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TMI Blog1982 (4) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... nd now the Bihar Finance Act, 1981, has been enacted. The provisions are for the present purposes, the same. Reference need only be made to the provisions of the Ordinance. Whatever argument or decision is applicable to the Ordinance shall apply to the Bihar Finance Act, 1981, as well. 4.. Under the Ordinance sales tax is leviable on intra-State sales. Section 3 is the charging section. This has to be read along with section 6. But for the purpose of computing the gross turnover not only intra-State sales, but sales made outside the State and in the course of inter-State trade or commerce or export are also taken into account. Section 5 of the Ordinance which levies the surcharge states in sub-clause (3) that the dealer, who is liable to pay surcharge, shall not be entitled to collect the amount of such surcharge. Thus the position is that a person whose gross turnover is Rs. 5,00,000 or more is liable to pay surcharge only on intra-State sales made by him, but for the purpose of computing the gross turnover, outside sales, inter-State sales as also the sales in the course of export and import have also to be taken into account. The impugned provision of the Ordinance is said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further held that the tax was not confiscatory in the nature. It was observed in this context that "as long as a tax retains its avowed character and does not confiscate property to the State under the guise of a tax, its reasonableness is outside judicial ken. Classification of dealers on the basis of their respective turnovers for the purpose of graded imposition so long as it is based on differential criteria relevent to the legislative object to be achieved is not unconstitutional." It was explained that "the basis is that just as in taxes upon income or upon transfers at death, so also in imposts upon business, the little man, by reason of inferior capacity to pay, should bear a lighter load of taxes, relatively as well as absolutely, than is borne by the big one." It was further observed that the capacity of a dealer, in particular circumstances, to pay tax is not an irrelevant factor in fixing the rate of tax and one index of capacity is the quantum of turnover. The argument that while a dealer beyond certain limit is obliged to pay higher tax when others bear a less tax, and it is consequently discriminatory, really are in a position of economic superiority by reason of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners referred to the decision in A.V. Fernandez v. State of Kerala [1957] 8 STC 561 (SC); AIR 1957 SC 657 and relied on paragraph 41 of the judgment. The situation discussed therein is different from the situation in the present case. Paragraph 44 of the judgment makes it clear that for the purpose of registration of a dealer and submission of returns of sales tax such sales can be taken into consideration. This is what was observed in the said case: "This position is not at all affected by the provisions with regard to registration and submissions of returns of the sales tax by the dealers under the Act. The legislature, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of article 286 of the Constitution, may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer's turnover. Such inclusion, however, for the purposes aforesaid would not affect the non-liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding provision enacted in the Act, as above." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus 10 per cent of 3 per cent would be only 0.3 per cent whereas in the other case it would be 1.3 per cent. It was therefore contended that there is no rational basis for imposing a higher burden of surcharge on the petitioner. Here again what the learned counsel loses sight of is the fact that the rate of sales tax for all goods is not and need not be the same. But the percentage of the surcharge is the same. If some goods are liable to lesser percentage of sales tax surcharge would necessarily be lower. There is nothing irrational or arbitrary in this. In relation to the percentage of surcharge all are treated alike and the same percentage (10 per cent at present) has to be paid by all dealers who come within the provisions of section 5 of the Ordinance. It is but natural that if the percentage of initial tax is lower, the net effect of the imposition of surcharge will also be lower. 12.. It was contended by Sri Shree Nath Singh, the learned counsel appearing for the petitioners in C.W.J.C. No. 2771 of 1981, that the impugned provision is confiscatory. Reference was made to several decisions of the Supreme Court. The general proposition is not in dispute. A taxing statute is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. It was the industry as such which will have to be taken into consideration for the purpose of the aforesaid fixation. Here also it is not how an individual has been managing his affairs which would affect the validity of the provision. If it could be shown that no one, in the category of business which the petitioner was carrying on, could make any profit, the position might have been different. The petitioner has not been able to show that imposition is such that no one in the situation of the petititioner could carry on trade or business without making any profit. Lest I may be misunderstood I would like to clarify that I am not suggesting that if the taxing provision is such as to make it impossible for a category of business man to make a profit the provision would be necessarily unconstitutional. 15.. It has also to be borne in mind that private contracts between dealers, or dealers and manufacturers, cannot control the power of legislation, particularly in regard to imposition of taxes. If it were so it would be always possible for persons in trade and business to so frame their contracts as to make it impossible to impose taxes. The parties must adjust or readjust thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness as guaranteed under article 19(1)(g). 17. So far as the first limb of argument is concerned it has to be appreciated that the impugned legislation falls entirely within the State list. It is wholly effective even though there may be some conflict or overlapping with the Central law. It would be sufficient only to refer to the decision of the Privy Council in Prafulla Kumar Mukherjee v. Bank of Commerce Ltd., KhuIna AIR 1947 PC 60. Therein there was direct conflict between the provisions under the Negotiable Instruments Act (relating to interest) on the one hand and the Bengal Moneylenders Act on the other. It was pointed out by the Privy Council "subjects must still overlap, and where they do, the question must be asked what in pith and substance is the effect of the enactment of which complaint is made, and in what list is its true nature and character to be found". It was pointed out that it was only where its provision advances so far into Federal territory as to show that its true nature is not concerned with the Provincial matter that the provision can be said to be transgressing constitutionally permissible limit. Here, in my view, the impugned provision is squarely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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