TMI Blog1996 (8) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... e the State into a place inside the State of West Bengal or from a place inside the State to a place outside the State of West Bengal. They are common carriers within the meaning of section 2 of the Carriers Act, 1865. The members of the applicantassociation have a common interest in the subject-matter in dispute. Annexure A is a list of 63 members including the applicant No. 2 (serial No. 21 of the list). 3.. The applicants case is that the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the 1941 Act ) was a general sales tax law originally imposing tax only on the last point of sale. In 1955 by an amendment, section 4A was inserted specifying certain goods as notified goods . With effect from April 15, 1993 section 2(1a-1) of 1941 Act was brought into force, for the first time introducing the concept of casual trader attracting liability to pay tax on casual sales or purchases. Prior to that, liability to pay tax arose in respect of dealers who carried on business of sales or purchases in goods with volume, frequency, continuity and regularity of transactions. Allegedly, the concept of a casual trader who was made liable to pay tax on casual sales or pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to satisfy the whims of the respondents. The respondents demand copies of consignors sales tax registration certificates, but it is not possible for transporters to obtain the same. 4.. Vehicles are allegedly held up at check-posts on the ground that copies of registration certificates could not be produced. Sometimes, trucks are detained even when such copies are produced. For example, vehicle No. WMK 3859 belonging to Shree Radhaballabh Roadways was detained at Dalkhola check-post despite production of copies of registration certificates of consignors or consignees. In support of this, a letter dated September 13, 1995 addressed to respondent No. 2 is made annexure B at page 19 of the annexures. The applicants have cited several instances of illegal actions of the respondents in paragraph 15 of the application and have complained that thereby articles 14, 19(1)(g) and 304(b) have been contravened. All sorts of impediment are being created in the matter of smooth running of transport business. With reference to section 11 of the 1994 Act, the applicants submit that it is impossible for the transporters to know whether sellers of goods outside West Bengal are registered de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and wide powers have been conferred on respondents to seize goods in course of transportation or those lying in godowns of transporters. Check-posts were not set up for the purposes of sections 11 and 14, those were meant for sections 69, 72 and 73. Notices addressed to consignors or consignees in forms 28, 31 and 32 or other notices cannot be served on transporters who are not authorised to accept such notices. Still, respondents are serving such notices to transporters. 5.. Among the many grounds of the application the further case of the applicants is that the expression transporter is defined in section 72 of 1994 Act and if the conception of such transporter is used for interpreting or giving effect to section 2(6), a transporter originating movement of goods from a place within West Bengal cannot be reasonably asked to shoulder any obligation as laid down in the Explanation 1 to section 2(6), since amended with effect from September 1, 1995. Respondents failed to take note of the judgment in RN-148 of 1993 [Road Transport Association v. Inspector of Commercial Taxes [1996] 100 STC 361 (WBTT)] on several points. Sections 11 and 14 of the 1994 Act are stated to be reproduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order dated December 15, 1995 are reproduced below: .........It is, therefore, clear that by the interim order we did not restrain the respondents from determining tax under section 14(4)(b) of the West Bengal Sales Tax Act, 1994 even in respect of the 63 members of the applicant No. 1, Association. We only restrained the respondents from making any demand of such tax or any security in lieu of such tax from them. By the interim order we have specifically said that the interim order will not prevent the respondents from proceeding under the provisions of the impugned Act of 1994 and the Rules of 1995 against persons other than the transporters in respect of the goods carried in the trucks........In view of the above, the stand taken by the applicant No. 1, Association in their letter dated October 29, 1995 addressed to the Assistant Commissioner, Commercial Taxes, Dalkhola Check-post to the effect that there cannot be any demand in the name of consignor or consignee if the goods are carried in the trucks operated by any of their 63 members nor can any tax be realised in the name of consignor or consignee, is contrary to the interim order........In order to safeguard the usual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llection of tax and illegal detention beyond 24 hours are denied. In order to enforce payment and collection of tax on purchases of goods already made in West Bengal, only the appropriate actions permissible in law are taken. As regards the case of Dainik Transport of