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1964 (10) TMI 53 - SC - VAT and Sales TaxWhether the sale was made in the course of inter-State trade, the case must be remitted to the High Court. Although Mr. Tewari has opposed the raising of the question at this stage whether the supply of coal amounted to sale, we are inclined to allow this point to be raised because the question is one of law which can be decided on the material on the records of the case, in the light of the decision of this Court in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar 1962 (11) TMI 21 - SUPREME COURT OF INDIA which was decided after the judgment of the High Court in this case. We express no opinion whether the said decision covers the present case or not.
Issues Involved:
1. Alternative remedy and delay. 2. Acquiescence in submitting consolidated returns. 3. Authority of the Sales Tax Officer under the Colliery Control Order, 1945. 4. Applicability of Article 286 of the Constitution. 5. Fundamental right to free trade. 6. Definition and liability of a "dealer" under the Rajasthan Sales Tax Act. 7. Nature of the transaction between the petitioner and the State of Rajasthan. 8. Jurisdiction under Article 226 of the Constitution. 9. Situs of sale and inter-State trade. Detailed Analysis: 1. Alternative Remedy and Delay: The petitioner argued that the Rajasthan Sales Tax Act was not applicable to the supply of coal by the collieries to the State of Rajasthan. The High Court held that where a tax is levied without legal authority, it is open to the aggrieved party to approach the Court under Article 226, even if an alternative remedy exists. The Court cited precedents such as Kalish Nath v. State of U.P. and Himmatlal v. State of M.P., emphasizing that the existence of an alternative remedy is no bar when fundamental rights are involved. The delay in seeking relief was justified due to assurances given by State officials, which were not contested by the respondents. 2. Acquiescence in Submitting Consolidated Returns: The respondents argued that the petitioner had acquiesced by submitting consolidated returns. The Court referred to Sales Tax Officer v. Kanhaiya Lal, where it was held that payment under a mistake of law entitles the payer to a refund. The Court concluded that mere submission of a consolidated statement does not constitute acquiescence, especially when the petitioner had consistently disputed the tax liability. 3. Authority of the Sales Tax Officer Under the Colliery Control Order, 1945: The petitioner contended that the Sales Tax Officer had no authority to demand tax under the Colliery Control Order, 1945. The Court reviewed the provisions of the Control Order, which regulated the sale and distribution of coal, and found that the petitioner acted as a broker or del credere agent, not as a seller. The transaction was between the collieries and the State of Rajasthan, with the petitioner merely facilitating the supply. 4. Applicability of Article 286 of the Constitution: The petitioner argued that Article 286 prohibits the State of Rajasthan from taxing sales or purchases outside its territory. The Court held that the sales in question did not occur within Rajasthan, as the title to the coal never passed to the petitioner. The coal was directly supplied by the collieries to the State, making the tax imposition invalid under Article 286. 5. Fundamental Right to Free Trade: The petitioner claimed that the imposition of tax infringed on its fundamental right to free trade. The Court agreed, stating that any illegal imposition of tax violates the right to carry on trade and commerce, which is a fundamental right under the Constitution. 6. Definition and Liability of a "Dealer" Under the Rajasthan Sales Tax Act: The respondents argued that the petitioner was a "dealer" under the Rajasthan Sales Tax Act. The Court examined the definition of "dealer" and concluded that the petitioner, acting as a broker or agent, did not qualify as a dealer for the transactions in question. The Court referred to the Supreme Court's decision in State of Bombay v. Ratilal Vadilal & Bros., which held that an agent arranging sales does not become a dealer. 7. Nature of the Transaction Between the Petitioner and the State of Rajasthan: The Court analyzed the agreement between the petitioner and the State, finding that the petitioner was a contractor arranging the supply of coal, not a seller. The coal was supplied at controlled rates, and the petitioner received brokerage from the collieries, not from the State. The transaction was consistent with the petitioner acting as an agent, not as a seller. 8. Jurisdiction Under Article 226 of the Constitution: The High Court justified its jurisdiction under Article 226, stating that the petitioner challenged the authority of the State to levy the tax and claimed infringement of fundamental rights. The Court held that the existence of an alternative remedy does not bar the issuance of a writ when fundamental rights are at stake. 9. Situs of Sale and Inter-State Trade: The Supreme Court remitted the case to the High Court to determine the situs of the sale and whether the sale occurred in the course of inter-State trade. The Court allowed the petitioner to raise the point that the supply of coal under the Colliery Control Order did not amount to a sale, based on the decision in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar. Conclusion: The High Court quashed the Sales Tax Officer's order to the extent it related to the price paid by the State of Rajasthan to the collieries for the supply of coal. The Supreme Court remitted the case to the High Court for further determination on the situs of the sale and inter-State trade issues, allowing the petitioner to raise additional legal points. The appeal was allowed, and the case was remitted for further proceedings.
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