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TMI Blog1964 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ia. It has a branch office at Jaipur. This office at Jaipur, besides supervising the supply of coal made directly by the collieries to the consumers through the petitioner, also carries on the business of selling coal in retail. For the purposes of retail sale the petitioner is registered with the Sales Tax Officer, Jaipur. On 2nd September, 1948, the petitioner entered into an agreement with the Equitable Coal Company Ltd., (hereinafter called the "collieries") whereby monopoly was granted to the petitioner for arranging the sale of their coal in the specified area. The collieries could effect the sale of their product through the petitioner and none else. According to the Colliery Control Order, 1945, the Government of India imposed certain restrictions on the sale and distribution of coal. Inter alia it provided that no person other than the owner of a colliery shall sell, despatch or transport coal to a purchaser unless sanction was accord- ed by the prescribed authority of the Government of India. A colliery could charge only the price fixed under clause 4 of the Order and if a broker was employed by the colliery such brokerage was not to exceed annas 6 per ton, Likewise, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vis the State a del cre dere agent. For the year 1955-56 the petitioner submitted its return to the Sales Tax Officer, Jaipur. In its return the petitioner furnished information regarding its turnover under two heads: (1) Regarding the supplies it made as a retail dealer, and (2) the supplies it made to the power houses in the State of Rajasthan, which sum the petitioner showed under the heading "turnover of goods exempted without fee". The Sales Tax Officer on the basis of that return submitted on 20th December, 1956, for the assessment year 1955-56 passed an order wherein for computing tax the Sales Tax Officer also included a sum of Rs. 7,11,941-13-3, representing the sale price of the coal supplied by the petitioner to the State of Rajasthan and assessed tax to the tune of Rs. 27,845-11-6. The petitioner paid its tax on the retail sales effected by it as a registered dealer having realised the same from the consumers, but it disputes its liability in respect of the coal supplies made by the collieries to the State of Rajasthan and it submits that it is not liable to pay the demand of Rs. 20,346-14-9, which is the tax claimed on that supply since that was no sale at the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner a bill used to be submitted and the price was paid as per agreement with the Government. The Government had nothing to do with the collieries. The respondents further submitted that the petitioner itself had placed before the Sales Tax Officer a consolidated statement of its turnover, including the price of the coal sold by it to the State of Rajasthan and it was on the basis of this consolidated statement that the Sales Tax Officer proceeded to assess the petitioner. A copy of the consolidated statement has been submitted with the reply. The petitioner, assuming that it had a grievance, according to the respondents, ought to have filed an appropriate appeal under the Sales Tax Act rather than invoked the extraordinary jurisdiction of this Court. It is disputed that the sale of coal was outside the State of Rajasthan and, therefore, it is submitted that Article 286 does not apply to the case. The petitioner had an alternative remedy by way of an appeal and the petitioner having allowed that remedy to lapse by efflux of time the present petition must fail. It is submitted that the petitioner is also guilty of latches and its petition should be dismissed. In its rejoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... United Motors (India) Ltd. [1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252." The existence of an alternative remedy is no bar to a party who comes to this Court with an allegation that its fundamental right has been infringed without the authority of law. In an appropriate case it may be the duty of the superior court to issue a writ of certiorari to correct the errors of an inferior court or tribunal called upon to exercise judicial or quasi-judicial functions and not to relegate the petitioner to other legal remedies available to him. If it is held that the Sales Tax Act itself does not authorise any such imposition and the law is not applicable to the circumstances of the case the provision of a remedy by way of appeal under the Act, cannot stand as a plea in bar. The learned Government Advocate invited our attention to two cases of this court-Ram Niranjan Kedia v. Income-tax Officer, 'A' Ward, Udaipur and Others I.L.R. 7 Raj. 509., and Jethmal Ramswaroop and Others v. The State and Others [1959] 10 S.T.C. 270. In Kedia's case I.L.R. 7 Raj. 509., notice under section 34(1) of the Indian Income-tax Act was issued. An appeal was preferred against the order in question but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited the sales tax for three years. Later the High Court of Allahabad held the levy of sales tax on forward transactions to be ultra vires. Thereupon, the assessee asked for a refund of the amount of the sales tax