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TMI Blog2011 (3) TMI 1503X X X X Extracts X X X X X X X X Extracts X X X X ..... reating a transporter as a dealer by creating legal fiction so as to treat, in the prescribed circumstances, a transporter, as a dealer, and/or by raising a legal presumption that the taxable goods, handled by a transporter, have been delivered to a dealer without any valid permit or by raising a legal presumption that the transporter has concealed the actual particulars of the goods transported by him and the goods have been sold, within the State, by the dealer without making payment of tax for such sale. The provisions of section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, are, so far as the same permit imposition of tax on transporters, are ultra vires entry 54 of List II of the Seventh Schedule to the Constitution of India. The provisions of section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, are, in so far as the same relate to levy of penalty to the extent of 150 per cent of the tax involved, intra vires entry 54 of List II of the Seventh Schedule to the Constitution of India. The provisions of the TST Act, 1976, and section 77 of the Act of the TVAT Act, 2004, do not have the effect of rendering the decision of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court, in Tripura Goods Transport Association v. Commissioner of Taxes reported in [1999] 112 STC 609 (SC); [1999] 2 SCC 253, had already held that there is no liability on a transporter to pay tax and/or penalty, whether the subsequent insertion of section 13A in the Tripura Sales Tax Act, 1976, vide the 8th Amendment, can be sustained? The above are some of the important questions of law, which require adjudication in the present set of writ applications, wherein the legality and validity of section 13A of the Tripura Sales Tax Act, 1976, and section 77 of the Tripura Value Added Tax Act, 2004, are principally under challenge. Before we attempt to answer the questions posed above, it is imperative that we take into account the circumstances, whereunder the writ petitions have been filed, under article 226 of the Constitution of India, raising the questions, which we have indicated above. The material facts, therefore, giving rise to these writ petitions, may, first, be noted. Background facts W.P. (C) No. 42 of 2005 The petitioner, a transporter registered in terms of the provisions of rule 64A of the Tripura Sales Tax Rules, 1976 (in short, the TST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re respondent No. 3 and, upon hearing, respondent No. 3 issued two orders, dated March 15, 2005 and March 22, 2005, whereby the petitioner has been saddled with the taxable liability of ₹ 5,51,293 coupled with penalty at the rate of 150 per cent on the said taxable liability by adopting best judgment procedure. In furtherance of the best judgment assessment so made, notices of demand, dated December 9, 2003 and March 23, 2005, were issued. The petitioner, then, sent a communication, in writing, on March 16, 2005, to M/s. Nicholas Piramol India Limited, seeking clarification about the shortage of bottles and in response thereto, M/s. Nicholas Piramol India Limited informed the petitioner that due to negligence, on the part of the labourers in their factory, some of the medicine boxes were packed without putting requisite numbers of bottles inside. The petitioner has, now, challenged the imposition of tax as well as the penalty, the case of the petitioner being, broadly speaking, that the taxable liability and consequential penalty have been imposed on the petitioner on the ground that he had transported the consignment, without obtaining from the dealer copies of valid permits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner, namely, M/s. M.S. Freight Carriers, a transporter registered in terms of the provisions of rule 64A of the Tripura Sales Tax Rules, 1976 (in short, the TST Rules, 1976 ), was served with an order, dated January 8, 2004, by respondent No. 3, namely, the Superintendent of Taxes, Charge I, Agartala, West Tripura, saddling the petitioner with taxable liability of ₹ 1,48,855. Thereafter, vide another order, dated June 22, 2004, respondent No. 3 modified the said order, dated January 8, 2004, reducing the liability to the tune of ₹ 78,003.70. Consequent upon the order, dated January 8, 2004, aforementioned, two notices of demand, dated January 20, 2004 and July 2, 2004 were also issued against the petitioner directing the petitioner to make payment of the said amount. Feeling aggrieved by the notices of demand, so issued, the petitioner filed three separate revision petitions under section 21 of the Tripura Sales Tax Act, 1976, before respondent No. 2, namely, Commissioner of Taxes, Government of Tripura, Agartala, assailing the findings recorded in the said demand notices by respondent No. 3. By order, dated July 12, 2005, respondent No. 2 dismissed the revision pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of tax as well as the penalty, the case of the petitioner being, broadly speaking, that the taxable liability and consequential penalty have been imposed on the petitioner on the ground that he had transported the consignment, without obtaining from the dealer copies of valid permits pertaining to a period prior to the introduction of the TVAT Act. The petitioner, therefore, contends that no taxable liability can be imposed under the TVAT Act inasmuch as the transaction took place before the TVAT Act came into force. The petitioner has accordingly sought for setting aside and quashing the impugned order of assessment, dated September 10, 2003, which has been made by adopting the procedure of best judgment assessment raised by the respondent/authority concerned and the impugned notice of demand, dated May 24, 2004. The petitioner has further sought for necessary direction to be issued restraining and prohibiting the respondents/authorities concerned from pursuing further the impugned order of assessment and the notice of demand and also the order, dated May 24, 2004, whereby the petitioner was directed to make deposit of the assessed amount on or before June 24, 2004. W.P. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consequent upon the order, dated September 10, 2003, aforementioned, a notice of demand, dated September 27, 2003, was also issued against the petitioner. Feeling aggrieved by the notice of demand, so issued, the petitioner filed a revision, which, eventually, came to be rejected. Being aggrieved by the rejection of the revision, the petitioner has filed this writ petition under article 226 of the Constitution of India seeking to get set aside and quashed the impugned notice of demand. The petitioner has also challenged the imposition of tax as well as the penalty, the case of the petitioner being, broadly speaking, that the taxable liability and consequential penalty have been imposed on the petitioner on the ground that he had transported the consignment, without obtaining from the dealer copies of valid permits pertaining to a period prior to the introduction of the TVAT Act. The petitioner, therefore, contends that no taxable liability can be imposed under the TVAT Act inasmuch as the transaction took place before the TVAT Act came into force. The petitioner has accordingly sought for setting aside and quashing the impugned order of assessment, dated September 10, 2003, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and the notice of demand and also the order, dated January 12, 2006, whereby the petitioner was directed to make deposit of the assessed amount on or before February 12, 2006. W.P. (C) No. 88 of 2007 The petitioner carries on business of transportation of goods of different persons, who are registered dealers, as defined under the Tripura Sales Tax Act, 1976 (in short, the TST Act, 1976 ), with respective Superintendents of Taxes within whose jurisdiction such dealers are carrying on their respective business. Under the scheme of the TST Act, 1976, the dealers are required to be registered under the TST Act so as to be able to import goods from outside the State of Tripura and this registration enables the taxing authority to assess and collect taxes from such dealers for the goods so imported. Rule 64A of the Tripura Sales Tax Rules, 1976 (in short, the TST Rules ) requires transporters/carriers, running the transport business in the State of Tripura, relating to taxable goods, to apply for registration to the jurisdictional Superintendent of Taxes. In terms of the requirements of rule 64A, the petitioner stands registered as a transporter. In fact, rule 64A(1) l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods, which the transporter might have carried without obtaining copy of valid permit from the dealer concerned coupled with the liability to pay penalty, which may extend to 150 per cent of the tax involved. The petitioner has accordingly sought for setting aside and quashing the impugned order of assessment, dated December 27, 2006, which has been made by adopting the procedure of best judgment assessment raised by the respondent/authority concerned and the impugned notice of demand, dated December 28, 2006. The petitioner has further sought for necessary direction to be issued restraining and prohibiting the respondents/authorities concerned from pursuing further the impugned order of assessment and the notice of demand and also the order, dated February 14, 2007, whereby the petitioner was directed to make deposit of the assessed amount on February 21, 2007. Submissions Mr. Somik Deb, learned counsel, appearing on behalf of the petitioners, has made multi-fold submissions in support of the challenges as indicated in the questions formulated above. He submitted that unless there is a sale of goods, State Legislature cannot cast liability on a person to pay tax and/ or penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be strictly construed. In applying the terms of the charge or the terms of an exemption from a charge, no consideration of equity or hardship are to affect the construction of a given fiscal statute. Relying on para 912 of volume 44 of Halsbury s Laws of England, Mr. Deb submits that while construing words in a taxing statute, the court must have primary regard to the words themselves and the same must be construed according to their natural meaning in their context. In support of his contention, Mr. Deb relied on a decision of the Supreme Court in Hoechst Pharmaceuticals Ltd. v. State of Bihar reported in [1984] 55 STC 1 (SC); [1983] 4 SCC 45, wherein it was held as under (page 31 in 55 STC): . . . Taxation is considered to be a distinct matter for purposes of legislative competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. . . Reliance has also been placed by Mr. Deb on a decision of the Supreme Court in Synthetics and Chemicals Ltd. v. State of U.P. [1991] 80 STC 270 (SC); [1990] 1 SCC 109, wherein it was held that the legislative powers, normally, include all incidental and subsidiary powers, but the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude a transporter within the definition of dealer has been created. Similarly, points out Mr. Deb, the definitions of sale and sale price as given in section 2(g) and 2(h) of the TST Act, 1976, respectively, do not relate to the transporters. It is further pointed out by Mr. Deb that the definition of tax as given in section 2(j) of the TST Act, 1976, and the liability to pay tax, as per section 3(1), suggest that only a dealer has the liability to pay tax under the said Act. Similarly, contends Mr. Deb, the liability to submit return or provisions for assessment of tax are relatable to only a dealer and not to anyone else, particularly, a transporter inasmuch as he does not sell goods nor does he fall within the definition of dealer , as given in the TST Act. It is pointed out by Mr. Deb that while section 2(p) of the TST Act and section 2(33) of the TVAT Act, defines the expression transporter to mean a registered transport company, a carrier or a transporting agent operating transport business, in Tripura, in taxable goods and the said definitions do not make a transporter a dealer within the meaning of the respective enactments, yet penal provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axes reported in [1999 ]112 STC 609 (SC); [1999] 2 SCC 253, and such legislative provisions, superseding a judicial decision, is impermissible in law. It is submitted by Mr. Deb that the State Legislature only wanted to override the decision/conclusion arrived at by the Supreme Court, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, without, however, altering/neutralizing the base of the said judgment. Mr. Deb contends that such a course of action, adopted by the State Legislature, is impermissible in law. According to Mr. Somik Deb, a transporter does not have, under the TST Act, 1976, and the Tripura Sales Tax Rules, 1976, any obligation whatsoever to pay any tax and/or penalty, yet section 13A of the TST Act, 1976, which was inserted in the statute subsequently by the Eighth Amendment Act and the incorporation of section 77 of the TVAT Act, 2004, aims at superseding the observations made, conclusions reached and decision rendered, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253. Mr. Deb submits that under the constitutional scheme, although the appropriate Legislature, within its legislative limitations, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his conduct suffers from dereliction of duty. Such provisions, according to the learned Advocate-General, cannot be construed to be beyond the competence of the Legislature. The learned Advocate-General, in support of his submissions, places reliance on State of West Bengal v. E.I.T.A. India Limited [2003] 131 STC 111 (SC); [2003] 5 SCC 239. The learned Advocate-General also contends that by the impugned provision of section 13A of the TST Act and section 77 of the TVAT Act, no tax and/or penalty can be said to have been imposed on a transporter , which is, otherwise, on a dealer and, therefore, the aforesaid provisions, can, in no way, dilute the base of the judgment in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253. In reply, Mr. Somik Deb, learned counsel for the petitioners, submits that in E.I.T.A. India Limited [2003] 131 STC 111 (SC); [2003] 5 SCC 239, the statutory provisions, which fell for consideration, contained deeming provisions treating a particular class of dealing by transporters as a sale, but no such deeming provisions exist in the TST Act and/or the TVAT Act and, hence, the decision, in E.I.T.A. India Limited [2003] 131 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope. . . (emphasis1 added) There can be no doubt that the High Court has the power to decide the constitutional validity of a statute; but since this power prevents the foreplay of democratic process, it is vital that it be exercised with rigorous self-restraint. Legislature must be given the freedom to do experimentation in exercising its power provided, of course, it does not clearly and flagrantly violate the constitutional limits. In His Holiness Kesavananda Bharati Sri Padagalvaru v. State of Kerala [1973] 4 SCC 225, the Supreme Court observed as under: 1535. In exercising the power of judicial review, the courts cannot be oblivious of the practical needs of the Government. The door has to be left open for trial and error. . . In Smt. P. Laxmi Devi [2008] 4 SCC 720, the Supreme Court cautioned that while examining the constitutional validity of a statute, the court 1Here italicised. should, ordinarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enactment, for, an Act, made by the Legislature, represents the will of the people and that cannot be lightly interfered with. The relevant observations, made, in this regard, in Bihar Distillery Ltd. [1997] 2 SCC 453, read as under: . . . The approach of the court, while examining the challenge to the constitutionality of an enactment, is to start with the presumption of constitutionality. The court should try to sustain its validity to the extent possible. It should strike down the enactment only when it is not possible to sustain it. The court should not approach the enactment with a view to pick holes or to search for defects of drafting, much less inexactitude of language employed. Indeed, any such defects of drafting should be ironed out as part of the attempt to sustain the validity/constitutionality of the enactment. After all, an Act made by the Legislature represents the will of the people and that cannot be lightly interfered with. The unconstitutionality must be plainly and clearly established before an enactment is declared as void. . . Thus, if two views are possible, one making provisions, in a statute, constitutional and other making it unconstitutional, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intention of the Legislature and by considering what was the substance of the matter. . . We must bear in mind that while construing fiscal statute, the function of a court is not to give a strained and unnatural meaning to the provision. We cannot strain the scope of the provision by analogy or place upon it what is called a beneficial or equitable construction in order to prevent anomaly or a supposed anomaly. There is no scope for repair or reconstruction of a provision. The intention of the Legislature, manifested in plain words, must be accepted. If provision of a taxing statute is doubtful or ambiguous, it is not possible to remove the ambiguity and create a new and added obligation not cast upon by the Legislature. We can at best iron out the creases, but we cannot alter materials of which the provision is woven. So said, Lord Denning, in Seaford Court Estates Ltd. v. Asher [1949] 2 All ER 155, 164 (CA): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxing statute. Tax and equity are strangers and an equitable construction has no room in a taxing statute. If interpretation of fiscal enactment is open to doubt, the construction, most beneficial to the subject, should be adopted even if it results in granting a double advantage. In Mahadeolal v. Administrator General of West Bengal AIR 1960 SC 936, Commissioner of Sales Tax v. Parson Tools and Plants [1975] 35 STC 413 (SC); [1975] 4 SCC 22, it has been held that it is the duty of the court to give effect to the words used without scanning the wisdom or policy of the Legislature and without engrafting, adding or implying anything, which is not congenial to, or consistent with, such expressed intent of the law-giver. If the statute is a taxing statute, we must assume that the law-making authority does not commit mistake or make omission. If the language of a statute is clear and explicit, effect must be given to it, for, in such a case, the words best declare the intention of the law-giver. It would not be right to refuse to place on the language of the statute the plain and natural meaning, which it must bear on the ground that it produces a consequence, which could not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s topic merely from the reference to it in the List, because the purpose of the Lists was not to create or confer powers, but only to distribute between the Federal and the Provincial Legislatures the powers which had been conferred by sections 99 and 100 of the Act. . . The Lists are designed to define and limit the respective areas of competence of the Union and the States. They neither impose any implied restriction on the legislative power conferred by article 246 of the Constitution nor do the entries prescribe any duty to exercise the legislative power in any particular manner. Hence, the language of the entries should be given, as indicated above, the widest scope. These Lists should be construed in a liberal spirit so as to include within each of them all that is subsidiary and incidental to the power thereunder enumerated. But an interpretation of the content and scope of such power, however liberal, cannot be adopted to include within its meaning anything, which an entry, in positive terms, excludes or restricts. In construing such an entry conferring legislative powers, the widest possible construction, according to their ordinary meaning, must be put upon the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Assam reported in [2005] 142 STC 88 (SC); [2005] 6 SCC 424, the Supreme Court held as under (page 100 in 142 STC): . . . As per the accepted norms of taxation the jurisdiction whatever is ancillary or subsidiary provision necessary for achieving the object of a tax statute is covered by entry 54 of List II of the Seventh Schedule to the Constitution of India. The entries in the legislative List have a very wide meaning and scope and should have a broad interpretation so as to make provisions in the Act workable and in the interest of the Revenue. . . Before entering into the examination of the constitutionality of the impugned provisions of the statute aforementioned, it may be noted that the TST Act, 1976, provides for levy of tax on the turnover of the sales at the rate specified in column (3) of the Schedule attached to the Act, the turnover having been defined, under section 2(m), to mean the aggregated amount of the sale price receivable or actually received by a dealer in respect of any sale of goods made, during any prescribed period, in any year, after making statutorily permissible deductions therefrom and the sale price being, as defined by section 2(h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in addition to tax, by way of penalty, a sum which may extend to one hundred and fifty per cent of the tax involved. (2) No order under sub-section (1) shall be made unless the transporter has been heard or has been given reasonable opportunity of being heard. Section 77 of the Tripura Value Added Tax Act, 2004, is reproduced hereinbelow: 77. Penalty payable by the transporters.-(1) If the Commissioner is satisfied that any transporter has delivered taxable goods to any person without obtaining from the dealer, copy of the valid permit or has concealed the actual particulars of the consignment transported by him, the Commissioner may direct that such transporter shall pay, in addition to tax, by way of penalty, a sum which may extend to one hundred and fifty per cent of the tax involved. (2) No order under sub-section (1) shall be made unless the transporter has been heard or has been given reasonable opportunity of being heard. Whether penalty can be imposed on a transporter, who facilitates and/or abets evasion of tax by a dealer and because of whose such default, evasion of tax takes place? As regards the imposition of penalty on a transporter , who faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The levy of penalty , on a transporter, has intimate nexus with evasion of tax by the dealer, whose goods are carried by the transporter and for whose failure to procure the road permit and furnish correct information, evasion of tax takes place. The Supreme Court, in Commercial Tax Officer v. Swastik Roadways reported in [2004] 135 STC 1 (SC); [2004] 3 SCC 640, rejected the contention that when tax is sought to be recovered from the clearing and forwarding agents in the form of penalty , the same falls outside the ancillary and incidental power of the State Legislature under entry 54 of List II. S. H. Kapadia, J. (as his Lordship then was), speaking for the court, observed thus (pages 9 and 10 in 135 STC): . . . What is disputed is that when tax is sought to be recovered from the clearing and forwarding agents in the form of penalty under section 57(2), the same falls outside the ancillary or incidental powers of the State Legislature under entry 54 of List II as the levy under the Act is on sale and purchase of goods and as there is no nexus between such sale or purchase of goods and the clearing and forwarding agents, sections 57 and 58 and especially the penalty prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be imposed on him. When such a presumption is drawn, tax is not charged on the transporter; rather, the transporter is treated to be a dealer and the tax is charged accordingly. It needs to be borne in mind that tax cannot be charged on a transporter nor can recovery of any sum be made, in the form of tax, from a transporter, which is, otherwise, chargeable from a dealer unless the transporter is, with the help of deeming provisions, either made a dealer or is presumed to be a dealer or is, at least, presumed to have sold the taxable goods, transported by him, without making payment of the taxable dues. Thus, in exercise of its legislative powers, under entry 54 of List II of the Seventh Schedule to the Constitution, a State Legislature, while enacting a taxing statute, cannot impose taxable liability on a transporter and the transporter cannot be made liable to pay the tax, which is payable by a dealer, unless by creating legal fiction, the transporter is either made a dealer or is presumed to be a dealer or is, at least, presumed to have sold the taxable goods, transported by him, without making payment of the taxable dues. In Tripura Goods Transport Associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be appropriate to take note of a decision of this court, in Freight Carriers v. State of Tripura [2009] 26 VST 233 (Gauhati), wherein one of us (Ansari, J.) clearly held that the obligation, imposed on transporter to check evasion of tax, would not make him a dealer. While analysing the provisions of section 32(b) of the TST Act, 1976, this court observed, in Freight Carriers [2009] 26 VST 233 (Gauhati), that the said provisions do not impose payment of tax on a transporter. In Freight Carriers [2009] 26 VST 233 (Gauhati), this court held as under (page 260 in 26 VST): . . . Clause (b) does not impose payment of tax on a transporter . What it does is that the tax, which was payable by the dealer , is made recoverable from the transporter if the transporter , who has committed any of the offences under section 29, opts for composition. It is one thing to say that statute imposes tax on a person and it is quite another that the statute makes it an offence for any person, who helps in concealment of a transaction of sale or purchase by a dealer or in concealment of tax liability of a dealer . Section 32(1)(b) takes care of those cases, where a person, though no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e offence as provided in section 32, he would become liable to pay sum(s) of money to the extent as section 32 imposes on such a transporter , carrier or transporting agent. 59. A careful analysis of section 32 shows that though failure or evasion of tax can be compounded under clause (a) of sub-section (1) of section 32, the act of aiding or abetting such evasion does not fall within clause (a) of sub-section (1) of section 32. Except those cases, where the offence consists of failure to pay, or evasion of tax recoverable under the TST Act, other persons, who commit any of the offences under section 29, would fall under clause (b) of sub-section (1) of section 32, which provides for composition of offence by imposing liability to pay a sum of rupees one thousand in addition to tax recoverable . Clause (b) does not impose any taxable liability on transporter nor does it create any charging provisions for payment of sales tax on the transporter . What it does is that the amount, which is required to be paid as a taxable liability by a dealer , makes recoverable from the transporter by taking resort to clause (b) of subsection (1) of section 32 if the transporter opts fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in charge of the vehicle, and, consequently, sales tax was leviable on the goods and the owner, or in-charge of the goods, was liable to pay the tax so levied. The Supreme Court, while analysing the provisions of section 28 of the U.P. Sales Tax Act, took the view that section 28B of the said Act raised a rebuttable presumption and if the presumption was not rebutted, in a given case, it was to be presumed that the goods had been sold in the State of U.P. Consequently, if presumption is raised that the goods have been sold within the State of U.P., there would be no impediment in law to treat the transporter as a person liable to pay tax so levied. While dealing with the term, presumption , contained in section 28B of the U.P. Sales Tax Act, the Supreme Court pointed out, in Sodhi Transport [1986] 62 STC 381 (SC); [1986] 2 SCC 486, that if the transit pass was not handed over to the officer in charge of the check-post or barrier before the goods were carried out of the State, it could be validly presumed that the goods, carried by the transporter, had been sold inside the State by the person in charge of the said goods. The relevant observations of the Supreme Court, in Sodhi T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f going forward with evidence on the fact presumed, and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed the purpose of presumption is over. Then the evidence will determine the true nature of the fact to be established. The rules of presumption are deduced from enlightened human knowledge and experience and are drawn from the connection, relation and coincidence of facts, and circumstances. The Supreme Court, in Sodhi Transport [1986] 62 STC 381 (SC); [1986] 2 SCC 486, also pointed out that a statutory provision, which creates a rebuttable presumption, as regards the proof of a set of circumstances, which would make a transaction liable to tax with the object of preventing evasion of the tax, cannot be considered as conferring on the authority concerned the power to levy a tax, which the Legislature cannot, otherwise, levy. The relevant observations, appearing, in this regard, in Sodhi Transport Co. [1986] 62 STC 381 (SC); [1986] 2 SCC 486, read as under (page 391 in 62 STC): 16. In our opinion, a statutory provision which creates a rebuttable presumption as regards the proof of a set of circumstances which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sporter if the transporter can, by creating necessary legal fiction, be treated as a dealer and tax would become imposable, when the sale of the goods by the transporter, as a dealer, is proved with the help of legal presumption in such a manner as the law permits. Otherwise also, the amount of tax, which is evaded by a dealer with the aid or help of a transporter, can be recovered from the transporter, by way of penalty, and such a measure of penalty will fall within the ambit of ancillary and incidental power of the State Legislature under entry 54 of List II of Schedule VII. The case of Check Post Officer, Coimbatore v. K.P. Abdulla and Bros. reported in [1971] 27 STC 1 (SC); [1970] 3 SCC 355, which Mr. Deb has relied upon, needs to be, now, examined. In K.P. Abdulla and Bros. [1971] 27 STC 1 (SC); [1970] 3 SCC 355, the Supreme Court held that a provision, enacted on the assumption that goods, carried in a vehicle from one State to another, must be presumed to have been transported after sale within the State, was unwarranted and, therefore, the power to seize and confiscate was liable to be struck down. While considering the case of K.P. Abdulla and Bros. [1971] 27 STC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fies 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: See United Provinces v. Mst. Atiqa Begum [1940] FCR 110, Navinchandra Mafatlal v. Commissioner of Income-tax, Bombay City [1954] 26 ITR 758 (SC); [1955] 1 SCR 829 and Balaji v. Income-tax Officer, Special Investigation Circle [1961] 43 ITR 393 (SC); [1962] 2 SCR 983. A taxing entry therefore confers power upon the Legislature to legislate for matters ancillary or incidental including provision 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 subsection (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 are not covered by the documents specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods found in a vehicle the driver of the vehicle is not carrying with him the documents specified therein, is not a provision which is ancillary or incidental to the power to tax sale of goods. In fact, the decision of the Constitution Bench, in K.P. Abdulla and Bros. [1971] 27 STC 1 (SC); [1970] 3 SCC 355, was also referred to in Commercial Tax Officer v. Swastik Roadways reported in [2004] 135 STC 1 (SC); [2004] 3 SCC 640, and the Supreme Court, in its later decision, in Swastik Roadways [2004] 135 STC 1 (SC); [2004] 3 SCC 640, distinguished the decision of the Constitution Bench, in K.P. Abdulla and Bros. [1971] 27 STC 1 (SC); [1970] 3 SCC 355 as under (page 16 in 135 STC): . . . As far as the penalty under section 57(2) is concerned we have already noted that it is levied only on the satisfaction being reached by the officer concerned that the failure of the clearing and forwarding agent to furnish the information required by the Commissioner facilitated the dealer to evade the tax. It presupposes that there was a taxable sale in respect of which the tax evasion appears to have occurred. The penalty under section 57(2), unlike section 42(3) of the MGST Act, is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n movement. Sub-section (5) of section 78 empowered the officer in charge of the check-post to impose, on the person in charge of the goods, a penalty equal to 30 per cent of the value of the goods for possession or movement of goods if they are not covered by prescribed documents, such as, challans, bills of sale, declaration forms, etc., or for submission of false or forged documents, etc. The challenge to the legislative competence was negatived in this case also. It was, however, clarified that the impugned sub-section cannot relate to personal belongings, which are not meant for sale. Explained the Supreme Court the position of law, in this regard, as under (pages 634 and 635 of 124 STC): 29. It is thus settled law that provisions to check evasion of tax are within the legislative competence of the States under entry 54 of List II. This being so, provisions to make the imposition of tax efficacious or to prevent evasion of tax are within the legislative competence. . . . If there was legislative competence to enact section 78(2) then the same power contained in entry 54 of List II could enable the State Legislature to provide for consequence of non-compliance by incorpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge of the goods carrier shall deliver within twenty-four hours the said copy to the officer in charge of the checkpost or barrier at the point of his exit from the State, failing which he shall be liable to pay a penalty, to be imposed by the officer in charge of the check-post or barrier of the entry, not exceeding two thousand rupees or twenty per centum of the value of the goods, whichever is greater: Provided further that no penalty shall be imposed unless the person concerned has been given a reasonable opportunity of being heard: Provided-further that where the owner or person in charge of the goods or the driver or other person in charge of the goods or carrier bound for any place inside the State has to pass through another State, such owner or person or the driver or other person shall furnish, in duplicate, to the officer in charge of the check-post or barrier of his exit from the State, a declaration in the prescribed form and obtain from him a copy thereof duly verified and shall deliver the same to the officer in charge of the check-post or barrier of his entry into the State, within four hours of his exit from the previous barrier or check-post in the State, fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 SCC 279, observed as under (page 628 of 124 STC): 20. From the aforesaid decision, Delite Carrier s case [1990] 77 STC 170 (SC), it is evident that the court regarded section 37 of the Haryana General Sales Tax Act as being nothing more than a provision, which had been enacted in the sales tax law of a State which would facilitate inspection of goods carried from one State to another and would fall within the legislative ambit of entry 54 of List II. The said section 37 of the Haryana Act is in pari materia with section 78 of the Rajasthan Act. What surfaces from the above discussion is that the statutory provisions to check evasion of tax are within the legislative competence of the States under entry 54 of List II. Naturally, therefore, the provisions, causing imposition of tax, realization of tax and prevention of evasion thereof are within the legislative competence. Referring to the penal provisions, the Supreme Court observed, in D.P. Metal s case [2001] 124 STC 611 (SC); [2002] 1 SCC 279, that the penal provisions work as a deterrent to tax evasion and there is nothing wrong in making such a provision nor can such provision be regarded as illegal. The court further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State to make these provisions in the sense that section 13A of the TST Act, 1976, and section 77 of the TVAT, 2004, consist of two parts, namely, (i) by way of penal provisions, it imposes, on a transporter, the liability to pay tax and (ii) it also imposes penalty, which may extend up to 150 per cent of the tax involved: In short, thus, the penal provisions consist of two parts inasmuch as these provisions realize not only tax, but also up to 150 per cent of the tax involved. Whether such realization of the tax and also imposition of penalty, up to 150 per cent of the tax involved, are constitutional, or not, is the question. Let us, first, determine as to whether the tax, under the scheme of the enactment, in question, could have been realized, by way of penalty, from the transporters? Before we draw the distinction, if any, between the two expressions, namely, tax vis-a-vis tax involved , suffice it to point out, at this stage, that transporter has been made liable to pay, in no uncertain words, by taking resort to section 13A and section 77, tax , which means, as rightly pointed out by Mr. Deb, the tax payable , for, the term tax means, under both the enactments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on the taxing power of the States in so far as it provides that no tax shall be levied or collected except by authority of law, which means a valid law. In order that a law may be valid, the tax proposed to be levied must be within the legislative competence of the Legislature imposing the tax and authorizing the collection thereof. A law providing for levy and collection of tax is a law within the meaning of Part III of the Constitution and it, therefore, must withstand the constitutional test of a valid law. Viewed in this light, the law , in article 265 of the Constitution, must be a valid law and a law, in order to be valid, must not only be one, which a Legislature makes in exercise of a power conferred on it, but also be one, which does not abridge the fundamental rights enshrined in the Constitution. Under entry 54 of List II of the Seventh Schedule to the Constitution, State is empowered to make a law imposing tax on sale or purchase of goods. In exercise of this power, the TST Act, 1976, and the TVAT Act, 2004, came to be enacted. Under both the enactments, tax is leviable on the taxable turnover of the goods. In exercise of such powers, tax cannot be impos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplete absence of any such deeming provisions, for realization of tax from the transporters, having been made under section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, as indicated above, one cannot but hold that it was beyond the legislative competence of the State Legislature, under entry 54, to impose, on the transporter, the liability to pay the tax , which is, otherwise, payable, by a dealer, particularly, when there is no mechanism provided in the said two enactments for assessment of tax, which the transporter may have evaded or helped in evasion. Section 13A merely states that if the Commissioner is satisfied that any transporter has delivered taxable goods to any person without obtaining from the dealer copy of the valid permit or has concealed the actual particulars of the consignment transported by him, the Commissioner may direct that such transporter shall pay, in addition to tax , by way of penalty , a sum, which may extend to one hundred and fifty per cent of the tax involved meaning thereby that the Commissioner may direct the transporter to pay, apart from penalty , tax as well. This tax , in the light of the definition of tax , as gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the person, whom goods were delivered to. Since the provisions for realization of tax in section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, are severable from the remaining part of section 13A of the TST Act, 1976, and/or of section 77 of the TVAT Act, 2004, respectively, section 13A of the TST Act, 1976, and section 77 of the TVAT, 2004, are not required to be struck down as a whole. For forgoing reasons, we hold that section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, are, in so far as the same permit imposition of tax on transporters , ultra vires entry 54 of List II of the Seventh Schedule to the Constitution of India. Whether the provisions for imposition of penalty to the extent of 150 per cent of tax involved as embodied in section 13A of the Tripura Sales Tax Act, 1976, and section 77 of the Tripura Value Added Tax Act, 2004, are constitutionally valid? The power to levy a tax , as already noted above, includes all incidental power to prevent evasion of such tax. The powers, such as, the power to seize and confiscate goods in the event of evasion of tax and the power to levy penalty are meant to check evasion of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax involved . To put it a little differently, what is contended is that if tax has to be measured without assessment on the turnover as provided under the scheme of the Acts, there must, at least, be sale in order to make the tax leviable and since there is no deeming provisions, in any of the Acts, treating delivery of the goods by the transporter to any person, without discharging the transporter s obligation, as a sale of the goods, it is not even possible to quantify tax leviable on the goods, far less tax payable by the transporter . The TST Act, 1976, as well as the TVAT Act, 2004, provide not only for levy of tax on sale and purchase of goods, but also provide for computation of tax, incidence of tax, recovery of tax, assessment and reassessment thereof. The impugned section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, operate in aid of the main charging section. To check evasion of tax, the impugned provisions have been made. The obligations of the transporters to obtain copy of the valid permits from the dealer and to furnish correct particulars of the consignment, transported by him, are aimed at ensuring the Revenue to identify the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such prescribed qualification, a court is bound not only to look at the word, but also to examine the context in which the word has been used and, then, establish the connection between the word used and the object, which is sought to be awarded. The Supreme Court, in Commissioner of Gift-tax v. N.S. Getti Chettiar [1971] 82 ITR 599 (SC), held that an interpretation clause, which extends a meaning of a word, does not take away its original meaning. An interpretation clause is not meant to prevent the word receiving its ordinary, popular and natural sense whenever that would be properly applicable. In Annicola Investments v. Minster of Housing and Local Government [1965] 3 All ER 850, it was held that every word has distinct fluidity of meaning and it is best construed in relation to the context in which it is found and in relation to the objects and propose of the Act or of the section of the Act in which it is used. The Supreme Court, in N.K. Jain v. C.K. Saha [1991] 2 SCC 495, held as under: . . . Due weight ought to be given to the words unless the context otherwise requires . The subject-matter and the context in which a particular word is used are of great impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty is different than that of determination of the liability to pay tax and charging section. The interpretation applied to charging section cannot, thus, be applied mechanically, while interpreting a penalty provision. Both the provisions, i.e., penalty and charging, have different objects to achieve and consequences to follow. They operate in altogether different fields. The Supreme Court, in Joint Commissioner of Income-tax v. Saheli Leasing and Industries Ltd. [2010] 324 ITR 170 (SC); [2010] 6 SCC 384, has held that a particular word, occurring in one section of an Act, having a particular object, cannot carry the same meaning, when used in a different section of the Act, with a different object. The Supreme Court s observations, appearing, in this regard, in Saheli Leasing and Industries Ltd. [2010] 324 ITR 170 (SC); [2010] 6 SCC 384 read (page 180 in 324 ITR): . . . A particular word occurring in one section of the Act, having a particular object cannot carry the same meaning when used in a different section of the same Act, which is enacted for different object. In other words, one word occurring in different sections of the Act can have different meaning, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible so to interpret it in order to give all words, used in the legislation, a rational meaning consistent with the legislative intent and object. Keeping in mind the principles of interpretation of statute, as indicated above, appropriate meaning must, now, be ascribed to the word involved , appearing in section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004. Further, as discussed earlier, in a taxing statute, the intention of the Legislature has to be gathered from the words used in the statute. Hence, it cannot be said that by using the phraseology tax involved , the Legislature intended to mean tax payable under either the TST Act, 1976, or the TVAT Act, 2004. If some reasonable meaning, in the context of penalty is required to be given to the words tax involved , appearing in section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, it would mean that element of tax, which is involved in a given transaction, and it is not necessary that the said tax must be levied, charged, assessed and thereby made payable under the Act. The element of tax, involved in a transaction, is only a measure or yardstick for determination of penalty under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 77 of the TVAT Act, 2004, in so far as the same relate to realization of penalty, are constitutionally invalid merely because they provide for imposition of such a penalty, which may extend to 150 per cent of the tax involved without providing for determination of tax and levy of tax. Since section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, are incidental and ancillary to main charging section and since the Acts provide for the levy, determination, assessment, recovery, etc., and impugned provisions deal with imposition of penalty only, there is no question of first levying the tax by determining the tax payable for the purpose of imposition of penalty under section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004. We also take note of a decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC), wherein it was held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not, ordinarily, be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of goods. The provisions of sections 29, 30, 32, 36A, 38 and 38B of the TST Act, 1976, cast obligation on transporters and carriers to get themselves registered, maintain accounts of the goods transported by them and to furnish declaration forms relating to consignments. All these obligations are aimed at only achieving the objective of sealing loopholes of evasion of sales tax. The Supreme Court, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, was examining the constitutional validity of the aforesaid provisions, which were challenged as being beyond the competence of the State Legislature and ultra virus the Constitution offending articles 14, 19(1)(g), 246, 265, 286, 300A and 301 of the Constitution of India. The challenge was based on the ground that a transporter is not a dealer within the meaning of section 2(b) of the said Act; hence, obligations, cast on the transporter , under the Act and Rules, are beyond the legislative competence of the State Legislature. By the aforesaid provision, the transporters, carrying on the business of transportation in Tripura, are required to obtain a certificate of registration and to comply wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to checking of evasion of tax, then composition of offence under section 32 would also confine itself within this sphere. We do not find any of these provisions in any way placing any liability on the transporter which is otherwise on a dealer under this Act. Similarly, as aforesaid, the maintenance of account by the transporters, carriers, etc., under section 36A is only to render help to the authorities in checking the evasion of tax. This does not put any such obligation on the transporter to hold that these provisions transgress the legislative competence of the State Legislature. The Supreme Court, thus, upheld the validity of the impugned provisions of the TST Act, 1976. After the decision, in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, was rendered by the Supreme Court, the TST Act, 1976, was amended by the Tripura Sales Tax (Eighth Amendment) Act, 2000, and section 13A was inserted with effect from February 28, 2000. Before deciding the question as to whether the impugned provisions of section 13A of the TST Act are contrary to the decision of the Supreme Court in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon a subsequent judge is the principle upon which the case was decided. Statements which are not part of the ratio decidendi are distinguished as obiter dicta and are not authoritative. The task of finding the principle is fraught with difficulty as without an investigation into the facts, it cannot be assumed whether a similar direction must or ought to be made as a measure of social justice. Precedents sub silentio and without argument are of no moment. Mere casual expressions carry no weight at all, nor every passing expression of a judge, however eminent, can be treated as an ex cathedra statement having the weight of authority. In Ram Prasad Sarma v. Mani Kumar Subba [2003] 1 SCC 289, the Supreme Court observed that there is no precedent of facts and it is the legal proposition flowing from the judgment, which has binding effect. To make a judgment applicable as precedence to a particular case, the factual aspects have to be firmly borne in mind. Keeping in mind the above principles laid down by the Supreme Court, let us, once again, look at the decision in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253. In this decision, the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid provisions cannot be per se declared unconstitutional, for, the court does not find that insertion of section 13A and/or section 77 aforementioned requires altering/neutralizing the base of the decision in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253. In fact, the decision in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253, has not been overridden by insertion of section 13A and section 77. Far from this, what the Legislature has done is that it has made provisions as embodied in section 13A and section 77, which it deemed necessary to create stricter liabilities on the transporter so as to create a sense of deterrence in the transporters in helping or facilitating the dealers in their acts of avoiding payment of tax. The said provisions of section 13A of the TST Act, 1976, and section 77 of the TVAT Act, 2004, does not have the effect of rendering the decision in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253 ineffective and the same has not been enacted to override the decision in Tripura Goods Transport Association [1999] 112 STC 609 (SC); [1999] 2 SCC 253. While examining the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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