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TMI Blog1993 (10) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... application has been filed by the applicant No. 1 association on behalf of its members who are registered dealers in iron and steel under the 1941 Act, applicant No. 2 being its president and a dealer himself. Their case is that in order to check evasion of tax, iron and steel within the meaning of section 14(iv) of the 1956 Act, were notified with effect from September 1, 1986, under section 4A of the 1941 Act and subjected to the specified consequences. Section 14D of the 1941 Act was enacted in 1988 and then substituted in 1989, but the provisions thereof had not been enforced till May 31, 1992. Section 14D has been brought into force with effect from June 1, 1992, by Notification No. 2851 F.T. dated May 15, 1992, iron and steel being mentioned therein as "specified goods" so as to attract section 14D. Allegedly, even sales/despatches of iron and steel in the course of inter-State trade or commerce as defined in section 3 of the 1956 Act, were brought within the purview of section 14D by amending rule 27C and introducing a new rule 89AAA in the 1941 Rules with effect from June 1, 1992. It is required by these provisions that a serially numbered declaration in form XXXE signed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm XXXE so that the same can be produced at the time of assessment. Production of the declaration at the time of assessment may in some cases be an impossibility. It is stated that transporters generally act on behalf of consignees who are of places outside this State; therefore, consignors have no control over them. Applicants say that declared goods under section 14 of the 1956 Act cannot be treated by the State in the like manner as other goods, and the State Legislature cannot impose same restrictions on declared goods as in respect of other goods. The impugned provisions are also said to be violative of section 6A of the 1956 Act and rule 12(5) of the Central Sales Tax (Registration and Turnover) Rules, 1957. 4.. The case of the respondents in their affidavit-in-opposition is that the impugned provisions are valid and neither illegal nor unconstitutional in any manner, as alleged. At present, the 1941 Act levies multi-point tax except in case of declared goods like "iron and steel" which are, however, subjected to a single point tax, namely, at the first point, in terms of the 1956 Act. The tax on the other declared goods is levied on the last point. Prior to April 1, 1985, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the turnover under the 1941 Act. The impugned rule 27C(1)(b) has no application to such transfer. The declaration in form XXXE will be prepared by consignors in their own stationery. The impugned provisions are ancillary and incidental to the power to tax. So, the State Legislature is competent to enact the same. 5.. It is common ground that "iron and steel" goods enumerated in clause (iv) of section 14 of the Central Sales Tax Act, 1956, are declared goods of special importance in inter-State trade or commerce in terms of clause (3) of article 286 of the Constitution. Section 15(a) of the 1956 Act lays down, according to the same article 286(3), that sales tax law of a State shall be subject to two restrictions in respect of those declared goods. The two restrictions are that (i) the rate of tax on sales inside the State shall not exceed four per cent and (ii) such tax shall not be levied at more than one stage. It is also common ground that since April 1, 1985, "iron and steel" goods enumerated in section 14(iv) of the 1956 Act are subjected to tax at 4 per cent at the first point of sale inside the State. It is to be noted that these restrictions and conditions are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer or a goods vehicle, the following particulars as applicable: (i) the name of the railway or steamer station of despatch or place of despatch and station or place of destination, (ii) number of railway receipt, bill of lading, (iii) number and date of consignment note and the name of the transporter, (iv) invoice number or bill number with date, (v) the names and addresses of the consignor and the consignee, and (vi) the description and quantity or weight of the goods consigned with their value; and (b) produce, if the goods specified under sub-section (1) of section 14D forming the subject-matter of the sale have been carried by a transporter in any goods vehicle, the declaration duly countersigned under sub-rule (3) of rule 89AAA and the documents referred to in sub-section (1) of that section: Provided that if a dealer proves to the satisfaction of the assessing authority that for cause beyond his control he is not in a position to produce all or any of the duly countersigned declarations referred to above, such authority may, for reasons to be recorded in writing, exempt such dealer from production of such declaration or declarations." 