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TMI Blog1995 (7) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... in an open defiance of the governmental intention manifested through various notifications, have levied tax on the said commodity even by going to the extent of challenging the legislative competence of the State Government in this regard. According to the petitioners, the action of the respondent-authorities is not only impermissible in law but is deplorable because it reflects hierarchical indiscipline which has never been approved by the courts. The petitioners therefore pray for quashing of the impugned assessment orders which pertain to the periods 1991-92 and onwards. 3.. The legislative exercise to exempt wheat products from levy of tax under the Act started with publication of Government Order No. FD 172 CSL 91 dated October 19, 1991 in the Karnataka Gazette dated January 16, 1992 (Government Order, for short). This order needs to be quoted in extenso since its preamble sets out the facts and reasons which impelled the Government to abolish the sales tax levy on wheat products. The said order reads as under: "Proceedings of the Government of Karnataka Subject: Levy of sales tax on wheat and wheat products under the K.S.T. Act, 1957-Abolition of tax-Issue of orders-Reg. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision. The Karnataka Roller Flour Mills Association, Bangalore, in their representation read above, have requested for abolition of the sales tax on wheat and wheat products adducing the reason that no tax is being levied in the neighbouring States of Andhra Pradesh, Maharashtra and Goa. It is further stated that earlier, wheat was being allotted to the roller flour mills through the Food Corporation of India at subsidised rates resulting in lesser cost on wheat which practice has been dispensed with, and now, that wheat has to be imported from other States especially Punjab. Though wheat is available in plenty, cost of importing it and tax burden would make the end wheat products to cost very heavy which pose serious problem to the consumers who are compelled to switch over to consumption of other food items like rice which besides, involving heavy flow of funds as subsidy, and creating demand for rice, the price of which would also shoot up beyond the ability of the common consumer, would make the roller flour mills to face stiff competition in marketing their products from the mills of the neighbouring States where these products are not saddled with taxes. The argument adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngalore, dated 3rd November, 1992 SO 3019, Karnataka Gazette, dated 26th November, 1992. In the entries relating to Sl. No. 64 in the Fifth Schedule to the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), after the word "soji" and before the words "of wheat" the following words shall be and shall be deemed always to have been inserted with effect from the Nineteenth day of October, 1991, namely: 'and bran.' 6.. Strangely, despite the Government Order noticed above, by the Karnataka Act 4 of 1992 itself the "wheat bran" was put with bran of rice and maize by substituting entry 8(iii) in the Second Schedule making it effective retrospectively from October 19, 1991 thereby declaring it liable to 3 per cent tax at the first point of sale in the State as provided under section 5(3)(a) of the Act. This entry 8(iii) reads as under: "Sl.No. Descriptioin of goods which applicable Period for Rate of tax 8. Cereals and pulses, that is to say,- (i) ........... (ii) .......... (iii) Flour and husks of pulses; flour From Three and soji of maize; grits and flakes of 19-10-1991 per cent" maize; parched rice; rice soji and beaten rice; bran of rice, wheat and maize. 7.. Subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of import of the goods into the territory of India; (u-2) 'total turnover' means the aggregate turnover in all goods of a dealer at all places of business in the State, whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India;" "5(3). Notwithstanding anything contained in sub-section (1), the tax under this Act shall be levied (a) in the case of the sale of any of the goods mentioned in column (2) of the Second Schedule, by the first or the earliest of successive dealers in the State who is liable to tax under this section, a tax at the rate specified in the corresponding entry of column (3) of the said Schedule, on the taxable turnover of sales of such dealer in each year relating to such goods......................." "8. Exemption of tax.-(1) No tax shall be payable under this Act on the sale of goods specified in the fifth Schedule subject to the conditions and exception, if any, set out therein." "8-A. Power of State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ena of judicial pronouncements that non-levelling or wrong levelling of a statutory provision is inconsequential so long as the power/jurisdiction exercised is referable to some statutory source (see Municipal Corporation of the City of Ahmedabad v. Ben Hiraben Manilal AIR 1983 SC 537, para 5). In somewhat identical situation a similar question had arisen for consideration before the Full Bench of the Patna High Court in the case of Tara Steel Industries v. Assistant Commissioner of Commercial Taxes reported in [1986] 61 STC 301, wherein their Lordships have held that: "Now it seems plain from the above (and no other provisions to the contrary could be brought to our notice) and, indeed, it was common ground that the law has not prescribed any particular or peculiar form for a notification generally or those under the Sales Tax Act. That being so, where a formal resolution of the Government expressly issued in its name and recorded by the order of the Governor is duly published in the Gazette, specifying in express terms the exemptions to be granted, can it possibly be said that it would not come within the ambit of the notifications referred to in the Sales Tax Act? The answer p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned, on the plain words used therein and without any further interpretation, it is neither referable to subsection (1) of section 8-A nor to sub-section (2-A) thereof. This corrigendum does not in express words extend any exemption from tax under the Act on the transactions of wheat bran. Therefore, it is not an exercise of powers under section 8-A(1) of the Act. Similarly it cannot be justified on its plain reading, under sub-section (2-A) of section 8-A since this sub-section empowers the State Government, inter alia to transpose any entry or part thereof from one Schedule to another, whereas the corrigendum on its face has not transposed "wheat bran" from any other Schedule of the Act to the Fifth Schedule. Be that as it may, the intention seems to be clear that the Government wanted to extend exemption of tax to wheat bran as well though that has been sought to be done in somewhat unskilled manner which is unbecoming of the State Government which has a regular Law Department with experts in legislative technics. Nonetheless and irrespective of the efficacy of the corrigendum through which the Government has intended to effectuate its intention, the Government Order which I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be presumed that there was such a transposition and as such wheat bran ceased to be in the Second Schedule. Once this conclusion is reached, then, sub-section (3) and (6) of the Act comes into operation which are to the following effect: Here italicised. "8-A(3): The State Government may, by notification, cancel or vary any notification issued under sub-section (1) or sub-section (2-A). ............................... 8-A(6): Any notification issued under sub-section (1) or subsection (2-A) shall be valid until it is cancelled under sub-section (3), notwithstanding that the tax payable in accordance with such notification in respect of any specified goods or class of goods or by any specified class of persons on the sale or purchase of any specified class of goods by any specified class of dealers, is modified by an amendment to this Act." 15.. In the present case, admittedly subsequent to the issue of the aforesaid Government Order and the corrigendum notification no further notification cancelling or varying the same as required under section 8-A(3) has been issued by the State Government. Therefore, since the Legislature has in express terms provided that unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raman Co. (P) Ltd. v. State of Madras [1966] 17 STC 418, the Constitution Bench of the Supreme Court at page 440 has held that: "......................an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions." A similar effort was made by the authorities under the Act to nullify an earlier order of the Karnataka Government conceding certain sales tax concessions. In the case of Assistant Commissioner of Commercial Taxes (Asst.) v. Dharmendra Trading Company [1988] 70 STC 59, the Supreme Court disapproved such a course adopted by the State functionaries by holding that"The next submission of learned counsel for the appellants was that the concessions granted by the said order dated 30th June, 1969 were of no legal effect as there is no statutory provision under which such concessions could be granted and the order of 30th June, 1969 was ultra vires and bad in law. We totally fail to see how an Assistant Commissioner or Deputy Commissioner of Sales Tax who are functionaries of a State can say that a concession granted by the State itself was beyond the powers of the State or how the State can say so eit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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