Siliguri, the respondents deny that an undertaking to pay Rs. 12,300 was forcibly taken from Shri Shib Sankar Mondal, Advocate. On the contrary, Shri Mondal gave the undertaking voluntarily. Notice in form 32 was served on Dainik Transport not because of the undertaking, but due to failure of the transporter to comply with the legal requirements. Had Dainik Transport produced invoice, challan, transport receipt, consignment note or document of like nature and had it disclosed the specified details of the consignor or the consignee according to law, such notice would not have been served. Where a consignor purchased goods at Howrah Hat and the transporter was in possession of necessary documents to that effect, there could be no doubt that the goods belonged to the consignor and that required to be verified according to law. Levy of tax under sections 11 and 14 being constitutional and within the competence of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consignee or consignor. The provisions of the 1994 Act do not require a transporter to know if the seller of goods outside the West Bengal is a registered dealer. What a transporter is expected to know is whether the consignee whose name and address appear in the invoice or challan is a registered dealer or not in West Bengal. Unless one is in collusion or in league with consignor or consignee, it is not impossible to furnish their correct names and addresses. A transporter cannot claim any immunity from the provisions of law. Rule 189(2) of the 1995 Rules is a mere reiteration of section 2(6). If in any case a transporter has been saddled with liability to pay tax by an order of any respondent, the appropriate remedy is available in appeal or by revision, as provided for in the 1994 Act and the Rules made thereunder. In most of the cases, consignors who are casual traders, do not come forward to pay tax or deny liability to pay tax, and as such the amounts of tax payable on the purchases are tendered by transporters for and on behalf of consignors. Under the impugned provisions of the 1994 Act a transporter is deemed to have purchased or brought goods, only when he fails to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the law as well as the judgment of this Tribunal, a vehicle carrying goods cannot be detained for more than 24 hours and as such, within the short time the tax payable by consignors or consignees or casual traders has to be determined and demand notice has to be served on the transporter. In the event a transporter or his employee or the person-in-charge of the vehicle agrees to pay tax on behalf of consignors, the tax is determined and notice of demand is served according to law and thereafter the amount of tax is tendered. However, in a case of erroneous determination and collection of tax from any transporter, sufficient remedy is available by way of appeal or revision under the 1994 Act. In the event of failure of a transporter to disclose names and addresses of consignors and consignees in West Bengal, there is an alternative provision for furnishing invoice, challan, transport receipt, consignment note or document of like nature. 10.. The applicants have filed an affidavit-in-reply reiterating their case in the main application and denying the material allegations and averments in the affidavit-in-opposition. The concept of deemed sale or purchase has been introduced i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 174A, 174B and 188. The relevant rule with respect to section 14 (purchase tax) is rule 189 of the 1995 Rules. Under rule 191 copy of order passed under section 11 or under section 14 is required to be served on casual trader or transporter as the case may be. The aforesaid provisions are, therefore, reproduced below for proper appreciation of the challenges made by the applicants. The 1994 Act came into operation with effect from May 1, 1995. And amendments were effected to sections 2(6), 11 and 14 thereafter. Since the present application concerns only transporters, it is necessary to note the major differences brought in by amendments between the legal position obtained as on May 1, 1995 and the same as on September 1, 1995. By Explanation 1 to section 2(6) as it stood on May 1, 1995, a transporter was to be deemed to be a casual trader in respect of certain goods on the happening of the contingency of failure to disclose name and address of consignee or consignor in West Bengal or to furnish copy of invoice, challan, transport receipt or consignment note or document of like nature. But in the amended section 2(6) as it stands on September 1, 1995, a transporter as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption, and who, for such failure, shall be deemed to have brought such goods as specified in sub-clause (a) or procured such goods as specified in sub-clause (b) or purchased such goods as specified in sub-clause (c), as the case may be, on his own account; 11. Liability to pay tax on sales by casual trader.