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1985 (1) TMI 306
Interpretation of the term 'wilful default' appearing in the proviso to section 10 (2) of the Tamil Nadu Buil dings (Lease and Rent Control) Act, 1960
Held that:- A consensus of the meaning of the words 'wilful default' appears to indicate that default in order to be wilful must be intentional, deliberate, calculated and conscious, with full knowledge of legal consequences flowing therefrom. Taking for instance a case where a tenant commits default after default despite oral demands or reminders and fails to pay the rent without any just or lawful cause, it cannot be said that he is not guilty of wilful default because such a course of conduct manifestly amounts to wilful default as contemplated either by the Act or by other Acts referred to above.
In civil appeal No. 1178 of 1984, it would appear that though the tenant had committed a default but he had paid the entire rent well before the filing of the suit by the landlord. In fact, the suit for eviction was filed by the landlord not on the ground of pending arrears but to penalise the tenant for having defaulted in the past. Such a suit cannot be entertained because once the entire dues are paid to the landlord the cause of action for filing of a suit completely vanishes. Hence, the suit arising out of civil appeal No. 1978 of 1984 must be dismissed as being not maintainable and the order of ejectment passed by the High Court is hereby set aside.
In civil appeal No. 6211 of 1983, having regard to the tests and the criteria laid down by us there can be no doubt that wilful default in the payment of arrears to the tune of ₹ 900 has been proved and as there is nothing to show that the arrears were not paid or withheld due to circumstances beyond the control of the tenant, the order of eviction passed by the High Court is confirmed, and the appeal is allowed.
In civil appeal No. 1992 of 1982 the arrears having been paid through the Bank Draft, the question of eviction of the tenant did not arise nor did the question of default come into the picture merely because the landlord wanted to harass him by filing an eviction petition. The High Court was, therefore, clearly in error in passing the decree of ejectment against the tenant. We, therefore, allow the appeal and set aside the order of the High Court evicting the tenant.
In civil appeal No. 1659 of 1982, as it was clearly a case of wilful default on the part of the tenant we affirm the order of the High Court evicting the tenant and dismiss the appeal.
In civil appeal No. 3668 of 1982, some dispute arose between the parties as to whether the rent was to be deposited in Bank, resulting in the filing of the present suit for eviction on 1.4.80 in the court of the Rent Controller by the landlord after verifying from the Bank that the tenant had not deposited the rent for the months of January and February 1980. This default, in our opinion, was undoubtedly deliberate, conscious and without any reasonable or rational basis and the High Court was perfectly right in holding that the tenant A was guilty of wilful default and passing a decree for ejectments. As no notice was given by the landlord, Explanation to proviso to s. 10 (2) of the Act does not apply at all. The appeal is accordingly dismissed.
In civil appeal No. 2246 of 1982 the High Court in revision upheld the order of eviction on the ground that there was no satisfactory explanation for non- payment of rent for the period January to June 1976 was clearly in error because the tenant had already deposited the entire dues including the rent from January to June, on 17.7.76. Thus, the question of wilful default could not arise nor could it be said that the default was either conscious or deliberate or international. Moreover, in view of the Explanation since the tenant had paid the amount within the time of the notice, there could be no question of wilful default. This fact seems to have been completely overlooked by the High Court. We, therefore, allow the appeal and set aside the order of the High Court directing eviction of the tenant.
In civil appeal No. 4012 of 1982, the tenant occupied the premises at a monthly rent of ₹ 325. It appears that the tenant defaulted in payment of tent from June 1976 onwards and after repeated demands, only a sum Or ₹ 1000 was paid by him on 1.4 77. leaving a substantial balance of arrears unpaid. This was, therefore, a clear case of wilful default where the tenant did not pay the rent deliberately, consciously and intentionally.
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1985 (1) TMI 305
Issues Involved:
1. Whether "other charges" collected by the assessee for rendering unspecified services can be treated as commission.
2. Whether such commission forms part of the sale price as defined in section 2(p) of the Rajasthan Sales Tax Act, 1954.
Issue-wise Detailed Analysis:
1. Whether "other charges" collected by the assessee for rendering unspecified services can be treated as commission:
The assessee, M/s. Uttumal Gagumal, was assessed to tax under section 10 of the Rajasthan Sales Tax Act, 1954, for the period March 24, 1966, to April 11, 1967. The Commercial Taxes Officer included an amount of Rs. 24,302.50 shown as "other charges" in the taxable amount, asserting that the definition of "sale price" was broad and the assessee could not claim ignorance.
The Deputy Commissioner (Appeals) upheld this assessment, noting that the assessee failed to specify the services for which these "other charges" were collected, suggesting an attempt to evade tax. The Board of Revenue, however, accepted the assessee's revision, holding that the commission does not fall under the definition of "sale price" based on a precedent from the U.P. Sales Tax Act.
Upon further appeal by the department, the High Court was called upon to decide whether these "other charges" could be considered as commission. The Court noted that the assessee failed to demonstrate what specific services were rendered for these charges, and thus, they could only be treated as commission.
