2009 (9) TMI 881 - HC - VAT and Sales Tax

When the transporters , as a class, do not fall within the definition of the term dealer , in a given fiscal statute, whether it is constitutionally permissible to impose legal obligations on the functioning of the transporters so as to ensure that the acts or omissions of transporters do not help evasion of tax by dealers ? Whether contravention of such statutory obligations, imposed on the transporters can be made offences? Whether it is permissible for the Legislature to make such provisions, in such a fiscal statute, as would enable a transporter to opt for composition of such offences by making payment of such sum(s), which may be recoverable as the taxable liability of the dealer , whose taxable consignment had been carried by the transporter or whose taxable liability the transporter has helped escaped assessment of? Whether it would be permissible for the State to recover tax, which is, otherwise, payable by a dealer , by making payment of such taxable amount as a condition for composition of an offence, which a transporter may have committed? Held that - In the present cases, apart from the fact that the composition amount could not be shown to be unreasonably high or oppressive, the impugned orders state that the petitioners had opted for composition of the offence under sections 29(4), 29(5), 29(6) and 29(12). The petitioners, as transporter , contend, at the time of hearing of these writ petitions, that they had not opted for composition. It, thus becomes a disputed question of fact as to whether the petitioners had, or had not, as a matter of fact, opted for composition. Such a disputed question of fact cannot be decided and determined in a writ proceeding, such as, the present one, and the resort, in such a case, must be taken by a person within the scheme of the statute itself. Considered in this light, it becomes clear that if it is the contention of the petitioners that they had not opted for composition, they have to take remedial option provided in the statute itself and not by way of a writ petition under article 226 of the Constitution of India as has been done in the case at hand.

Summary

Issues Involved:
1. Constitutional permissibility of imposing legal obligations on transporters who do not fall within the definition of "dealer" in a fiscal statute.
2. Whether contravention of statutory obligations imposed on transporters can be made offenses.
3. Legislative authority to enable transporters to opt for composition of offenses by making payments recoverable as the taxable liability of the dealer.
4. Permissibility of the State recovering tax payable by a dealer from a transporter in the absence of charging provisions.

Issue-wise Detailed Analysis:

1. Constitutional Permissibility of Imposing Legal Obligations on Transporters:
The petitioner, a transporter, challenged the imposition of legal obligations under the Tripura Sales Tax Act, 1976 (TST Act) and the Tripura Sales Tax Rules, 1976 (TST Rules), arguing that transporters do not fall within the definition of "dealer" and thus cannot be subjected to such obligations. The court noted that the obligations imposed on transporters, such as maintaining accounts and furnishing information, are aimed at preventing tax evasion by dealers. The Supreme Court in Tripura Goods Transport Association v. Commissioner of Taxes upheld the constitutionality of such provisions, emphasizing that they are necessary to ensure no tax liability escapes notice of the taxing authority. The court concluded that imposing such obligations on transporters is constitutionally permissible.

2. Whether Contravention of Statutory Obligations Imposed on Transporters Can Be Made Offenses:
The court examined sections 29 and 30 of the TST Act, which penalize failure to produce accounts, compliance with requirements, and furnishing incorrect information. It was determined that these provisions apply to "whoever" commits such offenses, including transporters. The court held that transporters are subject to these penal provisions for failing to fulfill their statutory obligations, thus making contraventions punishable.

3. Legislative Authority to Enable Transporters to Opt for Composition of Offenses:
Section 32 of the TST Act allows the Commissioner to accept composition of offenses from persons who have committed or are suspected of committing offenses under the Act. The court clarified that while clause (a) of section 32(1) applies to dealers, clause (b) applies to other persons, including transporters, who may help in tax evasion. The court held that section 32 does not impose tax liability on transporters but provides an escape route for them to compound offenses by paying a sum of money in addition to the tax recoverable from the dealer. The court upheld the legislative authority to enable transporters to opt for composition.

4. Permissibility of the State Recovering Tax Payable by a Dealer from a Transporter:
The petitioner argued that without charging provisions imposing tax liability on transporters, the State cannot recover tax payable by a dealer from a transporter. The court noted that section 32 does not impose tax liability on transporters but allows recovery of the dealer's tax liability if the transporter opts for composition of offenses. The court emphasized that the provisions aim to check tax evasion and ensure compliance with statutory obligations. The court concluded that the State can recover the dealer's tax liability from the transporter under section 32, provided the transporter opts for composition.

Conclusion:
The court found no merit in the petitioner's challenges and upheld the constitutionality and applicability of the relevant provisions of the TST Act and TST Rules. The court dismissed the writ petitions, emphasizing that the obligations and penalties imposed on transporters are necessary to prevent tax evasion and ensure compliance with the fiscal statute. The court also noted that any disputed questions of fact regarding the petitioner's opting for composition should be resolved within the statutory framework, not through writ petitions.