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TMI Blog2003 (3) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... nce (Sales Tax) Act, 1941 which was then in force. 2.. The respondents challenged the constitutional validity of the following provisions of the Act: (i) section 2(6); (ii) Explanation to sub-section (1), sub-sections (5), (7), (8), (10), (11) and (12) of section 11; (iii) sub-section (4) of section 14; and (iv) rules 172, 173, 174, 188 and 189 of the West Bengal Sales Tax Rules, 1994 (for short "the Rules"). The Tribunal See Road Transport Association v. Inspector of Commercial Taxes [1998] 108 STC 355 at 395. held: "that section 2(6) of the 1994 Act is valid and constitutional with the rider that until the manner of disclosure of name and address of the consignor or consignee is prescribed in terms of this judgment, the provision as to disclosure of those particulars shall remain suspended. Observations have also been made in the body of the judgment regarding the extent of responsibility of a transporter in furnishing the required documents and disclosing the required particulars. The Explanation below sub-section (1) of section 11 is declared to be unreasonable and ultra vires the Constitution. The said Explanation is, therefore, struck down. As per paragraphs 20 and 21 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolative of article 14 of the Constitution, can be successfully met on the principle of reasonable classification having nexus to the object of the Act sought to be achieved; (See State of Bombay v. F.N. Balsara [1951] SCR 682 and Budhan Choudhary v. State of Bihar [1955] 1 SCR 1045. However, the Legislature enjoys a greater latitude for classification in the field of taxation (See: Steelsworth Ltd. v. State of Assam1 [1962] Suppl 2 SCR 589, Gopal Narain v. State of Uttar Pradesh AIR 1964 SC 370 and Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh AIR 1980 SC 286. No legislation can be declared to be illegal, much less unconstitutional on the ground of being unreasonable or harsh on the anvil of article 14 of the Constitution, except, of course, when it fails to clear the test of arbitrariness and discrimination which would render it violative of article 14 of the Constitution. (See Steelsworth Ltd. [1962] Suppl 2 SCR 589 and McDowell & Co. (1996) 3 SCC 709. 5.. Inasmuch as the expression "casual trader", defined in sub- section (6) of section 2 of the Act is of great significant, it will be apt to read it here: "2. Definitions.-In this Act, unless the context otherwise req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son other than a registered dealer for sale in West Bengal, or (c) purchases any goods, other than the excluded goods, in West Bengal from any person, other than a registered dealer, for purposes other than his personal use or consumption of such goods in West Bengal. The second part takes in its fold a person, whether he has a fixed place of business in West Bengal or not, who is (i) a transporter, as defined in clause (a) of the Explanation to section 72, and while carrying such goods in his goods vehicle, fails: (a) to disclose the name and address of the consignor or consignee in West Bengal, or (b) to furnish a copy of invoice, challan, transport receipt or consignment note or document of like nature in respect of such goods; or (ii) an owner or lessee of a warehouse where such goods are stored and fails (a) to disclose the name and address of the owner of such goods, or (b) to satisfy the Commissioner that such goods are for his personal use or consumption. And the third part contains a statutory presumption to the effect that such a transporter or an owner or lessee of a warehouse, who fails to fulfil the obligations mentioned above, is deemed to have brought su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransporter to furnish information which is beyond his capacity or control. So also a prudent and reasonable owner or lessee of a warehouse where such goods are stored is expected to know the name and address of the owner of such goods and requiring him to furnish those particulars cannot be said to be either oppressive, irrelevant or arbitrary. As an alternative to non-disclosure of the name and address of the owner of the goods stored in the warehouse, such an owner or lessee is required to satisfy the Commissioner that such goods are for his personal use or consumption. A person in possession of the goods must have stored them for and on behalf of the owner thereof or as his own goods for his personal use or consumption. The information required to be furnished by the owner or the lessee of a warehouse will normally be within his knowledge and, at any rate, ought to be within the knowledge of a reasonable owner or the lessee of a warehouse. In any event, after the Act came into force, such a person is expected to know and collect necessary particulars and information. So there can be no legitimate excuse for non-compliance of the statutory requirements. It is only in the event o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be levied on sales of goods which are effected on or after the date on which he becomes liable to pay tax under section 9 or sub-section (3) of section 27 and is registered under section 26 or section 27. Explanation.