TMI Blog1963 (12) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected various sales outside the State of Bombay. Being sales outside the State of Bombay, these sales were not taxable under the Act by reason of Article 286(1) of the Constitution; but in the assessment of the petitioners for the period 1st April, 1949, to 31st March, 1950, they were included in the taxable turnover of the petitioners and a sum of Rs. 4,494-3-9 was paid by the petitioners as tax on such sales. The petitioners challenged the inclusion of these sales in their taxable turnover in the appeal filed by them before the Assistant Collector of Sales Tax but the appeal was unsuccessful. The matter was then carried in revision to the Additional Collector of Sales Tax, who by his order dated 30th April, 1958, excluded certain sales as outside State sales and made an order for refund of Rs. 2,238-0-6 being the amount of tax paid by the petitioners in respect of those sales. Pursuant to this order, a refund payment order was sent by the Sales Tax Officer to the petitioners on 11th June, 1958, and the amount of the refund was received by the petitioners. In the meanwhile, the Additional Collector of Sales Tax by his letter dated 17th May, 1958, gave notice to the petitioners t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being outside State sales were exempt from tax by reason of Article 286(1) of the Constitution, but in the mistaken belief that they were taxable, the petitioners initially paid a sum of Rs. 23,806-3-6 as tax in respect of such sales along with the quarterly returns at the time of the assessment. The petitioners thereafter, realising that these sales were not taxable, submitted revised returns excluding these sales from their taxable turnover and claimed refund of Rs. 23,806-3-6. This claim was negatived by the Sales Tax Officer on 31st March, 1957. The petitioners thereupon carried the matter in appeal and the Assistant Collector of Sales Tax by his order dated 10th April, 1958, excluded certain sales as outside State sales and granted refund of Rs. 12,154-15-0 to the petitioners. The Assistant Collector of Sales Tax by his letter dated 27th May, 1958, forwarded to the petitioners his order sanctioning refund of Rs. 12,154-15-0 and asked the petitioners to approach the Sales Tax Officer for refund payment order for the said amount. The Assistant Collector of Sales Tax by his said letter also gave notice to the petitioners that if the petitioners failed to refund the amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sum of Rs. 3,588-1-9 was ordered to be refunded by the Additional Collector of Sales Tax but neither any refund payment order was issued nor was refund of the said amount given to the petitioners and so far as the balance of Rs. 8,063-2-9 was concerned, the Tribunal had by its order directed modification of the assessment of the petitioners which would result in the grant of refund of the said amount to the petitioners, but Reference No. 2 of 1961 directed against the order of the Tribunal was pending in this Court. This was broadly the position at the date when the petition came to be filed and, as will be seen from what is stated above, the petitioners had considerable grievance against the Sales Tax Authorities since they were not carrying out the orders of the superior Tribunals granting relief to the petitioners. But what precipitated the filing of the petition was the issue of a notice by the Sales Tax Officer on 27th June, 1962, by which the Sales Tax Officer called upon the petitioners to remain present in his office on 2nd July, 1962, with particulars of amount recovered by the petitioners by way of sales tax from purchasers in other States during the period 26th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners, opened his arguments, the first complaint that he made on behalf of the petitioners, was against the refusal of the Sales Tax Officer to carry out the order of the Tribunal directing the modification of the assessment of the petitioners in respect of the first period. Though the order was made by the Tribunal as far back as 26th November, 1958, the Sales Tax Officer had failed to carry it out by making the necessary modification in the assessment which would result in the granting of refund to the petitioners of the balance of Rs. 2,256-2-6. Mr. Kaji contended that the order of the Tribunal was final and binding on the parties and the Sales Tax Officer was, therefore, under a statutory obligation to carry it out and since the Sales Tax Officer had failed to comply with this statutory obligation and the petitioners had no other remedy to compel performance of it, the petitioners were entitled to have a writ of mandamus issued requiring the first respondent to carry out the order of the Tribunal by making modification in the assessment of the petitioners in accordance with such order and granting consequential refund of Rs. 2,256-2-6 to the petitioners. An identical conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prayer is for compelling the respondents to comply with the order of refund and to refund to the petitioners the sums of Rs. 2,256-2-6 and Rs. 3,588-1-9. Of course the sum of Rs. 2,256-2-6 represented the amount of refund which the petitioners were entitled to get as a necessary consequence of the