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TMI Blog1955 (9) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner is not a "dealer" as defined in the Orissa Sales Tax Act, that he had no "place of business" in Orissa, that he was merely sending the goods from Orissa to places outside the State and consequently the Orissa Sales Tax Authorities had no jurisdiction to assess him to sales tax. Secondly, he complains that the opposite parties realised a sum of Rs. 1,200 as court- fees under rule 59 of the Orissa Sales Tax Rules and that the levy of court-fees on his memorandum of appeal and revision petitions is ultra vires. Finally, he contends that the opposite parties had no jurisdic- tion to make twelve separate assessments under section 12(5) after service of a single notice in Form VI. 2.. The Sales Tax Officer, Patna Circle, issued a notice on 21st July, 1950, under sections 11(1), 12(5) and 12(7) of the Orissa Sales Tax Act in Form VI as follows: "FORM VI Notice to a dealer under Sections 11(1), 12(5) and 12(7) of the Orissa Sales Tax Act, 1947. [See Rules 22, 23 and 28(2).] To Chukabhai Golabhai, Village/Post Lakhna. Whereas it appears to me that your gross turnover immediately preceding the commencement of the Orissa Sales Tax Act, 1947, had ex- ceeded Rs. 5,000 but that yo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at Lakhna and were despatched to places outside the State, to the regular cus- tomers of the firm, by rail in all cases. He said that the railway receipts were sent to the consignees who paid the freight on delivery of the commodity. The Sales Tax Officer therefore held that the transfer of the property in the goods was completed in Orissa as soon as the goods were delivered to the railway, namely, a common carrier. He also held that the firm had wilfully failed to apply for registration of its business in Orissa and therefore assessed the firm to the best of his judgment. 3.. The view taken by the Department is that there was sufficient territorial nexus between the goods sold and the State of Orissa and that delivery was completed when the leaves were despatched by rail under railway receipts endorsed to the consignees outside Orissa who were only to pay the freight and take delivery. In the affidavit filed by the Collector of Commercial Taxes in this Court it is stated that the petitioner did not prove that the delivery of the goods took place out- side the State of Orissa for the purpose of consumption and that, there- fore, when the assessment was made for the quarters sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers outside Orissa. 5.. The transactions in question may be divided into two groups, namely, those that took place before the 26th January, 1950, i.e., before the Constitution came into force, and those that took place after that date. In respect of the latter category it cannot now be seriously dis- puted that the sales are deemed to be completed only in the State where the delivery took place, irrespective of the presence of the goods or the other elements of sale being completed in Orissa. In respect of the sales that took place before the Constitution came into force, it is equally clear that the Orissa State could assess them to tax provided there was sufficient territorial nexus between the goods and the State. This test however would not avail the taxing authorities if no attempt had been made to assess the petitioner before the Constitution came into force. It was pointed out by the learned Advocate-General and very rightly-that the recalcitrant attitude adopted by the petitioner in refusing to produce his books of account rendered it impos- sible for the taxing authorities to exclude the sales that took place out- side Orissa during the pre-Constitution period. The pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in matters stated in the body of the Act. Section 9, for instance, dealing with registration of dealers says that a dealer required to be registered shall make an application accompanied by such annual fee not exceeding Rs. 10 to such authority as may be prescribed. Under section 9-A a dealer may apply in the prescribed manner, accompanied by a fee of Rs. 2 and get himself voluntarily registered although his turnover has not exceeded Rs. 10,000 during the year. The annual registration fee is fixed at Re. 10 under sub-section (4) of that section. Under section 11 the Collector may direct that the dealer shall, by way of penalty, pay a sum not exceeding 10 per centum of the tax due or Rs. 5 for every day. Section 24 deals with the statement of cases to the High Court and requires a deposit of Rs. 100 to be made if the dealer requires the Revenue Commissioner to refer to the High Court any question of law arising out of an order under section 23. Section 29 vests the power to make rules for carrying out the purpose of the Act in the Provincial Government, and section 29(2)(s) says that such rules may prescribe "the procedure for and other matters (includ- ing fees) incidental to the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mps. It would appear from these provisions that the Government have failed to make any distinction between the functions of the taxing authorities and those of a Court constituted by the Legislature, in exercise of the power vested in it by item 3 of the State List. 8.. It is not every tribunal that can be characterised as a Court. The word "Court" is not defined anywhere, but the right to establish a Court flows from the sovereign power of the State whose duty it is to exercise judicial power to decide disputes between its subjects, or bet- ween it and its subjects whether it related to life, liberty or property. This judicial power is vested in the Courts under the Constitution which is the repository of the sovereign power of the State. The term "Court has acquired the meaning of "a place where justice is admi- nistered and also applies to persons who exercise judicial functions under authority derived either immediately or mediately from the sovereign power. All tribunals, however, are not Courts in the sense in which the term is understood. Thus arbitrators, committees of clubs and the like though they may be tribunals exercising judicial functions are not "Courts" in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which a matter is referred by another body. An administrative tribunal may act judicially, but still remain an ad- ministrative tribunal as distinguished from a Court." In the case of taxing authorities there are many functions which are inconsistent with strict judicial action and consistent with executive action. The appellate authority is specifically empowered to make such further enquiry as it thinks fit into the case of an assessee under rule 50, and all the officers engaged in the assessment proceedings up to the Board of Revenue are designated as "Sales Tax Authorities" under rule 3. The appellate authorities are administrative tribunals who review the decisions of the Sales Tax Officer who admittedly is not a judicial, but an executive officer. 