Report No. 61

6.3. Case relating to U.P. Act.-

In a recent case1 decided by the Supreme Court a dealer wrongly collected a certain sum as sales tax from the customer. The question was whether the State Legislature is competent to pass a law for the deposit of that amount in the Government Treasury. The U.P. Legislature had, through an amending Act, substituted the following provision (in place of the old section) in the U.P. Sales Tax Act-

"29A.(1) Where any amount is realised from any person by any dealer purporting to do so by way of realisation of tax on the sale of any goods to such person, such dealer shall deposit the entire amount so realised into the Government treasury, within such period as may be prescribed, n9twithstanding that the dealer is not liable to pay such amount as tax or that only a part of it is due from him as tax under this Act.

(2) Any amount deposited by any dealer under sub-section (1) shall, to the extent it is not due as tax, be held by the State Government in trust for the person from whom it was realised by the dealer, or for his legal representatives, and the deposit shall discharge such dealer of the liability in respect thereof to the extent of deposit.

(3) Where any amount is deposited by any dealer under sub-section (1) such amount or any part thereof shall, on a claim being made in that behalf in such form as may be prescribed, be paid to the person from whom such dealer had actually realised such amount or part, or to his legal representative, and to no other person:

"Provided that no such claim shall be entertained after the expiry of three years from the date of the order of assessment or one year from the date of the final order on appeal, revision or reference, if any, in respect thereof, whichever is later."

1. State of Uttar Pradesh v. Annapurna Biscuit Mfg. Co., (1973) 1 SCR 668 (dated 3rd May, 1973): AIR 1973 SC 1333 (July) (Section 29A, U.P. Act).