9911796707
Advanced Search 
TMI Blog1970 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ry dealer, who in the course of inter-State trade or commerce- (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be three per cent. of his turnover. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1)- (a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent., or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law. (2-A) Notwithstanding anything contained in sub-section (1) or sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted. (3) 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 sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, 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 and such rules may provide that a breach of any rule shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (b) directs that the tax to be calculated at the rate of 10 per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. It then creates a legal fiction by which such a dealer is considered as a dealer liable to be taxed under the law of the appropriate State. This provision applied the rates of taxation to the declared goods which rates are applicable to the sale or purchase of declared goods inside the appropriate States. And in regard to non-declared goods, it fixes 10 per cent. as the tax leviable but states further that if the State rates are higher than the said 10 per cent., higher rates shall apply. In so far as the prevailing rates at the time when the provision was enacted were concerned it is conceded that the Parliament could determine the rates by reference to a State law. What was, however, argued was that as the rate determined by the State Legislatures for the transactions inside the State are liable to be legislatively changed and, in fact, they are so changed in many States, the Parliament could not have adopted such a future law of the State without applying its own mind. It is in that respect t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xes on the sale or purchase of goods other than newspapers subject to the provisions of the said entry 92-A. It is also relevant to note that according to article 269 of the Constitution, taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce shall be levied and collected by the Government of India, but shall be assigned to the State in the manner provided in sub-article (2) of article 269. It is in this background that we have to read the provisions of section 9. That section declares the levy of Central sales tax by the Government of India and it empowers the State machinery to collect the same on behalf of the Government of India. Sub-section (4) directs that the proceeds thus levied and collected on behalf of the Government of India by the State shall be assigned to the concerned State. Let us then examine the correctness of the arguments advanced before us and as referred to above. In Shama Rao v. Union Territory of Pondicheryy[1967] 20 S.T.C. 215 (S.C.); A.I.R. 1967 S.C. 1480., the petitioner challenged the validity of section 2(1) of the Pondicherry General Sales Tax Act, 1965. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force in the other territories subject to his Government or which may hereafter be enacted by the Council of the Governor-General or of the said Lt. Governor for making laws and regulation. The Privy Council held that plenary powers of legislation carried with them the power to legislate absolutely or conditionally. The Privy Council rejected the view of the majority who had held that the Legislative Council ought to have decided at the time of passing the Act, whether the Khasi and Jaintia Hills were to be excluded from the jurisdiction of the courts and what laws were to be applied to those Hills. It laid down: "The proper Legislature has exercised its judgment as to place, persons, laws, powers; and the result of that judgment has been to legislate conditionally as to all these things. The conditions having been fulfilled, the legislation is now absolute." Thus in Burah's case(1878) 3 App. Cas. 889., section 8 of the Garo Hills Act, 1869, which authorised the Lt. Governor to extend to the named territory any law or any portion of any law "which may hereafter be enacted by the Council of the Governor-General or of the Lt. Governor for making laws and regulations" was upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it provides an instance of abdication of functions by a legislature. In that case, a different legislature which was other than the one created by the British North American Act, 1867, was set up. The Act was held invalid because the machinery which it provided for making laws was contrary to the machinery set up by the Constitution, since the Act rendered the Lt. Governor powerless to prevent a law submitted to the voters from becoming an actual law if approved by them. The learned Sikri, J., observed: "Apart from authority, in my view, Parliament has full power to delegate legislative authority to subordinate bodies. This power flows, in my judgment, from article 246 of the Constitution. The word 'exclusive' means exclusive of any other legislature and not exclusive of any subordinate body. There is, however, one restriction in this respect and that is also contained in article 246. Parliament must pass a law in respect of an item or items of the relevant list. Negatively this means that Parliament cannot abdicate its functions. It seems to me that this was the position under the various Government of India Acts, and the Constitution has made no difference in this respect. I rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In such a case, the legislature retains with itself the power to control the delegated legislation. It can always withdraw or determine the delegated authority or can even repeal or cancel the subordinate legislation made by the delegated authority. It cannot in such a case be said to have effaced itself or abdicated its power to make laws merely because it has delegated the power to legislate to a subordinate authority. The law on the limits of permissible delegation cannot be said to be in doubt now. The majority judgment in Birla Mills case' clearly lays down that Banarsi Das case[1958] 9 S.T.C. 388 (S.C.); [1959] S.C.R. 427. was rightly decided. The observation of Venkatarama Aiyar, J., in that case has been approved. It has disagreed with the view taken in Devi Dass case[1967] 20 S.T.C. 430 (S.C.); A.I.R. 1967 S.C. 1895. It further lays down that it is not necessary in all cases to ascertain the policy, safeguards or guidelines with a view to find out whether a law is void for excessive delegation of legislative power. Hidayatullah, J. (as he then was), observed that the real thing to find out was whether the legislature had expressed its own will in unequivocal terms so a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of a legislature? If the legislature retains control over the delegated legislation, it can hardly be contended that the legislature has abdicated its function. Whatever, therefore, may be the approach to such a question, the heart of it is to find out whether even essential functions of legislature, that is to say, laying down the policy and a rule of binding conduct has also been delegated to an agency not contemplated by the Constitution. It is only in a case where even such functions are delegated or parted with that the question of abdication of legislative function can arise and in no other case. It is in the light of this discussion that we have to examine whether sections 8 and 9 of the Act amount to abdication of legislative function or those provisions merely delegate the power to determine the rates of taxes or in according exemptions to the transactions to the State Legislatures. If the history of the legislation relating to inter-State trade and commerce and the position which now stands because of the above referred to provisions of the Constitution are kept in view, then it becomes clear that although the taxing authority is the Parliament, the levy and collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in our view, is besides the point. It is not necessary that the authority to whom the power to make subordinate law is delegated should in every respect be subordinate to the delegator. It is enough if the power delegated to legislate is kept under the control of the delegator. Whether it is entrusted to the Central Government or the State Government, the Parliament will always have control over such subordinate law. Instances are in abundance where the Central Legislature has entrusted the power to make rules to the State Government, and no fault could be found on that. We fail to see then how an objection can be raised if the power to fix the rates which undoubtedly is a case of subordinate legislation is entrusted to the State Legislature, which is a more responsible body than the executive authorities to whom normally such functions are delegated. The Parliament has retained the power to fix the rates itself or lay down the procedure or give the exemption whenever it chooses to do so. It can cancel the delegation by amending sections 8 and 9 suitably. It can also cancel the subordinate legislation made by any or all the States in that behalf. As long as the Parliament has laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient standard or guidelines and in that view of the matter the provisions of sections 8 and 9 cannot be said to be bad on the ground of excessive delegation. It was then contended that levy of Central sales tax is violative of articles 301 and 303(1) of the Constitution of India. This contention has already been rejected by the Supreme Court in the State of Madras v. N. K. Nataraja Mudaliar[1968] 22 S.T.C. 376 (S.C.). In view of that judgment, the matter was not pursued. The other contention that the Act violates article 14 of the Constitution is also not available in view of the High Court's decision in E. I. Sandal Oil Distilleries Limited v. State of A.P.(6) In view of the amending Act 28 of 1969, the decision in State of Mysore v. Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.). no more holds the field and it is the amended provision which would be applicable because it has been given retrospective effect. In W. P. No. 1638 of 1968, it was contended by the learned counsel for the petitioner that the petitioner has not collected tax from the buyers, and although his case does not expressly fall within the amended provision of law, he desires to make a request to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
