SUNDARARAJAN AND COMPANY LIMITED Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE assessee was a registered dealer, registered under the provisions of the Madras General Sales Tax Act, 1939 (hereinafter referred to as the Act). In the assessment year 1952-53 a sum of Rs. 46, 456-12-6, which represented the amounts the assessee firm had collected that year from its purchasers by way of tax under section 8-B of the Act, was included in its assessable turnover. THE contention of the assessee firm, that it was not liable to pay sales tax on that sum, was negatived by the departmental authorities, and the Appellate Tribunal agreed with them. It was the correctness of the decision that the assessee challenged before us. On 7th January, 1954, a Division Bench of this High Court, which consisted of Satyanarayana Rao, J., and one of us, held in Deputy Commissioner of Commercial Taxes v. Krishnaswami Mudaliar that under the scheme of the Act the amount collected by a registered dealer from the consumer by way of sales tax and paid over to the Government should not be included in the turnover of the registered dealer as part of the sale price of the goods sold, and that that amount was not liable to be taxed over again. Subsequent to that, the Madras Legislature passed the Madras General Sales Tax (Definition of Turnover and Validation of Assessments) Act, 1954 (Act XVII of 1954) (hereinafter referred to as the impugned Act). That Act received the assent of the President on 6th July, 1954. Section 2 of the impugned Act ran :-

(2.) IT was solely on the basis of Act XVII of 1954 that the taxing authorities and the Appellate Tribunal decided that the assessee was liable to pay sales tax on the disputed turnover. The petitioner contended that the impugned Act was ultra vires the legislature, and that it had no legislative competence to pass such a measure. The Appellate Tribunal declined to investigate that question.

(3.) IT should be noted that the correctness of the decision in Bata Shoe Co. v. Board of Revenue, West Bengal 1949 (1) STC 193), on the application of the provisions of the Bengal Act was not challenged and was not doubted in Krishnaswami Mudaliar's case. Nor was its correctness with reference to the provisions of the Bengal Act challenged before us. The learned counsel for the petitioner urged that the principle laid down in Krishnaswami Mudaliar's case was really left unaffected by the provisions of the impugned Act. The definitions of 'sale" and "turnover" in the Act were left untouched. Section 8-B of the Act was still retained. The levy still retained the character of a tax on sales tax, and that, the learned counsel for the petitioner urged, was beyond the legislative competence of the legislature. Entry 54 of List II of the Seventh Schedule of the Constitution is : "Taxes on the sale or purchase of goods other than newspapers."