TMI Blog1968 (10) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... mending Act applies mutatis mutandis to Haryana Amendment Act also. - W.P. No. 185 of 1968, 230 of 1968, 239 of 1968, 248 of 1968, 249 of 1968, 252 of 1968, & 253 of 1968 - - - Dated:- 29-10-1968 - HIDAYATULLAH M., SHAH J.C., RAMASWAMI V. AND HEGDE K.S. AND GROVER A.N. JJ. Hardev Singh, Advocate, for the petitioner in W.P. No. 169 of 1968. R.N. Sachthey, Advocate, for the respondents in W.Ps. Nos. 185, 230, 239, 248, 249, 252 and 253 of 1968. O.P. Malhotra and R.N. Sachthey, Advocates, for the respondents in W. Ps. Nos. 169 to 172 of 1968. Anand Saroop, Advocate-General for the State of Haryana (R.N. Sachthey, Advocate, with him), for the respondents in W.P. Nos. 218, 219, 227, and 228 of 1968. B. Datta and P.C. Bharthari, Advocates, for J.B. Dadachanji and Co., for the interveners in W.P. No. 165 of 1968. S.V. Gupte, Senior Advocate (S.K. Mehta and K.L. Mehta, Advocates of K.L. Mehta and Co., with him), for the petitioner in W.P. No. 133 of 1968. M.C. Chagla, Senior Advocate (A.N. Sinha and B.P. Jha, Advocates, with him), for the petitioners in W.P. No. 185 of 1968. Niren De, Solicitor-General of India (O.P. Malhotra and R.N. Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 956 (74 of 1956) provided as follows: "15. Restrictions and conditions in regard to tax on sale or Purchase of declared goods within a State.-Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent. of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State." The section provides that in respect of declared goods the tax (sale or purchase) shall not exceed the prescribed limit and shall not be levied at more than one stage and shall be refunded to persons from whom it is collected if the goods are sold in the course of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1948, and for the assessment years 1960-61, 1961-62 and 1962-63 the mills denied their liability to the Central sales tax on the purchase of cotton in the accounting years. The scheme of the Act then in force put the tax on purchase of cotton (which was a declared commodity) at the rate of 2 naye paise in a rupee. By the second proviso to section 5(1) it was further provided that such tax shall not be levied on the purchase or sale of such goods at more than one stage. The word "dealer" at that time was defined as follows: "'Dealer' means any person including a department of Government who in the normal course of trade sells or purchases any goods that are actually delivered for the purpose of consumption in the State of Punjab, irrespective of the fact that the main place of business of such person is outside the said State and where the main place of business of any such person is not in the said State, 'dealer' includes the local manager or agent of such person in Punjab in respect of such business." The provisions for taxing purchases of cotton were challenged on the ground that there was a possibility of the tax being levied at more than one stage, the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der that the second proviso to section 5(1) by its mere declaration prevented the levy of tax at more than one stage. The difficulty, however, remained that the Act itself did not indicate the stage at which the tax was to be levied and because under section 15(1) of the Central Act there could be no liability for payment of tax unless this stage was so stated in the Act or the rules thereunder. It was pointed out that a dealer would have to show in his return all purchases of cotton and pay the tax with his return. There was nothing which would have enabled the dealer to know whether the tax had already been paid by another dealer and to exclude from his return those transactions. The dealer could not take a chance as heavy penalties were provided. This was particularly so where the goods passed through an unregistered dealer's bands at an intermediate stage. In dealing with the latter part of the reasons this court gave an example which may be quoted here: "...if a dealer A sells the declared goods to B, six months after the close of the year (B being a registered dealer), A becomes liable to purchase tax. But, if B sells the identical declared goods, again, after the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never be taken into account at any stage for the purpose of calculating or arriving at the taxable turnover and for levying tax." Relying upon the observations in A.V. Fernandez v. State of Kerala [1957] S.C.R. 837; 8 S.T.C. 561. this court concluded: "...the provisions contained in a statute with respect to exemptions of tax or refund or rebate, on the one hand, must be distinguished from the total non-liability or non-imposition of tax, on the other. These observations, also, in our opinion, effectively provide an answer to the stand taken by the State, in this case, that section 12 of the Act provides an adequate relief, by way of refund, even if tax is collected at an earlier stage." The Amending Acts which are now challenged set about removing these difficulties. These amendments are again challenged on the same lines. It is convenient to take the two Amending Acts