-Where a transporter, or an owner or a lessee of a warehouse, deemed to be a casual trader in respect of any goods referred to in sub-section (1), is found to have disposed of such goods, the disposal of such goods shall be deemed to have been made by way of sale by him in West Bengal, unless he proves it otherwise with satisfactory evidence. (2) The tax payable under this section by a casual trader shall be levied at the rate referred to in clause (a), clause (b), clause (d), clause (e), clause (f), clause (g), or clause (h), as the case may be, of sub-section (1) of section 17. (3) The tax payable under this section shall, notwithstanding anything contained in section 46, be determined, collected and recovered in such manner and by such authority as may be prescribed and shall be paid by such time as may be prescribed. (4) No person shall, except in accordance with the restrictions and conditions provided in sub-section (5), bring into West Bengal any goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 3 to assist him is satisfied that a casual trader may become liable to pay tax under sub-section (1) in respect of any goods, he may, in order to secure payment of tax that may become due upon determination of tax under sub-section (3) and for reasons to be recorded in writing, demand from such casual trader an amount in advance equivalent to the amount of tax that may become due from him after determination, or security for an equivalent amount, after taking into consideration the salable value of such goods. (8) The amount in advance equivalent to the amount of tax that may become due from a casual trader after determination after taking into consideration the salable value of the goods as aforesaid shall, on demand under sub-section (4), be paid by him in advance and shall be adjusted with the amount of tax due from him; and the security, if any, for the equivalent amount shall, on demand, be furnished by him, and shall be refunded to him, in such manner and on such terms and conditions as may be prescribed. (9) For the purposes of this section, if- (a) production and inspection of accounts, registers and documents, and seizure thereof, (b) entry, search and sealing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso is not relevant for our purpose. 12.. The Explanation to sub-section (1) says that where a transporter or an owner or lessee of a warehouse, deemed to be a casual trader in respect of any goods referred to in sub-section (1), is found to have disposed of such goods, the disposal of such goods shall be deemed to have been made by way of sale by him in West Bengal, unless he proves to the contra with satisfactory evidence. It is this Explanation which has been the subject-matter of a lengthy debate. It is contended by Mr. Yashank Adhyaru that except to the extent the provision of clause (29A) of article 366 of the Constitution of India provides for a deemed sale, no State Legislature can create a fiction to treat any other transaction as sale and, therefore, the disposal of the goods by a casual trader cannot per se be treated as sale of the goods and he cannot be put to onerous task of proving a negative fact that the disposal of the goods was not by way of sale. This contention, though attractive, lacks substance. It will be apposite to notice here section 4 of the Indian Evidence Act, 1872, which defines, inter alia, the expressions "may presume" and "shall presume". The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden of proof. The court has pointed out that the authority concerned before levying sales tax arrives at the conclusion by a judicial process that the goods have been sold inside the State and in so doing, relies upon the statutory rule of presumption contained in section 28-B of the Act which may be rebutted by the person against whom action is taken under section 28-B. The person concerned has opportunity to displace the presumption by leading evidence, therefore there is no unconstitutionality in it. 14.. It is provided in sub-section (2) that the levy of tax payable by a casual trader shall be at the rate referred to in clauses (a), (b), (d), (e), (f), (g) or (h), as the case may be, of sub-section (1) of section 17. Sub-section (3) says that the tax payable under section 11 shall be determined, collected and recovered in such manner and by such authority and as may be prescribed, notwithstanding anything contained in section 46. The mandate contained in sub-section (4) is that no person shall bring into West Bengal any goods (other than the excluded goods), except in accordance with the restrictions and conditions provided in sub-section (5). 