paid. The same was refused. The assessee moved the High Court of Allahabad praying for a writ of certiorari for quashing the aforesaid assessment orders and for a writ of mandamus requiring the Sales Tax Authorities to refund the aforesaid amount paid by the assessee. The High Court held that the State was bound to refund the moneys unlawfully received by it from the assessee by way of sales tax. The State preferred an appeal before the Supreme Court and it was held that section 72 of the Indian Contract Act makes no distinction between a mistake of law and a mistake of fact. The term has been used without any qualification or limitation whatever, and comprises within its scope a mistake of law as well as a mistake of fact. "The true principle enunciated is that if one party under a mistake, whether of fact or of law, pays to another party money which is not due by contract or otherwise that money must be repaid. The mistake lies in thinking that the money paid was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was a mere broker entitled to commission and the transac- tion between the petitioner and the State could in no sense be characterised as sale. This is borne out, urged the learned counsel, by the agreement dated 28th April, 1955, between the State of Rajasthan and the petitioner (exhibit P-3), wherein the petitioner was described as a mere contractor. Price for the sale as per clause(6) of the agreement was to be at the controlled rate. In point of practice as well the railway receipts, a sample copy of which is exhibit P-8, the consignor was Ranipur Colliery and the consignee was described as the Executive Engineer (Generation) Electrical and Mechanical Department. The procedure of supply according to the Control Order was as stated in paragraph 9 of the petition. In actual practice the Deputy Coal Commissioner (Distribution) Calcutta, used to sanction an allotment of coal in favour of the Chief Engineer, Electrical and Mechanical Department, Rajasthan, Jaipur, as would be apparent from exhibit P-4, a sample allotment order. The petitioner was, therefore, a mere broker or del cre dere agent and not a seller. The sale took place outside the State. In spite of the so- c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m selling or agreeing to sell, or offering to sell, coal at a price different from the price fixed under clause 4 of the Control Order. No agreement to the contrary shall be operative unless the same is modified in regard to price as fixed under clause 4. Clause 6 of the Control Order inter alia provides that where a colliery owner has signified to the Deputy Coal Commissioner (Distribution) in writing his willingness to sell direct to consumers and an allotment is made by the Deputy Coal Commissioner (Distribution) to a consumer with his consent for such direct sale, the coal shall be delivered to the consumer at the price fixed under clause 4, and no commission or other charges shall be paid in addition thereto, except where a broker is employed, a brokerage not exceeding six annas per ton may be paid by the colliery owner to the broker. Where the coal is purchased through a del cre dere agent then what he is entitled to receive is also specified in clause 6 of the Control Order. Under clause 12-E no person shall acquire or purchase or agree to acquire or purchase any coal from a colliery and no colliery owner or his agent shall despatch or agree to despatch or transport any coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Rajasthan State (exhibit P-5). A sample railway receipt admittedly indicated that the consignee used to be the Executive Engineer, Power House, Jaipur. This railway receipt, in practice, was sent to the consignee through the petitioner. The bill for the sale price of the coal supplied along with the copies of railway receipts were sent by the head office to its Jaipur office of the petitioner for collection of the price. Respondents' contention in their reply that they had nothing to do with the collieries does not appear to be correct. In this state of facts we have to ascertain whether the petitioner ever came to acquire any right or title in the coal received by the State of Rajasthan. We have it on record that the Deputy Coal Commissioner (Distribution) sanctioned the allotment of coal to the State Engineer. In the absence of any such sanction the collieries could not supply the coal to the petitioner nor could the petitioner purchase the coal from the collieries. The sanction was necessary before the collieries could, under the Control Order, sell or despatch any coal, thereafter the collieries despatched by rail the coal so sanctioned directly to the State power house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing tax on the sale of goods, other- wise the imposition would be illegal. In this connection we might refer to the decision in State of Bombay v. Ratilal Vadilal & Bros. [1961] 12 S.T.C. 18., which is a case very much in point. The facts were that Ratilal Vadilal & Bros., were commission agents through whom 22 tons of coal were obtained by a brick manufacturer. The colliery supplied the coal to the brick manufacturer directly. The consignment was in the name of the brick manufacturer. The bill was sent by the colliery to Ratilal Vadilal & Bros., to collect