TMI Blog1958 (8) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... s on or after the 26th January, 1950, and reduction of penalty, rejected the petition on other points. (4) Being dissatisfied with the said order the assessee filed an application (Exhibit F) before the Board for making a reference to the High Court on the following questions, said to be questions of law: (1) Whether the inclusion of sales tax realised during the period under assessment in the gross turnover determined is legal and valid? (ii) Whether there is material on the record to hold that the assessee was a dealer in respect of the coal transactions referred to in the assessment order? (iii) Whether on the materials on the record, the assessee is liable to assessment and penalty under section 24A of the Bihar Sales Tax Act, 1947, in respect of these transactions? (5) After due hearing, the Board for reasons set forth in the order dated the 5th March, 1956 (Exhibit G), refers only the following question of law for the decision of the High Court: "Whether, in the circumstances of the case, the sales tax could be legally included in the taxable turnover. Ramanugrah Prasad, for the petitioner." The Government Advocate and L. S. Sinha, for the opposite party. JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of sale or supply of goods or carrying out of any contract, effected or made during a given period, or, where the amount of turnover is determined in the prescribed manner, the amount so determined;........" It was also pointed out that section 14-A of the Act provides that "no dealer who is not a registered dealer shall realise any amount by way of tax on sale of goods from purchasers, nor shall any registered dealer make any collection of such tax except in accordance with such restrictions and conditions as may be prescribed". It was also submitted that section 14(6) of the Act made a provision that the amount of sales tax together with the penalty, if any, which remains unpaid on the date specified in the notice issued under section 14, sub-section (4), shall be recoverable as an arrear of land revenue. Learned counsel also relied upon the decision of this High Court in Messrs Tata Iron and Steel Company Limited v. State of Bihar [1956] 7 S.T.C. 158; A.I.R. 1956 Pat. 92. , where this question of law has been expressly dealt with and it has been held that the Sales Tax Authorities are not legally en titled to include sales tax in the taxable turnover of the assessee. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the amount of sales tax collected, and in substance the tax was "a tax on sales tax" and such an item was not the subject-matter of the State List and so the new legislation is ultra vires of the Bihar Legislature. The argument was put forward that the amount collected by the assessee retained the character of tax and was not part of the sale price. It was also pointed out that the sales tax is collected by the dealer for and on behalf of the State and the dealer is also under the obligation to make over the amount so collected to the State. In my opinion, the argument addressed by learned counsel on behalf of the assessee is untenable and must be rejected. I hold that the impugned statute, namely, Bihar Act XIII of 1958, falls within item 54 of the State List and does not fall under any of the items of the Union List. The question at issue is the true character and nature of the tax, and the question must be answered by a reference to the charging section of the statute. Section 4 of Bihar Act XIX of 1947 is the charging section and is in the following terms: "4. Incidence of taxation.-(1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from the commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate or rates levied immediately before the commencement of the Bihar Sales Tax (Amendment) Act, 1953; Provided further that in respect of the period commencing on the Ist day of October, 1948, and ending with the 31st March, 1949, every dealer shall pay tax at the rate or rates specified in the schedule." I think that it is constitutionally open to the Legislature to say that the taxable turnover of a dealer shall include the amount of sales tax paid by the customers under the provisions of section 5 of the Act. It cannot be argued that the nature of tax has changed because of such a provision with regard to the quantitative measure of taxation. The reason is that the tax imposed upon the dealer is still a tax on the sale of goods. The identity and character of the tax is not changed, it would still be a tax on the sale of goods within the meaning of item 54 of the State List of the Seventh Schedule of the Constitution. In a matter of this description, in deciding the question of constitutional validity of a tax, importance must be given to the language of the taxing section of the statute. In Provincial Treasurer of Alberta and Another v. C.E. Kerr and Another [1933] A.C. 71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vires the Provincial Legislature. The problem in this case is a problem of characterisation of the law or classification of the law. In other words, the question at issue iswhat is the subject-matter of legislation, in its "pith and substance" or in its true nature and character? We must find out what is the primary subject dealt with in order to discover the class of subjects to which it belongs. In Huddart Parker v. Moorehead8 Com. L. R. 410. Higgins, J., observed: "Now, how are we to determine what is the subject of any law, or any legislation, when two or more things that might be subjects of legislation are mentioned in it? The mere fact of mentioning corporations in these sections 5 and 8 does not necessarily make them a law 'with respect to' on the subject of corporations. If a Licensing Act provides that the Licensing Court shall not transfer the licence of a wife to her husband unless the husband be approved by the Court as a holder of a licence, we should not call it legislation 'with respect to' marriage or marital relations. If an Act provides that every marriage shall be celebrated in the presence of two witnesses of full age, and shall be registered, we should not cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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