order of the Tribunal but as yet there was no order of refund in respect of that amount and unless such an order of refund was made by the first respondent as a result of modification of the assessment of the petitioners in pursuance of the order of the Tribunal, the petitioners could not claim any relief requiring the respondents to refund that amount to the petitioners. The only relief which the petitioners could claim in this connection was that the first respondent be required to modify the assessment of the petitioners in accordance with the direction contained in the order of the Tribunal. This relief was, however, not claimed in the petition and we cannot, therefore, grant it. Realizing this difficulty in his way on the petition as it is stands, Mr. Kaji at the fag-end of his argument applied for leave to amend the petition by adding paragraph 25A after paragraph 25 of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them were well-founded. The argument was, to put it briefly, that justice was not on the side of the petitioners and that they should not, therefore, have relief under Article 226. The learned Advocate-General relied on three decisions of the Supreme Court, namely, G. Veerappa Pillai, Proprietor Sathi Vilas Bus Service v. Raman and Raman Ltd.A.I.R. 1952 S.C. 192. Sangram Singh v. Election Tribunal, Kotah and AnotherA.I.R. 1955 S.C. 425., and A.M. Allison and Another v. B.L. Sen OthersA.I.R. 1957 S.C. 227., and also referred to a decision of the Allahabad High Court in Lala Kailashpat Singhania v. Income-tax Officer, Kanpur[1963] 47 I.T.R. 453. Now, it is true that as a general principle granting of relief under Article 226 is discretionary and that ordinarily a writ will not issue unless the justice of the case requires it; but there is no such hard and fast rule which limits the discretion of the Court in all cases and besides, different considerations prevail in case of different writs and particularly in the case of writ of prohibition. We shall examine that presently, but before we do so, we must point out that in the present case, if the legal contentions of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d made by the Additional Collector of Sales Tax for a period of about 3 1/2 years. We do not, therefore, see any reason why, if the petitioners are otherwise entitled to the relief claimed by them, they should not be granted relief in respect of the order of refund made by the Additional Collector of Sales Tax. So far as the relief in respect of the notice dated 27th June, 1962, is concerned, there are two reasons why such relief should not be refused to the petitioners. The first is that here what the petitioners complain of is a threatened infringement of their fundamental rights and they seek interposition of the Court with a view to protection of those rights. Where a citizen goes to the Court under Article 226 for protection of his fundamental rights guaranteed to him under the Constitution, there is a duty laid on the Court to protect such rights by issuing an appropriate writ and the Court will be failing in its duty if it refused to protect such rights on the ground that the petitioner had another remedy available to him or that he had acquiesced in the breach of such rights or that justice was not on his side. These are grounds which may legitimately be taken into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a paramount consideration with the Court and nothing should be allowed to countervail it, for it is of the utmost importance in a democratic society where the Constitution is founded on the rule of law that fundamental rights of the citizen are not trampled upon by the State, whether he be honest or dishonest. We are, therefore, of the view that where a petitioner complains of infraction of his fundamental rights, the Court must interfere under Article 226 to protect such fundamental rights and should not refuse protection on the ground that he has other remedy available to him or that justice is not on his side. This view, we find, is supported not only by the observations of Chagla, C.J., in United Motors Ltd. v. The State of Bombay(1953) 55 Bom. L.R. 246; 4 S.T.C. 10., but also by the observations of Mahajan, C.J., in Himmatlal Harilal Mehta v. The State of Madhya Pradesh and Others [1954] S.C.R. 1122 at page 1125; 5 S.T.C. 115. The learned Advocate-General attempted to combat this view by relying on the decision of the Supreme Court in Hurmat s/o Satwa v. The State of U.P. Others A.I.R. 1961 S.C. 1457. In that case one of the questions raised before the Supreme Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate Ltd. v. Shri H.N. Date and Another, in Miscellaneous Petition No. 115 of 1958. That decision, however, cannot help us since the petitioner in that case did not complain of any infraction of his fundamental rights and the learned Judge actually emphasized the fact that the petitioner had not referred to fundamental rights of any kind in the petition. Of course the learned Judge did observe in passing that even if the case before him involved violation of fundamental rights, he would still in the exercise of his discretion refuse to interfere by way of a writ under Article 226, but this observation was clearly obiter and in any event, for reasons we have already given, we cannot accept