the price of the coal supplied together with their commission. The liability to pay the colliery rested upon Ratilal Vadilal & Bros. The question arose whether in the circumstances Ratilal Vadilal & Bros., was or was not a dealer within the meaning of the Bombay Sales Tax Act, 1953. The Supreme Court held: "The scheme of the Control Order shows that no sale of coal could take place except to a person holding a certificate. A sale otherwise was in contravention of the Control Order. The certificate which has been produced in the case, though made out in the name of the respondents, shows the consumer as the consignee. It is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, I hold that the word 'supply' in section 2(c) of the Act must be interpreted so as to include the conception of sale". To the same effect is the view of Das, J. In Karamchand Thapar & Bros. v. The State of Bihar [1956] 7 S.T.C. 58., the word "supply" in the Bihar Sales Tax Act again came to be considered and Das, C.J., and Kanhaiya Singh, J., held that the word "supply" in the definition of dealer in section 2(c) of the Bihar Sales Tax Act was not to be given its literal meaning but must be interpreted in a qualified sense. "Supply" is merely a form of sale and despatch, and unless there was sale there was no supply of goods. In this case as well the petitioner did not deal in coal but merely acted as a middleman and arranged for the despatch of coal from the collieries to the intending buyers. The Sales Tax Authorities held that the assessee being a registered dealer and the registration being in operation it was liable to pay tax on its sale of coal. The High Court held that merely because an assessee is a registered dealer it will be erroneous to say that even the transactions carried on by it as a middleman will be included in its taxable turnover. We are in respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready noticed that the agreement of sale and purchase was between the assessees and the mills. The mills refused to recognise the third parties as contracting parties. That transaction which took place between the assessees and the third parties was again a transfer of property in the goods and constituted sale. In the case before us there was no sale at any point of time by the collieries to the petitioner. The certificate of allotment was granted to the Executive Engineer, Rajasthan, Jaipur; the Engineer was designated as the consignee in the railway receipt; the petitioner merely passed on the railway receipt to the Engineer for the purposes of taking delivery from the railway and added nothing by way of profit. Therefore, the case before us contains no element of sale between the collieries and the petitioner. The facts of the second case from Nagpur were that the assessee was assessed to sales tax on the sale of logs to a company at Ambernath in the State of Bombay. The contract of sale between the assessee and the company inter alia provided that the logs on arrival at Ambernath were liable to be rejected by the company's factory manager if the logs did not conform to the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of a proxy, a factor, and other agent; but with this difference, that the broker, being employed by persons who have opposite interests to manage, he is, as it were, agent both for the one and the other, to negotiate the commerce or affair in which he concerns himself. Thus his engage- ment is twofold, and consists in being faithful to all the parties, in the execution of what each one of them entrusts him with. And his power is not a trust, but to explain the intentions of both parties, and to negotiate in such a manner as to put those who employ him in a condition to treat together personally." In this view of the matter we are of the opinion that the petitioner acted merely as a broker, a middleman who effected no sale or supply in the nature of sale or transferred any title in the property. In fact at no point of the time he had any title to pass. The price paid by the State to the collieries could not be included in the taxable turnover of the petitioner. The order of the Sales Tax Officer dated 20th December, 1956, is, therefore, not authorised by law to the extent it relates to the price paid by the State of Rajasthan to the collieries for supply of coal. To that exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the other part. The contractor shall supply the coal to the Rajasthan Government Power House at Jaipur in accordance with the specifications and terms as follows, for a period of one month- 1.. Rubble Coal, selected grade A, double screened, size ¾" to 1½" fusion point of ash 1250 F, from Bejdih, Dhamomain and Jamuria West Collieries and as per coal analysis mentioned in their letter No. CS/4844 dated 11-2-1955. 2.. The contractor shall deposit a sum of Rs. 10,000 (Rupees ten thousand only) as security for due performance of the contract, which would be forfeited in the event of their failure to fulfil their part of the contract satisfactorily. 3.. The test report given by the laboratory at Jaipur Power House will be final. 4.. The decision of the Chief Engineer, Electrical and Mechanical Department, Government of Rajasthan, will be final, for all purposes. 