TMI Blog2014 (9) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ect accounts and other such account as may be prescribed in the manner provided in the Act. Similarly section 44 also empowers the provisions of accounts and also confers power of entry, such as rule 58 have been framed under the Act for the effective implementation of these statutory provisions. These provisions are incorporated in the KVAT Act with identical objects and for achieving the very same purposes which are found by the apex court to sustain the provisions of the Tripura and Assam Acts. - Therefore, in view of the principles laid down by the apex court in the aforesaid judgments, the challenge against section 15(2)(xi) has to fail. - Decided against the assessee. - W.P. (C). No. 8739 of 2010 - - - Dated:- 28-2-2013 - ANTONY DOMINIC, J. For the Appellant : V.V. Asokan and K.I. Mayankutty Mather. For the Respondents : Shaij Raj. T.K., Government Pleader,. ANTONY DOMINIC J.- Heard the learned counsel for the petitioner and the learned Government Pleader appearing for the respondents. 2. Exhibits P1 and P1(a) are the licences issued by the Bureau of Indian Standards recognizing the petitioner as an assay and hallmarking centre subject to terms and condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorise the State to legislate requiring the petitioner to obtain registration under the Act. This contention was sought to be substantiated by relying on the judgment of the apex court in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 6 RC 276; [2006] 3 SCC 1, where, after examining the constitutional scheme which obtained prior to the 46th Amendment and subsequent thereto, the apex court held in paragraphs 35, 44, 45 and 46, thus (pages 111, 112, 115 and 116 in 145 STC): 35. . . . Prior to the 46th Amendment, composite contracts such as works contracts, hire purchase contracts and catering contracts were not assessable as contracts for sale of goods. The locus classicus holding the field was State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353 (SC). There this court held that the words 'sale of goods' in entry 48 of List II, Schedule VII to the Government of India Act, 1935, did not cover the sale sought to be taxed by the State Government under the Madras General Sales Tax Act, 1939. The classical concept of sale was held to apply to the entry in the legislative List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC 353 (SC) survived the 46th Constitutional Amendment in two respects. First with regard to the definition of 'sale' for the purposes of the Constitution in general and for the purposes of entry 54 of List II in particular except to the extent that the clauses in article 366(29A) operate. By introducing separate categories of 'deemed sales,' the meaning of the word 'goods' was not altered. Thus the definitions of the composite elements of a sale such as intention of the parties, goods, delivery, etc., would continue to be defined according to known legal connotations. This does not mean that the content of the concepts remain static. Courts must move with the times (Attorney-General v. Edition Telephone Company of London [1880] 6 QBD 244). But the 46th Amendment does not give a licence for example to assume that a transaction is a sale and then to look around for what could be the goods. The word 'goods' has not been altered by the 46th Amendment. That ingredient of a sale continues to have the same definition. The second respect in which Gannon Dunkerley [1958] 9 STC 353 (SC) has survived is with reference to the dominant nature test to be applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding whether a contract falls into one category or the other is as to what is 'the substance of the contract'. We will, for the want of a better phrase, call this the dominant nature test. 8. Although the contention of the learned counsel for the petitioner is unexceptionable, in my view, the vires of section 15(2)(xi) of the KVAT Act has to be judged in the light of the legislative entry, namely, entry 54 of List II of the Seventh Schedule to the Constitution, which authorizes the State Legislature to levy tax on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. 9. I shall proceed to examine whether section 15(2) (xi) of the KVAT Act, requiring the hallmarking units in the State to obtain registration under the Act, to be a valid piece of registration. In my view, this issue is fully covered by the authoritative pronouncements of the apex court and I shall refer to those judgments. The question whether the constitutional disability of a State to tax a person, will prevent it from requiring a dealer to get itself registered or to file returns, came up for consideration of the apex court in its judgment in A.V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore clearly an authority for the proposition that the State Legislature notwithstanding article 286 of the Constitution while making a law under entry 54 of List II of the Seventh Schedule can, for purposes of the registration of a dealer and submission of returns of sales tax, include the transactions covered by article 286 of the Constitution. . . 11. Subsequently, in the judgment in Tripura Goods Transport Association v. Commissioner of Taxes [1999] 112 STC 609 (SC); [1999] 2 SCC 253, the question which arose before the Apex Court was whether the provisions of the Tripura Sales Tax Act, requiring the transporters in Tripura to obtain certificate of registration and to comply with various other formalities prescribed under the Sales Tax Act and the Rules, was beyond the legislative competence of the State Legislature. The contention raised was that the obligation cast under the Tripura Sales Tax Act could only be on dealers and that since transporters are engaged neither in sale nor purchase of any goods, they are not dealers under the Act and therefore, the provisions lacked legislative competence. This question was considered by the apex court and the constitutional validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is impugned, there is an initial presumption of its constitutionality. If