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TMI Blog2003 (12) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as follows :- "Where any goods liable to tax under any other provision of this Act are sold by a dealer to another dealer and such other dealer furnishes to the selling dealer in the prescribed form and manner a certificate to the effect that he holds a recognition certificate issued under sub-s. (2) in respect thereof, the selling dealer shall be liable in respect of those goods to tax at such concessional rate or be wholly or partly exempt from tax, whether unconditionally or subject to the conditions and restrictions specified in that behalf, as may be notified in the Gazette by the State Government in that behalf."* 5. The procedure to implement the scheme contained in sections 3-AAA and 4-B is that the purchasing dealer has to issue to the selling dealer a declaration stating the fact that he is entitled to make purchases either exempt from tax or at a concessional rate of tax. The assessing authority of the selling dealer has then to be satisfied that the exemption or concession from tax has been rightly granted. Such satisfaction has to be reached upon examination and verification of such declaration forms as may be obtained by the selling dealer from the purchasing dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the writ petition that at any given point of time the demand for forms III-A and III-B is always more than the supply available with any issuing Trade Tax Officer. On account of short supply of forms available with the issuing Trade Tax Officer the said authority issues lesser number of forms than actually prayed for. This leads to accumulation of backlog of applications for issuance of blank declaration forms III-A and III-B. It is alleged in paragraph 21 of the petition that it takes months for any issuing Trade Tax Officer to issue the requisite forms. The result is that whenever a purchasing dealer is issued blank form III-A or III-B by his assessing authority, such purchasing dealer ends up utilising those forms against sale transactions performed in the past. 11. It is alleged in paragraph 23 of the writ petition that the trade of sale and purchase of goods is such that the demand for goods is dependent on numerous market variables which all are beyond the control of the dealers. The dealers only react to a situation, which arises in the market creating the demand for a commodity. They have to respond as quickly as possible and cater to that demand, and time is of utmost i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emanding or charging on the sale or purchase of any goods, any tax not due under the Act. Section 12-B empowers the appellate authorities to admit additional evidence in certain circumstances mentioned in that provision. 14. In paragraph 32 it is alleged that prior to May 1, 2001, there was no condition in rule 12-A or rule 25-B of the Rules prohibiting the use of form III-A or III-B issued during an assessment year in respect of transactions performed in earlier assessment years. Thus, for example, prior to May 1, 2001 a purchasing dealer could freely issue form III-A or III-B issued to it by the authority in assessment year 2000-2001 in respect of transactions performed several years earlier. However, on May 1, 2001 the impugned U.P. Trade Tax (Amendment) Rules, 2001 were published. By that amendment rules 12-A and 25-B along with rules 12-B and 12-C have been amended. True copy of the 2001 Amendment Rules is annexure 2 to the writ petition. In this amendment it is stated that form III-A or III-B issued in a particular financial year shall be valid for transactions of purchase or sale made during that financial year and also during the two financial years immediately preceding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authority granted the petitioner six months time to submit such forms, vide annexure 3 to the writ petition. However, by order dated August 14, 2002 the assessing authority refused to grant the benefit to the petitioner in respect of these forms submitted by the petitioner in view of the impugned amendment of rules 12-A and 25-A. True copy of the order dated August 14, 2002 is annexure 4 to the writ petition. 16. It is alleged in paragraph 47 of the petition that the impugned amendment is also ultra vires the Act because the State Government has not been empowered to prescribe the time-limit within which the selling dealer has to submit the forms before its assessing authority. It is alleged that rules cannot be made contrary to the provisions of the Act. 17. Counter and supplementary counter-affidavits have been filed by the respondents and we have perused the same. In paragraph 14 of the counter-affidavit it is stated that there is no short supply of statutory forms and there is no delay in supplying the same. No evidence has been placed by the petitioner in support of his averment that there was short supply of the forms. In paragraph 15 it is stated that the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 24 of the U.P. Trade Tax Act, 1948 and it is alleged that these amendments are valid. 