9.. It cannot, therefore, be argued with any semblance of reason that the Assistant Collector or the Revenue Commissioner is a judicial tribunal functioning as a Court. It has been held that an Income-tax Appellate Tribunal is not a Court and that the Legislature has the power to require the deposit of a sum as a condition for preferring an appeal to that Tribunal under section 33 of the Indian Income-tax Act-See R. M. Seshadri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public authority for public purposes enforceable by law and is not payment for services rendered. Fee is a charge for special services rendered to individuals by some Governmental agency and is based on the expenses incurred by Government in rendering the service. Ordi- narily fees are uniform and no account is taken of the varying abilities of the different recipients to pay. It is therefore absolutely necessary that the levy of fees should, on the face of the legislative provision, bear some relation to the expense incurred by the Government in ren- dering the service. There are ordinarily two classes of cases where Government imposes fees upon persons. In the first class of cases the Government grants permission or privilege to do something and extracts fees from that person in return for the privilege that is conferred. In the second class of cases Government does some positive work for the benefit of persons and the money is taken as the return for the work done or the services rendered. If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public it can be coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property in the goods, and delivery of the goods. But the State Legislature sought to tax the sale of goods at one or more of these points and accordingly enacted by this proviso that irrespective of the situs of the agreement to sell, or of the sale itself, the goods were liable to tax if at the time of the contract they were found within the State of Orissa. In other words, it was not necessary that the sale should actually take place with- in the territorial limits of the State in the sense that all the ingredients of a sale should have territorial connection with the State. As has been ex- plained by the Supreme Court in State of Bombay v. United Motors (India) Ltd.(1), "Broadly speaking, local activities of buying or selling carried on in the State in relation to local goods was a sufficient basis to sustain the taxing power of the State provided of course such activities ultimately resulted in a concluded sale or purchase to be taxed." Such claims to taxing power on behalf of the State led to multiple taxation of the same transaction by different Provinces. The Constitution-makers found it necessary, therefore, to restrict the taxing power on sales involving inter-State elem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ................. and any such investigation, legal proceeding or remedy may be institut- ed, continued or enforced and any such penalty, forfeiture or punish- ment may be imposed as if the repealing Act or Regulation had not been passed." The argument is that the liability had been incurred under the proviso before it was repealed by the Adaptation of Laws Order and that the assessment proceedings could be instituted alter the Constitution came into force. The effect of the repeal of an enactment is to obliterate it as completely from the records as if it had never been passed, and it must be considered as a law that never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law-per Tyndall, C.J., in K. v. Goodwyn(1). In England the practice was to insert in most of the repeal- ing statutes a clause saving anything duly done or suffered under the repealed statutes and any pending legal proceedings or investigations. This procedure was found to be cumbersome and ultimately section 38(2) was inserted in the Interpretation Act of i889 which provided that a repeal, unless a contrary intention appears, does not affec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clauses Act would certainly be applicable in the absence of the Adaptation Order. Where there is an adaptation the provisions of the Adaptation Order and not of the General Clauses Act should apply. The Adaptation Order itself makes a provision similar to section 6 of the General Clauses Act with only a slight difference. Paragraph 20 of the Adaptation Order says: "Nothing in this Order shall affect the previous operation of any- thing duly done or suffered under any existing law, or any right, pri- vilege, obligation or liability already acquired, accrued or incurred under any such law, and any penalty, forfeiture, or punishment incurr- ed in respect of any offence already committed against any such law." It will be noticed that there is no provision in this Order similar to that contained in section 6 empowering the institution of legal pro- ceedings after the repeal in respect of liabilities incurred before the repeal. On the other hand, clause 20 of the Adaptation Order indicates the contrary intention by the use of the word "already" before the words "acquired, accrued or incurred." I am inclined to the view that the provisions of the General Clauses Act are not applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The liability of a dealer to whom