2. Whether such commission forms part of the sale price as defined in section 2(p) of the Rajasthan Sales Tax Act, 1954:
The Court examined the definition of "sale price" under section 2(p) of the Act, which includes "any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof." The Court concluded that the definition is broad enough to encompass "other charges" received by the assessee, whether as commission or adhat, related to the goods sold on behalf of the principal.
The Court emphasized that the Board of Revenue did not provide a clear finding on the nature of the transaction and relied on the facts established by the Deputy Commissioner (Appeals) and the Commercial Taxes Officer. The Court held that the "other charges" collected by the assessee for rendering unspecified services can only be treated as commission, which forms part of the "sale price" under section 2(p) of the Act.
Conclusion:
The High Court answered the reference by concluding that the "other charges" collected by the assessee for unspecified services are to be treated as commission and such commission forms part of the "sale price" as defined in section 2(p) of the Rajasthan Sales Tax Act, 1954. The parties were directed to bear their own costs.
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1985 (1) TMI 304
Issues:
The judgment involves the interpretation of a tax case concerning the exemption claimed by the petitioner on the turnover of handmade matches, specifically focusing on whether the petitioner's sale should be considered as the first taxable sale inside the State.
Interpretation of Exemption:
The assessing authority initially denied exemption to the petitioner's turnover of Rs. 54,000, arguing that the sale by the manufacturer had already been exempted, making the petitioner's sale the first taxable sale inside the State. However, the Appellate Assistant Commissioner disagreed, stating that since there was an earlier sale inside the State by the manufacturer to the petitioner, the petitioner's sale should not be considered the first taxable sale.
Tribunal's Decision:
The Tribunal held that the exemption granted by the Government was specific to the manufacturer's sale and did not extend to subsequent sales of handmade matches. As the exemption only covered the manufacturer's sale and not subsequent sales, the petitioner's sale was deemed the first taxable sale inside the State, making it liable for taxation.
Court's Analysis:
The Court agreed with the Tribunal's decision, emphasizing that the exemption was limited to the manufacturer's sale and did not provide a general exemption for handmade matches in general. Therefore, the petitioner's sale, being subsequent to the manufacturer's exempted sale, was considered the first taxable sale inside the State and was not entitled to exemption. The Court concluded that the Tribunal had correctly interpreted the law, leading to the dismissal of the tax case.
Conclusion:
In conclusion, the Court upheld the Tribunal's decision, ruling that the petitioner was not entitled to the exemption on the turnover of Rs. 54,000 related to the sale of handmade matches. The petition was dismissed accordingly.
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1985 (1) TMI 303
The High Court of Delhi considered a case involving the Ghaziabad Engineering Company Private Limited regarding the applicability of a tax provision. The court found in favor of the petitioner on the second question raised in the petition, quashing the addition of a specific sum to the taxable quantum. The case was remanded to the Sales Tax Officer for further investigation. The petition was partly allowed with no costs. (Case Citation: 1985 (1) TMI 303 - DELHI HIGH COURT)
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1985 (1) TMI 302
Issues Involved:
1. Whether section 22-A of the Karnataka Sales Tax Act, 1957, confers power on the Commissioner to interfere with an order made by an appellate authority under section 20 of the Act.
2. If the answer to the first question is in the affirmative, whether section 22-A of the Act is void as offending article 14 of the Constitution.
Detailed Analysis:
Re. Question No. (1)
Issue: Interpretation of Section 22-A of the Karnataka Sales Tax Act, 1957
The petitioner, engaged in the manufacture and sale of tobacco products, challenged the reassessment of sales turnover by the Commercial Tax Officer (CTO) under section 12-A of the Act. The Deputy Commissioner of Commercial Taxes (DC) allowed the appeal against the CTO's order. Subsequently, the Commissioner of Commercial Taxes issued a show cause notice under section 22-A to revise the DC's order. The petitioner contested the constitutional validity of section 22-A and the Commissioner's jurisdiction.
Arguments:
1. Petitioner's Counsel: Urged for a negative answer to the question, arguing that section 22-A does not empower the Commissioner to revise orders made by an appellate authority.
2. Respondent's Counsel: Argued for an affirmative answer, asserting that section 22-A does confer such power.
Court's Analysis:
The court examined the language and intent of section 22-A, emphasizing that the statute should be interpreted according to the legislature's intent. The court cited various precedents and principles of statutory interpretation, including Maxwell on "The Interpretation of Statutes," and rulings from the Supreme Court and other High Courts.
Key Points:
- Statutory Interpretation: The court highlighted the fundamental rule that a statute should be expounded according to the intent of the legislature. The words of the statute, if precise and unambiguous, should be interpreted in their natural and ordinary sense.
- Historical Context: The court reviewed the legislative history and amendments to the Act, noting that section 22-A was introduced to empower the Commissioner to revise orders prejudicial to revenue.
- Subordination: The court affirmed that the Deputy Commissioner, acting as an appellate authority, is still an officer subordinate to the Commissioner. Therefore, the Commissioner has the authority to revise such orders under section 22-A.
Conclusion:
The court concluded that section 22-A of the Act does confer power on the Commissioner to interfere with an order made by an appellate authority under section 20 of the Act. The answer to question No. (1) was affirmative.