it as a correct exposition of the law. There is also another reason why we do not think we should refuse relief to the petitioners in respect of the notice dated 27th June, 1962, if we find that they are otherwise entitled to the same. That reason is that the writ of prohibition which is claimed by the petitioners is a writ which must issue almost as a matter of course. Once it is shown by the petitioners that the first respondent is acting without jurisdiction which would be the case if the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the balance to the petitioners. Having regard to this statement made by the learned AdvocateGeneral on behalf of the respondents, it is not necessary to issue any writ of mandamus against the respondents as prayed for by the petitioners in so far as the order of the Additional Collector of Sales Tax is concerned. That takes us to the main question involved in the petition, namely, whether the notice dated 27th June, 1962, issued by the first respondent is valid. Now, the notice does not state under what provision of law it is issued but it was common ground between the parties that it was issued under section 12A(4) of the Bombay Sales Tax Act, 1946. The attack against the validity of the notice was, as we have pointed out above, a twofold attack. Mr. Kaji in the first instance contended that on a true construction of section 12A(4), the notice was not within the scope and ambit of section 12A(4) and it was only if this claim of his was negatived that he submitted that section 12A(4) was violative of Article 19(1)(f) and was, therefore, void. The first contention raises the question of construction of section 12A(4) while the second raises the question of vires of the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of this contention. Now the question raised by this contention being a question of construction, the safer and more correct course of dealing with such a question would be to take the words of the section itself and to arrive at a possible meaning without referring to cases. If the words of the section are themselves clear and unambiguous, then no more is necessary than to expound them in their ordinary and natural sense. In such a case the words themselves best declare the intention of the law giver and the task of interpretation can hardly be said to arise. That is the position in the present case. When we examine the words of section 12A, we find that the legislative intent revealed by those words is clear and simple and does not admit of any doubt. Sub-section (1) provides that no person which would include a dealer, registered as well as unregistered, shall collect any amount by way of tax under the Act in respect of sales or supplies of any goods which are declared under section 7 to be sales or supplies on which tax is not payable. This provision is obviously intended to secure that since no tax is payable on such sales or to use the words of Mr. Kaji, no tax is lawf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsections are intended to secure that no amount is collected by a dealer by way of tax from a purchaser in respect of sales on which tax is not payable by him and that if any such amount is collected, it shall not be retained by him but shall be forfeited to the State. These sub-sections, therefore, far from being confined to cases of collection of tax by a dealer which is lawfully leviable under the Act, deal with exactly opposite type of cases, namely, where collection is made by a dealer of an amount by way of tax when tax is not lawfully leviable under the Act. This is the only plain and natural construction of the language used in these sub-sections. Even if an unregistered dealer collects an amount by way of tax in respect of sales on which tax is not lawfully leviable under the Act, such as outside State sales, he would still be within the words of the prohibition enacted in sub-section (2) and equally the words "if any registered dealer collects any amount by way of tax in excess of the amount payable by him under this Act" in sub-section (4), according to their ordinary and natural sense, comprehend within their scope and ambit collection of an amount by way of tax on a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Madras High Court was followed by the Mysore High Court in Minerva Mills Ltd., and Another v. State of Mysore and Another[1956] 7 S.T.C. 148. , but when the decision of the Mysore High Court was taken on appeal to the Supreme Court, the Supreme Court in a decision reported in State of Mysore v. Mysore Spinning and Manufacturing Co. Ltd.