there exists any difficulty in ascertaining the limits of the legislative power, it must be resolved, as far as possible in favour of the Legislature, putting the most liberal construction on the legislative entry so that it is intra vires.' It is now necessary to scrutinise the impugned provisions to see what are the obligations cast on the transporters, what is the purpose of such obligation, is it in any way taxing such transporters or impeding the transport business to make it beyond the legislative competence and ultra virus article 301 of the Constitution of India? Whenever any goods is sold or purchased inside or outside the State, the incidence of tax and the quantum of tax has to be ascertained under the provisions of the relevant taxing statute. For this, it is necessary to fix a dealer, the taxable goods, place of sale or purchase of such goods and the quantum of tax. If a dealer in taxable goods transaction of sale or purchase escapes attention of the taxing authority, tax on such goods escapes with resultant loss to the State revenue. To overreach this possible escape a mechanism is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f offences covering both dealers and non-dealers as is evident by the opening word 'whoever'. Subsection (4), to which learned counsel referred to, obligates a person to produce any accounts, evidence or documents or to furnish any information as required by the concerned authority. Of course, all this would be what one is required to maintain and in the case of transporters, carriers, etc., what the relevant provisions require him to do. If he is required to maintain or produce some document which he has to maintain under a statute, and if he does not produce it then of course, he should be made liable for offence. It is only on his failure to do this, that is treated as an offence, punishment as it is one of the legitimate weapons to enforce one to help the authorities. Such information and documents sought are either with or within the knowledge of transporter. As aforesaid, this is for the sole objective of ascertaining a consignor and consignee of the taxable goods which the transporter is carrying. Such requirement has no correlation with the sale and purchase of the goods or to treat a transporter as dealer and consequently, no obligation is cast on him to pay any ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsignor's invoice number and date, railway receipt or bill of lading and in case goods are sent outside the State, the permit number and date authorizing such export under rule 47C. First, the question is why such information is required, if necessary, what possibly is the difficulty of the transporters, finally whether any objection by them is sustainable in law? As we have said that these informations are required solely for the purpose for checking the evasion of tax. Next, we do not find any difficulty for any transporter to disclose the names and addresses of the consignor and the consignee, the place of destination, he would also be knowing the description of consignment being transported its quantity, weight and value also from the description as disclosed by the consignor. The information which the transporter has to give so far with reference to the quantity, weight and value of the goods, would be based on the basis of the documents, paper, etc., as disclosed by the consignor. The fear expressed by the learned counsel for the appellants that in case such description, specially with reference to its weight or value, is found to be wrong about which he would never be ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in on the basis of the information given by the consignor. Every taxing state has charging sections. It lays down the procedure to assess tax and penalties, etc., it also provides provisions to cover pilferage of such revenue by providing such mechanism as it deem fit, in other words, to check evasion of tax and in doing so if any obligation is cast on any person having connections with consignor or consignee in relation to such goods, may be other than a dealer, to perform such obligation in aid, to check evasion and in case he is made liable for any offence, for his dereliction of duty or deliberate false act contrary to what he is obligated to do. In our opinion, it cannot be construed to be beyond the competence of State Legislature. The impugned provisions are not charging sections, no tax liability is placed on the transporters. We find neither sections 29, 30, 32 and 36A nor rules 46A, 63A and 64A lack any legislative competence. They are within the legislative competence of the State Legislature and would fall under List II of entry 54 of the Seventh Schedule to the Constitution of India. 12. Subsequently in M/s. A.B.C. (India) Ltd., v. State of Assam and another (AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Haryana General Sales Tax Act, 1973 because of apparent ambiguity inherent therein. However, in course of considering the analogous provision, viz., section 36A and section 38B of the Tripura Sales Tax Act, 1976, this court in the case of Tripura Goods Transport Association v. Commissioner of Taxes [1999] 112 STC 609 (SC); [1999] 2 SCC 253 held that maintenance of accounts by the transporters is only to help the taxing authority to trace the dealer, fix the goods transported co-relating with the dealers transporting such goods for fixing tax liability in this regard. This court further held as follows: 'If a clearing or forwarding agent or dalal or person transporting goods is indeed reasonably and proximately connected with the sale occasioning the liability to the sales tax, it is legitimate to require him to licence himself under the Act and maintain and furnish such information and particulars to the assessing authority thereunder as he would in the course of his business come to possess. It is legitimate then to make him liable for such escapement of tax as has resulted from the breach by him of such obligation and to a reasonable penalty.' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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