Re. Question No. (2)
Issue: Constitutionality of Section 22-A under Article 14 of the Constitution
The petitioner argued that section 22-A is violative of Article 14 of the Constitution, which guarantees equality before the law.
Arguments:
1. Petitioner's Counsel: Contended that section 22-A confers unguided, uncanalised, and arbitrary power on the Commissioner, violating Article 14.
2. Respondent's Counsel: Argued that section 22-A is not violative of Article 14, asserting that the provision has sufficient safeguards and guidelines.
Court's Analysis:
The court reviewed the scope and ambit of Article 14, emphasizing that it commands the State to ensure equality before the law. The court examined whether the State, in enacting a taxation law, should place itself in the same position as other persons or assessees.
Key Points:
- State as a Person: The court opined that the State, within its own jurisdiction, is not a "person" under Article 14 and is not subject to the same requirements as other persons.
- Guidelines and Safeguards: The court noted that section 22-A provides clear guidelines for the exercise of the Commissioner's power, including the requirement that the order must be erroneous and prejudicial to revenue, adherence to principles of natural justice, and a specified time limit for exercising the power.
- Precedents: The court referred to various judgments, including those from the Supreme Court, which upheld provisions granting special powers to authorities in taxation matters as not violative of Article 14.
Conclusion:
The court concluded that section 22-A of the Act is not violative of Article 14 of the Constitution. The answer to question No. (2) was negative.
Final Directions:
The court directed the Registrar to place the papers before the Honourable Chief Justice for posting the case before a Division Bench for final disposal.
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1985 (1) TMI 301
Issues:
Challenge to show cause notice under section 22-A of the Karnataka Sales Tax Act, 1957 based on lack of revision power and violation of article 14 of the Constitution. Interpretation of section 22-A's power to revise appellate orders. Justification for court's interference with the show cause notice. Direction for petitioner to appear before the Commissioner for further proceedings.
Analysis:
The petitioner challenged a show cause notice issued by the Commissioner of Commercial Taxes in Karnataka under section 22-A of the Karnataka Sales Tax Act, 1957, proposing to revise an appellate order. The petitioner contended that section 22-A does not empower the Commissioner to interfere with appellate orders under section 20 and argued a potential violation of article 14 of the Constitution. A Full Bench of the Court provided its opinion against the petitioner on both grounds, leading to the rejection of the petitioner's arguments. The petitioner's counsel did not dispute this position but maintained that the appellate order did not warrant revision under section 22-A, citing a precedent from the Orissa High Court.
The Government Advocate representing the respondent argued that the Court should not interfere with the show cause notice before the Commissioner examines and decides on the objections raised by the petitioner. The Court acknowledged that the petitioner could argue before the Commissioner that the appellate order does not justify revision under section 22-A, indicating that the matter should be determined by the Commissioner. Therefore, the Court found no basis for interference at that stage, especially considering that any adverse decision by the Commissioner could be appealed before the Court.
The Court directed the petitioner to appear before the Commissioner to present their case and receive further instructions on the matter. The Court dismissed the writ petition, discharged the rule issued, and directed the parties to bear their own costs. The order was to be communicated to the respondent within ten days. The Court clarified that the dismissal of the petition should not be construed as expressing an opinion on the merits, except for matters conclusively addressed in the order.
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1985 (1) TMI 300
The High Court of Allahabad allowed the revision filed by the assessee under section 11(1) of the U.P. Sales Tax Act against the Sales Tax Tribunal's judgment. The Court held that a finding must be recorded before imposing tax if goods were not purchased locally. The Tribunal's order was set aside, and the appeal was directed to be decided afresh based on the evidence.
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1985 (1) TMI 299
Issues: Withholding of ST-1 forms by the first respondent to the petitioner, interpretation of rule 8 of the Delhi Sales Tax Rules, power of assessing authority to withhold forms, requirements under clause (c) of sub-rule (4) of rule 8, completion of enquiry and issuance of ST-1 forms.
Analysis:
The High Court of Delhi, comprising of Justices Dalip K. Kapur and Sunanda Bhandare, heard a writ petition after a notice to show cause was issued. The main issue revolved around the first respondent withholding the grant of ST-1 forms to the petitioner, a registered dealer. The Court examined rule 8 of the Delhi Sales Tax Rules, specifically focusing on clause (c) of sub-rule (4), which outlines the circumstances under which the assessing authority can withhold the issuance of ST-1 forms. This clause requires a default in furnishing returns and other documents, along with adverse material suggesting concealment of sale or inaccurate particulars.
In the present case, the forms were refused on the basis of a pending enquiry. However, the Court noted that no conclusion had been reached in the enquiry, and the assessment of the assessee had not taken place. As a result, the Court found that there was no evidence of any loss in revenue or any actions by the petitioner justifying the withholding of the ST-1 forms. Therefore, the Court allowed the petition and directed the respondent to issue the ST-1 forms in accordance with the procedure outlined in sub-rule (4) of rule 8.
It was clarified that this decision did not prevent the Sales Tax Officer or other assessing authority from taking any further actions in accordance with sub-rule (4) of rule 8. The judgment emphasized the importance of following the prescribed procedures and requirements before withholding the issuance of ST-1 forms, highlighting the need for a written order and specific conditions to be met before such action can be taken.
