9911796707
TMI Blog1981 (1) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ra. The respondents were registered as a dealer under the Act. They also had got themselves registered under the Bombay Sales Tax Act, 1959, as a non-resident dealer with effect from 4th February, 1963. In respect of the period 3rd May, 1963, to 9th November, 1964, the respondents were assessed to Central sales tax by the taxing authorities under the local sales tax law in force in the State of Andhra Pradesh and had paid the tax to the Central Government in the said State. By his order dated 22nd December, 1968, the Sales Tax Officer, NonResident Circle, Bombay, again assessed the respondents to Central sales tax on the very same transactions of inter-State sales which had been assessed and in respect of which the respondents had paid tax in the State of Andhra Pradesh. The Sales Tax Officer held that the movement of goods, which were the subjectmatter of these transactions, had commenced in the State of Maharashtra and therefore the State of Maharashtra was the appropriate State to assess and collect the amount of tax on these transactions of inter-State sales. He further held that the first of the transactions of inter-State sales effected by the respondents was on 3rd May, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their inter-State sales in question, from which State the movement of the goods had commenced as a result of the respondents' sales in question? (4) Whether the Tribunal was correct in law in holding that the State of Andhra Pradesh was an agent of the Central Government in respect of the interState sales of the respondents, when admittedly that State was not the appropriate State for the purpose of assessment and collection of Central sales tax in respect of the respondents' inter-State sales in question, as the movement of the goods had not commenced from that State but from the State of Maharashtra?" In our opininon, it was unnecessary for the Tribunal to have framed and referred all the above four questions. Question No. (1) alone would have served the purpose as it clearly brings out and pinpoints the actual point which arises in this case for determination. The other three questions are argumentative and repetitious. Further, questions Nos. (3) and (4) in the way they assume facts are not correct. There was no question of the respondents not disputing that the Maharashtra State was the appropriate State to collect the tax. It had throughout been contended by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xes on inter-State sales and purchases fall within the exclusive legislative domain of Parliament, while taxes on local sales and purchases fall within the exclusive legislative domain of the State Legislatures. Though Parliament alone has the power to legislate with respect to taxes on inter-State sales and purchases, the amount of taxes collected by such levy is not to be retained by the Government of India but is to be assigned by it to the various States in which these taxes have been collected. This is provided for in article 269 of the Constitution. The material provisions of that article are: "269. Taxes levied and collected by the Union but assigned to the States.(1) The following duties and taxes shall be levied and collected by the Government of India but shall be assigned to the States in the manner provided in clauses (2) and (3), namely: * * * * (f) taxes on the sale or purchase of newspapers and on advertisements published therein; (g) taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. (2) The net proceeds in any financial year of any such duty or tax, except in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have, under the general sales tax law of the State; and the provisions of such law including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly. (3) The proceeds (reduced by the cost of collection) in any financial year of any tax levied and collected under this Act in any State on behalf of the Government of India shall, except in so far as those proceeds represent proceeds attributable to Union territories, be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India." Sub-section (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) in the case of a sale of goods in the course of inter-State trade or commerce falling within clause (a) of section 3, the place from which the goods have been moved by reason of such sale; (ii) in the case of any such sale falling within clause (b) of section 3, the place where the sale is effected." Thus under clause (a) as originally enacted the term "appropriate State" was to be understood as the place of business and was to be ascertained with reference to the movement of goods where an inter-State sale had occasioned the movement of goods from one State to another or with reference to the place where the inter-State sale was effected in cases where such sale had been effected by a transfer of documents of title to the goods during their movement from one State to another. The State in which a dealer's actual place of business was located was irrelevant for the purpose of determining which would be the appropriate State. Every State, therefore, from which the goods moved in the course of inter-State trade or commerce or in which a sale was effected, when the sale had taken place in the course of transit of goods would thus become the agent of the Government of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of sale but having relation to his place of business in the ordinary sense as also in the extended sense given to that expression by clause (dd), but in each of these senses having reference to a particular place or location. If such were the position, the present reference would have presented no difficulty at all, because an argument that the appropriate State which could assess and collect tax was the State of Maharashtra could never have arisen, since admittedly the respondents' main place of business was in Andhra Pradesh and there is no finding that the respondents had at any material time any place of business in the State of Maharashtra. The difficulty is created, however, by the fact that by the very same Amendment Act, namely, Act No. 31 of 1958, sub-sections (1) and (2) of section 9 also came to be amended. Sub-section (1) was amended to read as follows: "The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce (whether such sales fall within clause (a) or clause (b) of section 3] shall be levied and collected by the Government of India in the manner provided in sub-section (3) in the State from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced". Thus the expression "appropriate State" disappears from subsection (1). Had a corresponding amendment been made in sub-section (2), it would have presented no difficulty in understanding which State is to act as agent of the Government of India in assessing and collecting the tax under the Act, for such State would be the State from which the movement of goods commenced, and in the case of a subsequent sale it would have been the State from which the registered dealer effecting it had obtained or could have obtained the declaration form under section 8(4). A corresponding amendment has, however, not been made in sub-section (2). As mentioned earlier, the old sub-section (2) which had become subsection (3) was renumbered as sub-section (2) and substituted with retrospective effect by the said Amendment Ordinance No. 4 of 1969 which was re-enacted and replaced by Amendment Act No. 28 of 1969. It is unnecessary to set out the whole of this sub-section either as amended or substituted. Since the sub-section which was operative