7.. Rule 89AAA is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with any constitutional provision. Having regard to these circumstances and to the nature of the applicants' grievances before us, we are not required to adjudicate upon the question of vires of rule 89AAA or section 14D. 9.. Trade circular No. 3/92 dated May 20, 1992, issued by respondent No. 1 has also been challenged. It is well-settled that such circulars are merely administrative instructions, having no legal force, and not binding upon the quasijudicial authorities. Moreover, the trade circular itself states its object as "bringing to the notice of the trade, the transporters and all others concerned the legal and procedural formalities.......". It states the purport of rules 89AAA and 27C(1)(b) and encloses the format of form XXXE of the declaration, thereby indicating that the declaration will be prepared in the party's own stationery. The trade circular, therefore, will abide the decision in this case. 10.. The only grievance pressed with some force by Mr. Bose on behalf of the applicants is that if rule 27C(1)(b) is to be mandatorily followed by the consignor-dealer at the time of his assessment, it will amount to infringement of section 15(a) of the 1956 Act and art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "Provided that if a dealer proves to the satisfaction of the assessing authority that for cause beyond his control he is not in a position to produce all or any of the duly countersigned declarations referred to above, such authority may, for reasons to be recorded in writing, exempt such dealer from production of such declaration or declarations." 11.. The trade circular dated May 20, 1992, also does not say that if a dealer submits that the declaration cannot be produced by him, the assessing authority should exempt him from production thereof and allow him to adduce alternative evidence. The circular has merely proceeded on the lines of the aforesaid proviso. We are inclined to agree with Mr. Bose, appearing for applicants, that the language of rule 27C(1) and the proviso to rule 27C(1)(b) does not indicate that production of the declaration in form XXXE is only directory. The aforesaid proviso to rule 27C(1)(b) leaves a wide discretion to the assessing authority to either grant the exemption from producing declaration or to refuse to do so. In case, the exemption is refused, the result is that interState sales of iron and steel within the meaning of section 14(iv) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s those provisions. 12.. Mr. S.N. Bose, learned advocate for the applicants, referred to a decision of this Tribunal in the case of Tata lisco Dealers' Association v. Commissioner of Commercial Taxes, reported in [1990] 76 STC 14 and contended that in that case also, invalidity of a provision for furnishing declaration for the purpose of section 5(2)(a)(vd) of the 1941 Act was involved. There, it was held that the mandatory nature of requirement of a declaration would make the provision itself unconstitutional, contravening section 15(a) of the 1956 Act and article 286(3). Therefore, the provision was held as directory and it was interpreted as merely an alternative mode of proof. By referring to the case of Govind Saran Ganga Saran [1985] 60 STC 1 (SC) Mr. Bose contended that a fixed point of tax under the sales tax law is mandatory in view of section 15 of the 1956 Act. In the instant case, according to Mr. Bose, as the undisputed point of tax is the first point of sale, any possibility of imposition of tax at a subsequent point would contravene section 15(a) of the 1956 Act. He also referred to the case of Bhawani Cotton Mills Ltd. [1967] 20 STC 290 (SC) and contended that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly submitted that the benefit of section 15 of the 1956 Act is available to only those goods which are specifically enumerated in section 14(iv) of the 1956 Act. Mr. De also referred to section 9(2A) and section 13(3) and (4)(c) of the 1956 Act and rule 11 of the Central Sales Tax (West Bengal) Rules, 1958, which provides that the provisions of the 1941 Act and the 1941 Rules including the use of forms thereunder shall apply mutatis mutandis to all proceedings or other incidental matters under the 1956 Act, for which there is no provision in the rules framed under the same Act. Mr. De, thus hinted that production of declaration under rule 27C(1) could be lawfully prescribed even for inter-State sales, Mr. De also contended that even if the claim under section 5(2)(a)(v) of the 1941 Act is rejected by the assessing authority due to non-production of declaration under rule 27C(1), the sales are not at once exigible to tax, because it will still be open to the applicants to take the benefit of section 5(2)(a)(vd). Mr. Bose did not agree with this. The purpose and circumstances of section 5(2)(a)(vd) appear to us to be different from those of section 5(2)(a)(v). Moreover, once a return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in order to make the provision constitutional and valid, the word "shall" in rule 27C(1) must be read as "may". In other words, rule 27C(1) does not make it mandatory for a consignor-dealer of "iron and steel" goods within the meaning of section 14(iv) of the 1956 Act, to produce a declaration in form XXXE for the purpose of proving its claim under section 5(2)(a)(v) of the 1941 Act at the stage of assessment. To say it differently, under rule 27C(1), a dealer of the aforesaid goods will be at liberty to either produce a declaration in form XXXE or adduce alternative evidence (alternative to the declaration) together with other necessary documents to prove the claim under section 5(2)(a)(v) before the assessing authority. It is, however, for the benefit of both the dealer and the assessing authority that a declaration in form XXXE is produced, because it is an easy and simple mode of proving the claim. But such production will be optional and alternative for the dealer. The proviso to rule 27C(1)(b) cannot be retained at all. It is beyond rectification. It is not possible to give interpretation to some words or expressions in the proviso in order to make it conform to article 286(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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