-(1) Notwithstanding anything contained elsewhere in this Act, a casual trader shall be liable to pay tax on all his sales in West Bengal of goods, other than those specified in Schedule I or Schedule IV or those notified under sub-section (2) of section 10, brought by him into West Bengal from any place outside West Bengal, or on all his sales in West Bengal of goods, other than those specified in Schedule I or Schedule IV, procured by him otherwise than by way of purchase from a person other than a registered dealer: Provided that no tax shall be levied on sales of goods which are effected on or after the date on which he becomes liable to pay tax under section 9 or sub-section (3) of section 27 and is registered under section 26 or section 27. Explanation.-Where a transporter, or an owner or a lessee of a warehouse, deemed to be a casual trader in respect of any go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses of this section or section 14, the owner or lessee of a warehouse where goods are stored, shall furnish, on demand, before the Commissioner or the authorised officer,- (a) if he is the owner of such goods, the invoice, challan or other documents in support of the manner of securing such goods, or (b) if he declares that the goods are being stored by another person, name and address of the person who has stored the goods and evidence in support of occupancy of the warehouse by that person, and, in the event of failure to furnish such particulars or evidence within a reasonable time, the authorised officer may seal such warehouse for a period ordinarily not exceeding twenty-four hours from the time of enquiry or search for the purposes of sub-section (7) and sub-section (8). (7) If the Commissioner or any person appointed under sub-section (1) of section 3 to assist him is satisfied that a casual trader may become liable to pay tax under sub-section (1) in respect of any goods, he may, in order to secure payment of tax that may become due upon determination of tax under subsection (3) and for reasons to be recorded in writing, demand from such casual trader an amount in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty is not paid, the seized goods may be sold in open auction and sale proceeds thereof shall be applied in the manner, and subject to the conditions, provided in sub-section (4), sub-section (5), sub-section (6), subsection (7) and sub-section (8), of section 71 as may be applicable for the purposes of this section. 14. Liability to pay tax on purchases by casual trader.-(1) Notwithstanding anything contained elsewhere in this Act, a casual trader shall, subject to the provisions of sub-section (3), be liable to pay tax on his every purchase of goods, other than those specified in Schedule IV in West Bengal: Provided that no tax shall be levied on- (a) purchases of goods, sales of which are declared tax-free under section 24; (b) purchases of goods specified in section 14 of the Central Sales Tax Act, 1956 (74 of 1956), on a prior sale or purchase whereof in West Bengal due tax is shown to the satisfaction of the Commissioner to have been paid; (c) purchases of goods which are shown to the satisfaction of the Commissioner to have been made from a registered dealer in West Bengal; (d) such other purchases on such conditions and restrictions as may be prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch for the purposes of sub-section (6). (6) The tax payable under this section shall, notwithstanding anything contained in section 46, be determined, collected and recovered in such manner and by such authority as may be prescribed and shall be paid by a casual trader at such time as may be prescribed. (7) For the purposes of this section, if- (a) production and inspection of accounts, registers and documents of seizure thereof, (b) entry, search and sealing of warehouse, (c) interception, detention and search of road vehicles, and (d) seizure of goods, other than those specified in Schedule I or Schedule IV, are required by the authorised officer, the provisions of section 65, section 66, section 67, section 69 and section 70 shall apply mutatis mutandis. (8) Where the casual trader or transporter or owner or lessee of a warehouse, as the case may be, fails to make payment of tax determined under sub-section (6) within the period prescribed for such payment, the authorised officer may seize such goods. (9) If the goods seized under sub-section (8) are not claimed by the casual trader of such goods on payment of tax determined under sub-section (6), the seized go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made payment of any amount equivalent to the amount of tax payable under sub-rule (2), he shall be entitled to get refund of the amount so paid under that sub-rule or be entitled to release of the security furnished under rule 173 if he proves to the satisfaction of the Assistant Commissioner or the Commercial Tax Officer, as the case may be, that he has disposed of such goods otherwise than by way of sale in West Bengal. (4) On receipt of an application from the person claiming refund under sub rule (3), if the Assistant Commissioner or the Commercial Tax Officer, as the case may be, is satisfied that such person is entitled to get refund under that sub rule, he shall issue a Refund Payment Order (Cash) in favour of such person. Rule 173. Security in lieu of amount equivalent to tax to be furnished by casual traders.