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1985 (1) TMI 298
Issues Involved:
1. Whether the polishing of stones constitutes "manufacture" under section 2(k) of the Rajasthan Sales Tax Act.
2. Whether the dealer-assessee is liable to pay sales tax at the concessional rate under section 5C of the Act.
Detailed Analysis:
Issue 1: Definition of "Manufacture"
- The primary question was whether the polishing of stones falls within the term "manufacture" as defined in section 2(k) of the Rajasthan Sales Tax Act. The Act defines "manufacture" to include any process or manner of producing, collecting, extracting, preparing, or making any goods.
- The court examined various definitions and interpretations of the term "manufacture," including those from Chambers Twentieth Century Dictionary and previous case law such as Commissioner of Sales Tax v. Harbilas Rai & Sons [1968] 21 STC 17 (SC) and Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63 (SC).
- The court noted that "manufacture" implies a transformation where a new and different article emerges with a distinctive name, character, or use. It emphasized that if the commodity retains its essential identity, it cannot be considered as manufactured.
Issue 2: Application to Polishing of Stones
- The court considered whether the process of polishing stones changes their essential identity. Referring to cases like G.R. Kulkarni v. The State [1957] 8 STC 294 and Commissioner of Sales Tax v. Hastimal Ratanlal [1972] 30 STC 484, it was argued that polishing does not result in a new commercial commodity.
- The court observed that the polished stones retain their original identity and do not transform into a different commercial article. Therefore, polishing stones does not constitute "manufacture" under section 2(k) of the Act.
- The court adopted the reasoning from Commissioner of Sales Tax v. Harbilas Rai & Sons [1968] 21 STC 17 (SC), which stated that if the goods remain essentially the same commercial article after the application of labor, it cannot be considered as manufactured.
Conclusion:
- The court concluded that the polishing of stones does not involve a process that falls within the term "manufacture" as defined in section 2(k) of the Act.
- Consequently, the dealer-assessee is not liable to pay sales tax at the concessional rate under section 5C of the Rajasthan Sales Tax Act.
- The question referred for the court's decision was answered in the negative, in favor of the dealer-assessee and against the department. The court ordered that there would be no costs associated with this reference and directed that the answer be returned to the Board under section 15(5) of the Act.
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1985 (1) TMI 297
The High Court of Allahabad allowed the revision by the assessee under section 11(1) of the U.P. Sales Tax Act against the Sales Tax Tribunal's judgment. The Tribunal had set aside a reduction of 1,75,000 bricks utilized for construction, stating they were sold, but the High Court found no evidence of sale and directed a fresh appeal. The parties will bear their own costs. A copy of the order will be sent to the Tribunal as per the U.P. Sales Tax Act. (Citation: 1985 (1) TMI 297 - ALLAHABAD HIGH COURT)
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1985 (1) TMI 296
Issues Involved:
1. Jurisdiction of the assessing authority in remand proceedings.
2. Validity of the assessment order dated 31st December 1981.
3. Limitation period for reassessment under section 19(1) of the M.P. General Sales Tax Act.
4. Scope of the remand order issued by the Additional Commissioner of Sales Tax.
5. Alternative remedy and writ jurisdiction.
Issue-Wise Detailed Analysis:
1. Jurisdiction of the Assessing Authority in Remand Proceedings:
The petitioner contended that respondent No. 1 exceeded his jurisdiction by reassessing the escaped turnover during the remand proceedings, which was beyond the scope of the remand order issued by respondent No. 2. The remand order was specific to verifying the deduction of Rs. 52,173.20 from the opening stock and did not authorize a fresh assessment or reassessment of escaped turnover. The court held that the assessing authority had no jurisdiction to reassess the petitioner for escaped turnover based on the remand order, which was limited to scrutinizing the stock position.
2. Validity of the Assessment Order Dated 31st December 1981:
The assessment order dated 31st December 1981, passed by respondent No. 1, was challenged on the grounds that it was beyond the scope of the remand order and that the assessing authority had no jurisdiction to reassess the petitioner for escaped turnover. The court found that the assessing authority's action to reassess the petitioner for escaped turnover was without jurisdiction and beyond the scope of the remand order. Consequently, the assessment order dated 31st December 1981, was quashed and set aside.
3. Limitation Period for Reassessment Under Section 19(1) of the M.P. General Sales Tax Act:
The petitioner argued that the reassessment proceedings initiated by respondent No. 1 were barred by the limitation period prescribed under section 19(1) of the M.P. General Sales Tax Act, which is five years from the date of the original assessment order. The original assessment order was passed on 10th April 1974, and no notice for the alleged escaped assessment was issued within the prescribed period. The court observed that the reassessment proceedings were initiated beyond the limitation period, making them time-barred and without jurisdiction.
4. Scope of the Remand Order Issued by the Additional Commissioner of Sales Tax:
The remand order issued by the Additional Commissioner of Sales Tax was specific to verifying the deduction of Rs. 52,173.20 from the opening stock and did not authorize a fresh assessment or reassessment of escaped turnover. The court noted that the remand order was clear and specific, and the assessing authority could not transgress the scope of the remand order to reassess the petitioner for escaped turnover. The court emphasized that the remand order did not set aside the original assessment order but directed scrutiny of the stock position for a specific amount.
