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TMI Blog1984 (5) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... of their clients against the railway receipts at the aforesaid railway stations and hand over the goods and documents to their clients. In lieu of this service, they charge their remuneration from the clients. It is further stated that the Act came into force in the State of Haryana with effect from 5th May, 1973. In this Act section 38 provides for furnishing of information in respect of goods transported by the clearing and forwarding agents or dalals who during the course of business handle documents of title to goods for or on behalf of any dealer in the State of Haryana. Sub-section (2) of the said section reads as under: "38. (2) No clearing or forwarding agent, dalal or any other person transporting goods within the State shall carry on his business unless he obtains from the Assessing Authority, on payment of a fee not exceeding fifty rupees, a licence in the form and manner and subject to such conditions as may be prescribed." Sub-section (3) of section 38 of the Act provides for imposition of penalty for contravention of the provisions of sub-sections (1) and (2) at the rate of an amount equivalent to twenty percentum of the value of goods in respect of which no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons such as the petitioners, who are not engaged in the business of sale and purchase of goods but do only labour/job work and are not dealers as defined in the Act. Such a provision is outside the. scope of entry 54 of List II of the Seventh Schedule to the Constitution of India. Further, the provisions contained in section 38 of the Act and rule 53 of the Rules are invalid as the same are outside the purview of the Act inasmuch as the Act is not one which provides for the levy of licence fee. Similarly, other grounds have also been taken in the petition by which it is sought to be shown that the provisions of section 38 of the Act and rule 53 of the Rules are ultra vires the Constitution of India. The petition came up for motion hearing on 20th October, 1979, when notice of motion was issued. On receipt of the notice of motion, the respondents put in two separate written statements, one on behalf of respondents Nos. 1 and 2 and the other on behalf of respondent No. 3, in which material allegations made in the petition have been controverted. After the filing of the written statements, the petition came up for motion hearing on 1st December, 1976, when the same was admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their services for booking and/or taking delivery of consignments at the railway stations on behalf of their clients on payment of remuneration. According to the petitioners, the normal practice of their trade is that on the instructions of their clients, they arrange booking of the goods to be transported by railway and get the necessary documents in the names of their clients. They also take delivery of the consignment on behalf of their clients against the railway receipt and hand over the goods and documents to their clients. The Haryana General Sales Tax Act, 1973 (hereafter the Act), came into force in the State of Haryana on 5th May, 1973. Section 38 of the Act reads: "38. Furnishing of information by clearing and forwarding agents, etc.-(1) Every clearing or forwarding agent, dalal or any other person transporting goods within the State, who, during the course of his business, handles documents of title to goods for or on behalf of any dealer, shall furnish to the Assessing Authority the particulars and information in respect of the transactions of the goods in such form and manner, as may be prescribed. (2) No clearing or forwarding agent, dalal or any other person t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of consignments of goods handled by him." Entry 54 of List II of the Seventh Schedule to the Constitution reads: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I." The Act has been made by the State Legislature in exercise of power conferred under entry 54 reproduced above read with article 246(3) of the Constitution. The petitioners have challenged the vires of section 38 of the Act and rule 53 of the Rules in the present writ. The learned counsel for the petitioners has argued that section 38 of the Act and rule 53 of the Rules are outside the competence of the State Legislature being beyond the scope of entry 51 of List II of the Seventh Schedule inasmuch as they relate to persons (like petitioners) who are not in any way connected with the sale or purchase of goods. The argument proceeds that the petitioners work for remuneration as carriers of goods to and from a railway station on behalf of their clients. They are not liable for the payment of sales tax under the Act. The State Legislature cannot legislate under entry 54, List II of the Seventh Schedule to the Constitution, for utilising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the department monthly in form S.T. 43 because dalals very well know who are the real dealers. ...................................................................... The intention behind the enactment of section 38 of the Act is not to penalise the petitioners but to check the evasion of tax which is done through bogus transactions and in fictitious