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TMI Blog1964 (4) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year, the transactions in untanned hides and skins up to 29th May, 1954, were treated as those of an unlicensed tanner. This part of the turnover was not taxed on the purchase value. It was brought to tax at the sales point on the estimated turnover of Rs. 1,79,849. After allowing exemption for export sales, the taxable sales turnover was fixed at Rs. 1,42,011 and this, added to the turnover already determined at the original assessment, came to Rs. 2,12,882. It is to quash this order of assessment that the present writ petition has been filed. It is contended by the petitioner that the authorities have no jurisdiction to revise the assessments, and that the licence taken by the petitioner was valid for the whole year and not only from 29th May, 1954. It is urged that since the sale were effected only after the licence had been taken, no tax could be levied at the sales point. It is also contended that in so far as the scheme of taxation subjected unlicensed dealers to a differential treatment as compared with licensed dealers, those provisions offend Article 14 of the Constitution. It is claimed accordingly that the assessment is illegal and has to be quashed. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 29th May, 1954. He claimed further that since the sales were effected after the petitioner became a licensed dealer, it cannot be denied the benefit of taxation on the purchase price. It has to be seen how far these contentions can be accepted. It seems futile to argue at this point of time that the distinction between the licensed and unlicensed dealers is unreal in the sense that the classification is not integrally connected with the underlying purpose of the Act. It is conceded by the learned counsel that in State of Madras v. M.A. Noor Mohammed Co.[1956] 7 S.T.C. 1; I.L.R. 1956 Mad. 369., the Supreme Court has decided against such a contention. At that time the Supreme Court determined this question, the Turnover and Assessment Rules provided by rule 16(5) that the sales of hides and skins by dealers other than licensed dealers in hides and skins shall, subject to the provisions of section 3, be liable to taxation on each occasion of sale. The principal point which their Lordships had to consider was whether this rule, which provided for multi-point taxation of unlicensed dealers, was inconsistent with section 5 of the Act, which provided for a single point levy of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961] 1 S.C.R. 148; 11 S.T.C. 570. It was argued that the State of Madras deleted rule 16(5) even before the commencement of the assessment year 1954-55. Mr. Venkatachari urges that there is no provision in rules 16(1) to (4) fixing the point of taxation. But that again seems to me to stem from the same misconception. The decision of the Supreme Court has clearly laid down that all the sales of any commodity would come within the scope of the general charging section, section 3 of the Act, which provides for a multi-point levy, and it is only where the law fixes a single point that the rules have to provide for the prescription of that particular point. In the case of an unlicensed dealer, the question does not arise at all. An unlicensed dealer becomes liable to tax under section 3 of the Act. Rules 16(1) to (4), in so far as they purport to provide for a particular point of taxation as required by section 5 of the Act, can only relate to a licensed dealer. Reference in this connection was made by the learned counsel to Munuswamy Mudaliar Co. v. State of Madras[1956] 7 S.T.C. 1; I.L.R. 1956 Mad. 369. The purport of that decision can be gathered from that part of the headnote whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I can find nothing in any of the authorities cited which supports that contention. The Madras General Sales Tax Rules provide that every person who deals in hides and skins shall, if he desires to avail himself of the exemption provided under section 5, or to the concession of taxation only at a single point specified in section 5, submit an application so as to reach the authority not later than the 30th day of April of the year for which the licence is applied for. Rule 6(3) states that if the application for the grant of a licence is received after the prescribed date, the licence shall not ordinarily be granted with effect from a date prior to the date of the receipt of the application. The effect of these rules is clearly that the licence can be granted only from the date on which the application is received, except in cases where such an application is made before the 30th day of April, in which event alone the licence could be granted effective from the 1st April of that year. It is not the contention of the petitioner that the licence had been applied for before the 30th April, 1954. That point has not been put in issue. Admittedly, the application was submitted after that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding licensing is comprehended within the relevant taxation entry, which would be answered in the affirmative if licensing were the usual method employed for gathering the revenue, i.e., if it were ancillary or incidental to the taxing power." It is true that in this case, the impact of the licensing provisions upon Article 14 was not considered. There is no doubt, however, that the above decision is an authority that a licensing system is a reasonable restriction upon the freedom guaranteed by Article 19(1)(g). Mr. Venkatachari has referred to Rai Ramakrishna v. State of BiharA.I.R. 1963 S.C. 1667, 1673., and to certain observations contained therein. That was really a case which dealt with the question as to how far a levy of tax on goods and passengers offended the freedom guaranteed by Part XIII of the Constitution. Their Lordships observe here that taxing statutes are not beyond the pale of constitutional limitations prescribed by Articles 19 and 14, and that the taxing power is an essential attribute of the Government, and the Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; he pays on the purchase price only. If the dealer purchases raw hides or skins from outside the State and tans them within the State, he will be liable to pay sales tax on the sale price of the tanned hides or skins. He too will have to pay more for tax even though the hides and skins are tanned within the State, merely on account of his having imported the hides and skins from outside, and having not therefore paid any tax under sub-rule (1). It is true that dealers, though few, selling hides and skins which had been tanned within the State, will also have to pay similar tax if no tax had been paid previously, they having not purchased the raw hides and skins at all as they were from the carcasses of animals owned by them; but this does not affect the discriminatory nature of the tax as already indicated." Relying upon this passage, Mr. Venkatachari contends that in the present case also the tax on the sale price of the goods is far higher than the tax at the purchase point and that since the tax at the higher rate has to be paid by an unlicensed dealer, the substantial disparity in the taxes is sufficient to warrant the conclusion that the guarantee of Article 14 is infringed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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