21, Thus it is evident from this background that the impugned amendments were made to prevent tax evasion by misuse of the statutory forms. It is evident that these amendments were made after the matter was considered by the concerned authorities including the Commissioner, Trade Tax, Finance Secretary, Finance Minister and the Cabinet, and it is not that they were made without due application of mind. 22. A supplementary rejoinder affidavit has also been filed and we have perused the same. An objection has been made in paragraph 3 of the Supplementary rejoinder affidavit that the supplementary counter-affidavit was filed after the judgment was reserved in this case on October 30, 2003. It is true that the supplementary counter- affidavit was filed after the judgment was reserved. However by order dated November 11, 2003 we permitted the learned counsel for the petitioner to file a supplementary rejoinder affidavit in reply to the supplementary counter- affidavit and we directed the case to be listed for further argument on November 18, 2003 along with the connected cases. A supplementary re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer in the financial year shall be valid in respect of the transactions of purchase or sale. According to the amended rules, these will be valid in respect of sales and purchases made during that financial year as also made during the two preceding years. The proviso to the amended rule 12-A also fixed a certain limitation period for the validity of the form. Similarly the impugned rule 25-B also makes similar amendments. 28. Learned counsel for the petitioner has relied on the decision of the Supreme Court in Sales Tax Officer, v. K.I. Abraham. In that decision the Supreme Court observed : "In our opinion, the phrase 'in the prescribed manner' occurring in s. 8(4) of the Act only confers power on the rule-making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished. But the phrase 'in the prescribed manner' in s. 8(4) does not take in the time-element. In other words, the section does not authorise the rule-making authority to prescribe a time-limit within which the declaration is to be filed by the regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj Mahal Hotel wherein it was held that the Income-tax Rules cannot take away what is conferred by the Income-tax Act or whittle down its effect. He has also relied on the decision of the Supreme Court in Kunj Behari Lal Butail v. State of H.P. In our opinion these decisions are clearly distinguishable. The amended rules do not take away or whittle down the effect of section 4-B or section 3- AAA. In our opinion these amendments only safeguard the interest of the revenue which is naturally interested in seeing that the benefits conferred by section 3-AAA and section 4-B are not misused for tax evasion. Hence no exception can be taken to the impugned amendments to the rules. We also fail to see how the decision of this Court in J.K. Manufacturers Ltd, v. Sales Tax Officer and of the Supreme Court in Chunni Lal Parshadi Lal v. Commissioner of Sales Tax, U.P. [1 9861 can be of any help to the petitioner. The former decision has been distinguished in the division Bench decision of this Court in Govind Ram Tansukh Rai & Co. v. Commissioner of Sales Tax which has been approved by the Supreme Court in Commissioner of Sales Tax v. Prabhudayal Prem Narain. In our opinion the amended rules d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 12 ; page 8 in STC): "Sub-s. (2) of section 3-AA merely enacted a rule of evidence and did not provide for the nature and mode of proof, but in cl. (a) of sub-s. (7) of section 3-D such a provision has been clearly made and the presumption is to be rebutted in the manner provided under the rule 12-B. We, therefore, are of the opinion that this case is distinguishable." Paragraph 5 of the said decision states : " No universal rule can be laid down to distinguish between a statute that is imperative and that which is merely directory. But several tests have been propounded in decided cases for determining the question whether a provision in a statute or rule is mandatory or directory. One of the tests is where rights, privileges, immunities, are granted with a direction that certain regulations, formalities or conditions shall be complied with and it seems neither unjust nor incorrect to exact a rigorous observance of them as essential to the acquisition of right, such provision of statute or rule has been held to be imperative. (See Maxwell on Interpretation of the Statutes, VI edition, page 649). In Sharif Ud-Din v. Abdul Gani Lone, it was held that where a provision of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rules were made. 40. In our opinion there is nothing unreasonable or arbitrary if the validity of a form is fixed for a certain period because if a form is made valid for an indefinite period it may become liable to be misused since after a lapse of a long time the related transaction cannot be verified. In our opinion the impugned amendment to the rules only imposes reasonable restrictions to avoid misuse of the form and tax evasion. 