5. Alternative Remedy and Writ Jurisdiction:
The respondents argued that the petitioner had an alternative remedy by way of an appeal, which was still pending, and that the court should not interfere in the exercise of writ jurisdiction. However, the court held that the issue raised was about the jurisdiction of the assessing authority, which could be considered in the writ petition. The court found that the appellate authority was not inclined to decide the matter due to the pending writ petition, and therefore, the court could exercise its writ jurisdiction to address the jurisdictional issue.
Conclusion:
The court allowed the petition, quashing and setting aside the assessment order dated 31st December 1981, passed by respondent No. 1, as it was without jurisdiction. The court emphasized that the assessing authority could not reassess the petitioner for escaped turnover based on the remand order, which was specific to verifying the deduction of Rs. 52,173.20 from the opening stock. The court also noted that the reassessment proceedings were time-barred under section 19(1) of the M.P. General Sales Tax Act.
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1985 (1) TMI 295
Issues:
Tax revision cases questioning the correctness of the order passed by the Tribunal relating to two assessment years. Dispute over taxable turnovers reported by the State Trading Corporation. Determination of whether the transactions represent inter-State sales or agency transactions. Interpretation of the agreement between the State Trading Corporation and the Civil Supplies Corporations. Distinction between a contract of sale and a contract of agency.
Analysis:
The judgment of the Madras High Court, delivered by Ramanujam J., dealt with tax revision cases concerning the State Trading Corporation of India's taxable turnovers for the assessment years 1979-80 and 1980-81. The assessing officer had determined the taxable turnover higher than reported by the Corporation, leading to a dispute regarding the nature of transactions with Civil Supplies Corporations in Andhra Pradesh and Kerala. The revenue contended that these transactions constituted inter-State sales, while the Corporation argued they were agency transactions. Both the assessing authority and the appellate authority initially held in favor of the revenue, but the Tribunal reversed this decision, considering the Civil Supplies Corporations as agents and not buyers.
Upon thorough consideration, the High Court agreed with the Tribunal's conclusion. The Court rejected the revenue's argument that prepayment by the agent transformed them into purchasers, emphasizing that the agency relationship should be determined independently of payment arrangements. The Appellate Assistant Commissioner had highlighted certain aspects of the agreement between the parties to support the revenue's position, but the Tribunal focused on the agreement's terms to establish the agency relationship. The Court emphasized the importance of the agreement's provisions in determining the nature of the transactions.
Referring to a Supreme Court decision, the High Court reiterated the distinction between a contract of sale and a contract of agency. The essence of a sale involves the transfer of title for a price, while agency involves delivering goods for sale on behalf of the principal. Analyzing the agreement between the State Trading Corporation and the Civil Supplies Corporations, the Court concluded that the transactions were agency-based, not sales. The terms of the agreement clearly indicated that the Civil Supplies Corporations were acting as agents, not buyers, of the goods.
In light of the agreement's terms and the nature of the transactions, the High Court upheld the Tribunal's decision, dismissing the revision. The judgment emphasized that the transactions between the State Trading Corporation and the Civil Supplies Corporations were of an agency nature, and there was no basis for interference in the Tribunal's orders. The Court's detailed analysis focused on the legal distinction between sales and agency transactions, highlighting the significance of the agreement's terms in determining the nature of the dealings between the parties.
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1985 (1) TMI 294
The High Court dismissed the firm's petition seeking exemption of sales tax on Persian wheel frames, ruling that the frames were not agricultural implements and the petition lacked merit. The court upheld the preliminary objection that the petitioner did not file the required application before the Financial Commissioner. The petition was dismissed with no costs.
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1985 (1) TMI 293
Issues:
1. Validity of the assessment order under the U.P. Sales Tax Act for the assessment year 1981-82.
2. Consideration of legal questions raised by the assessee before the Tribunal and the Assistant Commissioner (Judicial).
3. Non-issuance of notice by the assessing authority before determining the turnover for best judgment assessment.
4. Compliance with rule 41(7), proviso (2) regarding the issuance of a show cause notice.
Detailed Analysis:
1. The judgment pertains to a revision filed by the assessee under section 11(1) of the U.P. Sales Tax Act against the order passed by the Sales Tax Tribunal for the assessment year 1981-82. The assessee, engaged in the business of bhang as a licensed dealer, contested the enhanced turnover determined by the Sales Tax Officer, which led to the imposition of additional sales tax. The Assistant Commissioner (Judicial) upheld the assessing authority's decision, prompting the assessee to appeal to the Sales Tax Tribunal, resulting in a reduction of the turnover. Subsequently, the assessee approached the High Court through the revision challenging the Tribunal's order.
2. The legal counsel for the assessee argued that a crucial legal question raised before the Tribunal and the Assistant Commissioner (Judicial) was not adequately addressed. The contention highlighted the failure to consider the ground of appeal related to the non-issuance of a mandatory show cause notice before rejecting the disclosed turnover. The counsel specifically referred to rule 41(7), proviso (2), which necessitates the assessing authority to serve a notice on the dealer explaining the reasons for non-acceptance of the turnover before resorting to best judgment assessment.
