9911796707
TMI Blog1955 (1) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... This is a case in which the petitioner has been asked to pay the sales tax even before the turnover for the year has been determined under the rules. Mr. Seshadri appearing for the petitioner contends that though under the relevant rules, the petitioner can be asked to pay the tax, the rules themselves are ultra vires of the powers given to the Government under the statute. The turnover rules are framed under section 3, clauses (4) and (5) of the Madras General Sales Tax Act. Section 3(1) says that "subject to the provisions of this Act, (a) every dealer shall pay for each year a tax on his total turnover for such year. Section 3, clause (4), says that "for the purpose of this section and the other provisions of this Act, turnover shall be determined in accord- ance with such rules as may be prescribed. Provided that no such rule shall come into force unless they are approved by a resolution of the Legislative Assembly." This clause, therefore, provides only for the determination of the turnover. Under clause (5) "The taxes under sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed." "Prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first instance by Somasundaram, J., who directed the case to be posted before a Division Bench, as the question involved was one of considerable importance. The facts necessary for a disposal of this case are these: The petitioner is a dealer in sweetmeats. He commenced this business on or about 1st August, 1953. On 25th October, 1953, he was served with a notice in Form A-2 demanding from him the payment of a provisional sales tax for the months from August to October, 1953, which was assessed in a sum of Rs. 105, on or before 14th November, 1953. The accused failed to pay the amount. On 13th November, 1953, he intimated that he had stopped his business. He was thereupon charged with an offence under section 15(b) of the Madras General Sales Tax Act, hereinafter referred to as the Act. There can be no doubt that the assessment and levy of the said tax were in accordance with the Turnover and Assess- ment Rules made by the Government in exercise of the powers conferred by the Act. The only question raised by the petitioner is whether these rules are valid. Before we deal with the question, it is useful to set out the material provisions of the Act, and the relevant rules. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him. Section 15 deals with offences and penalties. We are only con- cerned with clause (b), which makes failure to pay within the time allowed any tax assessed, an offence punishable with a fine which may extend to one thousand rupees. In case of conviction, the Magistrate is required to specify in the order the tax which the person convicted has failed to pay. Section 19 confers power on the State Government to make rules to carry out the purposes of the Act, and in particular, to provide for all matters expressly required or allowed by this Act to be pres- cribed. Under sub-section (4) of the section, the power to make rules is subject to the condition of the rules being made after previous publi- cation for a period of not less than four weeks. Sub-section (5) declares that "all rules made under this section shall be published in the Fort St. George Gazette and upon such publication shall have effect as if enacted in this Act." In exercise of the powers so conferred, the Madras Government have made two sets of rules, namely, the Madras General Sales Tax (Turnover and Assessment) Rules, and the Madras General Sales Tax Rules. Under rule 6 of the former rules, that is, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any year does not accrue till the end of that year, because the liability is to pay the tax on the total turnover of such year. In the present case, according to the definition in the Act, the year would be financial year commenting from 1st April, 1953, and ending with 31st March, 1954. The petitioner, however, has been called upon to pay the tax long before the lapse of the year. Under the rules, undoubtedly, the petitioner would be liable to pay as per the provisional assessment made by the assessing authority. The contention is that the rules are inconsistent with, and go beyond, the section, and the rules, in so far as they are inconsistent with, and repugnant to, the section, are invalid. The alternative argument of the petitioner's counsel was that in case it be held that the rule-making authority, namely, the Government, has been given power to make rules neither covered nor contemplated by the enactment itself, then such delegation of legislative power would be un- constitutional. The learned Advocate-General sought to uphold the validity of the rules in question on several grounds: firstly, he contend- ed that the rules were not inconsistent with, and did not travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n force, it was not competent for any one to question their authority. Lord Herschell was evidently much impressed by the pro- cedure which had to be followed before the rules came into force. The learned Lord Chancellor dealt with the question whether the validity of the rules could be canvassed in the courts, when once rules had been made by the Board of Trade and laid as provided on the tables of both Houses of Parliament. He said: "They (the rules) are to be of the same effect as if they were con- tained in this Act'. My Lords, I have asked in vain for any explanation of the meaning of those words or any suggestion as to the effect to be given to them if, notwithstanding that provision, the rules are open to review and consideration by the courts. The effect of an enactment is that it binds all subjects who are affected by it. They are bound to conform themselves to the provisions of the law so made. The effect of a statutory rule if validly made is precisely the same that every person must conform himself to its provisions, and, if in each case a penalty be imposed, any person who does not comply with the provisions whether of the enactment or the rule becomes equally subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f he chooses to take advantage of it, of moving that they be annulled. It is a precaution which in ninety-nine cases out of a hundred would be practically a sufficient precaution; but with reference to the abstract proposition which was queried in the judgment of the Master of the Rolls which has been cited, I have arriv- ed at the conclusion that if the rules were not such rules as it was con- templated, the Board of Trade should have the authority of making under the sections giving them the authority of making rules, it was the duty of the court to determine that they were ultra vires." I do not think that this decision helps the learned Advocate-General very much. Though I understand from the learned Advocate-General that the rules now in question along with the other rules described as "Turnover and Assessment Rules" were approved by the Legislative Assembly there is nothing in the Act which makes such procedure neces- sary, except as regards the rules relating to the calculation of the turn- over. I do not understand this decision to lay down that even if the rules made relate to a subject matter not covered by the Act itself, they would still be valid because of the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasonable. If thay fail to comply with such conditions, the court may quash them or treat them as un- enforceable. The court is not precluded from inquiring into the validity of an order because.the statute authorising the making of the order pro- vides that it shall have effect as if it were enacted in the statute" (468-9). There is abundant authority in decisions of the Courts in India for this position. So it becomes necessary to decide whether rules 6 to 11 are in any way inconsistent with any of the provisions of the Act. The learned Advocate-General laid considerable stress on the language in section 3(5) of the Act, which he said was wide enough to permit a rule being made to assess, levy and collect the tax in any manner, so long as it was the (1) [1931] A.C. 494. total turnover that was finally treated as being liable to tax. While I agree that once the tax has accrued in accordance with the charging section, the rules can provide for the assessment, levy and collection of the tax in such manner as the Government may consider proper and expedient, I fail to see how when the charging section says that every dealer shall pay for a financial year sales tax on his total t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there may at times be gasoline received in the month covered by the report (1) [1952] 2 M.L.J. 598 at p. 613; 3 S.T.C. 367 at p. 394. which has not been exported by the twentieth of the succeeding month; but the distributor is entitled to a credit for such exportation in his report made in the next month, and the mere fact that he cannot claim an anticipatory credit for gasoline not yet exported, but intended so to be, seems to us to be too slight a burden to be of any moment, or to raise a substantial constitutional question'. Monamotor Oil Co. v. Johnson(1). The attack on rule 15(2) must accordingly fail. It may be added that this contention is of academic interest so far as the petitioners are concerned, as it is admitted by them that they tanned all the goods purchased by them for tanning." No doubt the rule in question was rule 15, which related specially to hides and skins. But that does not furnish a ground of distinction The attack on rule 15 in that case was that the rule was unconstitutional. So far as I am able to recollect, there was no argument that rule 15 was inconsistent with section 3(1) and went beyond it and was therefore ultra vires and invalid. The citation f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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