1959 (11) TMI 39 - SC - VAT and Sales Tax

Appeals filed by the State of Bihar (hereinafter called the appellant) against three separate registered dealers with a certificate issued by the Patna High Court under Article 132(1) of the Constitution that they involve a substantial question of law as to the interpretation of Article 20(1) of the Constitution Held that - In dealing with the question we cannot ignore the fact that the relevant provisions which fall to be construed in the present appeal impose a serious penalty on the registered dealer, and so, even if the view for which the appellant contends may perhaps be a possible view, we see no reason why the other view for which the first respondent contends and which appellant contends may perhaps be a possible view, we see no reason result we hold that the proviso to section 14A cannot be invoked against the first respondent and so the order of forfeiture passed against him by the second respondent is unjustified and illegal. In view of this conclusion it is unnecessary to consider the objections raised by the first respondent against the validity of the proviso on the ground that it contravenes Articles 20(1) and 31(2) of the Constitution. We may incidentally add that during the course of the arguments before us we have also heard all the learned counsel on the question as to whether the said proviso contravenes the provisions of Article 19(1)(f) as well. Appeal dismissed.

Summary

Issues Involved:
1. Validity of the orders of forfeiture under Section 14A of the Bihar Sales Tax Act, 1947.
2. Interpretation of the proviso to Section 14A of the Bihar Sales Tax Act.
3. Applicability of Article 20(1) and Article 31(2) of the Constitution.
4. Whether the proviso to Section 14A contravenes Article 19(1)(f) of the Constitution.

Detailed Analysis:

1. Validity of the Orders of Forfeiture under Section 14A of the Bihar Sales Tax Act, 1947:

The appeals were filed by the State of Bihar against three registered dealers, challenging the validity of orders of forfeiture passed under Section 14A of the Bihar Sales Tax Act, 1947. The dealers had collected sales tax from purchasers but were later found not liable to pay the tax under the Act due to the transactions being inter-State sales, exempted under Article 286 of the Constitution as interpreted in the United Motors case. The Superintendent of Sales Tax directed the dealers to forfeit the collected amounts to the government, which was challenged by the dealers.

2. Interpretation of the Proviso to Section 14A of the Bihar Sales Tax Act:

The proviso to Section 14A states that if any dealer collects any amount by way of tax in contravention of the section or the conditions and restrictions prescribed, the amount so collected shall be forfeited to the State Government. The Court examined whether the dealers had contravened the conditions and restrictions prescribed by the Rules, particularly Rule 19, which prohibits the collection of tax on turnover allowed to be deducted from the gross turnover for determining taxable turnover. The Court held that the transactions in question were outside the scope of the Act and not liable to tax, thus the dealers' collections did not violate the proviso to Rule 19.

3. Applicability of Article 20(1) and Article 31(2) of the Constitution:

The dealers argued that if the proviso to Section 14A justified the forfeiture, it would violate Article 20(1) and Article 31(2) of the Constitution. Article 20(1) protects against ex post facto laws, and Article 31(2) pertains to the compulsory acquisition of property. The High Court had ruled in favor of the dealers on these constitutional grounds. However, the Supreme Court found it unnecessary to address these constitutional objections, as it concluded that the proviso to Section 14A was not applicable to the dealers' case.

4. Whether the Proviso to Section 14A Contravenes Article 19(1)(f) of the Constitution:

Although the argument regarding Article 19(1)(f) (right to property) was raised during the proceedings, the Court did not find it necessary to decide on this issue, as the primary ground for dismissing the appeal was the inapplicability of the proviso to Section 14A to the dealers' case.

Conclusion:
The Supreme Court dismissed the appeals, holding that the orders of forfeiture were unjustified and illegal as the proviso to Section 14A of the Bihar Sales Tax Act did not apply to the dealers' case. The transactions in question were exempt from tax under Article 286 of the Constitution, and thus, the collections made by the dealers did not contravene the conditions prescribed by the Act or the Rules. The decision in this appeal governed the other two appeals, which were also dismissed with costs.