5.. The coal will be supplied F.O.R. colliery subject to the following- (a) Payment will be claimed only in respect of supplies actually received and admitted as per specifications at the Jaipur Power House. (b) The contractor will arrange all the transport and safe delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he colliery owner is obliged by clause (9) to dispose of coal in accordance therewith. Clause 12-E directs that- "No person shall acquire or purchase or agree to acquire or purchase any coal from a colliery and no colliery owner or his agent shall despatch or agree to despatch or transport any coal from the colliery except under the authority and in accordance with the conditions contained in a general or special authority of the Central Government." The actual procedure adopted for the supply as stated by the petitioner and not disputed by the appellant before the High Court was as follows: "The Chief Engineer, Electrical and Mechanical Department, Government of Rajasthan, Jaipur, informed the Deputy Coal Controller, Calcutta, for a monthly ad hoc allotment of coal through the petitioner. A copy was marked to the petitioner's office at Jaipur. The petitioner through its head office at Calcutta would submit a programme to the Deputy Coal Commissioner (Distribution), Calcutta, for the supply of coal from the collieries who issued a sanction according to the programme and sent copies of such sanction to the railway allotment authorities so that adequate wagons might be allotted an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers passed a resolution exempting sales of coal to the Electrical and Mechanical Department this could not be implemented because the papers were not submitted through the Finance Department. This decision was, however, orally communicated to the petitioner. In the meantime the petitioner submitted the returns for the assessment year 1956-57, showing therein the supply of the coal to the power houses under the head "turnover of goods exempt without fee on Form STV." The company alleged that it feared that the Sales Tax Officer would tax the said turnover as before. The petitioner contested its liability to be taxed in respect of the supply of coal to the power houses on three grounds. First, that the petitioner acted merely as a broker and was not a dealer within the definition of the word "dealer" in the first para. of section 2(f) of the Rajasthan Sales Tax Act, 1954, as far as the supplies in question are concerned. Secondly, that the sales took place in the course of inter-State trade and, thirdly, that the sales took place outside the State of Rajasthan. Mr. Viswanatha Sastri, relying on the decision of this Court in Messrs New India Sugar Mills Ltd. v. Com- missioner of Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is evident, he says, from clause (6) and the direction given by the Coal Controller under clause (8) of the Colliery Control Order. Under the direction coal could only be supplied to the State of Rajasthan. It seems to us that the petitioner is not a dealer within the defini- tion of the word "dealer" in the first para. of section 2(f), set out above. The petitioner did not sell or supply coal. What it did was to procure the supply of coal. Under the direction issued under clause (8) of the Colliery Control Order, it is the Equitable Coal Company that supplied the coal directly to the Rajasthan Government. No property in the coal ever passed or could pass to the petitioner. If the agreement dated April 28, 1955, contemplated a sale by the petitioner to the Rajasthan Government, the agreement could not be carried out in view of the provisions of the Colliery Control Order, at least as far as supplies from collieries are concerned, because the collieries could not but obey directions issued under clause (8). Therefore, we must reject the contention of Mr. Tewari that the petitioner fell within the first para. of section 2(f). Mr. Tewari put his alternative point thus: The High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he point raised by Mr. Tewari that the High Court should not have granted relief under Article 226. He does not dispute that the High Court had the jurisdiction, but he says that on the facts of the case, the High Court should not have interfered. We are unable to agree with him. The High Court has given good reasons for interfering. The High Court observed that "the petitioner had challenged the authority of the State of Rajasthan to enact a law whereby tax on the sale of goods outside the State of Rajasthan could be levied and the application of the law itself to the circumstances of the case. The petitioner has also averred in its petition that it has a fundamental right of free trade and any such imposition infringes this right of the petitioner. We cannot, therefore, entertain the plea in bar. " Regarding delay, the High Court excused the delay on the following ground: "The petitioner has also in our opinion adequately explained the dealy in seeking relief from this Court. The petitioner has alleged, and this allegation has not been controverted, that the Secretary of the Government Public Works Department, submitted a proposal to the Council on 30th December, 1957, recommen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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