-If a casual trader referred to in sub-section (1) of section 11 is not in a position to pay in advance the amount equivalent to tax as estimated under sub-rule (1) of rule 172 in the manner referred to in sub-rule (2) of that rule, the Assistant Commissioner, Commercial Tax Officer or Inspector, authorised by the Commissioner in this behalf, may by an order, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutatis mutandis in the matter of hearing the person referred to in sub-rule (1), determination of the value of seized goods, and imposition and realisation of penalty, under section 11, and release of the seized goods. Rule 174B. Procedure for auction sale and application of such proceeds, etc.-(1) Where goods are seized and penalty is imposed under section 11, but the penalty is not paid by the date specified in the notice in form 45, the seized goods shall be sold in open auction. (2) The provisions of rule 229, rule 230, rule 231 and rule 232 shall apply mutatis mutandis in the matter of procedure of auction sale under sub-rule (1), destruction of certain seized goods, deposit of the proceeds of auction sale and payment of the balance amount of sale proceeds to the person from whom goods are seized. Rule 188. Determination of tax due from casual traders on sales and payment of such tax.-(1) If upon information or otherwise, it comes to the knowledge of such Assistant Commissioner, Commercial Tax Officer or Inspector, as may be authorised by the Commissioner in this behalf (hereinafter referred to in this rule as the authorised officer), has reasons to believe that a cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat where goods are seized under sub-section (8) of section 14, the provisions of this rule shall not apply. (2) Before a person is held to be a casual trader or before determining the amount of tax payable by him, he shall be given a reasonable opportunity of being heard. (3) In determining a casual trader s liability to pay tax and the amount of tax due from him, such Assistant Commissioner, Commercial Tax Officer or Inspector shall take into consideration any objection preferred by such trader or his representative together with such document as may be required in support of his objection. (4) Upon determination of the tax under sub-rule (1), the authority referred to in that sub-rule shall serve on the casual trader a notice in form 32 demanding the payment of the amount of tax so determined in such manner and by such time as may be directed therein. (5) If a casual trader fails to pay the amount of tax determined under subrule (1) by the time as directed in form 32 referred to in sub-rule (4), such amount of tax shall be recoverable in accordance with the provisions of section 52. 12.. The present challenges are confined to the application of the impugned provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fails to furnish copy of invoice, challan, transport receipt or consignment note or document of like nature. Thus, there are two alternative obligations. In order to avoid the pain of being held to be a casual trader, a transporter may disclose the name and address of the consignor or consignee in West Bengal, i.e., of any one of the two. A transporter will not also become a casual trader if he furnishes any one of the documents mentioned in clause (i) of the inclusive part of the definition in amended section 2(6). Evidently, invoice, challan, transport receipt, consignment note or document of like nature are alternatives. Each one of those documents is not required to be furnished. A transporter has a choice to furnish any one of them. See the case of Saral Kumar v. State of Haryana reported in AIR 1996 SC 1047. If, however, a transporter fails to discharge even any one of these two sets of obligations, he not only becomes a casual trader within the definition in section 2(6), but also he shall be deemed to have brought such goods............or procured such goods..........or purchased such goods.............on his own account . None of the provisions of the 1994 Act charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disposal will be a deemed sale, unless he can prove otherwise by satisfactory evidence. In the first place, a transporter is not a deemed casual trader, as said in the beginning of the Explanation. He is a casual trader proper under the inclusive part of section 2(6), provided he fails to perform his obligation. But, this piece of apparently inconsistent legislative drafting is not really material. The applicants have contended that the trade practice is that goods transported by a transporter are delivered to the consignee or whichever person appears as consignee in exchange of the consignee s copy of the consignment note; and in proof of delivery, only that copy of consignment note can be produced, and no other evidence. The consignee s copy is, it is contended, a negotiable instrument like a railway receipt in case of goods transported by railway. Hence, if a transporter is asked to produce any other satisfactory evidence, that will be asking him to perform an impossible task. Moreover, the applicants contend that in any case, entry 54 read with article 366(29A) does not confer on the State Legislature the power to treat something as a deemed sale, where there is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that: Consumption by an owner of goods in which he deals is therefore not a sale within the meaning of