[1960] 11 S.T.C. 734., did not decide the question of construction of that section and expressly left it open. Two other High Courts, namely, the Andhra Pradesh High Court in Golla Venkata Subramanyam v. The State of Andhra[1956] 7 S.T.C. 599., and the Hyderabad High Court in Cement Marketing Company v. A.V.R. Krishnamurthy[1956] 7 S.T.C. 762., also followed the Madras decision and took the same view of the construction of the relevant provision in the sales tax laws of their respective States as the Madras High Court. The Travancore-Cochin High Court, however, took a different view in K.J. Mathew v. The Sales Tax Officer, Alwaye[1954] 5 S.T.C. 58., and adhered to that view in Kunju Moideen Kunju v. State of Travancore-Cochin[1954] 5 S.T.C. 462. , notwithstanding the Madras decision given in the meantime. It is, therefore, evident that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to be paid over to the State under sub-section (2) of section 8B were amounts collected in excess of the tax, if any, paid by him and not in excess of the tax, if any, payable by him under the Act. All these three considerations are absent when we turn to section 12A. As a matter of fact the entire scheme of section 12A is different. What section 12A aims at achieving is that no amount should be collected by a dealer from the purchaser by way of tax in respect of sales on which no tax is payable by him and that if he collects any such amount, he should not be allowed to retain it but it should be paid over to the State and this result is clearly brought about by the use of clear and unambiguous language which leaves no doubt as to the true intention of the Legislature. The language of the various provisions of section 12A clearly negatives the applicability of the reasoning adopted by the Madras High Court and shows that the basis of the Madras decision cannot apply when we have to interpret the provisions of section 12A. Another decision cited by Mr. Kaji was a decision of the Allahabad High Court in Sales Tax Commissioner, U.P. v. Sada Sukh Vyopar Mandal[1959] 10 S.T.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of tax on outside State sales, the petitioners had not acted in contravention of any conditions and restrictions prescribed in the Rules. The State then contended that in any event there was a contravention of the second part of section 14A and the amount collected by the petitioners was, therefore, liable to be forfeited to the State. The Supreme Court was called upon to construe section 14A for the purpose of dealing with this contention and construing that section, the Supreme Court observed: "Section 14A consists of two parts both of which are put in a negative form. The second part with which we are concerned in effect means nothing more than this, that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be prescribed. If the argument is that the first respondent was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside section 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of section 14A as such". It would be seen from the aforesaid discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agwati, J., in Bengal Immunity Co. Ltd. v. State of Bihar and Others[1955] 6 S.T.C. 446; A.I.R. 1955 S.C. 661 at page 710.: "All the provisions contained in the Bihar Sales Tax Act with regard to the registration of the outside dealer, the maintenance of the books of account, submission of returns by him to the Sales Tax Authorities of the State of Bihar, the production and inspection of books of account before the Sales Tax Authorities, the search of the premises of the outside dealer by them and the imposition of penalties on him by reason of his non-compliance with the various provisions contained in the Act amongst others are unwarranted and illegitimate exercise of the powers incidental to the power of taxing sales or purchases conferred upon the State of Bihar by Article 246(3) and the Entry 54 in List II, Schedule 7, to the Constitution and do not affect non-resident businessmen who are outside the territories of the State of Bihar." These observations, however, do not in any way support the contention urged by him. All that these observations mean is that since the State has no power to tax outside State sales, any provisions incidental or ancillary to recovery of tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate-General combated this contention and gave a twofold answer. The first answer he gave was that when a registered dealer collects any amount by way of tax from the purchaser, such amount does not become the property of the registered dealer and the law which provides for expropriation of such amount cannot, therefore, be said to be violative of the fundamental right of the registered dealer under Article 19(1)(f). The learned AdvocateGeneral also contended in the alternative, and that was the second answer given by him, that in any event, even if such amount becomes the property of the registered dealer, section 12A(4) is yet saved by Article 19(5) since the restrictions it imposes are reasonable restrictions in the interest of the general public. These were broadly the rival contentions of the parties relating to the applicability of Article 19(1)(f). The first point that must arise for determination on these contentions is as to whether the amount collected by a registered dealer in excess of the amount of tax payable by him under the Act can be said to be an amount belonging to him, for unless that is so there can be no question of invoking the protection of Article 19(1)(f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to transferring the property to him and the purchaser would have no legal or beneficial interest in the amount. All that the purchaser would have would be a claim against the registered dealer for recovery of such amount on the ground of moneys paid under a mistake of law or moneys had and received. In both these cases, therefore, the amount collected by way of tax from the purchaser by a registered dealer, whether in respect