separately. First we shall take up for consideration the Punjab amendments. Here, we are concerned only with a few of the amendments made by the Amending Act No. 7 of 1967. Section 5 was amended retrospectively from different dates. In sub-section (1), in the second proviso, the words "as defined in clause (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the assessing authority shall (whether or not an application is made to him in this behalf), review all assessments and reassessments made before the commencement of the Punjab General Sales Tax (Amendment and Validation) Act, 1967, in respect of declared goods and make such order varying or revising the order previously made as may be necessary for bringing the order previously made into conformity with the provisions of this Act as amended by the Punjab General Sales Tax (Amendment and Validation) Act, 1967: Provided that no proceeding for review shall be initiated without giving the dealer concerned a notice in writing of not less than thirty days. (2) Any dealer on whom a notice is served under subsection (1) may within thirty days from the date of receipt of such notice intimate in writing the assessing authority of his intention to abide by the assessment or reassessment sought to be reviewed and if he does so, the assessing authority shall not review such assessment or reassessment under this section. (3) No order shall be made under this section against any dealer without giving such dealer a reasonable opportunity of being heard. (4) Notwithstanding-anything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when he is. Therefore, he will not include the transaction in his taxable turnover in the first case but include it in the second. Goods in the hands of a dealer are not taxed. They are only taxed on the last purchase or sale. This information is always possessed by a dealer and by providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now clear. It is contended that even so the dealer may not know that he is the last dealer and may make some mistake. The law does not take into account the actions of persons who are negligent or mistaken but only of persons who act correctly, according to law. If the dealer is clear about his own position he is now quite able to see whether he is the last purchaser liable to pay the tax or the last seller liable to pay the tax. The Act by specify- ing the stage as the last purchase or sale by a dealer liable to pay the tax makes the stage quite clear and by giving an option to him not to include such transactions in his return saves him from the liability to pay the tax till he is the dealer liable to pay the tax. In our opinion, therefore, the present provisions of the Act are quite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents which are common to both sets of cases before considering the case of the Haryana amendment. It is argued that the reorganisation of the State took place on November 1, 1966, and the amendment in some of its parts seeks to amend the original Act from a date anterior to this date. In other words, the Legislature of one of the States seeks to amend a law passed by the composite State. This argument entirely misunderstands the position of the original Act after the reorganisation. That Act applied now as an independent Act to each of the areas and is subject to the legislative competence of the Legislature in that area. The Act has been amended in the new States in relation to the area of that State and it is unconceivable that this could not be within their competence. If the argument were accepted then the Act would remain unamendable unless the composite State came into existence once more. The scheme of the States Reorganisation Act makes the laws applicable to the new areas until superseded, amended or altered by the appropriate Legislature in the new States. This is what the Legislature has done and there is nothing that can be said against such amendment. In regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced, article 304(a) has no application". Here also the tax is at the same rate and therefore the tax cannot be said to be higher in the case of imported goods. It may be that when the rate is applied the resulting tax is somewhat higher but that does not offend against the equality contemplated by article 304. That is the consequence of ad valorem tax being levied at a particular rate. So long as the rate is the same article 304 is satisfied. Even in the case of local manufacturers if their cost of production varies, the net tax collected will be more or less in some cases but that does not create any inequality because inequality is not the result of the tax but results from the cost of production of the goods or the cost of their importation. This ground, therefore, has also no substance. We do not think it necessary to set down here the provisions of the Haryana Amendment Act because they follow the scheme of the Punjab Amendment Act in substance and what we have said in regard to the Punjab Amending Act applies mutatis mutandis to Haryana Amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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