the Sale of Goods Act and therefore it is not sale of goods within the meaning of entry 54, List II, Schedule VII of the Constitution. The legislative power for levying tax on sale of goods being restricted to enacting legislation for levying tax on transactions which conform to the definition of sale of goods within the meaning of the Sale of Goods Act, 1930, the extended definition (in Madhya Pradesh Act 4 of 1958) which includes consumption by a retail dealer himself of motor spirit or lubricants sold to him for retail sale is beyond the competence of the State Legislature . Mr. S.N. Bose, counsel for the applicants, rightly contended on the basis of this decision that what is not a sale of goods within the Sale of Goods Act is not also a sale of goods within the meaning of entry 54, List II, Schedule VII, read together with clause (29A) of article 366. What article 366(29A) has done is that certain types of transactions which were held by courts or otherwise considered as not comprehended in entry 54, were declared to be sales of goods so that no further quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, or alternatively to furnish any one of the documents mentioned. To that extent, the provision is beyond any legal or constitutional criticism, because what is required of a transporter is quite capable of being performed by him and those particulars or documents should be in his possession in the customary course of his business [see [1993] 91 STC 321 (SC) (State of Haryana v. Sant Lal). In case of failure to fulfil the obligation, two results ensue- (a) the transporter becomes a casual trader under the inclusive part of the definition, and (b) he is deemed to have brought, procured, or purchased on his own account such goods as respectively specified in sub-clauses (a), (b) and (c) of the main part of section 2(6). As regards result (a), there is nothing in it that can be said to be illegal or unconstitutional. We have already observed that any one of the several alternative obligations in sub-clause (i) of the inclusive part of section 2(6) can be fulfilled by a transporter and thereby take himself outside the definition of casual trader . As held by this Tribunal in [1996] 100 STC 361 (Road Transport Association v. Inspector of Commercial Taxes), there is no prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments given to him at the time of booking a consignment. He acts upon whatever is furnished to him. If accuracy or genuineness of documents or particulars furnished or disclosed by him is sought to be guaranteed by him, it will be highly unreasonable and it will amount to contravention of article 19(1)(g). Unless a transporter himself has forged or fabricated the documents or particulars, or has colluded with any other person in such forgery or fabrication, those furnished or disclosed by him should not be disbelieved by authorised officers in the absence of strong contrary evidence. 18.. The decision in State of Haryana v. Sant Lal [1993] 91 STC 321 (SC) on which applicants advocate relied is very significant in the context of the instant case. The Supreme Court was considering the constitutionality of section 38 of the Haryana General Sales Tax Act, 1973. Section 38 sought to impose a duty on clearing or forwarding agents or dalals or other persons transporting goods to furnish particulars and information regarding the consignments handled by them, and requiring them to take out a licence before carrying on business. The Supreme Court held that section 38 was beyond the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure on the part of the transporter to fulfil any obligation. The mere fact of disposal of goods transported raises the presumption. We may note that the trade practice pleaded by the applicants has not been disputed by the respondents. The explanation below sub-section (1) of section 11 of 1994 Act has not required of a transporter to prove that the goods transported have been delivered to the person entitled to take delivery; it has on the other hand required him to prove that the goods were not sold, after already presuming that those were sold. It is not laid down as to what is satisfactory evidence , thus leaving it to a subjective and variable standard of an individual officer. It is to be noted that the said Explanation is not confined in its application to only those transporters who have a reasonable and proximate nexus with purchases or sales of the goods transported. Mr. K.K. Saha, Respondents advocate, relied on the case of Sodhi Transport Co. [1986] 62 STC 381 (SC) and contended that the burden of proof placed on transporter under the Explanation below section 11(1) is valid and constitutional because it raises a rebuttable presumption that the goods disposed of by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person has sold the goods which he had brought inside the State, then he would be a dealer even according to the definition of the word dealer as it stood from the very commencement of the Act subject to the other conditions prescribed in this behalf being fulfilled . In the first place, the decision in Sodhi Transport Co. [1986] 62 STC 381 (SC) cannot be applied to the present case in respect of the Explanation below section 11(1), because under section 