TMI Blog1970 (2) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... any time of the opinion that it would be in the public interest that any commodity which is liable to taxation under the State Act of 1941 should be taxed under the State Act of 1954, it may by notification in the Official Gazette specify such commodity and direct that with effect from such date as may be fixed in the notification, the State Act of 1941 shall cease to apply to such commodity and the State Act of 1954 shall apply to such commodity. In exercise of the said power under section 25 of the State Act of 1954, the State Government by a notification No. 885-F.T. dated 1st May, 1955, directed that certain commodities mentioned in the said notification, one of which being betel-nut, should be taxed under the State Act of 1954. It may be noted here that prior to the said notification, commodities specified therein including betel-nuts, were liable to taxation under the State Act of 1941. It was contended by Mr. Bhattacharjee, learned Advocate on behalf of the petitioner, that if the sales of the commodity for the said amount had taken place within the State of West Bengal, in that case, the petitioner would not be liable to tax under the State Act of 1954, for the said sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent. (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation.-For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods. (3) The goods referred to in clause (b) of sub-section (I)[(a) Omitted.] (b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that notwithstanding anything contained in sub-section (1) or sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent., the tax payable under the Central Act on his turnover or any part thereof relating to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate. The explanation to sub-section (2A) states that a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods. There can be no doubt that in view of the non obstante clause in sub-section (2A), where the provisions of sub-section (2A) applies, the provisions of sub-sections (1) and (2) will not apply. In order to attract the provisions of sub-section (2A) and to claim that the tax payable on the turnover relating to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that as the provisions of the State Act of 1954 were inapplicable to the sales in question, or in other words, those sales having been exempted from taxation under the said Act, if the sales had taken place inside West Bengal, the petitioner was entitled to a similar exemption under the Central Act in view of the provisions of sub-section (3) of section 9 of the Central Act. Section 9 of the Central Act as amended by the Central Sales Tax (Second Amendment) Act, 1958, is as follows: "9. (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce whether such sales fall within clause (a) or clause (b) of section 3 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: Provided that, in the case of a sale of goods during their movement from one State to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within subsection (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated Fund of India." In support of his contention Mr. Bhattacharjee strongly relied on a decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.); A.I.R. 1965 S.C. 1510. The facts of the Supreme Court decision are that under section 5(3)(a) of the Mysore Sales Tax Act, 1957, tax shall be levied in the case of the sale of any of the goods mentioned in column (2) of the Second Schedule by the first or the earliest of successive dealers in the State, who is liable to tax under that section, at the rate specified in the corresponding entry of column (3) of the said schedule on the turnover of sale of such dealer in each year relating to such goods. The assessee who was not the first or the earliest of successive dealers in respect of inter-State sales of handloom and power-loom cloth was sought to be taxed under the Central Act. It was contended by the assessee that he, not being the first or earliest of the successive dealers of the disputed turnover and not being liable to tax under section 5(3)(a) of the Mysore Sales Tax Act, 1957, if those sales had been effected intra-State, could not be taxed under the Central Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodity in question, could not be taxed under the Central Act. The said argument of Mr. Bhattacharjee might have been of some substance, had not the provisions of the Central Act been changed to a great extent with retrospective effect by the Central Sales Tax (Amendment) Act, 1969 (hereinafter referred to as the Amendment Act). By section 3 of the Amendment Act, section 6 of the Central Act has been amended. Section 3 of the Amendment Act states as follows: "3. Amendment Of section 6.