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TMI Blog1983 (10) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... c., at Daraganj, Allahabad, as also in Magh Mela. The assessee did not maintain any accounts, and on the basis of the decision of the Supreme Court in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC); AIR 1978 SC 1591 claimed exemption from payment of tax. The assessee declared a nil turnover. The assessing authority repelled the contention of the assessee and on the basis of a best of judgment assessment assessed the assessee on a turnover of Rs. 4,50,000. The assessee preferred an appeal but the Assistant Commissioner (Judicial) dismissed the appeal and upheld the turnover determined by the assessing authority. The assessee preferred a second appeal and the Tribunal partly allowed the appeal and reduced the turnover to Rs. 2,65,000. The Tribunal found that during the surveys conducted on 29th August, 1976, and 8th October, 1976, at the assessee's shop at Daraganj stocks of sweetmeats, namkin, coca-cola, etc., besides raw materials were found. The Tribunal found that the assessee did not maintain any account. The Tribunal found that the assessee admitted daily sales at Rs. 25 to Rs. 30. The Tribunal found that the total value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om payment of tax on the basis of the decision of the Supreme Court in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC); AIR 1978 SC 1591. The Tribunal found that the assessee provided the services of bearers, radio fans, etc., and made seating arrangements during the aforesaid years and as such the assessee must have continued to provide those services to their customers during the assessment years in question as well. The Tribunal found that the department has adduced no evidence to the contrary. Accordingly, the Tribunal, as said above, partly allowed the appeals. Aggrieved, the Commissioner has filed the revisions. One common question, in all these revisions, is whether the assessees are liable to pay sales tax on their transactions of supply of food stuffs, etc., to their customers which are exigible to payment of sales tax on their turnover of sales. The assessees contend that what the assessees, who are the restaurant owners, are doing, was not effecting sales to their customers but were rendering services to their customers and sales were only incidental to services. They contend that in view of the decision of the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commencement of the present Amendment Act if the conditions mentioned in sub-clause (2) of clause 6 of the Bill are satisfied. In the case of food or drink supplied by restaurants this relief will be available only in respect of the period after the date of judgment in the Northern India Caterers (India) Limited case [1978] 42 STC 386 (SC) and the commencement of the present Amendment Act." The amendments with which we are concerned at present, are the amendment of article 366 of the Constitution which is a definition clause by which a new clause (29A) has been inserted. The relevant part of clause (29A) inserted in article 366 of the Constitution, reads as under: "(29A) 'tax on the sale or purchase of goods' includes- (a) ............................................. (b) ............................................. (c) ............................................. (d) ............................................. (e) ............................................. (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court, tribunal or authority of any decree or order directing the refund of, any such aforesaid tax which has been collected; (iii) recoveries shall be made in accordance with the provisions of such law of all amounts which would have been collected thereunder as such aforesaid tax if this section had been in force at all material times. (2) Notwithstanding anything contained in sub-section (1), any supply of the nature referred to therein shall be exempt from the aforesaid tax- (a) where such supply has been made, by any restaurant or eating house (by whatever name called), at any time on or after the 7th day of September, 1978, and before the commencement of this Act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time; or (b) where such supply, not being any such supply by any restaurant or eating house (by whatever name called), has been made at any time on or after the 4th day of January, 1972, and before the commencement of this Act and the aforesaid tax has not been collected on such supply on the ground that no such tax could have been levied or collected at that time: Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , hypothecation, charge or pledge. Explanation I.-A transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a tittle to any goods as security for payment of the price, be deemed to be a sale." There were originally three explanations but the two explanations, namely, explanations II and III, have since been deleted. The rest of the sub-section is the same as originally enacted by the legislature except for the words "and includes forward contracts" have since been deleted. The word "turnover" is defined in section 2(i) of the U.P. Sales Tax Act, 1948, as under: "2. (i) 'turnover' means the aggregate amount for which goods are supplied or distributed by way of sale or are sold, by a dealer either directly or through another, on his account or on account of others, whether for cash or deferred payment or other valuable consideration. Explanation II.