3. The judgment emphasized the mandatory nature of rule 41(7), proviso (2), requiring the assessing authority to issue a show cause notice to the dealer if the disclosed turnover is deemed unacceptable. The absence of such notice in the instant case was deemed as vitiating the best judgment assessment. The failure to provide the dealer with reasons for non-acceptance of turnover before passing the assessment order was considered a violation of the procedural requirement, rendering the assessment order unsustainable.
4. Consequently, the High Court allowed the revision, quashed the orders of the lower authorities, and directed the matter to be remanded to the Sales Tax Officer for a fresh assessment. The court instructed the Sales Tax Officer to comply with the provisions of rule 41(7), proviso (2) by issuing a show cause notice to the assessee before determining the turnover for the assessment year. The judgment highlighted the importance of procedural fairness and adherence to statutory requirements in conducting tax assessments under the U.P. Sales Tax Act.
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1985 (1) TMI 292
The High Court of Allahabad dismissed two revisions filed by the assessee under section 11(1) of the U.P. Sales Tax Act against the judgment of the Sales Tax Tribunal, Aligarh, for assessment years 1978-79 and 1979-80. The assessee, engaged in the business of gur, claimed exemptions on freight charges but the Tribunal upheld the inclusion of freight charges in the turnover. The Court found the Tribunal's decision justified and dismissed the revisions. The parties were ordered to bear their own costs.
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1985 (1) TMI 291
Issues:
1. Dismissal of appeal in default by the Sales Tax Tribunal for failure to appear.
2. Refusal to restore the appeal by the Tribunal.
3. Legal representation and actions of the petitioner's counsel.
4. Justification of dismissal of appeal by the Tribunal.
5. Adjourning the hearing and restoration of the appeal.
6. Exercise of power to dismiss in default by the Tribunal.
Detailed Analysis:
1. The petitioner, a sales tax assessee, filed a petition under articles 226 and 227 of the Constitution challenging the dismissal of their appeal by the Sales Tax Tribunal for failure to appear. The appeal related to deductions disallowed in the assessment for the year 1977. The petitioner's first appeal was rejected, leading to a second appeal before the Tribunal. The petitioner's counsel sought adjournment due to prior commitments, but the Tribunal dismissed the appeal in default on the ground of insufficient cause for adjournment.
2. The petitioner's counsel made efforts to restore the appeal, but the Tribunal dismissed the application for restoration, stating it lacked sufficient cause. The respondents argued that the Tribunal was justified in its actions and suggested the petitioner should have made a reference to the High Court under section 44(1) of the Sales Tax Act. The Tribunal did not address the appeal's merits, focusing solely on the dismissal for non-appearance and subsequent refusal to restore the appeal.
3. The petitioner's counsel, a Chartered Accountant, had sought adjournment before the hearing but was unable to attend due to prior commitments. The petitioner argued that the dismissal of the appeal and refusal to restore it were harsh, emphasizing that the Tribunal should have considered principles of natural justice and given a proper hearing. The petitioner cited legal precedents to support the contention that the party should not suffer due to counsel's inaction.
4. The Government Advocate opposed the petitioner's stance, asserting that the Tribunal was justified in dismissing the appeal due to the petitioner's lack of vigilance. However, it was noted that the Tribunal should exercise the power to dismiss in default exceptionally, not routinely. The Tribunal was expected to decide on merits and could have adjourned the hearing subject to costs, which was not done in this case.
5. The High Court opined that the power to dismiss in default should be used sparingly and that the Tribunal should have decided the appeal on its merits. The Court found that the dismissal of the appeal and refusal to restore it were not justified in this case. Consequently, the Court allowed the petition, set aside the Tribunal's orders, and directed the Tribunal to restore the appeal and decide on merits within four months, subject to payment of costs by the petitioner.
6. The Court emphasized the importance of fairness and justice in handling such matters and highlighted that the petitioner should not be entitled to adjournment without sufficient cause. The Court also directed the petitioner to pay costs and counsel's fee within a specified timeframe, failing which the Tribunal's order would stand. Ultimately, the writ petition was allowed in favor of the petitioner.
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1985 (1) TMI 290
Issues:
Improper presentation of a special appeal before the Board of Revenue.
Analysis:
The case involves a reference under section 15 of the Rajasthan Sales Tax Act, 1954 regarding the presentation of a special appeal by Shri Dalu Ram Sharma, D.P. The assessing authority determined the tax liability of the respondent, M/s. Poonam Chand Uttamchand of Beawar, which was later appealed by the assessee to the Deputy Commissioner (Appeals), Commercial Taxes, Ajmer. The State of Rajasthan then moved an application for revision before the Board of Revenue, which was rejected by a single-member bench. Subsequently, the assessing authority filed a special appeal under section 14(4A) against the order of the single-member bench, leading to a contention that the special appeal was improperly presented as Shri Dalu Ram Sharma did not have a valid authorization to act on behalf of the appellant.
