TMI Blog1958 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... refore be contended that in view of Article 286(3) no tax can be levied on the sale of a commodity declared essential by Act XXIV of 1946. We may add that Act LII of 1952 is not available to the appellant either, for it had not been passed at the date when the levy of the tax objected to in this case was made. Appeal dismissed. - Civil Appeal No. 192 of 1955, WP. No. 2/A/5/2 of 1951-52, - - - Dated:- 3-4-1958 - DAS S.R. J. AND VENKATARAMA AIYAR T.L. AND DAS S.K. AND SARKAR A.K. AND VIVIAN BOSE JJ. T.V.R. Tatachari, Advocate, for the appellant. C.K. Daphtary, Solicitor-General of India, (R. Ganapathi Iyer and T.M. Sen, Advocates, with him), for the respondents -------------------------------------------------- The Judgment of S.R. Das, C.J., Venkatarama Aiyar, S.K. Das and Sarkar, JJ., was delivered by Sarkar, J. Bose, J., delivered a separate Judgment. SARKAR, J.- This appeal raises a question under the Hyderabad General Sales Tax Act, 1950. It is from a judgment of a Full Bench of the High Court at Hyderabad, dated September 11, 1953, which, by a majority, dismissed a petition by the appellant asking for the issue of certain writs. In Warangal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t liable to pay any tax. He also intimated that a dealer in ground-nuts was at liberty to collect the tax paid by him on his purchases of ground-nuts, from the person to whom he subsequently sold the ground-nuts and in the cases in which he converted the ground-nuts into oil, he was entitled to include the tax in the price of the oil sold by him. The Association then addressed the Finance Minister of the Government of Hyderabad on the same question, on January 9, 1951. Before a reply was received from the Finance Minister the members of the Association were pressed by the local Tax Authorities to submit their returns and this they thereupon did, claiming in such returns a deduction of tax on ground-nuts purchased by them from the agriculturists. Assessments were duly made on these returns but the deductions claimed were not allowed. Demands for payment of tax were thereafter made on the members of the Association in terms of the orders of assessment. The assessees preferred appeals from the orders of assessment but these appeals had not been disposed of on the date when the petition for the issued of writs, out of which the present appeal arises, was filed. On June 5, 1951, the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Act. The learned Advocate for the appellant then stated that sections 3 and 4 of the Act showed that a purchase from an agriculturist is outside the scope of the Act. Sections 3 and 4 are sections levying the tax. These sections make every dealer and every casual trader whose turnover in the periods mentioned exceeds a specified amount, liable to pay tax on so much of his turnover as is attributable to transactions in goods other than exempted goods, which it may be stated ground-nuts were not. It will not be necessary to refer to a casual dealer hereafter as this appeal is not concerned with any. The learned Advocate's contention is that the tax is by these sections really levied on a dealer, in respect of his turnover attributable to some of his transactions. He then referred to the definition of a dealer in the Act which is substantially that a dealer is a person engaged in the business of selling or supplying goods. He points out that an agriculturist is not a dealer because his business is not to sell or supply the agricultural produce but to grow them. We will for the purpose of this appeal assume that an agriculturist is not a dealer. We say assume, because it is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable to agree that sections 3 and 4 do not impose a tax on a purchase by a dealer from an agriculturist. Under these sections the tax is on the turnover, that is to say, the aggregate amount for which the goods are either bought or sold. The sections no doubt limit the taxable turnover to transactions in goods which are not exempted goods. But this only means that the buying or selling, whichever is taxed, is not to be of the exempted goods. It may be pointed out here that under section 5 of the Act the tax is made payable at every point in a series of sales by successive dealers but the buyer and the seller are not both to be taxed in respect of the same transaction of sale, and where a dealer is taxed as the buyer of goods he shall not be taxed in respect of a subsequent sale by him of the same goods, and under rule 5(2) of the Rules framed under the Act, in the case of ground-nuts the turnover shall be the amount for which they were bought by the dealer. The result therefore is that under the Act tax is leviable on a sale either on the seller or on the buyer but not on both and it has been provided by rule 5(2) that in the case of sale of ground-nuts the buyer shall pay the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. The State of Bihar [1958] 9 S.T.C. 267. that in law a sales tax need not be an indirect tax and that a tax can be a sales tax though the primary liability for it is put upon a person without giving him any power to recoup the amount of the tax payable, from any other party. We do not think it necessary to go into the question whether the respondents were right in informing the appellant that he could recoup himself of the amount paid by him as tax by collecting the tax from the persons to whom he in his turn sold the ground-nuts or if he converted them into oil, by adding the amount of the tax to the price of the oil, for the primary liability for the tax was on the appellant and it made no difference whether he was able to recoup himself the amount paid or not. The last point of the learned Advocate for the appellant is that, ground-nuts had been declared an essential commodity by Parliament and therefore under Article 286(3) of the Constitution no tax was leviable in respect of it. That provision in the Constitution, which was later repealed, was in these terms: "No law made by the legislature of a State imposing, or authorising the imposition of, a tax on the sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d distribution thereof, and trade and commerce therein. " The object of the declaration by the Act of goods as essential was not to prevent sales tax being levied on them. The Act had nothing to do with Article 286(3) of the Constitution and in fact did not declare any goods to be essential for the life of the community at all. It there- fore seems to us that Act XXIV of 1946 was not an Act declaring any commodity essential for the life of the community within the contemplation of Article 286(3). In our view, any Act of Parliament declaring certain goods to be essential for its own purposes, as Act XXIV of 1946 does, is not an Act within the contemplation of Article 286(3). The Parliamentary Act, there contemplation, has to be passed in exercise of the powers contained in it and must clearly be referable to it. In fact such an Act was later passed by Parliament. That was "The Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, LII of 1952, which came into force on August 9, 1952. Its preamble states it to be an Act to declare in pursuance of clause(3) of Article 286 of the Constitution, certain goods to be essential for the life of the community and sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes as well but surely it is impossible to say that they are not essential for the life of the community; and when Parliament goes out of its way to declare them essential and provides penalties for contravention of orders made about them, it seems to me, with the deepest respect, that we shut our eyes to reality when we hold that Parliament meant them to be essential for some subsidiary and unessential purpose but not essential for the one thing for which, apart from subtle technicalities, one would have thought food and clothing and raiment are primarily essential, namely the life of the community. With the utmost respect, I cannot accept this subtlety of thought and I would hold broadly and boldly that when Parliament declared this commodity to be essential, it meant essential for the purposes for which such a commodity is normally essential, namely, the life of the community. It may be that there is no need to control the commodity at a given date but that does not mean that it is not essential for the life of the community. All it means is that though essential for that purpose, control is not necessary at a particular point of time. The only other point is whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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