-Subject to such conditions and restrictions, if any, as may be prescribed in this behalf,- (i) the amount for which goods are sold shall include any sums charged for anything done by the dealer in respect of the goods sold at the time of or before the delivery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when sold loose or unpacked." The State is entrusted with the powers to levy taxes on the sale and purchase of goods by entry 54 of List II of the Seventh Schedule. It runs as follows: "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I." The Statement of Objects and Reasons to the Amendment Act states that the phrase "sale of goods" has been interpreted by the Supreme Court as connoting only those sales which come within the meaning of the Sale of Goods Act, 1930. The amendment which has now been made by way of addition of a new clause (29A) in article 366 of the Constitution which is a definition clause, is that the phrase "tax on the sale or purchase of goods" in the Constitution will include certain heads of taxation which had been held to be outside the scope of entry 54 of List II of the Seventh Schedule and to include a tax on the supply by way of or as part of any service or in any other manner whatsoever, of goods being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal scheme. It is open to the legislature within certain limits to amend the provisions of an Act retrospectively and to declare that the law shall be deemed to have been, but it is not open to the legislature to say that a judgment of a court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the court. 11.. This Court in Amalgamated Coalfields Ltd.'s case [1963] Supp 1 SCR 172; AIR 1964 SC 1013 held that the cess was not validly imposed and levied because the sanction of the State Government was not obtained at the time of enhancing the rate of levy of tax. That judgment was binding between the parties and also by virtue of article 141 binding on all courts in the territory of India. The legislature could not say that declaration of law was either erroneous, invalid or ineffective either as a precedent or between the parties." In that case the Supreme Court has laid down the test which a validating law is required to pass. It was held that before a validating law could be effected (1) it had to be within the competence of the legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that has been made by Parliament is under its constituent powers under article 368 of the Constitution. Clause (1) of article 368 of the Constitution provides that notwithstanding anything in this Constitution, Parliament may in exercise of its constituent powers amend by way of addition, variation or repeal any provision of this Constitution in accordance with the procedure laid down in this article. Thus, notwithstanding the fact that under entry 54 of List II of the Seventh Schedule, taxes on sale or purchase of goods is within the legislative competence of the State Legislature, Parliament was competent to legislate in respect of taxes on sale or purchase of goods in its constituent powers and widen the scope of entry 54 of List II of the Seventh Schedule by adding clause 29A in article 366 of the Constitution as also by providing for certain consequences of the amendment by section 6 of the Amendment Act. The Supreme Court in the case of Sasanka Sekhar Maity v. Union of India AIR 1981 SC 522 wherein the question was whether the provisions of Chapter IIB of the West Bengal Land Reforms Act, 1955 (Act 10 of 1956), inserted by the West Bengal Land Reforms (Amendment) Act, 1971 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When article 31B was introduced in the Constitution by the Constitution (First Amendment) Act, 1951, it validated retrospectively 13 Acts specified in the Ninth Schedule, which, but for this provision, were liable to be impugned under article 13(2). Article 31B conferred constitutional immunity to such laws (all being enactments of State Legislatures) and Parliament alone could have done so by inserting the said article in the Constitution in exercise of its constituent power under article 368. In substance and reality it was a constitutional device employed to protect State laws from becoming void under article 13(2). It will appear clear that the language in article 31B is virtually lifted from article 13(1) and (2), while article 13(2) invalidates legislation, which takes away or abridges the rights conferred by Part III, article 31B extends 'protective umbrella' to such legislation if it is included in the Ninth Schedule, and therefore, the courts will have no power to go into the constitutionality of the enactment as included in the Ninth Schedule except on the ground of want of legislative competence." I, therefore, find that the scope of the State's legislative competence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Taxes on the sale of goods and advertisements was a legislative head of a State by virtue of entry 48 of List II of the Seventh Schedule of the Government India Act, 1935. There are numerous Sales Tax Acts in force some of which are pre-Constitution and some of which are post-Constitution. A few of the preConstitution Sales Tax Acts are Bihar Sales Tax Act, 1947; U.P. Sales Tax Act, 1948; Punjab General Sales Tax Act, 1948; Bengal Finance (Sales Tax) Act, 1941; Orissa Sales Tax Act, 1947; East Punjab General Sales Tax Act, 1948; Assam Sales Tax Act, 1947, and Madras General Sales Tax Act, 1939. Post-Constitution Sales Tax Acts are Bombay Sales Tax Act, 1959; Gujarat Sales Tax Act, 1970; Karnataka Sales Tax Act, 1957; Kerala General Sales Tax Act, 1963 and Rajasthan Sales Tax Act, 1954. In his very able argument, Sri A.P. Misra, the learned standing counsel, has argued, in reply, that in the Statement of Objects and Reasons attached to the Amendment Act, Parliament has referred to a number of decisions of the Supreme Court and they all are decisions given in respect of pre-Constitution laws. He also referred to, in particular, paragraph 13 of the Statement of Objects and Reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in the case of State of Bihar v. Sir Kameshwar Singh AIR 1952 SC 252, wherein the Supreme Court, at page 285, in paragraph 95, has observed as follows: "This obligation to provide for compensation is no doubt one of the provisions of article 31(2) but if, as contended by Mr. P.R. Das, the self-same provision be found elsewhere in the same Constitution, e.g., entry 36 in