The High Court referred to relevant legal provisions, including section 14(4A) of the Act and Rules 2(b) and 34 of the Rajasthan Sales Tax Rules. It was argued that a person authorized in writing could act as an agent before any sales tax authority. The court considered precedents such as State of Rajasthan v. Gorilal Ajmera and Commercial Taxes Officer v. Ayurved Sewashram, where the requirement of a "vakalatnama" for representation was waived as a curable irregularity. Additionally, cases like C.T.O. v. Sanghi Oxygen Co. and C.T.O. v. Industrial Chemicals & Plastics were cited to support the notion that irregularities in presentation could be overlooked under certain circumstances.
The court also examined the decision in State of Rajasthan v. Gemini Murti Kalakar, emphasizing the necessity of proper authorization for appeal presentation. However, it was noted that rule 34 allowed for appeal presentation by the appellant, pleader, or agent, indicating flexibility in the mode of submission. The court concluded that since the memo of appeal was signed by the assessing authority after consultation with Shri Dalu Ram Sharma, the special appeal was not improperly presented. The judgment referenced Khandelwal Enterprise v. A.C.T.O., Ward I to highlight that the defect of filing by an unauthorized person could be cured by submitting the required authority subsequently.
In the final analysis, the court answered the question of law in the negative, ruling in favor of the department and against the assessee. The reference was thus resolved with a finding that the special appeal by Shri Dalu Ram Sharma was not improperly presented before the Board of Revenue.
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1985 (1) TMI 289
Issues Involved:
1. Whether the sale of toddy in the petitioners' taverns constitutes a "sale" under the Karnataka Sales Tax Act, 1957.
2. Whether toddy is an "agricultural produce" and the petitioners are "agriculturists" exempt from tax under the Act.
3. Whether the State Legislature is competent to impose tax on the turnover of the sale of toddy under entry 54 of List II of the Seventh Schedule to the Constitution.
Issue-wise Detailed Analysis:
1. Whether the sale of toddy in the petitioners' taverns constitutes a "sale" under the Karnataka Sales Tax Act, 1957:
The petitioners contended that the sale of toddy in their taverns is not a "sale" as defined under section 2(t) of the Act and that they are not "dealers" under section 2(k) of the Act. They argued that the toddy is tapped from their own trees and sold in their taverns, which should not be considered a sale of goods. The court, however, found that the petitioners' argument lacked sufficient particulars and evidence. The court held that the mere assertion that the sale of toddy is a service rendered to consumers does not suffice to exempt it from being considered a sale. The court also referred to the Supreme Court's decision in Northern India Caterers' case, which emphasized that the substance of the transaction should be considered. The court concluded that the petitioners are indeed dealers under the Act and their turnover in the sale of toddy is subject to tax.
2. Whether toddy is an "agricultural produce" and the petitioners are "agriculturists" exempt from tax under the Act:
The petitioners argued that toddy is an agricultural produce and they are agriculturists, thus exempt from tax under section 2(k) of the Act. The court analyzed the definitions of "agriculturist" and "agriculture" under the Act and the Income-tax Act, 1961. It referred to the Privy Council's decision in Raja Mustafa Ali Khan v. Commissioner of Income-tax and the Supreme Court's decisions in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy and Karimtharuvi Tea Estates Ltd. v. State of Kerala. The court concluded that mere tapping of toddy from palm trees does not constitute agriculture and the income derived from it is not agricultural income. The court disagreed with the Madras High Court's decision in Commissioner of Income-tax v. Yagappa Nadar, which held that income from toddy is agricultural income. The court held that the petitioners are not entitled to claim exemption from tax on the sale of toddy.
3. Whether the State Legislature is competent to impose tax on the turnover of the sale of toddy under entry 54 of List II of the Seventh Schedule to the Constitution:
The petitioners contended that the State Legislature is not competent to impose tax on the sale of toddy under entry 54 of List II of the Seventh Schedule to the Constitution. The court referred to the definition of "goods" under section 2(m) of the Act and the Sale of Goods Act, which includes all kinds of movable property. The court concluded that toddy falls within the definition of goods and is subject to tax under the Act. The court also referred to the Supreme Court's decision in State of Karnataka v. Udipi Krishna Bhavan, which held that the sale of food in an eating-house or restaurant is subject to sales tax. The court held that the State Legislature is competent to impose tax on the sale of toddy.
Conclusion:
The court dismissed the writ petitions, holding that the petitioners are not exempt from tax under the Act and that the State Legislature is competent to impose tax on the sale of toddy. The court rejected the petitioners' request for a certificate of fitness to appeal to the Supreme Court, stating that the case does not involve any substantial question of law of general importance. The court also denied the petitioners' request for a stay of the order. There was no order as to costs.
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1985 (1) TMI 288
Issues Involved:
1. Validity of Section 6 of the Amendment Act.
2. Whether the Amendment Act authorizes the levy and collection of sales tax without amending the definition of "sale" in the Sales Tax Act.