28-B of the U.P. Act it was a case of mere transit of goods from a place outside the State of U.P. through that State, to another place in some other State. The State of U.P. was being used as a corridor for the purpose of transportation. The delivery of consignments was not to be made in the customary course of business within the State of U.P., because the place of booking of the consignment and the destination of transportation, where delivery was to be made to the person entitled to take delivery, both were outside the State. In the present case, however, under the Explanation under section 11(1) the situations are completely different. Here, the goods are carried to a place within the State of West Bengal by a transporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Sales Tax Act, 1950 was held to be beyond the legislative competence of the State under entry 54. Section 11(2) laid down that any amount collected by way of tax by any person otherwise than in accordance with the provisions of the Act must be paid over to the Government, and in default, the amount would be recovered as arrears of land revenue. The Supreme Court held that if a dealer collected anything from a purchaser which is not authorised by the taxing law, that is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly collected by the dealer. This cannot be done directly, for it is not a tax at all within the meaning of entry 54. Nor can the State Legislature under the guise of incidental or ancillary power do indirectly what it cannot do directly. In the instant case, the provisions for collecting sales tax or purchase tax from transporters under the provisions of sections 2(6), 11 and 14 and the relevant rules must come directly within entry 54 and its incidental or ancillary powers or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, that he did not cause the importation. Similarly, Mr. Bose referred to [1992] 85 STC 337 (Ker) (P.D. Sudhi v. Intelligence Officer, Agricultural Income-tax and Sales Tax). At page 353 of the Report it was held by the Division Bench of the Kerala High Court that when a person is required to prove a negative fact, the matter should be evaluated only on the principle of preponderance of probabilities, the burden of proof being akin to that in a civil case. When the ratio is applied to the present application, Mr. Bose contended, under the Explanation below section 11(1), a transporter cannot be required to prove with satisfactory evidence that he has not sold the goods. The best evidence that he could be asked to adduce is the manner how he has disposed of the goods. As already noted, according to an undisputed trade practice, a transporter delivers the goods transported to the person entitled to receive the goods on production of the consignment note or the document of booking or title to the goods. Reference was also made on behalf of the applicants to a single Bench decision of the Allahabad High Court reported in [1992] 84 STC 308 (Commissioner of Sales Tax v. Shukla Transpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trued, we hold that under sections 11(5) and 14(4) also, so far as the documents are concerned, every person transporting goods in a road vehicle shall on demand produce before the authorised officer any one of the documents, namely, invoice, challan, transport receipt, consignment note or documents of like nature. All the documents are not required to be produced. On behalf of the transporters it was contended before us that unless the consignor or consignee, if registered, furnishes his number of certificate of registration, it is not possible for the person transporting to furnish the same on demand. There is no provision in the 1994 Act or the Rules framed thereunder requiring the registered consignor or consignee to furnish number of certificate of his registration, to the person transporting the goods. Without any such statutory obligation on the consignor or consignee, it is arbitrary to ask the person transporting to mandatorily furnish the number of certificate of registration of a registered consignor or a registered consignee. Mr. K.K. Saha, learned advocate for the respondents, relied on Harihar Prasad Debuka [1989] 73 STC 353 (SC) which was a case under articles 301 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the consignor or consignee, i.e., of any one of them (but not the number of their registration certificates) if it appears to the authorised officer that goods are being transported by a person who is not a casual trader liable to pay tax under sections 11 and 14(1), he shall immediately allow movement of such vehicle. In our opinion, the above provisions are constitutional. If, however, it appears to the authorised officer that the goods are being transported by a casual trader or by some person on his behalf, he may detain the vehicle under section 11(5) ordinarily for a period not exceeding twentyfour hours for the purposes of sub-sections (7) and (8). The detention is linked to sub-sections (7) and (8) which lay down that an amount may be demanded in advance from the casual trader in order to secure payment of sales tax that may become due upon determination under section 11(3), or he may demand security for an equivalent amount after considering the