihar  Anr   dissented from
R Abdul Qader  Co vs Sales Tax Officer Hyderabad   Orient Paper Mills Ltd vs State of Orissa  Ors  and State of Orissa vs Orissa Cement Ltd  Ors  referred to