-In section 6 of the principal Act,(a) after sub-section (1), the following sub-section shall be, and shall be deemed always to have been, inserted, namely: '(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.'; (b) in sub-section (2), for the word, brackets and figure 'subsection (1)', the words, brackets, figures and letter 'sub-section (1) or sub-section (1A)' shall be, and shall be deemed to have been, substitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf make necessary provision for all or any of the matters specified in this sub-section. (3) The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India." The insertion of the new sub-section (1A) in section 6 of the Central Act rules out all arguments to the effect that where no tax is leviable under the sales tax law of the appropriate State in respect of sale of any goods by a dealer if the sale had taken place within the State, the dealer cannot be made liable to pay tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finds support from a recent decision of the Supreme Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Aluminium IndustriesSince reported at [1970] 25 S.T.C. 476 (S.C.)., C. A. Nos. 1230-1231 of 1969 disposed of on 11th August, 1969, where it has been held that the law as stated in the majority decision of Lakshminarasimhiah's case[1965] 16 S.T.C. 231 (S.C.) A.I.R. 1965 S.C. 1510. has been superseded by clauses 3 and 6 of the Central Sales Tax (Amendment) Ordinance, 1969 (4 of 1969) which preceded the Amendment Act. It has been argued on behalf of the petitioner that the provisions of the Central Act in so far as the same impose tax on inter-State sales of goods not liable to tax under the sales tax law of the State if the sales had been effected within the State, impede the movement of goods and the free flow of trade and as such, the said provisions are ultra vires article 301 of the Constitution of India. This point is now covered by the decision of the Supreme Court in State of Madras v. N.K. Nataraja Mudaliar[1968] 22 S.T.C. 376 (S.C.); A.I.R. 1969 S.C. 147. In the said Supreme Court decision, the contention that sections 8, 8(2A) and 8(5) of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 13 of the Central Act. Section 10 of the Central Act provides for imposition of penalties and section 10A provides for imposition of penalty in lieu of prosecution. Sections 10 and 10A are as follows: "10. If any person (a) fails to get himself registered as required by section 7; or (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration; or (c) not being a registered dealer, falsely represents when purchasing goods in the course of inter-State trade or commerce that he is a registered dealer; or (d) after purchasing any goods for any of the purposes specified in clause (b) of sub-section (3) of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose; (e) has in his possession any form prescribed for the purposes of subsection (4) of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; (f) collects any amount by way of tax in contravention of the provisions contained in section 9A; he shall be punishable with simple im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to be filed. Rule 11 of the State Rules, 1958, provides that the provisions of the State Act of 1941 and the rules made thereunder including the use of forms shall apply mutatis mutandis to all proceedings or other matters incidental to the carrying out of the purpose of the Act and for which no provision is made in the State Rules or in the Central Sales Tax (Registration and Turnover) Rules, 1957. By virtue of rule 11 of the State Rules, 1958, the provisions of the State Act of 1941 are attracted. Section 11 of the State Act, 1941, deals with assessment of tax and it inter alia provides that in case of failure by a registered or certified dealer to submit in respect of any period a return accompanied by a receipt from a Government Treasury or the Reserve Bank of India, by the prescribed date, the Commissioner may, if he is satisfied that the default was made without reasonable cause, direct that the dealer shall pay by way of penalty in addition to the amount of the tax so assessed a sum not exceeding one and a half times that amount. It is, therefore, clear that by virtue of rule 11 of the State Rules, 1958, a dealer may be penalised for his failure to file returns within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13 include any such matter. But, section 9(2) as substituted by the Amendment Act provides that for the purpose of assessment, reassessment, collection and enforcement of payment of tax, including any penalty, payable by a dealer under the Central Act, as if the tax or penalty payable by such a dealer is a tax or penalty payable under the general sales tax law of the State, the provisions of such law, including provisions relating to returns etc., shall apply. It is, therefore, clear that section 9(2) attracts the provisions relating to returns under the general sales tax law of the State. Section 11(1) of the State Act of 1941 provides for penalty for the default of the dealer to submit returns as required by section 10 of the Act. In my opinion, section 11(1) of the State Act of 1941 is a provision relating to returns. Therefore, the provisions of section 11(1) will apply by virtue of section 9(2) of the Central Act. Rule 11 of the State Rules, 1958, in so far as it makes applicable the provisions of section 11(1) of the State Act of 1941, only does so for carrying out the purpose of the Central Act and it is not in any way inconsistent with the provisions of the Central Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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