List II or entry 42 in List III, then that 'provision' must also be regarded as having been covered by article 31(4) and the two added articles for otherwise those articles will be rendered nugatory. In my opinion, if, two constructions are possible, the court should adopt that which will implement and discard that which will stultify the apparent intention of the makers of the Constitution. Further, it must be borne in mind that article 31(4) which applies 'notwithstanding anything in this Constitution' will, by force of the very words, protect the Act against even legislative incompetency, if any, arising out of the alleged noncompliance with the suggested implied provisions, if any, of entry 36 in List II and entry 42 in List III." Sri A.P. Misra has also referred, in this connection, to a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is that the language of sub-section (1) of section 6 of the Amendment Act is clear and unambiguous and as such it is not permissible for this Court to interpret it in a manner which is not consistent with the language of the statute after taking into account the Statement of Objects and Reasons as being sought to be done by the learned standing counsel. Several cases have been relied upon and some of them are referred to here. One of the cases is Commissioner of Sales Tax, U.P., Lucknow v. Parson Tools and Plants, Kanpur [1975] 35 STC 413 (SC); (1975) 4 SCC 22. In paragraph 15 of the judgment it was observed as follows: "Be that as it may, from the scheme and language of section 10, the intention of the legislature to exclude the unrestricted application of the principles of sections 5 and 10 of the Limitation Act is manifestly clear. These provisions of the Limitation Act, which the legislature did not, after due application of mind, incorporate in the Sales Tax Act, cannot be imported into it by analogy. An enactment being the will of the legislature, the paramount rule of interpretation, which overrides all others, is that a statute is to be expounded 'according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to the Statement of Objects and Reasons, it must be remembered that it seeks only to explain what reasons induced the mover to introduce the Bill in the House and what objects he sought to achieve. But those objects and reasons may or may not correspond to the objective which the majority of members had in view when they passed it into law. The Bill may have undergone radical changes during its passage through the House or Houses, and there is no guarantee that the reasons which led to its introduction and the objects thereby sought to be achieved have remained the same throughout till the Bill emerges from the House as an Act of the Legislature, for they do not form part of the Bill and are not voted upon by the members. We, therefore, consider that the Statement of Objects and Reasons appended to the Bill should be ruled out as an aid to the construction of a statute. 33.. The omission of part (a) of the proviso to clause (2) of the Bill seems to us to stand on no higher footing. It sought to exclude from the purview of the Bill the right of an Advocate of the Supreme Court to plead or to act in any High Court in exercise of its Original jurisdiction. Its omission was stron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , observed in paragraph 13 as follows: "13. It may be possible to look for legislative intention in materials outside the four corners of a statute where its language is really ambiguous or conflicting. But, where no such difficulty arises, the mere fact that the intentions of the law-makers, sought to be demonstrated by what was said by some of them or by those advising them when the Constitution was on the anvil were really different from the result which clearly follows from the language used in the legislative provisions under consideration, could not authorise the use of such an exceptional mode of construction. 'It is well accepted', said Lord Morris (see Davies, Jenkins & Co. v. Davies [1967] 2 WLR 1139 at page 1156), 'that the beliefs and assumptions of those who frame Acts of Parliament cannot make the law'. " Again, in paragraph 19, the court observed as follows: "We think that the view contained in the judgment under appeal, necessarily results in writing some words into or adding them to the relevant statutory provisions, to the effect that the candidates from graduates' constituencies of Legislative Councils must also possess the qualification to having graduated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded, clauses (a) and (b) thereof. It seems that the words "in pursuance" in sub-section (1) qualifies the phrase "for the purposes of any law passed or made, or purporting to have been passed or made, before the commencement of this Act" under the provisions relating to "tax on the sale or purchase of goods" and to no other. The phrase "before the commencement of this Act" in sub-section (1) does not mention any earlier date and is completely unqualified. It has been argued that it means a period anterior in time of the coming into force of the Constitution itself. On the other hand, the assessees urged that the phrase "before the commencement of this Act" referred to the point of time when the Constitution itself came into force. Prior to coming into force of the Constitution, the Government of India Act, 1935, under entry 48 of List II of the Seventh Schedule, authorised levy of taxes on sales of goods by the State Legislatures. The entry 48 ran as follows: "48. Taxes on the sale of goods and on advertisements." Thus, the U.P. Sales Tax Act, 1948, was enacted under entry 48 referred to above. That entry is not identical with entry 54 of List II of the Seventh Schedule whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ph 14, it was observed as follows: "14. For the purposes of the case before me all that I have to decide is whether the act or omission alleged against accused Nos. 2 and 6, namely, Girdharilal Mahajan and Ramchander, is