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TMI Blog1959 (11) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... nnecessary 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. - C.A. Nos. 678 of 1957, 546 of 1958, 115 of 1959, - - - Dated:- 26-11-1959 - DAS GUPTA K.C. AND SHAH J.C. JJ H.N. Sanyal, Additional Solicitor-General of India (C.P. Lal, Advocate, with him), for respondent No. 1 in C.A. No. 546 of 1958. C.K. Daphtary, Solicitor-General of India (R.C. Prasad, Advocate, with him) for respondent No. 1 in C.A. No. 678 of 1957. B.C. Ghose, Senior Adovcate (P.K. Chatterjee, Advocate, with him), for the Intervener. H.N. Sanyal, Additional Solicitor-General of India (P.K. Chatterjee, Advocate, with him), for respondent No. 1 in C.A. No. 115 of 1959. Lal Narayan Sinha and S.P. Varma, Advocates, for the appellant. -------------------------------------------------- The Judgment of the Court was del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d question Article 286 fell to be considered. According to the majority judgment in that case Article 286(1)(a) read with the explanation thereto and construed in the light of Article 301 and Article 304 prohibits the taxation of sales or purchases involving inter- State elements by all States except the State in which the goods are delivered for the purpose of consumption therein. The latter State is left free to tax such sales or purchases and it derives this power not by virtue of the explanation to Article 286(1) but under Article 243(3) read with entry 54 of List II. The view that the explanation does not deprive the State in which the property in the goods passed of its taxing power and that consequently both the State in which the property in the goods passes and the State in which the goods are deliver- ed for consumption have the power to tax is not correct. When the first respondent's assessment was taken up by the second respondent his attention was invited to this Court's decision in the case of the United Motors [1953] 4 S.T.C. 133; [1953] S.C.R. 1069.; he followed the said decision and held that the turnover of Rs. 92,24,386-1-6 on account of despatch of manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional points urged by the first respondent and found in his favour on both of them. On these findings the petition filed by the first respondent was allowed, the impugned order of forfeiture was set aside and the proceedings taken against the first respondent under section 14A were quashed. The appellant then applied for and obtained a certificate from the said High Court under Article 132(1) of the Constitution. On behalf of the appellant, Mr. Lal Narayan Sinha has contended that the High Court was in error in holding that the proviso to section 14A violates either Article 20(1)or Article 31(2) of the Constitution. He has addressed us at length in support of this case that neither of the two articles is violated by the impugned proviso. On the other hand, the learned Solicitor-General has sought to support the findings of the High Court on the said two constitutional points; and he has pressed before us as a preliminary point his argument that on a fair and reason- able construction, the proviso cannot be applied to the case of the first respondent. We would, therefore, first deal with this preliminary point. In cases where the vires of statutory provisions are challenged on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the charging section provides that every dealer whose gross turnover during the specified period on sales which have taken place both in and outside Bihar exceeds Rs. 10,000 shall be liable to pay tax on sales which have taken place in Bihar on and from the date of the commencement of the Act. This section shows that the incidence of taxation can be attracted only where the gross turnover of the dealer exceeds Rs. 10,000 and in determining this prescribed minimum, sales which take place both in Bihar and outside are taken into account. Section 5 prescribes the rate of tax at six pies in a rupee on the taxable turnover. The provisos to this section confer specific powers on the State Government; the first proviso which is relevant for our purpose empowers the State Government by notification to fix a higher rate of tax not exceeding one anna in a rupee or any lower rate of tax in respect of sale of any goods or class of goods specified in such notification subject to such conditions as it may impose. The explanation to this section indicates what the taxable turnover for the purpose of the section means. "Tax- able turnover" according to this explanation means that part of a deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected shall, without prejudice to any punishment to which the dealer may be liable for an offence under this Act, be forfeited to the State Government and such dealer shall pay such amount into the Government treasury in accordance with a direction issued to him by the Commissioner or any officer appointed under section 3 to assist him and in default of such payment, the amount shall be recovered as an arrear of land revenue." The effect of this proviso is clear. A dealer is authorised to collect amounts by way of tax from the purchasers only in accordance with the provision of section 14A and the conditions and restrictions prescribed there under. The conditions and restrictions referred to in the proviso are to be found in the material Rules framed under the Act. If it is shown that a dealer has collected an amount by way of tax in violation of the conditions and restrictions prescribed by the Rules he incurs the penalty of forfeiture as specified in the proviso. There can be no doubt that before the penalty of forfeiture can be imposed upon the dealer under the proviso it must be shown that he has acted contrary to the conditions and restrictions prescribed by the Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to this rule lays down that no such registered dealer shall realise any amount by way of tax at a rate higher than the rate at which he is liable to pay tax under the Act, or realise any amount by way of tax in respect of such part of his turn- over as is allowed to be deducted from his gross turnover for the determination of his taxable turnover under the Act of these Rules. The appellant relies on the latter part of the proviso and argues that the part of the turnover of the first respondent which is in question fell within section 33(1)(a)(i) and as such was not liable to be taxed. That being so there was no justification for the first respondent to collect any amount by way of tax from his purchasers under section 14A. The scheme of section 14A is to permit the registered dealer to collect such amounts of tax from his purchasers as he in his turn is liable to pay to the appellant. Authority to collect such tax amounts given to the registered dealer inevitably postulates his liability to pay a similar amount to the appellant. Authority to collect such tax amounts given to the registered dealer inevitably postulates his liability to pay a similar amount to the appellant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that transactions like those in question in the present appeal were liable to pay the tax at the rate of three pies as prescribed by the relevant notification; the registered dealers also had no doubt on the point; and so taxes were collected in respect of such transactions by the appellant from the registered dealers and by the registered dealers in their turn from their purchasers. Nevertheless, after the enactment of section 33 the legal fiction about the retrospective operation of the said section must be given effect to and in construing the proviso to rule 19 it must be assumed that the transactions in question were outside the scope of the Act and no tax could have been imposed in respect of them. Constructing the proviso on this assumption, can it be said that in respect of the part of the first respondent's turnover which is in question a deduction was allowable within the meaning of the proviso? In our opinion this question cannot be answered in favour of the appellant. Rule 19 itself was framed in 1949 and has not been amended subsequent to the enactment of section 33. As it was framed its reference to the allowable deductions was clearly based on the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover means the whole of the gross turnover which must include all sale transactions whether they took place within Bihar or outside it, and in support of this argument reliance is placed on the definition of "turnover" contained in section 2(i). If the whole of the gross turnover has to be mentioned under item I, it is urged, the claim for the exclusion of the transactions in question can well be adjusted under one or the other of the deduction items prescribed in the form. We are not inclined to accept this argument. The form as it has been prescribed construed in the light of the material provisions contained in sections 6, 7 and 8 does not support the case that in prescribing its several items it was intended that the transactions falling under section 33 should be first shown under item 1 and then excluded under one or the other of the remaining items of deduction. Besides it may be relevant to point out that the heading of Chapter VII which deals with the submission of returns by dealers is " return of taxable turnover" and it is arguable that the gross turnover mentioned in Form VI may mean "gross taxable turnover" and not the gross turnover including the transactions wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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