41. Filing of the form for claiming exemption has been held to be mandatory by the Supreme Court in Commissioner of Sales Tax v. Prabhn Dayal Prem Narain Tansukh Raji & Co. v. Commissioner of Sales Tax and by this Court in Govind Ram. 42. We see no illegality in the impugned rules as in our opinion they have been made with the object of preventing tax evasion. The right to do business in art. 19(l)(g) is subject to reasonable restrictions vide Hathising Mfg. Co. Ltd. v. Union of India and in our opinion the restrictions imposed by the impugned rules are clearly reasonable as they aim at preventing tax evasion. No Government can run without taxes. As held by the Supreme Court in Assistant Collector of Central Excise v. Dunlop India Ltd. the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid."* 47. In Superintendent and Rememberancer of Legal Affairs, West Bengal v. Girish Kumar Navalkha the Supreme Court observed : "It would seem that in fiscal and regulatory matters the court not only entertains a greater presumption of constitutionality but also places the burden on the party challenging its validity to show that it has no reasonable basis for making the classification."* 48. It may be noted that s. 24 of the U.P. Trade Tax Act confers power on the State Government to make rules to carry out the purposes of the Act. Hence there is certainly legislative sanction for making the impugned amendment to the rules. 49. In our opinion the court should exercise judicial restraint and should not hamper the State in measures which aim at preventing tax evasion. In the present case it is obvious that the State Government felt that tax evasion on a large scale was going on by certain unscrupulous dealers by misuse of the statutory forms. If the Government decided to stop this malpractice it is not for this Court to obstruct the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation, (see also 'The Legacy of Holmes and Brandeis' by Samuel Konefsky)."* 54. In P.T.R. Exports (Madras) Pvt. 'Ltd. v. Union of India, the Supreme Court observed : "The power to lay policy by executive decisions or by legislation includes power to withdraw the same unless in the former case, it is by mala fide exercise of power or the decision or action taken is in abuse of power. The court leaves the authority to decide its full range of choice within the executive or legislative power. In matters of economic policy, it is a settled law that the court gives a large leeway to the executive and the Legislature.Government would take diverse factors for formulating the policy in the overall larger interest of the economy of the country. When the Government is satisfied that change in the policy was necessary in the public interest, it would be entitled to revise the policy and lay down new policy."* 55. In Secretary of Agriculture v. Central Roig. Refining Co. 1949 (338) US 604 (617) ; 94 Law Ed. 381 392, Mr. Justice Fran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to proceed on broad categorisations not singular individualisations."* 61. Hence even if some dealers suffer by the impugned rules that would not make the rules invalid. We see no illegality in the impugned amendment to the Rules or in the impugned order dated August 14, 2002 (annexure 4 to the writ petition). 62. For the reasons given above the petition is dismissed. 63. Before parting with this case we would like to mention that the Courts should exercise great self-restraint in interfering in economic policy matters as these are matters ordinarily to be dealt with by experts in Government departments and in the statutory bodies. 64. In R.K. Garg v. Union of India (690), a Constitution Bench of the Supreme Court observed : "Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. It has been said by no less a person than Holmes, J., that the Legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate sector, to the detriment of depositors/investors, a segment of the society which can be appropriately described as weaker in relation to the mighty corporation. In a welfare State, it is the constitutional obligation of the State to protect socially and economically weaker segments of the society against the exploitation by Corporations."* 68. It must be remembered that certain matters are by their nature such as best be left to experts in the field. This Court does not have the technical and administrative expertise in this respect. 69. In the words of Chief Justice Neely : "I have very few illusions about my own limitations as a Judge. I am not an accountant, electrical engineer, financer, banker, stockbroker or system management analyst. It is the height of folly to expect Judges intelligently to review a 5000 page record addressing the intricacies of a public utility operation. It is not the function of a Judge to act as a super board, or with the zeal of a pedantic school master substituting its judgment for that of the administrator."* 70. In our opinion there should be judicial restraint in fiscal and economic regulatory measures. The State should not be hampered b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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