15.. A plain reading of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. What it aims is an amount in advance equivalent to the amount of tax that may become due from a casual trader or security for an equivalent amount depending upon the saleable value of the goods in question. There is thus a clear nexus between the amount in advance or security and the levy of impost on the casual trader. The provision is meant to ensure collection of tax. Sub-section (8) provides for payment of the amount in advance or the security, if any, referred to in sub-section (7) by a casual trader on demand under sub-section (4) at the time of bringing any goods, except those specified in Schedules I and IV or those notified under section 10(2) of the Act, for being adjusted with the amount of tax due from him and for refund after due adjustment in the prescribed manner. 17.. It is, thus clear that sub-sections (3), (4), (5), (6), (7) and (8) are part of the same scheme aimed at prevention of evasion of tax payable under the Act. Sub-sections (10) and (12) are consequential provisions. Sub-section (10) empowers the Commissioner or the authorised officer to seize the goods with containers or other packing materials, if any, when he has reason to believe contravention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reasons more than one. Firstly, section 8A of that Act, as it stood at that time was upheld by the Constitution Bench as valid and secondly, in the instant case, the impugned provisions embody ample safeguards for a transporter of goods as also for an owner or lessee of a warehouse, enquiry is contemplated for determination of the amount in advance or security authorised to be demanded which, in any event, cannot be more than the amount of tax that could be levied in respect of the goods in question on such a person. It supports the case of the appellant. 20.. In Balaji v. Income-tax Officer, Special Investigation Circle [1962] 2 SCR 983, the petitioner challenged the provisions of section 16(3)(a)(i) of the Income-tax Act, 1922 in this Court under article 32 of the Constitution of India. The petitioner and his wife started a business in partnership and admitted their minor sons to it. While computing the total income of the petitioner for the purpose of assessment to income-tax, the Income-tax Officer included the share of the income of the wife and the minor sons under the said provision. It was held that entries in the legislative Lists were not powers but are fields of le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was contended that being transporters, they were not trading in sale or purchase of any goods and therefore they could not be held to be "dealers" within the meaning of the Act and as such the impugned provisions which laid certain obligation on them were beyond the legislative competence of the State Legislature under entry 54 of List II of the Seventh Schedule to the Constitution. Negativing the contention it was held that if the Legislature makes any ancillary or subsidiary provisions which incidentally transgresses over its jurisdiction for achieving the object of such legislation, it would be a valid piece of legislation. The entries in a legislative List should not be read in a narrow or pedantic sense but must be given their fullest meaning, the widest amplitude and be held to extend to all ancillary and subsidiary matters which can fairly and reasonably be comprehended. Thus, the provision incorporating mechanism to seal all loopholes of escape and casting obligation on someone to perform certain acts to achieve this objective was held to be a valid provision. 23.. In State of Rajasthan v. D.P. MetalsSee State of West Bengal v. Road Transport Association [2003] 131 STC 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Bengal on his own account or on behalf of any other person shall, on interception by any person appointed under sub-section (1) of section 3 and authorised by the Commissioner in this behalf (hereinafter referred to in this section as the authorised officer), stop the road vehicle and produce, on demand, before such authorised officer, invoice, challan, transport receipt or consignment note or document of like nature in respect of such goods and shall also furnish the name, address and number of certificate of registration of the consignor or consignee, if registered, and thereafter,- (a) if the authorised officer is satisfied that the person transporting the goods is not liable to pay tax under sub-section (1), he shall immediately allow movement of the road vehicle, or (b) if the authorised officer is satisfied that the goods are being transported by a casual trader or a person on behalf of a casual trader, he may detain the road vehicle for a period ordinarily not exceeding twenty-four hours for the purposes of sub-section (6)." 27.. A perusal of sub-section (4) shows that every person who is transporting in a road vehicle goods, other than the excluded goods, purchased by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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