sub-section (1) of section 4 does not apply commences from the year immediately following that during which his gross turnover exceeded Rs. 5,000 as the Act stood before its amend- ment. Sub-section (3) says that this liability shall remain in force for three consecutive years although his gross turnover did not exceed Rs. 5,000, or such further period as may be prescribed. It further says that " on the expiry of this latter period the liability to pay tax shall cease." The liability again revives under sub-section (4) when the gross turnover exceeds Rs. 5,000. It is clear, therefore, that the ex- pression "liability" occurring in section 4 refers to a contingent liabi- lity which may continue or cease upon the happening of a certain event and this liability is expressly stated to be "subject to the provisions of sections 5, 6, 7 and 8." Section 5 says that the tax payable by a dealer shall be levied at a particular rate which again is a fluctuating factor. It may also be compounded by paying the tax in such manner as may be prescribed. Section 5(2) defines what "taxable turnover" means under the Act, and provides for certain deductions to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal liability actually existing at law and not a prospective liability. Lord Greene, M.R., observed: " Although it is absolutely certain that income-tax would be im- posed in the following year it did not become a legal liability unless it was perfectly ascertainable without any doubt whatsoever, namely, an existing legal liability actually existing in law at the relevant date. The words cannot be stretched so as to cover something which, in a business sense, is morally certain and for which a business man ought to make provision, but which in law does not become a liability until a subse- quent date." In Hinckley Urban District Council v. West Midland Gas Board(3) an undertaking for the supply of gas, belonging to the plaintiff, vested in the defendant, viz., The West Midland Gas Board, by the Hinckley Gas Act of 1922. After the vesting the plaintiff, namely the Hinckley Urban District Council, had found that they had gained surplus profits during the previous year before it vested in the defendant. These profits could (1) [1947] 1 All E.R. 793. (3) [1951] 1 Ch. 577. (2) [1949] 1 Ch. 28. be spent in a number of ways stated in the Hinckley Local Boards Gas Act of 1880 and emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Act. Mr. Mohanty pointed out that a compo- site notice as prescribed in Form VI is repugnant to the scheme of the Act. Form VI is so framed as to meet all forms of notice prescribed under the Act. The instruction given at the bottom of the form is that unnecessary words should be scored out. The tax authorities, however, (1) [1954] 5 S.T.C 193. (3) [1955] 6 S.T.C. 87; 21 C.L.T. 66. (2) [1954] 5 S.T.C. 307; A.I.R. 1954 Mad. 932. do not always follow these instructions with the result that the notice actually issued calls upon a dealer to perform a number of acts simul- taneously. 18.. The scheme of the Act is that, in the first instance, the dealer is to be called upon by notice to furnish returns. He is permitted by sub-section (2) of section 11 to furnish a revised return if he discovers any omission or wrong statement made in the first one. If he fails to comply with the notice without any reasonable cause, he incurs the liability to be pena- lised. Then comes the stage when the Collector is to be satisfied whether the return furnished is correct and complete. Section 12(1) speaks of the satisfaction of the Collector with the return furnished before he can asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould the Sales Tax Officer believe anything, or have any reason to believe, before calling upon the dealer to furnish a return, and before determining that his gross turnover had exceeded Rs. 5,000? The notice further requires the dealer to submit a return and simulta- neously calls upon him to produce his accounts. This is contrary to the procedure contemplated in the Act. If the return is furnished it is open to the Collector to accept it if he, is satisfied as to its correctness. But why should the dealer be called upon to produce his accounts along with his return when the Act does not specifically say so? It may be that a dealer furnishes a return on the balance sheet, but may not have put his accounts in proper order. The hardship that is likely to ensue as a result of such composite notices can easily be visualised. An even graver objection is that the dealer is required to show cause why in addition to the tax a penalty should not be imposed on him under sec- tion 12(5). As I have stated already, section 12(5) is explicit and imperative that the dealer must be given a reasonable opportunity to prove that he had not wilfully failed to get himself registered. If, as is the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of "sale" in section 2(g). 20.. Incidentally I should like to point out that the procedure adopted so far by the taxing authorities in issuing combined notices in Form VI without complying with the instructions given in the form, is contrary to the scheme of the Act, and exposes the orders passed by them to the risk of being quashed. 21.. The conclusions I have reached, therefore, are: (1) That the petitioner is a dealer and is liable to be registered under the Orissa Sales Tax Act; (2) That he is liable to be taxed for sales concluded in Orissa both before and after the coming into force of the Constitution; (3) That he is not liable to be taxed in respect of transactions affected by the second proviso to section 2(g) of the Act, but that his liability in respect of transactions governed by the definition of "sale" is not affected by the Adaptation of Laws Order made by the President and (4) That the levy of court-fees by the Taxing Officer at different stages of the assessment proceedings is ultra vires. 22.. In the result the assessment order is set aside. The petitioner shall be directed to furnish a return of his transactions under section 11, for the period for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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