of a sale taxable under the Act or in respect of a sale not taxable under the Act, would become the property of the registered dealer and the registered dealer would be entitled to invoke the protection of Article 19(1)(f) against section 12A(4) unless the validity of section 12A(4) is saved by Article 19(5). The learned Advocate-General sought to repel this view by relying on a decision of the Supreme Court in Orient Paper Mills Ltd. v. State of Orissa[1961] 12 S.T.C. 357., where Shah, J., delivering the judgment of the Court observed while dealing with section 9B of the Orissa Sales Tax Act, 1947, that the amount collected by the assessees from the purchasers belonged primarily to the purchasers and not to the assessees, but that observation was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... text to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict." Bearing these observations in mind we must examine whether section 12A(4) satisfies the objective test of reasonableness. In order to judge the reasonableness of the restraint we must take into account the nature of the evil which it was the purpose and object of the restraint to curb or eliminate and the ratio of the harm caused to the individual dealer by the restraint to the beneficial effect reasonably expected to result to the general public. We must also consider whether the restraint imposed by the section trenches upon the rights of the individual dealer more than is necessary in the interest of the general public or in other words whether the restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g short of permitting extortion. The Legislature, therefore, intervened and amended the Act by introducing section 12A. The object obviously was to ensure the proper working of the Act and to prevent the law from being abused by dealers who might collect from the unwary and illiterate consuming public moneys by way of tax when in fact no tax was payable by them. The Legislature first enacted a prohibition in sub-section (1) of section 12A in regard to collection by way of tax in respect of sales exempt from tax under section 7 and made it penal to contravene the provisions of that sub-section. The Legislature then enacted in sub-section (2) of section 12A a prohibition against an unregistered dealer collecting any amount by way of tax since no tax would be payable by him to the State and made the contravention of the provisions of that sub-section too, an offence. The Legislature also provided in addition, in both these cases, another penalty, namely, the penalty of forfeiture in sub-section (4) of section 12A. This penalty of forfeiture provided by sub-section (4) of section 12A was without prejudice to any prosecution which might be launched by the State against the offending d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he cannot have any cause for complaint. The restrictions imposed by section 12A(4), therefore, in our opinion, satisfy the objective test of reasonableness and the validity of the section must be sustained. Before we part with this point we must refer to two decisions cited by Mr. Kaji. Out of the two decisions the strongest reliance was placed by Mr. Kaji on the decision of the Supreme Court in Bombay Dyeing and Manufacturing Co. Ltd. v. The State of BombayA.I.R. 1958 S.C. 328. This decision raised a question of vires of section 3(1) read with section 3(2)(b) of the Bombay Labour Welfare Fund Act, 1953, under which unclaimed wages due by the employers to the employees which had not been paid for a period of three years from the date on which they became due were statutorily transferred to the Bombay Labour Welfare Fund constituted under the Act. The Supreme Court held that this provision was ultra vires Article 19(1)(f) and was not saved by Article 19(5) since the restrictions imposed by it on the right of the petitioners who were employers to hold moneys was unreasonable restriction. The main ground on which the restriction was held to be unreasonable was that the employers w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority on the point before us but we are unable to accept the correctness of this decision for two reasons. In the first instance the entire basis of the decision appears to be that when a dealer collects from his customer an amount equal to the amount of tax payable in respect of the sale, what he actually does is to transfer his liability to pay the tax over to the customer and the customer, as a part of the bargain, undertakes himself to discharge the liability to pay the tax which in normal circumstances would rest upon the dealer. This basis is, with great respect to the learned Judges of the Mysore High Court who decided this case, erroneous, for it is not correct to say that when a dealer collects an amount by way of tax from his customer, the customer undertakes to discharge the liability to pay tax on the sale. The liability to pay tax on the sale remains that of the dealer and the dealer merely recovers an amount equal to the amount of tax from the customer. But apart altogether from this fallacy, we find that there is another fallacy affecting this decision and it is that Article 19(5) has not been considered at all by the Mysore High Court. This decision which declares ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
