TMI Blog1974 (9) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 6-A is not merely violative of article 19(1)(g) of the Constitution, but also inconsistent with the letter and spirit of section 15 of the Central Sales Tax Act. 3. At this stage, it is necessary to refer to some of the provisions of law in order to appreciate the contentions of the petitioners. The assessments in question relate to the period prior to 31st March, 1973. Until 1st April, 1973, cardamom was included as one of the declared goods under section 14 of the Central Sales Tax Act. Clause (a) of section 15 of the Central Sales Tax Act provided that: "Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage..........." Section 5(4) of the Act was enacted in conformity with the provisions of section 15 of the Central Sales Tax Act. Section 5(4) of the Act reads as follows: "(4) Notwithstandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of the turnover of a dealer in declared goods, imposes an unreasonable burden on the dealers which would be violative of article 19(1)(g) of the Constitution. Sri Srinivasan gave the following illustration in support of the contention of the petitioners: If a registered dealer purchases any of the declared goods from another registered dealer, there may not be much difficulty in establishing the fact that the turnover relating to the goods in question has suffered tax at the hands of the vendor, but when a registered dealer sells any of the declared goods to an unregistered dealer and another registered dealer purchases the same goods from the unregistered dealer who has purchased from a registered dealer, it may not be possible at all for the second registered dealer to collect necessary information regarding the fact whether the turnover relating to the goods in question has suffered any taxation at the hands of the first registered dealer because the unregistered dealer who sells the goods to the second registered dealer is not under any legal obligation under the Act or the Rules framed thereunder to furnish information to the second registered dealer that he had purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of such profits liable to excess profits tax and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section." It was contended on behalf of the assessee in that case that the discovery for the purpose of section 15 of that Act must be of facts which were in existence during the chargeable accounting period and that facts which came into existence subsequently could not form the basis of reassessment. Rejecting the above contention, the Supreme Court observed as follows: "We must accordingly examine what indications there are in the Act, which will show the precise connotation of the word 'discovers' in section 15 of the Act. That section is, it should be emphasised, not a charging section, but a machinery section. And a machinery section should be so construed as to effectuate the charging sections. Section 15 is intended to vest in the Excess Profits Tax Officer a power to amend the assessment, when it is found that the relief granted is in excess of what the law allows......................." Ultimately, the Supreme Court was of the opinion that the said section referred to discovery of not merely the facts whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epend on assessment. That ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay." On the basis of the classification of the provisions of a fiscal legislation made by Lord Dunedin in the above case, the Supreme Court held that while interpreting a machinery provision of a fiscal legislation, the court must take the charge effective and the statute workable. In that view of the matter the words "from the 1st day of January in the financial year in which the tax was paid" appearing in sub-section (6) of section 18A were interpreted to mean "from the first day of January in the financial year in which the tax ought to have been paid". 8.. The object of enacting sub-section (2) of section 6-A of the Act is to see that the turnover relating to any of the declared goods mentioned in the Fourth Schedule of the Act, does not escape tax under the Act at the prescribed point in the State. It is quite obvious that the information regarding the question whether the turnover of any of the declared goods has suffered taxation at any earlier point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered dealer or in the course of inter-State trade or in the course of export out of the territory of India, should be excluded from the turnover. In other words, wherever the goods in question were sold after six months, the turnover in respect of them became liable to payment of tax. Similarly a person who purchased the goods from a dealer after six months from the date of his purchase, would also be liable to pay purchase tax if he sold the goods after six months from the close of the succeeding year. The Punjab Sales Tax Act, apart from making the above provision, did not say with definite precision or definition at what stage the tax had to be levied although it provided that the tax should be levied at only one point. It was contended on behalf of the assessee that in single point taxation, it was necessary that the legislature should lay down in clear and unequivocal terms the point or the stage at which the tax should be levied and that it should also make provision to ensure that the turnover in respect of the declared goods did not suffer taxation at more than one point. 10.. On an interpretation of the relevant provisions of the Punjab Act, the Supreme Court was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 6-A. It is enough if he proves that the turnover in respect of the said goods is liable to payment of tax in the hands of an earlier purchaser. 12.. In the view that I have taken, it cannot be said that subsection (2) of section 6-A suffers from any of the infirmities suggested on behalf of the petitioners. 13.. It was however argued by Sri Srinivasan that sub-section (1) of section 6-A was sufficient for the purpose of making the charge effective and that there was no necessity for the legislature to enact sub-section (2). Sub-section (1) of section 6-A provides that for the purpose of assessment of tax under the Act, the burden of proving that any transaction is not liable to tax lies on such dealer. It may be that the case covered by subsection (2) of section 6-A may also fall under sub-section (1) of section 6-A. But on that ground it cannot be said that sub-section (2) is unconstitutional. Presumably, sub-section (2) of section 6-A has been enacted by way of abundant caution to prevent the possibility of the tax being evaded. 14.. It is next urged that in the absence of any express provision in the Act or the Rules compelling an unregistered dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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