TMI Blog1966 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... him, being uneducated he was not aware of the provisions of this Act and had failed to collect even one naya paisa as sales tax from any one of the purchasers and to make returns of his transactions. He was, however, as he has said, maintaining correct accounts as well as invoices and keeping records relating to each transaction effected by him. The Intelligence Wing of the Sales Tax Department reported to the respondent about the petitioner's transactions during the said years and action was taken by the respondent to assess the transactions by serving notices on the petitioner to show cause why he should not be assessed as proposed. The notices set out the circumstances under which action was taken and the turnover for each year to be assessed at 7 per cent. under the Central Sales Tax Act as the petitioner had not sold on "C" declaration forms of the dealers of other States. The contention for the petitioner is that the action taken by the respondent to assess his alleged escaped turnover is wholly without jurisdiction and that rule 5(7) of the Central Sales Tax (Madras) Rules, 1957, is ultra vires section 13(3) and (4) of the Central Sales Tax Act. Reliance being placed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, provides for (1) assessment of escaped turnover, (2) period of limitation for applying the power to assess such turnover, namely, five years, and (3) determination by best judgment of the escaped turnover. The provisions of the Central Act do not themselves provide for any of these matters and certainly section 13(4) does not specifically confer power on the State Government to make a rule like sub-rule (7). The Madras General Sales Tax Act, 1939, by section 9 provided power for the assessing authority to assess the turnover on the basis of the return and where it does not accept the correctness or completeness of the return, to assess it to the best of his judgment and by section 19(1) authorised the State Government to make rules to carry out the purposes of the Act, and by sub-section (2) certain matters were particularised without prejudice to the general power to make rules for the purposes of the Act in respect of which the State Government could make rules. One of such matters specifically mentioned is "the assessment to tax under this Act of any turnover which has escaped assessment, and the period within which such assessment may be made not exceeding five years". Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment. The charge under the Central Act as well as the State Acts is on the turnover which means the actual turnover. A turnover determined by best judgment is what the authority, which determined it, had taken to be the turnover which need not necessarily be the actual turnover. Vide Commissioners of Customs and Excise v. Cure and Deeley Ltd.[1961] 3 All E.R. 641. A rule providing for determination of turnover by best judgment could only be valid if there is specific conferment of the enabling power upon the rule-making authority. The revenue, however, relies upon section 13(3) of the Central Act to sustain subrule (7). But section 13(3) is in general terms and confers power to make rules only to carry out the purposes of the Act. Nowhere in the Central Act is there any indication that one of its purposes is to provide for limitation for the exercise of the power to assess escaped turnover and to determine such turnover by best judgment. We hold that sub-rule (7) at least in so far as it provided for limitation and determination of escaped turnover by best judgment is in excess of the rule-making power and the sub-rule, as a whole, should be struck down as invalid. That does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of goods shall be deemed to take place in the course of inter-State trade or commerce, prescribes the locale of such sale and declares its liability to the Central tax. The rate of tax is fixed by section 8 which has, in certain circumstances, reference to the rate of tax obtaining under the State Acts. The next section provides for levy and collection of tax and penalties. Sub-section (1) says that inter-State sales tax shall be levied and collected by the Government of India in the manner provided in sub-section (3) in the State from which the movement of the goods commenced. Sub-section (1) has a proviso which we need not refer to. Sub-section (2) deals with collection of penalties imposed on a dealer under section 10-A. Sub-section (3) reads: "The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, and subject to any rules made under this Act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central sales tax and in discharging this duty, they have all the powers which they possess under the State sales tax law. The words "in the same manner" in sub-section (3) of section 9 of the Central Act clearly show, in our opinion, the true scope and effect of that sub-section, to wit, the State Sales Tax Authorities shall assess, collect and enforce payment of the Central tax in exactly the same way as under the local sales tax law and for that purpose the authorities will have the same powers as they possess under such law to assess, collect and enforce local sales tax. That being the effect of sub-section (3) of section 9, one has to turn to the provisions of the appropriate local sales tax law to see what powers the Sales Tax Authorities possess thereunder. When the Central Sales Tax Act, 1956, was enacted, there was in force in the State of Madras, the Madras General Sales Tax Act, 1939. Section 9 of this Act prescribed the procedure for assessment of tax and conferred power to assess turnovers and compute tax and, where the returns are incorrect or incomplete to assess turnover by best judgment. Section 19(2)(f) conferred on the State Government power to make rules for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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