at the date of the order of assessment out of which the present reference arises was the sub-section prior to its substitution with retrospective effect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any real acceptable solution to the problem. Mr. Jetly, the learned counsel for the applicant, attempted to get over the difficulty by pointing out that the respondents must have a place of business in Bombay if they have effected so many sales. He also drew our attention to the definition of "dealer" and particularly the very wide meaning given to it by explanation I thereto. These attempts could not, however, be sustained on the record because admittedly there is no finding that the respondents had at the relevant time any place of business in the State of Maharashtra. Mr. Jetly next suggested that the expression "appropriate State" in sub-section (2) should be read as meaning "the State from which the movement of the goods commenced". No convincing answer why one should read the expression "the appropriate State" in sub-section (2) as meaning "the State from which the movement of the goods commenced" instead of reading the expression "the State from which the movement of the goods commenced" in sub-section (1) as meaning "the appropriate State" was forthcoming. We, therefore, take it that the reason for advancing this construction was that it may clothe the State of Maharash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as a dealer under the Act. Registration of dealers is dealt with in section 7 of the Act, and under sub-section (1) thereof every dealer liable to pay tax is to apply for registration to the prescribed authority "in the appropriate State". In this reference we are not called upon to decide which was the State which would be the appropriate agency to assess and collect tax on behalf of the Government of India in respect of the inter-State sales in question. In our opinion, the answer to the question which has been submitted to us falls to be determined on very different principles altogether. We have been at pains to point out the above contradictions in view of the arguments advanced by Mr. Jetly, to which we will refer in the later part of the judgment. So far as the question which falls for determination is concerned, the tax under the Act in respect of the transactions in question has already been assessed by the Central Government and has been paid to the Central Government. It has been assessed by the sales tax authorities of the State of Andhra Pradesh acting on behalf of the Government of India, and the tax was paid to the Central Government. In seeking once again to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the doubtful and highly debatable construction, it can hardly be said that the action of the State of Andhra Pradesh acting as agent of the Union of India was wholly without jurisdiction. The second fact which has been ignored is that assuming for the sake of argument the first assessment order was without jurisdiction, it is the Government of India which has acted without jurisdiction and is seeking to retain the money which it had collected by reason of an act which is without any jurisdictional authority. The Government of India in seeking to recover an equal amount by an act which would have jurisdictional authority, while at the same time retaining the amount which had already been collected by it, would be taking advantage of its own wrong. If the Government of India wanted to collect this amount through a proper agency, it should have first refunded to the respondents the amount collected from them. We are here not concerned with a case where it may happen that by reason of certain inter-State transactions being taxed in a particular State where a lower rate of local tax prevails, the inter-State transactions come to be assessed and the tax thereon paid at a low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court were in error in observing that the levy of tax under the Act would have to be made by the appropriate State. As pointed out above, the levy is by the Government of India and the Government of India alone both under the provisions of the Constitution and the relevant provisions of the Act in that behalf which merely reproduce the constitutional provisions. Though the learned Judges have noticed sub-section (4) of section 9, now sub-section (3), under which the amount of tax collected is to be assigned to the State in which it was collected, they have proceeded upon the basis as if the levying and taxing authorities were the States acting in their own rights, and in not appreciating that under both the constitutional scheme as also the scheme under the Act this authority was the Government of India. The learned Judges concluded (at pages 381-382): "It follows, therefore, that a plea that a wrong State has already assessed will be no answer to an appopriate State bringing to tax transactions liable to be brought to charge by that State." With respect, we are unable to agree with this observation. It is not any State which is bringing to tax transactions of inter-State sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 3, has to be levied by the Government of India and the tax so levied shall be collected by the Central Government in accordance with the provisions of sub-section (2) in the State from which the movement of goods commenced, and the respondents have already been assessed by the Sales Tax Officer, Bareilly, and they have already deposited the tax so assessed and as such they cannot be made to pay the said tax over again; more so when the Sales Tax Officer, Delhi, had no jurisdiction to assess the respondents to tax without giving a positive finding as to the place where the sale was effected. In the circumstances, it cannot be urged that the petitions are not maintainable. In the special circumstances of the case, the learned single Judge was justified in holding that he was not inclined to dismiss the petitions on the ground of existence of an alternate remedy." The ratio of this judgment is, therefore, that the tax having been assessed on certain transactions once and the amount of tax collected, the same transactions could not be made the subject-matter of another assessment. In our opinion, the other observations of the learned Judges were not necessary for the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment at all made upon the dealer. The dealer had also not paid any tax. The Sales Tax Officer, Lucknow, therefore, issued a notice treating the sales to be inter-State sales having been effected in the State of Uttar Pradesh, and assessed the transaction to tax under the Act. A writ petition was thereupon filed challenging the jurisdiction of the Sales Tax Officer, Lucknow, to make the assessment. It was in this context that the court determined whether the Sales Tax Officer, Lucknow, had jurisdiction to make the assessment. The court held that sub-section (1) of section 9 of the Act conferred jurisdiction to make the levy and collection of the tax on the State in which the movement of the goods commenced and therefore the determining test for discovering the jurisdiction of a particular State is the place where the movement of the goods commenced and that the words "appropriate Government" (sic) in sub-section (3), now sub-section (2), should, therefore, necessarily refer to the State upon which by section 9(1) jurisdiction had been conferred to levy and collect the tax. The court further held that the definition of the words "appropriate Government" as contained in section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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