salable value of the goods. Such amount in advance and the security, if any, for the equivalent amount, shall have to be furnished by the casual trader, on demand. The grievance of the applicants is that these provisions are u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be invalid on the grounds that it was beyond the mandate of the Act and also contrary to concept of sale within the meaning of the Sale of Goods Act, 1930 and entry 54 of List II. On behalf of the respondents reliance was placed on [1984] 56 STC 214 (SC) (Khazan Chand v. State of Jammu and Kashmir) and [1993] 88 STC 539 (WBTT) (Sarada Plywood Industries Limited v. C.T.O.). In the case of Khazan Chand [1984] 56 STC 214 (SC) at page 222, the court held: Collection of tax by the State may be either after the liability is quantified by assessment or may be prior to actual assessment by requiring the assessee to pay before any assessment is made the amount of tax admitted to be due and payable by him. This is done by making provisions such as those for advance payment of tax and for self-assessment contained in the Income-tax Act, 1961. This is also what sub-section (3) of section 8 of the Act (Jammu and Kashmir General Sales Tax Act, 1962) does by requiring that the quarterly tax payable on the basis of a quarterly return required to be furnished by sub-section (2) of section 7 shall be paid before furnishing such return. This is a mode of collection of revenue in advance before qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislative competence. Because, under these provisions security is not merely for compliance of some regulatory measure. It is not being asked from a dealer. A transporter having no close nexus with sale is required to furnish security for payment of tax. Most importantly, this security under sub-sections (7) and (8) is really a substitute for advance tax, because the security is for the equivalent amount of tax which may be determined under section 11(3). The tax determined under section 11(3) is the tax payable under section 11(1), which is the charging provision making a casual trader liable to pay tax on all his sales. Therefore, having said at the beginning of section 11 that the tax is on sales, in a circuitous way it is said in sub-sections (7) and (8) that either an advance tax or a security for the equivalent amount should be paid or furnished. Therefore, this security is nothing but advance tax which is beyond the purview of the State s power. Accordingly, sub-sections (7) and (8) and also the words for the purposes of sub-section (7) and sub-section (8) in clause (ii) of sub-section (5) of section 11 are unconstitutional, and to that extent the follow-up actions conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 4D . Accordingly, we hold that in the instant case, no tax under section 11(1) or 14(1) can be levied merely on the basis of the legal fiction, i.e., the deeming clause at the end of section 2(6). Such levy of tax can be made, only if it is established by the Revenue that a transporter who is a casual trader under section 2(6) has actually made a sale or purchase within the definitions in clauses (30) and (25) of section 2 and under entry 54 read with categories of transactions enumerated in article 366(29A). It is not necessary for us to examine the remaining provisions of sections 11 and 14. 23.. We have already held rules 172 and 173 of the 1995 Rules as unconstitutional and beyond the legislative competence of the State. Rule 174 is similarly unconstitutional, because it also relates to payment of amount in advance equivalent to tax. Rules 174A and 174B are not related to that amount or to security in lieu thereof. So, we need not consider constitutionality of those Rules. Rule 188 is the machinery provision for tax payable under section 11(1). Rule 189 is the machinery provision for tax payable under section 14(1). There is no reason why these two rules should be held to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax is tendered. The applicants have complained that this indirect method of collecting tax from transporters, where they cannot be held liable, is causing undue hardship and harassment to them. Mr. K.K. Saha, learned advocate for the respondents, submitted that the driver was not the transporter, but his employee and if a notice is served on him and he receives and acts upon it, there should not be any legal bar to adopt that procedure. But a perusal of the definition of transporter in clause (a) of the Explanation to section 72 will at once make it clear that a driver or a person in-charge of the vehicle is also a transporter under that definition. This is the definition which has been adopted for the purpose of casual trader in section 2(6). That being so, where a transporter is not a casual trader or not liable to pay sales tax or purchase tax as a casual trader, notice of proceeding for determination of tax or notice of demand of tax so determined, cannot be served on the driver or the person in-charge of the vehicle for the simple reason that under the Carriers Act (there being no other Act governing the relationship between a transporter and a consignor or consignee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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