reasonably related to the discharge of their duty or omission of the discharge of their duty. I agree with the observations of the Punjab High Court that it is not a pretended or fanciful justification that should be taken into account but a connection close enough to bring the act or omission within the ambit of the official act done or purported to be done. The legislature has advisably used to expressions 'acting' or 'purporting to act', the latter expression means that even if the action may be somewhat beyond the scope of official duty, but was done under the colour of office, the protection can in a given case be considered. Having regard to these principles, in my opinion, the accused Nos. 2 and 6, namely, Girdharilal Mahajan and Ramchander, are alleged to have ordered the collection of refuse and omitted to cause its removal from the road and they have thereby committed the public nuisance. Both these are directly related to their duties as Municipal Admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance 12 of 1949 and even Ordinance 20 of 1949 legislative competence was lacking, and even by the deeming provisions in sections 8(2) of Ordinance 27 of 1949 or Act 31 of 1950 there was no valid vesting, because the original vesting was bad. We think it unnecessary to decide as to whether the deeming provision of section 8(2) of the Act or of Ordinance 27 of 1949 was sufficient to give validity to the vesting. Section 8(2-A) as introduced into the Act, in our opinion, makes the vesting valid, because it gives validity to the vesting which purported to have taken place as a result of Ordinance 27 of 1949 even though it was only apparently so and was not so in law, because that is what 'purport' implies." The learned standing counsel has then referred to the Stroud's Judicial Dictionary, 4th Edition, Vol. 4, at page 2213, where the word "purport" has been defined as follows: "When validity is given to anything 'purporting' to be done in pursuance of a power, a thing done under it may have validity though done at a time when the power would not be really exercisable: Dicker v. Angerstein (1876) 3 Ch D 600. In that case it was held that the proviso, following conditional power of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Madhya Pradesh AIR 1953 Nag 86 (FB) wherein it was held that the definition of "Ruler" contained in clause (22) of article 366 of the Constitution could not be applied to other laws. The relevant observation contained in paragraph 9 of the judgment, is reproduced hereunder: "The next question is whether the petitioner who claims to be the Ruler is outside the definition. The term 'Ruler' is defined thus in clause (22) of article 366 of the Constitution. 'Ruler' in relation to an Indian State means the Prince, Chief or other person by whom any such covenant or agreement as is referred to in clause (1) of article 291 was entered into and who for the time being is recognised by the President as the Ruler of the State, and includes any person who for the time being is recognised by the President as the successor of such Ruler.' According to this definition and also under the agreement which was entered into with the Government of India the petitioner is entitled to be called a Ruler. Since that is so and since the definition in the Act refers to an 'ex-Ruler' it is contended that the petitioner cannot fall within that definition. In our opinion, the definition of a Ruler c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to be sales within the meaning of sub-section (1) of section 6 of the Amendment Act, and the tax would be assessed accordingly. In the end, I now take up the argument of Sri S.O.P. Agrawal that section 6 was not enacted by Parliament under its constituent powers. He argued that sections 2, 3, 4 and 5 of the Amendment Act incorporated amendments of the Constitution and have been made by Parliament under article 368 of the Constitution. He, however, submits that section 6 of the Amendment Act is not enacted by Parliament in its constituent powers. He has further argued that it is only a clause validating the laws made by the State Legislatures. He points out that under the Constitution (First Amendment) Act, 1952. Section 4 thereof added article 31A and section 5 added article 31B to the Constitution. Then he points out that under the Constitution (Fourth Amendment) Act, 1955, section 2 thereof substituted in article 31 of the Constitution for existing clause (2) a new sub-clause and by section 3 in article 31A of the Constitution for the existing clause (1) a new clause was substituted and was always deemed to have been substituted. Thereafter by the Constitution (Fifth Ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, no order as to costs. In Sales Tax Revision No. 398 of 1982, the Tribunal was not prepared to give the benefit of the decision of the Supreme Court in the case of Northern India Caterers (India) Ltd.'s case [1978] 42 STC 386 (SC); AIR 1978 SC 1591. The Tribunal found that there was no evidence to show that the customers could not take away the food served to them from the premises of the assessee. In view of these findings the assessee could not be given any benefit of the decision of the Supreme Court in the case of Northern India Caterers (India) Ltd.'s case [1978] 42 STC 386 (SC); AIR 1978 SC 1591. The assessee did not maintain any account and the turnover and the tax liability had to be estimated. I do not find any such defect in determination of the turnover that would call for interference in revision. In the result, the revision is accordingly dismissed. There will, however, be no order as to costs. In Sales Tax Revisions Nos. 423 and 424 of 1982, the Tribunal found that the assessee was entitled to the benefit of the Northern India Caterers (India) Ltd.'s case [1978] 42 STC 386 (SC); AIR 1978 SC 1591 in respect of a part of his turnover. Northern India Caterer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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