names. ...................................................................... It is further relevant to mention here, that the trade of getting the goods booked with the railways on behalf of the dealers and getting the delivery of the goods from the railway by the dealers through the dalals is ancillary and incidental to the business of sale and purchase of goods. The State Legislature is empowered under entry 54 of List II in the Seventh Schedule to the Constitution of India to enact law for taxation on the sale or purchase of goods. ...................................................................... The livelihood of the petitioners is not taken away in any way. Rather the petitioners by getting the licence and rendering the monthly returns would help the State in the detection of the bogus transactions and lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly collected by the dealer. This cannot be done directly for it is not a tax at all within the meaning of entry 54 of List II, nor can the State Legislature under the guise of incidental or ancillary power do indirectly what it cannot do directly. In R. Abdul Quader's case [1964] 15 STC 403 (SC) their Lordships took notice of Orient Paper Mills' case [1961] 12 STC 357 (SC); AIR 1961 SC 1438 and distinguished the same by making the following observations: "That matter dealt with a question of refund and it cannot be doubted that refund of the tax collected is always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. We are not dealing with a case of refund in the present case. What section 11(2) provides is that something collected by way of tax, though it is not really due as a tax under the law enacted under entry 54 of List II must be paid to the Government. This situation in our opinion is entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; AIR 1964 SC 922. We must mention that the question as to whether an amount which is illegally collected as sales tax can be forfeited did not arise for consideration in Ashoka [1970] 26 STC 254 (SC); AIR 1971 SC 946." It has already been held that the petitioners are not connected with the sale or purchase of goods. They are admittedly not dealers. The legislature is as well competent to legislate with respect to matters incidental and ancillary to the main provision subject to the condition that they relate to the powers otherwise conferred by the primary head of the schedule. The ratio of the authorities referred to above is suggestive that incidental and ancillary power to legislate under entry 54, List II of the Seventh Schedule cannot be extended to cover a complete stranger to the sale or purchase of goods like the petitioners. In N. Pullayya v. Government of Andhra Pradesh [1968] 21 STC 291, a miller whose business consisted in milling rice for hire only and who was not a dealer in paddy and rice, challenged the provisions introduced in the Andhra Pradesh General Sales Tax Act, 1957, by the Andhra Pradesh General Sales Tax (Amendment) Act, 1963, in so far as they per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............................................." Their Lordships observed: "Entry 54 of List II of the Seventh Schedule to the Constitution authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods. A legislative entry does not merely enunciate powers: it specifies a field of legislation and the widest import and significance should be attached to it. Power to legislate on a specified topic includes power to legislate in respect of matters which may fairly and reasonably be said to be comprehended therein. A taxing entry, therefore, confers power upon the legislature to legislate for matters ancillary or incidental including provisions for preventing evasion of tax. Sub-sections (1) and (2) of section 42 are intended to set up machinery for preventing evasion of sales tax. But, in our judgment, the power to confiscate goods carried in a vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods. By sub-section (3) the officer in-charge of the check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This apart, there is hardly any justification to raise a presumption of evasion of sales tax in the transactions in respect of which an agent or dalal is required to furnish particulars and information to the Assessing Authority under section 38 of the Act. Similarly, it would be wrong to assume evasion of sales tax in the transactions, the particulars and information of which an agent or dalal has failed to furnish to the Assessing Authority. Moreover, the responsibility regarding the evasion of sales tax, if any, is that of the dealer and it cannot be justifiably foisted on the agent or dalal. The case under consideration is substantially covered by the ratio of K.P. Abdulla's case [1971] 27 STC 1 (SC). There being no liability of the agent or dalal to pay the sales tax or an attempt on his part or suspicion against him to escape its payment, it cannot be held that provisions contained in section 38 of the Act are intra vires the State Legislature being ancillary and incidental to the power to levy sales tax under entry 54, List II of the Seventh Schedule to the Constitution. In Mool Chand Chuni Lal v. Sri Manmohan Singh, Assistant Excise and Taxation Officer, Octroi In-charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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