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TMI Blog1956 (12) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... tax under the Act shall be deemed to be a sale. Notices of demand were served on the petitioner. The tax was due to be paid only on or before 23rd October, 1953. It is alleged that the notices of demand were mislaid in the Calcutta office of the petitioner and therefore an application was made for extension of time for appeals under the second proviso to section 30(1) of the Assam Sales Tax Act. The Superintendent of Taxes informed the petitioner that the question whether delay could be condoned could be considered only when the appeals were filed. On 22nd February the petitioner filed three appeals before the Assistant Commissioner of Taxes. These appeals were dismissed on 30th July, 1954, on the ground that they were barred by limitation. The Assistant Commissioner did not go into the merits of the controversy. The order, it is said, was passed without hearing the petitioner. He then filed three petitions of revision before the Commissioner of Taxes. These petitions were rejected on 18th May, 1956. The Commissioner came to the conclusion that the order rejecting the appeals was correct. But he did not dispose of the revision petitions only on that ground. He observed further a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power conferred on it by virtue of the provision in Entry No. 54, List II, of the Seventh Schedule to the Constitution of India. Adding to the powers under Entry No. 54 would amount to amending the Constitution which a State Legislature has no power to do. It can merely exercise the power within the limits imposed on it by the entry under which it purports to act. The Amending Act by which the impugned proviso was inserted in the Act could only be in the exercise of powers which the State Government had by virtue of the provisions contained in Entry No. 54. The position is almost axiomatic and is also concluded by authority. It was held in Sales Tax Officer v. Budh Prakash Jai Prakash[1954] 5 S.T.C. 193; A.I.R. 1954 S.C. 459. that the State Legislature cannot by enlarging the definition of "sale" as including forward contracts, arrogate to itself a power which is not conferred upon it by the Constitution Act. In Gannon Dunkerley and Co. (Madras) Ltd. v. State of Madras[1954] 5 S.T.C. 216; A.I.R. 1954 Mad. 1130. Item 48, List II, of the Government of India Act, 1935, came to be interpreted. It was held that, "the legislative power of the Provincial Legislature to levy a tax on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in the goods should pass to the purchaser for pecuniary consideration. These are essential elements of a transaction of sale. Their Lordships of the Supreme Court had also occasion to consider the question with reference to Entry 48 of List II of the Seventh Schedule to the Government of India Act, 1935, in Sales Tax Officer v. Budh Prakash Jai Prakash[1954] 5 S.T.C. 193; A.I.R. 1954 S.C. 459. Interpreting the expression "sale of goods" in Entry 48, in the sense in which it was used in legislation both in England and in India they held that it authorised the imposition of a tax only when there is a completed sale involving transfer of title and not when there is a mere agreement to sell. In this case it was further held that at the time of the enactment of the Government of India Act, there was a well defined and well established distinction between a sale and an agreement of sale and the expression in question was interpreted in full view of this distinction. The implication of this decision is that at the time the Government of India Act was enacted, the expression "sale of goods" had acquired a well defined meaning. The statutory meaning of the expression, given to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger powers are given to the State Legislatures by Entry 54 of List II of Seventh Schedule. The Government of India Act did not include the expression "purchase" in Entry 48. He argues that purchase as distinguished from sale also justifies the imposition of a levy. By adding the second proviso to section 2(12) the Assam State Legislature merely permitted taxation of purchases. He amplifies his argument by pointing out that the petitioner in this case purchased tea chests and parts of machinery in Calcutta. From Calcutta these were brought over to Assam for use here and if purchases are taxable, they would not cease to be so merely because goods purchased are used. In his view Entry 54 permits taxation of purchases whatever be the object. He therefore urges that even if the use contemplated by the impugned proviso may not fall within the purview of the expression "sale of goods" it would fall under purchase and therefore the proviso would not be beyond the legislative competence of the State Legislature. The reasoning suffers from a fallacy. There can be no transaction of sale without a purchaser. There cannot be also a transaction of purchase without a seller. A seller and a purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any constitutional objection. But the legislature could not add to its power of taxing purchases which it could not tax, merely on the ground that articles purchased were used by the purchaser. A sale or purchase inside the State is necessary in order to tax the seller or the purchaser. The user alone does not involve any transfer of property in question from a seller to a buyer. The impugned proviso therefore does contravene a prohibition of the Constitution and is hit by it. It involves excessive use of the legislative power by the legislature of the State. It is therefore constitutionally invalid and unenforceable. The assessment of the petitioner for the three periods under the impugned proviso would therefore be without any legal sanction. It is illegal. In view of the conclusion reached it is not necessary to examine the second contention raised on behalf of the petitioner. It was contended by his learned Advocate that the tea chests and the machinery parts which were taxed did not form part of his stock as a dealer under the Act. He was a dealer in tea. When selling tea in chests he was paying tax on his turnover on sales. As he was not dealing either in machinery parts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at at this stage no other remedy is available to the petitioner. We have found that the assessments are illegal and are incapable of being given effect to. The available remedy being by a writ of mandamus is discretionary. It may not be claimed as of right even in England. Article 226 leaves the discretion to the Court in the case of all writs including the writ of mandamus. Normally a writ of mandamus may not issue where another adequate and efficacious remedy is available. But even the existence of an alternative remedy does not invariably operate as a bar to the issue of the writ. In this case the petitioner admittedly has no other remedy available now. If the writ is refused it would amount to perpetuating a miscarriage of justice and this may not be suffered notwithstanding the fact that the petitioner might well have come to this Court by obtaining a reference. There is however a still better reason why a suitable writ should issue in this case. In Bengal Immunity Co., Ltd. v. State of Bihar[1955] 6 S.T.C. 446; A.I.R. 1955 S.C. 661., it was held by no less than four learned Judges of the Supreme Court that: "the remedy under an Act cannot be said to be adequate and is, inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of goods other than newspapers. It is under the authority of this entry read with the relevant Article 245 of the Constitution that the State Legislature proceeded to introduce the amendment inserting the proviso. The learned counsel for the petitioner argues that the word "sale", as used in Entry 48 of List II of the Government of India Act, 1935, or in Entry 54 of List II of the Seventh Schedule of the present Constitution, has a well-recognised and definite legal connotation, which does not and cannot include mere user of goods. According to the contention of the learned counsel, "use" of any goods is not "sale" and, therefore, under cover of the proviso in question, the State Legislature could not arrogate to itself the authority of taxing the use by a dealer of any goods in his stock. It is well-settled that, both under the English and Indian law, "sale" connotes the transfer of interest in the goods sold from one person to another, being the vendor and the purchaser respectively, for valuable consideration. In the case of user, all these elements are absent; there is neither a vendor nor a purchaser, nor is there any transfer of interest from the one to the other in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds used by the dealer from his stock were purchased, the State Legislature was entitled to tax those goods on account of their user by the dealer. This argument is palpably erroneous. Sale and purchase are no doubt but different phases of the same transaction; but to tax the mere user of the goods by the dealer is altogether different. The impugned proviso says nothing about purchase. If the sale or purchase took place outside the State, the State Legislature was precluded from taxing the same under Article 286(1) of the Constitution; but here the proviso contemplates taxing the use of the goods by the dealer. It is obvious that such a levy cannot be described as sale or purchase tax. It must, therefore, be held that the impugned proviso transgresses the constitutional powers of the State Legislature vouchsafed under Entry 54, List II, of the Seventh Schedule of the present Constitution, and as such is ultra vires. It is significant to note that we have not come across any such proviso in any other sales tax legislation in India unduly enlarging the meaning of sale in a parallel sense. There being thus no legal sanction for the assessment of taxes on the goods in question, the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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