TMI Blog1993 (9) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and order of a Division Bench of the Punjab and Haryana High Court whereby the writ petition filed by the respondents was allowed and section 38 of the Haryana General Sales Tax Act, 1973, and rule 53 of the Haryana General Sales Tax Rules, 1975, were struck down as unconstitutional. The respondents claimed in their writ petition to be clearing and forwarding agents. They rendered to their clients the service of booking and taking delivery of consignments at the railway stations at Sirsa and Hissar. On the instructions of their clients they arranged for booking of consignments to be transported by railway from the aforesaid railway stations and obtained the necessary documents in the names of their clients; similarly, they took delivery of consignments on behalf of their clients at the aforesaid railway stations and handed over the same and the documents relative thereto to their clients. For such services they were remunerated by their clients. By virtue of sub-section (1) of the said section 38 of the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the said Act") they were obliged to furnish information in respect of such consignments to, and by virtue of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sale or purchase of goods. The livelihood of the petitioners is not taken away in any way". The High Court found that the respondents were admittedly neither dealers nor liable to pay sales tax under the said Act. No foundation, however remote, had been laid in the written statements to warrant the finding that the respondents were not strangers to the sale or purchase of goods handled by them on behalf of their clients. The question, therefore, was whether the State Legislature was competent to legislate in respect of the respondents. The High Court after reference to various authorities, held that a clearing or forwarding agent or "dalal" was a stranger to the transaction of sale or purchase of the goods. He was not liable to pay sales tax nor was he responsible for its evasion inasmuch as he was not a dealer. This apart, there was no justification to raise a presumption of evasion of sales tax in the transactions in respect of which an agent or "dalal" was required to furnish particulars and information under the said section 38. Similarly, it was wrong to assume evasion of sales tax in the transactions the particulars and information of which an agent or "dalal" had faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d contracts for or on behalf of any dealer for a fee, reward, commission, remuneration or other valuable consideration or otherwise. (ii) 'person transporting goods' shall, besides the owner, include the manager, agent, driver, employee of the owner or person incharge of a place of loading or unloading of goods or of a railway out-agency, city booking office or city booking agency, when run by a private person under a contract with railways but excluding a rail head or a post office or of a goods carrier carrying such goods or a person who accepts consignment of such goods for despatch to other places or gives delivery of any consignment of such goods to the consignee." Section 2(c) of the said Act defines "dealer" thus: " 'dealer' means any person including a department of Government who carries on, whether regularly or otherwise, trade whether with or without a profit motive, directly or otherwise, whether for cash, deferred payment, commission, remuneration or other valuable consideration, of purchasing, selling, supplying or distributing any goods in the State, or importing into, or exporting out of the State, any goods, irrespective of the fact that the main place of busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Application for licence required to be obtained under section 38 shall be in form S.T. 40 and shall be made to the assessing authority of the area in which the place of business of the forwarding or clearing agent or dalal or the person transporting goods is located, within a period of thirty days of the coming into force of these rules. (2) The application shall be accompanied by a treasury receipt for five rupees on account of fee. (3) When the assessing authority after making any enquiry that he may consider necessary, is satisfied that the applicant has correctly given the requisite information, that he has deposited the licence fee into the appropriate Government treasury and that the application is in order he shall issue a licence in form S.T. 41. (4) The licence shall be held subject to the conditions set forth therein and the provisions of the Act and these rules. (5) A record of the licences issued shall be kept in a register in form ST 42." Rule 52 empowers the assessing authority granting such licence to cancel it in case of breach of the said rules, failure to furnish any information as required under rule 53 or furnishing of false information. The applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle to goods who is required to furnish the requisite particulars and information. However, sub-section (2) of the said section 38 debars all clearing or forwarding agents, "dalals" or other persons transporting goods within the State from carrying on their business unless they are licensed under the said Act and the penalty that is provided for in sub-section (3) is applicable to any clearing or forwarding agent, "dalal" or person transporting goods if he contravenes the provisions of sub-section (1) or (2). Therefore, it would appear that a clearing or forwarding agent or "dalal" or other person transporting goods within the State, even though he may not be handling documents of title to goods, is obliged to take a licence under the said Act though he may not be liable to the penalty as hereinafter explained. Under the provisions of sub-section (3) the Commissioner or any person appointed to assist him may impose the penalty after giving the person proposed to be penalised a reasonable opportunity of being heard and that penalty shall be of an amount equivalent to 20 per cent of the value of goods in respect of which no particulars and information has been furnished. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the said Rules the licence that is mandatory for carrying on the business of a clearing or forwarding agent or "dalal" or transporter of goods can be cancelled, in which event the clearing or forwarding agent or "dalal" or person transporting goods stands to lose his livelihood. This provision is applicable also, having regard to the definition of "person transporting goods", to an employee of the owner of the goods who books or receives them, so that he too stands in danger of losing his employment. The forms which have been referred to require the clearing and forwarding agent, "dalal" and person transporting goods to maintain records of and furnish information regarding the numbers of the registration certificates under the said Act of the consignor and the consignee. It is not clear from the said Act or otherwise that the clearing or forwarding agent or "dalal" or person transporting goods would necessarily have this information. The clearing or forwarding agent, "dalal" and person transporting goods is also required to maintain a record of and furnish information regarding the weight and value of the goods booked or taken delivery of through him. It is not clear ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame can be said to be ancillary or subsidiary matters which are fairly and reasonably comprehended within the power to levy sales tax. If a clearing or forwarding agent or "dalal" or person transporting goods is indeed reasonably and proximately connected with the sale occasioning the liability to the sales tax, it is legitimate to require him to license himself under the said Act and maintain and furnish such information and particulars to the assessing authority thereunder as he would in the course of his business come to possess. It is legitimate then to make him liable for such escapement of tax as has resulted from the breach by him of such obligation and to a reasonable penalty. As is clear from a reading of sub-section (1) of the said section 38, it is not every clearing or forwarding agent or "dalal" or person transporting goods who comes into possession of the particulars and information required to be furnished under the said Act and Rules for the sub-section itself casts that obligation only upon such clearing or forwarding agents, "dalals" or persons transporting goods who during the course of their business handle "documents of title to goods for or on behalf of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can reasonably and fairly be imposed which bears a proportion to the quantum of tax that has escaped assessment but it cannot reasonably and fairly bear a proportion to the value of the goods the sale of which has occasioned the liability to tax. A penalty as high as that sought to be imposed could well put a smaller clearing or forwarding agent or "dalal" or person transporting goods out of business. The definition of "person transporting goods" in the explanation to the said section 38 includes the manager, driver and employee of the owner of the goods. Such manager, driver or employee would be required to be licensed under sub- section (2) of the said section 38 and would be liable to penalty and cancellation of his licence in the event that he did not furnish the information and particulars required by sub-section (1) provided he had handled the documents of title to the goods. It seems to us that where the owner of the goods is a company or firm the booking and taking delivery of goods and the handling of documents of title thereto would necessarily be done by one or other employee of the company or firm and it is not reasonable or fair to require all such employees to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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