Summary:
(1) Validity of Section 6:
The petitioners, comprising hoteliers and licensees of bars and restaurants, challenged the Constitution (Forty-sixth Amendment) Act, 1982, particularly sections 4(f) and 6, as ultra vires of Article 368 of the Constitution and violative of their fundamental rights under Articles 14, 19(1)(g), and 21. They argued that section 6 of the Amendment Act, which sought to validate the levy and collection of sales tax on the supply of food and drinks, was not a valid exercise of the constituent power under Article 368. The Court, however, held that the Amendment Act was passed following the procedure prescribed under Article 368, including ratification by more than half of the State Legislatures and the President's assent. The Court found that the Amendment Act did not encroach upon judicial power but merely removed the basis of the earlier Supreme Court judgments that had exempted such supplies from sales tax. The Court concluded that section 6 of the Amendment Act was within the amending power of Parliament and did not affect the basic structure of the Constitution, thereby upholding its validity.
(2) Does the Amendment Authorize Levy of Tax:
The petitioners contended that the definition of "sale" in the Andhra Pradesh General Sales Tax Act, 1957, had not been amended to include the supply of food and drinks in hotels and restaurants, and thus the tax authorities lacked jurisdiction to levy sales tax on such supplies. The Court observed that section 6 of the Amendment Act aimed to validate past transactions and tax collections but did not explicitly authorize future levy and collection of sales tax without further legislative action by the State. The Court noted that other States had amended their respective Sales Tax Acts following the Amendment Act to include such supplies within the definition of "sale." Therefore, the Court held that further amendment of the State law was necessary to levy and collect tax on the supply of foodstuffs and beverages from 2nd February 1983 onwards. The provisional assessment orders for 1983-84 were quashed.
Conclusion:
The Court held that the Amendment Act:
(i) is valid and does not offend any of the basic features of the Constitution;
(ii) is not ultra vires of Article 368 of the Constitution and is not violative of Articles 14, 19(1)(g), and 21 of the Constitution; and
(iii) does not authorize the imposition and collection of tax on the supply of foodstuffs from 2nd February 1983, but confers legislative competence on the State Legislature to do so and merely validates the collection and recovery of tax by removing the invalidity in the existing law subject to the exemption granted under sub-section (2) of section 6. The writ petitions were partly allowed to this extent.
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1985 (1) TMI 287
Issues Involved:
1. Whether the services rendered at the petitioner's canteen, in compliance with the provisions of the Factories Act and the Mines Act, involved any element of sale?
2. Whether, on the facts and in the circumstances of the case, the petitioner was a dealer in respect of the canteen sale and liable to sales tax?
Issue-wise Detailed Analysis:
Issue I: Whether the services rendered at the petitioner's canteen, in compliance with the provisions of the Factories Act and the Mines Act, involved any element of sale?
The court addressed this issue by referencing the settled law in Vishnu Agencies (Private) Limited v. Commercial Tax Officer [1978] 42 STC 31 (SC); AIR 1978 SC 449, which concluded that "a transaction which is effected in compliance with the obligatory terms of a statute may nevertheless be a sale in the eye of the law." Therefore, the court affirmed that the services rendered at the petitioner's canteen did involve an element of sale. The answer to question No. I was rendered in the affirmative, i.e., in favor of the Revenue and against the assessee.
Issue II: Whether, on the facts and in the circumstances of the case, the petitioner was a dealer in respect of the canteen sale and liable to sales tax?
The court delved into whether the petitioner could be considered a "dealer" under section 2(f) of the Bihar Sales Tax Act, 1959, as it stood unamended in the year 1962-63. The petitioner argued that to be classified as a dealer, there must be a business with a profit motive or at least an element of commercial character, which was absent in this case since the canteens were run on a no-profit-no-loss basis due to statutory obligations.
The court noted that the statutory definitions required a person to be engaged in a business or sustained commercial activity to be deemed a dealer. The court cited precedents such as Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue, West Bengal [1967] 20 STC 398 (SC) and State of Gujarat v. Raipur Manufacturing Company Ltd. [1967] 19 STC 1 (SC), which emphasized that a business must have a profit motive, even if no profit is actually made.
The court highlighted three key premises:
1. The statutory obligation under the Factories Act and Mines Act mandated the maintenance of canteens, eliminating voluntary engagement in the business of selling foodstuffs.
2. The canteens were run without any profit motive, as required by law.
3. The Memorandum and Articles of Association of the company did not authorize it to run canteens as a business.
The court concluded that merely complying with statutory obligations does not constitute engaging in a business. The petitioner-company was not carrying on the business of running canteens and, therefore, could not be considered a dealer under section 2(f) of the Act.
The court also referred to binding precedents from the Supreme Court, such as State of Tamil Nadu v. Thirumagal Mills Limited [1972] 29 STC 290 (SC) and State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Company of India Limited [1973] 31 STC 426 (SC), which supported the view that running canteens under statutory obligations did not make the company a dealer liable for sales tax.
The court overruled the Division Bench judgment in Commissioner of Commercial Taxes, Bihar v. Burn and Company Limited (Tax Case No. 58 of 1966) and expressed dissent from the Orissa High Court's judgment in Tata Iron and Steel Company Limited v. State of Orissa [1975] 35 STC 195, which had taken a contrary view.
Finally, the court held that the petitioner was not a dealer under section 2(f) of the Act in respect of the canteen sales and was consequently not liable to sales tax. The answer to question No. II was rendered in the negative, i.e., in favor of the assessee and against the Revenue.
Separate Judgments:
UDAY SINHA, J. - I agree.
NAZIR AHMAD, J. - I agree.
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