TMI Blog1952 (12) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or office in the State of Bihar. It is stated in the affidavit that the petitioner is not a resident of Bihar nor does the petitioner carry on business as dealer within the territorial limits of Bihar. The petitioner alleges that on 18th December, 1951, the Superintendent of Commercial Taxes sent a notice under Section 13(5) of the Bihar Sales Tax Act "calling upon the petitioner to apply for registration and submit a return showing turnover for the period 26th January, 1950, to 30th September, 1951". The petitioner remonstrated saying that there is no liability to pay tax under the provisions of the Bihar Sales Tax Act and the petitioner cannot be lawfully required to be registered as dealer. But the Superintendent of Sales Tax rejected the contention and required the petitioner to comply with the terms of the notice previously sent. On 28th May, 1952, the petitioner was informed that in case of default, assessment will be made by the Sales Tax Officer to the best of his judgment in accordance with the provisions of Section 13(5) of the Act. It is submitted on behalf of the petitioner that the State of Bihar has no jurisdiction to impose sales tax on persons residing outside B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he acted mala fide without any such information. Section 13(5) not merely confers a power on the Sales Tax Officer to investigate but the section imposes a duty upon the Sales Tax Officer to make assess- ment after giving reasonable notice. The section states that if the Com- missioner is satisfied that any dealer is liable to pay tax, he shall after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of tax, if any, due from the dealer. The section presupposes that the Sales Tax Officer has power to satisfy him- self; and when he has power to do that he has power to investigate into the matter which comes before him and to form a conclusion one way or the other. It is manifest that the section expressly confers on the Sales Tax Officer jurisdiction to investigate for himself the facts before making the order of assessment. In my opinion the Sales Tax Officer was undoubtedly acting within his jurisdiction in issuing notice under Section 13(5) against the petitioner asking him to apply for registration and submit a return. It was contended for the petitioner that the Sales Tax Officer was erroneous in law in holding that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sales which have taken place both in and outside Bihar exceed- ed Rs. 10,000 shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such commencement". Section 2(c) as it originally stood defines "dealer" to mean "any person who carries on the business of selling or supplying goods in Bihar, whether for commission, remuneration or otherwise and includes any firm or a Hindu joint family, and any society, club or association which sells or supplies goods to its members". The section was amended by Bihar Act XVII of 1950 and as a result of the amendment the word "Bihar" was omitted from the sub-section. Section 2(g) states: " 'Sale' means, with all its grammatical variations and cognate expressions, any transfer of pro- perty in goods for cash or deferred payment or other valuable considera- tion, including a transfer of property in goods involved in the execution of contract but does not include a mortgage hypothecation, charge or pledge: (1) (1903) 4 Tax Cas. 549. Provided that a transfer of goods on hire purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Constitution which states: "Except in so far as Parliament may by law otherwise provide, no law Page No: 49 of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce". It was pointed out by the learned counsel that the petitioner was a manufacturer of vaccine and biological products with its head-office located at Calcutta, that the peti- tioner sold goods to various persons of Bihar, that the goods were des- patched from Calcutta and after crossing the inter-State border the goods were delivered to various persons in Bihar. It was argued that the peti- tioner was engaged in inter-State trade or commerce and the State of Bihar had no authority to impose tax on the goods of the petitioner. In my opinion the argument is attractive but wholly unsound. Sec- tion 33(2) of the newly amended Act only reproduces the explanation which is set out in Article 286(1) of the Constitution. It is necessary in this context to set out the provisions of Article 286 in full: "(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified by the other. The principle is stated by the Judicial Committee in Citizens Insurance Co. of Canada v. Parsons and Queen Insurance Co. v. Parsons(1): "With regard to certain classes of subjects, therefore, generally described in Section 91, legislative power may reside as to some matters falling within the general description of these subjects in the legislatures of the provinces. In these cases it is the duty of the Courts, however difficult it may be, to ascertain in what degree, and to what extent, authority to deal with matters falling within these classes of sub- jects exists in each legislature, and to define in the particular case before them the limits of their respective powers. It could not have been the intention that a conflict should exist; and, in order to prevent such a result, the two sections must be read together, and the language of the one interpreted, and, where necessary, modified, by that of the other. In this way it may in most cases be found possible to arrive at a reasonable and practical construction of the language of the sections, so as to reconcile the respective powers they contain, and give effect to all of them". The principle of constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng "use" of property which has just been moved in inter- State commerce or imposing property tax on goods at the conclusion of the inter-State journey. In McGoldrick v. Berwind-White Coal Mining Co.(1), it was held by the Supreme Court that the New York City tax laid upon the Pennsylvania Corporation as regards sale of coal for consump- tion in New York City did not infringe the commerce clause of the Federal Constitution. In the course of his opinion Mr. Justice Stone said: "But it was not the purpose of the commerce clause to relieve those engaged in inter-State commerce of their just share of state tax burdens, merely because an incidental or consequential effect of the tax is an increase in the cost of doing the business. Not all State taxation is to be condemned because, in some manner, it has an effect upon commerce between the States and there are many forms of tax whose burdens, when distributed through the play of economic forces, affect inter-State com- merce, which nevertheless falls short of the regulation of the commerce which the Constitution leaves to Congress". It was next objected that the impugned sections of the Sales Tax Act were invalid since they are repugna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slation falling entirely within Item 21 of the Provincial Legislative List, that is, land or any interest in land and, there- fore, no question of repugnancy could arise by reason of the fact that the Act might encroach to a certain extent upon the items in the Concurrent Legislative List, viz., Items 7, 8 and 10. The argument of Dr. Sen Gupta on this part of the case must therefore fail. I pass on to consider the argument that there is conflict between the impugned Act and Article 304 of the Constitution. It was contended by Dr. Sen Gupta that the impugned provisions of the Bihar Sales Tax Act impose restrictions on the freedom of trade and commerce within the meaning of Article 304(b), that the Act was not valid since previous sanc- tion of the President had not been obtained to the introduction of the Bill in the State Legislature. In my opinion the argument of the learned counsel is not correct. Article 304 occurs in Part XIII of the Constitution which is entitled "Trade, Commerce and Intercourse within the Territory of India". Article 301 states that "subject to the other provisions of this (1) (1947) 74 I.A. 12. Part, trade, commerce and intercourse throughout the terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the State Legislature had no power to impose a tax of this nature. It was argued that under Article 254 of the Constitution the Bihar Legislature was competent to make a law only for the territory of Bihar. In my opinion the argument proceeds upon misconception. It is true that the petitioner is a resident of Calcutta but jurisdiction to tax does not depend on the residence or domicile of the assessee. On the contrary the power of the State to tax (1) 52 C.L.R. 189. extends to all matters properly within the sovereignty of the State. The jurisdiction to tax exists not only in regard to persons or property but also as regards the business done within the State. It is not however necessary for the purpose of jurisdiction that the entire transaction of sale should have taken place within the frontiers of the State. On the other hand, the fact that the goods are delivered in Bihar for consumption constitutes a sufficient nexus or territorial connection which confers jurisdiction upon the Bihar Legislature to impose the tax. This opinion is supported by the decision of the Judicial Committee in Wallace Brothers Co. Ltd. v. Commissioner of Income-tax, Bombay City and Bombay S ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
