9911796707
TMI Blog1963 (9) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 20th March, 1950, and 30th March, 1951. The assessee paid some amounts towards the sales tax thus determined, but there remained substantial arrears for 1948-49 (Rs. 3,836-4-0) and for 1949-50 (Rs. 1,218-1-9). The department took coercive steps including prosecution, to collect the arrears from the aforesaid assessee, but the proceedings were not pursued after the criminal proceedings were dropped on 10th December, 1955. Thereafter, on 5th October, 1956, the assessee transferred his business for a consideration of Rs. 25,000 by a registered instrument to one Sukraj Peerajee, the petitioner in the writ petition as well as the appellant before us. By a notice dated 17th April, 1957, the Deputy Commercial Tax Officer, Park Town, Madras, calle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is imposed by the Act on the individual who carries on the business, and this liability could not be enforced against another, unless there was privity or devolution of interest. When rule 21-A sought to shift this liability to the transferee of the dealer who effected the sales, it involved a contravention of the statute and must therefore be struck down as ultra vires to that extent. Ganapatia Pillai, J., held, "What is taxed under the Act is really the transaction of sale and that is the subject-matter of the tax. But who is the person that is called upon to pay the tax may vary in individual instances." He also observed that it might not be correct to say that in every instance of payment of sales tax, the incidence of the taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been framed by the State Government under the rule-making power granted to it under section 19(1) and (2) of the 1939 Act. We must point out initially that the Act we are considering in this case is the Sales Tax Act of 1939 before its amendment in 1959. Reference in this judgment will be made throughout only to the old Act. Section 3(1) of the Act is the charging section. It imposes a liability to pay sales tax on every dealer for each year, and the tax is to be calculated on his total turnover for that year. The word "dealer" is defined in section 2(b) of the Act, to mean any person who carries on the business of buying or selling goods. The word "turnover" is also the subject-matter of definition in section 2(i) of the Act, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that, though with some hesitation, he would hold that section 19(1) empowered the State Government to make the aforesaid rule. Section 19(1) of the Act empowers the State Government to make rules to carry out the purposes of the Act. But such authority cannot be utilized to amplify the definition of a dealer in the Act, so as to constitute by a legal fiction some other person as a dealer, who does not fall within the definition of a dealer in the Act. In making a notification of the above kind the State Government clearly did not further the purposes of the Act, and acted beyond the scope of its rule-making power. As regards section 19(2)(c) of the Act, it also does not help the Government Pleader, who relied on it before us. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be extended to General Sales Tax Act. Therefore, the word "assessment" used in section 19(2)(c) cannot be equated to the determination of the person, who has to incur the liability to pay the sales tax. It is presumably after realising that rule 21-A went far beyond the rule-making power of the Government, that, when the Sales Tax Act was amended in 1959, the Legislature though it fit to embody a suitable provision in the statute itself. Thus the rule is clearly beyond the rule-making power of the Government whether under section 19(1) or section 19(2)(c) of the Act. We will briefly refer, before parting with the case, to an argument of the learned Government Pleader, based upon certain observations of the Supreme Court in Pandit Banars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax should fall on the purchaser or on the seller in respect of a transaction of sale. Such a delegation of power can be easily distinguished from the framing of rule 21-A, where the rule-making authority, in substance, has proceeded to enlarge the definition of "dealer" in the Act itself. Such a rule is obviously beyond the power of the rule-making authority, and requires to be struck down by this Court. The next argument, based upon the instrument of transfer, is easily met. The deed is silent about the sales tax liability. The learned Judge (Ganapatia Pillai, J.) observed that on a true construction of the deed, the transferee undertook to pay not only Schedule I liabilities but also other liabilities. By implication, the learned Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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