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TMI Blog1980 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. Writ Petition No. 2031 of 1971 pertains to the period from 1st October, 1964, to 30th September, 1965. The Commercial Taxes Officer, Special Circle, Kota, by his order dated 24th February, 1967, imposed a penalty of Rs. 53,000 with reference to sale of cotton worth Rs. 37,75,000. Aggrieved by the order of the Commercial Taxes Officer, the petitioner filed appeal before the Deputy Commissioner, Commercial Taxes (Appeals), Udaipur Range, Udaipur, who, by his order dated 27th March, 1970, held that penalty was leviable, but, at the same time, he remanded the case to the assessing authority for redetermining the amount of penalty after notice to the assessee. A copy of the Deputy Commissioner's order dated 27th March, 1970, has been placed on the record and marked annexure 1. On receipt of the record, the Commercial Taxes Officer issued a notice dated 19th February, 1971, to the assessee to show cause why penalty be not levied upon it under section 5C of the Rajasthan Sales Tax Act (No. 29 of 1954) (which will hereinafter be referred to as "the Act") for having transferred yarn outside Rajasthan. Thereafter, the Commercial Taxes Officer passed a fresh order on 24th May, 1971, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee should have availed the alternative remedy of appeal. It may, however, be pointed out that in all these cases the petitioner has challenged the vires of section 5C of the Act and has urged that penalty has been levied in two cases, viz., Writ Petitions Nos. 2031 of 1971 and 2030 of 1971, without authority of law and so also in the other two cases it has been argued that the notice issued by the assessing authority for levying penalty under section 5C is void being without authority of law and, therefore, the assessing authority should be restrained from taking any proceedings in pursuance of the impugned notice. At this stage, we may point out that there is no absolute bar against entertainability of a writ petition under article 226 of the Constitution of India, even if there exists an alternative remedy, provided an appropriate case for interference by writ is made out. It is noteworthy 'that the petitioner, in the present case, has challenged the vires of section 5C of the Act and has questioned the very jurisdiction of the assessing authority to initiate proceedings for levy of penalty under section 5C. In these circumstances, we are not prepared to throw out the writ peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncessional rate prescribed for the purpose mentioned in section 5C(1) is 1 per cent. However, a safeguard has been provided against the misuse of the concession and sub-section (2) lays down that if any raw material purchased by a registered dealer under sub-section (1) is utilised by him for any purpose other than a purpose specified therein, such dealer shall be liable to a penalty which shall be not less than the difference between the amount of tax on the sale of such raw material at the full rate and the amount of tax payable under sub-section (1), but not exceeding one and onequarter times the amount of tax at such full rate as the assessing authority may determine. In other words, to avail of the concession provided in subsection (1), two conditions must be fulfilled: (i) The raw material must be utilised for manufacture of goods in the State itself and not outside the State; and (ii) the goods manufactured out of the raw material must be sold within the State or in the course of inter-State trade or commerce. It appears to us that if either of these two conditions is broken, the dealer, who has availed the concession, is bound to pay the penalty, as prescribed under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside Rajasthan. Thus, it becomes clear that one essential condition regarding sale of the manufactured product within Rajasthan or in the course of inter-State trade or commerce was not complied with in respect of the yarn sold outside Rajasthan. The question then is whether such a provision providing penalty, in the circumstances mentioned in the section, is ultra vires article 301 of the Constitution of India. At this juncture, for the sake of convenience, we may also read articles 301, 302, 303 and 304, to which reference has been made by the learned counsel for the parties in the course of their arguments: "301. Freedom of trade, commerce and intercourse.-Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. 302.. Power of Parliament to impose restrictions on trade, commerce and intercourse.-Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. 303.. Restrictions on the legislative Powers of the Union and of the States with regard to tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as follows: "Normally, a tax on sale of goods does not directly impede the free movement or transport of goods. Section 21 of the Andhra Pradesh Sugarcane (Regu. lation of Supply and Purchase) Act, 1961 (Andhra Pradesh Act No. 45 of 1961) is no exception. It does not impede the free movement or transport of goods and is not violative of article 301." In Atiabari Tea Co. Ltd. v. State of Assam A.I.R. 1961 S.C. 232., which was approved by their Lordships in Andhra Sugars Ltd. v. State of Andhra Pradesh[1968] 21 S.T.C. 212 (S.C.); A.I.R. 1968 S.C. 599., it was held that it is the free movement or the transport of goods from one part of the country to the other part, which is intended to be saved, and if any Act imposes any direct restrictions on the very movement of such goods, it attracts the provisions of article 301, and its validity can be sustained only if it satisfies the requirements of article 302 or article 304 of Part XIII. It is not the petitioner's case that the impugned levy of penalty (as it is called) operates directly or immediately on trade or movement of goods nor has he been able to satisfy us that the movement of goods has been restricted directly by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o imported and goods so manufactured or produced. However, there is no question of goods being imported from other States in the present case. So also the case is not covered by sub-article (b) of article 304 of the Constitution as it is not the case of the State that any restrictions on freedom of trade have been imposed in the public interest. Before parting with this point, we may advert to a similar case decided by the High Court of Madhya Pradesh reported as Chhotabhai Jethabhai Patel Co. v. State of Madhya Pradesh[1972] 30 S.T.C. 1., wherein vires of section 8(2) of the Madhya Pradesh General Sales Tax Act, 1958, was challenged. Section 8 provides that the rate of tax payable on the sale to or purchase by a registered dealer of any raw material for manufacture of other goods for sale in the State of Madhya Pradesh or in the course of inter-State trade or commerce would be 1 per cent of the sale price or purchase price of such raw material. Sub-section (2) of section 8 however further provided that where raw material purchased under sub-section (1) by a registered dealer is utilised by him for any purpose other than the purpose specified in sub-section (1), such dealer wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riate measure to prevent its evasion. In that view of the matter, the provision regarding penalty contained in sub-section (2) of section 5C cannot be said to be ultra vires or void. Again, in A. V. Fernandez v. State of Travancore-Cochin[1955] 6 S.T.C. 22., where although the rules afforded a concession when the sale of coconut oil was made within the State and denied the same when it was effected outside the State, it was held that the rules were not open to challenge under article 303(1) of the Constitution of India. In view of what has been observed above, we are unable to accept the contention raised by Mr. Khetan that section 5C is ultra vires article 301 of the Constitution of India or is otherwise bad. With the decision on point No. (1), the plank of the petitioner's case falls. However, we may deal with the other points also raised by the learned counsel. Section 16(1)(k) provides that after purchasing any goods in respect of which a dealer has made a declaration under the provisions of this Act or the Rules made thereunder, but fails without reasonable cause to make use of the goods for the declared purpose, the assessing authority may direct that such person shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration were in the form, as it stood prior to its amendment on 29th March, 1973, and they did not specify that the resale of the goods purchased or their use as raw material in the manufacture of goods or the sale of manufactured goods should be inside Delhi. It was held that resale within the meaning of section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act (6 of 1941), as applied to the Union Territory of Delhi, was not confined to the territory of Delhi but also included resale outside the territory of Delhi. In other words, there was no geographical limitation confining "resale", "manufacture" or "sale" to the territory of Delhi. In these circumstances, the Supreme Court came to the conclusion that there was no breach of conditions. In the case on hand, however, there is a clear provision that in order to avail of the concession, the raw material must be utilised for the manufacture of goods in the State and the manufactured goods must also be sold in the State or in the course of inter-State trade or commerce. Consequently, the rationale of the decision in Polestar Electronic (P.) Ltd.[1978] 41 S.T.C. 409 (S.C.). has no application to the facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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