INDIAN ALUMINIUM CO Vs. STATE OF MADRAS

JUDGEMENT

(1.) THESE tax revision cases and the writ petitions raise a common question of law, challenging the validity of the amendment to Section 8-B (2) of the Madras General sales-tax Act introduced by Madras Act I of 1957. It will be convenient to deal with this point first before setting out the facts of each case and considering the contentions turning upon them.

(2.) SECTION 8-B, as it stood before its amendment by Madras Act I of 1957, reads:-" 8-B (1 ). No person who is not a registered dealer shall collect any amount by way of tax under this Act; nor shall a registered dealer make any such collection except in accordance with such conditions and restrictions, if any, as may be prescribed. Provided that the (State) Government may exempt persons who are not registered dealers from the provisions of this sub-section until such date, not being later than the 1st day of April 1948, as the (State)Government may direct. 2. Every person who has collected or collects any amount by way of tax under this Act, on or after the 1st day of April 1947, shall pay over to the State Government within such time and in such manner as may be prescribed, all amounts so collected by him if they are in excess of the tax, if any, paid by him for the period during which the collections were made. " the words in Section 8-B (2),--"and in default of such payment, the amounts may be recovered as if they were arrears of land revenue" were deleted by Section 7 of the Madras Act 15 of 1956. In Tata Iron and Steel Co Ltd. v. State of Madras, 1954-5 STC 382 a Division Bench of this Court (Satyanarayana Rao and rajagopalan JJ.) held that what a registered dealer was empowered to collect from purchasers under Section 8-B (1) of the Madras General Sales-tax Act was only what was lawfully leviable as tax and that a collection by a registered dealer from his purchasers under a mistaken conception of the liability of his transaction to be assessed under the Act was not liable to be paid over to the State Government as the collection was not a realisation by way of tax. At page 393, Rajagopalan J. observed thus:

(3.) THIS decision opened the eyes of the State, and Madras Act 1 of 1957, which took effect from 14-1957, was the result. Section 8-B (1) and the proviso was not in any way modified or amended by this later Act. Section 8-B (2) was re-enacted in the following terms: