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TMI Blog2014 (7) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... then the tax must follow. In other words, so long as mutual assent, express or implied, is not totally excluded, the transaction will amount to a sale. In the case at hand, the nature of the contract executed between the petitioner and the Staterespondents plainly shows that the four elements to constitute a sale, namely, competency of parties, mutual assent of the parties even though the same may not be total, passing of property in the goods supplied by the petitioner to the licensed retail vendors via the officer-in-charge of the warehouse/excise and treasury, and lastly, payment of price, though statutorily controlled, were all present to render the transaction liable to sales tax. Explanation 3(ii) to section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002, is intra vires the Constitution and the sales tax imposed thereby cannot be construed to be a tax on income beyond the legislative competence of the State Legislature of Assam. - Decided against the assessee. Jurisdiction of High Court - writ jurisdiction - Held that:- Revenue authorities appointed under section 3 of the Act are also Tribunals or, at any rate, have the trappings of a Tribunal as they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of best judgment assessment are called into question in this batch of three writ petitions filed by the same petitioner. As there is virtually a common question of facts and of law in the three writ petitions, suffice it to refer to the controversy involved in W.P.(C) No. 7807 of 2004 and our decision thereon will govern the remaining cases. The case of the petitioner in W.P.(C) No. 7807 of 2004 is that he is carrying on the business of contractual works under various Departments of the Government of Assam and the Central Government through his proprietorial concern, namely, M/s. S.D. Enterprise, having its office at Bharali Complex, G.S. Road, Guwahati. The Government of Assam, through the open tender process and in accordance with the provisions of the Assam Excise Rules, 1945, awarded the contract for wholesale supply of potable alcohol/rectified spirit (grade) to the excise warehouse located at Jorhat for a period commencing from September 13, 2000 to September 12, 2003, for which the agreement dated September 7, 2000 was executed by him with the Government of Assam. This was followed by the issuance of licence at annexure B to him so as to enable him to carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sale of the country spirit transported by him as indicated earlier. Contending that the contractual assignments undertaken by him in transporting the country spirit did not constitute a sale exigible to sales tax but is only a transportation contract, he approached the Commissioner of Excise, Assam (respondent 5) for appropriate action. Respondent No. 5 accordingly by his letter dated July 23, 2002 (annexure I) informed the Commissioner and Secretary, Government of Assam in the Excise Department that the spirit supply contractors were not supplying country spirit directly to the licensed retail vendors and, as such, they were not required to realise sales tax and the sales tax is to be paid by such vendors and deposited with the treasury with the further information that the officer-in-charge of the warehouse would issue the spirit from bottling plant after verification of treasury challan for sales tax and forwarded a copy of the same to respondent No. 2 for information and necessary action. Subsequently, respondent No. 5 by his letter dated September 12, 2002 (annexure J), inter alia, informed the respondent No. 2 that sales tax was to be realized from the lessees of coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ller of country spirit and is not, therefore, liable to pay sales tax against the supply of country liquor made by him and that it is rather the officer-in-charge of the country spirit excise warehouse, who is the first point seller of the spirit and is thus liable to pay the sales tax on such sale price. However, contrary to this settled law, contends the petitioner, respondent No. 3 issued notice to him to show cause as to why the submitted returns should not be rejected and assessment should not be completed under section 17(5) including taking action as per the provisions of the Assam General Sales Tax Act, 1993. The application of the petitioner for extending the time to submit his show cause reply was not granted by respondent No. 3, who, instead, proceeded to issue the impugned assessment order on the basis of the best judgment assessment. It is contended by the petitioner that the impugned assessment order is unconstitutional, illegal, arbitrary, unfair and unreasonable and is liable to be quashed. It is also the contention of the petitioner that section 4 of the Assam General Sales Tax Act, 1993, in so far as it seeks to bar a person from calling into question the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler of another State only when the former undertakes to utilize goods so purchased for the purpose of resale or use in the manufacture for sale of the result and finished goods. Similarly, delivery notes in form 24 of the Act are utilized for importing goods into Assam for the purpose of sale by the concerned importing dealer. Consequently, the conclusion is inevitable that he has been supplying the country spirit to the retail vendors within the meaning of the charging provisions of the extent sales tax legislation thereby making him liable to pay sales tax irrespective of whether he realizes such taxes from his buyers or not. The answering respondent further asserts that the Sales Tax Department rightly proceeded to levy and recover exigible sales tax on the country spirit supplied by the petitioner. The letter dated July 23, 2002 of the Commissioner of Excise is in the form of an individual opinion expressed by him, which cannot be held out against the Revenue as some kind of promissory estoppel as accepting such contention would amount to nullifying the mandatory requirements of the law apart from providing a licence to Government or other body to ignore binding provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Mr. N. Dutta, the learned senior counsel for the petitioner, that after procurement of the country spirit in the aforesaid manner from different distilleries/bonded warehouses against payment of cost and other duties payable thereon and transportation of the same to the excise warehouse, the petitioner did not have any access to the same and it was the officer-in-charge, excise warehouse, who took over the control of the country spirit transported by him till issue of the same to the retail vendors and although he transported the country spirit to the excise warehouse at his own cost, the same was ultimately issued to the retail vendor by the officer-in-charge, excise warehouse. Thus, according to the learned senior counsel, the petitioner cannot be regarded as the seller of the country spirit, but is merely a transporter of the country spirit. It is the contention of the learned senior counsel that as the petitioner never sold country spirit to the retail vendors but merely transported the same to the warehouse, the impugned Explanation 3(ii) to section 8(i)(a) of the Act under the guise of levying sales tax is in fact imposing a tax on the income earned by the petitioner in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spirit (Grade I) to the districts of Jorhat, Golaghat and Karbi Anglong in accordance with the terms of the licence issued by the Commissioner of Excise. The said agreement and the licence visualized, among others, (i) the payment by the petitioner of monthly rent of the excise warehouse from time to time, (ii) the fixation of the price per London proof litre of potable alcohol/rectified spirit by the Government from time to time, (iii) the responsibility of the petitioner to procure, supply and transport, at his own cost, the potable alcohol/rectified spirit from the place of manufacture, which may be anywhere in India under import permits to be issued by the Commissioner of Excise, Assam to the warehouse, (iv) the sale of the spirit only to licensed vendors producing passes in the prescribed form and (v) the obligation of the petitioner to supply to the licensed vendors by way of sale at any warehouse at which the sale of the spirit under the licence was permitted. The aforesaid terms and conditions have been made strictly in accordance with the provisions of the Assam Excise Rules, 1945 and the instructions relating to liquor. Therefore, the agreement can be said to be statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting areas for transactions are all within the realm of planning economic needs ensuring production and distribution of essential commodities and basic necessities of community. The recent trends in these legal rules delimit the variety of structure of rights and duties which individuals may create by such acts and transactions. The complexity of modern activities and the consequent difficulty of providing for every eventuality have shaken fervour for freedom of contract as there was during the nineteenth century. The economic environment has changed. The individual freedom is to be reconciled with adequate performance by the Government of its functions in a highly organised society. Delimiting areas for transactions or parties or denoting price for transactions are all within the area of individual freedom of contract with limited choice by reason of ensuring the greatest good for the greatest number by achieving proper supply at standard or fair price to eliminate the evils of hoarding and scarcity on the one hand and availability on the other. 39. In the present case, the parties are certain. The parties are defined, namely, that the sugarcane grower is delivering and supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. The price will be the controlled price. The grower can bargain for a higher price. The sugarcane grower can ask for payment in advance. Payment may be in cash or in kind. The sugarcane will be accepted after inspection. There is scope for rejection of goods. Various columns in the agreement indicate the villages where sugarcane is to be cultivated and the names of the varieties of sugarcane to be cultivated. The last two columns are estimated quantity offered to be delivered and the period of delivery. All these features indicate with unerring accuracy that there is offer, inspection and appropriation of goods to the contract. The goods will be accepted by the factory after inspection and price will be paid on delivery. The mutual assent is not only implicit but is also explicit. 44. The Control Orders are to be kept in the forefront for appre ciating the true character of transactions. It is apparent that the area is restricted. The parties are determined by the order. The minimum price is fixed. The minimum quantity of supply is also regulated. These features do not complete the picture. The entire transactions indicates that the parties agree to buy and sell. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retail dealers at a price fixed by the Government. On the question whether the transactions amount to sales under the respective Sales Tax Acts, a seven-judge Bench of the apex court was unanimous in holding that sales by the allottees of cement to the license holders in the State of West Bengal and the transactions between the growers and procuring agents as also those between the rice millers on the one hand and the wholesalers or retailers on the other in the State of Andhra Pradesh are sales exigible to sales tax in the respective States. In our opinion, the law has been succinctly explained by honourable Justice Beg, C.J. (Retd.) in his concurring judgment at paragraphs 48 to 52, the summary whereof is found at the headnote of the law report at page 521 as under: It is not really the nomenclature involved but the substance of the transaction under consideration which matters in such cases. It is true that a considerable part of the field, over which what are called 'sales' took place under either regulatory orders or levy orders passed or directions given under statutory provisions, is restricted and controlled by such orders and directions. Deprivation of propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement by which one party has bound itself to supply the stated quantity of the goods to the other party at a price not higher than the notified price and the other consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority. Offer and acceptance need not always be in the elementary form nor indeed does the law of contract or the sale of goods require that consent to a contract must be express. It is common place that offer and acceptance could be spelt out from the conduct of the parties which covers not only their acts, but omissions as well. Law does not require offer and acceptance to conform to any set pattern or formula. In the instant case, the sales tax so demanded is with respect to the period commencing from May 10, 2002 to May 3, 2003. In the year 2002, the Assam General Sales Tax Act, 1993 had been amended by the Assam General Sales Tax (Amendment) Act, 2002, which was published in the Gazette notification dated May 10, 2002 and had come into force immediately. By this amendment, Explanation 3(ii), among others, to section 8 had been inserted, which was in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if his licence be cancelled or suspended, the contractor shall be bound to leave, if so ordered by the Excise Commissioner, in each of the warehouses the quantity of spirit prescribed therein, but such quantity so left shall be paid for at the rate at which the new contractor shall have agreed to supply country spirit to such warehouse, or, if such rate be not accepted by him or if there be no such licence then at such rate as may be fixed by the Government: the outgoing contractor shall within ten days of the receipt of the notice from the District Collector, remove the excess quantity from the warehouse on payment of full duty or under bond for payment of duty unless he can arrange its disposal with the incoming contractor. If he fails to remove or dispose of all surplus spirits within ten days of the receipt of the written notice from the District Collector, the cost of any establishment which it may be necessary to employ at any of the warehouses may be recovered from him, and in default of his so doing within one month, the spirit shall be liable to forfeiture of the discretion of the Excise Commissioner. Rule 104 is also important, which says that the spirit supplied to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s up to the quantity covered by the bond. Coming now to instruction relating to liquor, under clause 58, licensed retail vendors in contract supply areas are required to pay into treasury the duty and cost price and, in the case of settlement under the vend-fee system, for the quantity of spirit which they require. The challans are to be prepared in quadruplicate, one copy to be kept in the treasury and the remaining three copies to be presented by the vendor or his agent to the officer-in-charge of excise at the district headquarters after completion in the treasury. The officer-in-charge will endorse on one copy of the challan order authorising the issue of the quantity of spirit on which duty, cost, cost price, etc., have been paid and is required to enter on a second copy a note that the costs price has been entered in the register of certificate for issue of country spirit and then to hand over these copies to the vendor or his agent and to keep the third copy in his office. Thereafter, the vendor is required to present the said two copies of the challans to the officer-incharge of the spirit warehouse, who is then required to issue the spirit and make over the other copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner. In other words, after transporting the spirits to the warehouse, his contractual duties did not end. On the contrary, he continued to have the custody of the spirits, albeit indirect or remote, as the warehouse was put under the joint lock of the officer-in-charge of the warehouse and himself. Even after transporting the spirits to the warehouse, he was required to keep regular accounts showing the quantity and strength of the spirits received in, issued from and remaining in the warehouse. Though the contract cost price of the spirits together with the still head duty payable thereon were required to be paid by the retail vendors into treasury, the petitioner was the ultimate recipient of the cost price and was entitled to receive every month the total amount deposited in his favour as the cost price thereof during the preceding months. The cost price was the fixed wholesale rate, which was determined by tender. It may also be noted that the cost price also included the cost of carriage from the distillery to the warehouses. As for the method of payment of duty and cost price, the licensed vendors were required to pay into treasury the duty (still head duty) and cost by c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are there in an elementary form, there can be no taxable sale. In the instant case, there was undoubtedly an element of compulsion or regulation in both the selling and buying, perhaps more for the supplier than for the licensed retail vendor, but then a statutorily regulated/ controlled sale can nevertheless be a sale as sale can also often take place without volition of a party. So long as the parties trade under the control of the State at the tender price and accept these as any other law of the State because they must, the contract being for a fixed price and the payment being made through treasury and both sides having or deemed to have agreed to such a price, such a contract is just another example of an implied contract with an implied offer and implied acceptance by the parties. If a sale, express or implied, is found to exist then the tax must follow. In other words, so long as mutual assent, express or implied, is not totally excluded, the transaction will amount to a sale. In the case at hand, the nature of the contract executed between the petitioner and the Staterespondents plainly shows that the four elements to constitute a sale, namely, competency of parties, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority after receipt of any notice under this Act from such authority, is violative of the basic structure of the Constitution as it takes away the power of judicial review vested in the High Court under articles 226 and 227 of the Constitution. His argument runs along the following lines. Under our constitutional scheme, every High Court has, by virtue of articles 226 and 227 of the Constitution, the power to issue prerogative writs or orders to all authorities and instrumentalities of the State which function within its territorial jurisdiction. In such situation, no authority or Tribunal located within the territorial jurisdiction of a High Court can disregard the law declared by it. The impugned provision, in so far as it seeks to divest the High Court of its power of superintendence over all revenue authorities, situated within its territorial jurisdiction, violate one of the basic features of the Constitution. He relies on the decision of the apex court in L. Chandra Kumar v. Union of India [1997] 105 STC 618 (SC); [1997] 3 SCC 261, to fortify his submissions. Section 4 of the Act reads thus: 4. No person shall be entitled to call in question the jurisdiction of any aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion, the Revenue authorities appointed under section 3 of the Act are also Tribunals or, at any rate, have the trappings of a Tribunal as they are exercising quasi-judicial functions. Ouster of jurisdiction by statutory provision may either be express or implied. When the exclusion of jurisdiction is also not expressly stated in the statute, it can be implied. In the instant case, though the language of section 4 does not say so in many words that even the jurisdiction of this court under article 226 of the Constitution to issue a writ of certiorari is barred, yet it is to be necessarily implied. When the Legislature intends to oust the jurisdiction of only civil courts and not the High Courts or the Supreme Court, it has been made apparent by them as indicated by section 39 of the Act. We, therefore, hold that section 4 violates the basic feature of the Constitution, and cannot be sustained in law. But then, this court cannot be too trigger happy in striking down legislations as tersely observed by his Lordship, V.R. Krishna Iyer, J (Retd.) in Maharao Sahib Shri Bhim Singhji v. Union of India [1981] 1 SCC 166: . . . reading down meanings of words with loose lexical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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