TMI Blog1979 (2) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1958 (hereinafter referred to as the "State Act"). Orders for assessment for the assessment years 1969-76 were made by the assessing authorities under the State Act during the period from 18th December, 1975, to 13th July, 1977, and a total sales tax liability of Rs. 16,70,425 together with penalty of Rs. 49,87,020 was determined against the petitioner under the said orders. According to the petitioner, as it found it difficult to prefer appeals against the abovesaid orders due to its incapacity to deposit the prescribed proportion of the tax assessed, it had to remain content with making applications to the Commissioner under section 39 of the State Act for revision of the assessments in question and grant of necessary reliefs. The petitioner also, in the meantime, approached the State Government for grant of facility for payment of the amount in question in instalments on the basis of the estimated aggregated liability. The State Government made an order on 29th October, 1976 (annexure A), granting the facility of payment of the amount in question in instalments subject to certain conditions stated in the said order. However, as, according to the State Government, there were de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration from Bombay, the petitioner, registered as "purchasing dealer" in form B under the Central Act, was entitled to the issuance of C forms under the provisions in question so that it could reduce its sales tax liability to 4 per cent as against 12 per cent under the schedule. As since May, 1976, the C forms were withheld by the sales tax authorities, the Indian Oil Corporation made a debit against the petitioner at 12 per cent in lieu of the sales tax. The petitioner also carried on business as dealers of tractors, motor cycles and motor parts supplied by Escorts Ltd., Faridabad. In respect of the said goods also, the petitioner was entitled to the issuance of C forms so as to reduce its sales tax liability to 4 per cent as against 15 per cent under the schedule. On account of the C forms having been withheld by the sales tax authorities and consequential failure of the petitioner to furnish the same to Escorts Ltd., the said selling dealer issued debit note to the petitioner charging sales tax at 15 per cent. Similarly, the petitioner was doing business as a dealer of Hindustan Motors, Calcutta. Till November, 1976, Hindustan Motors had no local warehouse in Madhya Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Act and the M.P. Sales Tax (Central) Rules, 1957. 6.. The Central Sales Tax Act (74 of 1956) was enacted by the Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and to declare certain goods to be of special importance in interState trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. By Chapter II (sections 3 to 5), the principles of determining when a sale or purchase of goods takes place in the course of interState trade or commerce or outside a State or in the course of import or export are enacted. Chapter III (sections 6 to 13) deals with inter-State sales tax. By section 6, liability is imposed upon every dealer to pay tax under the Act on all sales effected by him in the course of inter-State trade or commerce during any year. Section 7 provides for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner- (a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government: Provided that the declaration referred to in clause (a) is furnished within the prescribed time or within such further time as that authority may, for sufficient cause, permit. (5).............................." Section 9(1) states that the tax payable by any dealer under the Central Act on sales of goods effected by him in the course of inter-State trade or commerce shall be levied by the Government of India and the tax so levied shall be collected by the Government, in accordance with the provisions of sub-section (2), in the State from which the movement of goods commenced. Section 9(2) of the Central Act is as follows: "9. (2) Subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be cancelled; (d) the form in which and the particulars to be contained in any declaration or certificate to be given under this Act, the State of origin of such form or certificate and the time within which any such certificate or declaration shall be produced or furnished; (e) the enumeration of goods or class of goods used in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power; (f) the matters in respect of which provision may be made under the proviso to sub-section (2) of section 9; (g) the fees payable in respect of applications under this Act. (2) Every rule made by the Central Government under sub-section (1) shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of such appeals; (f) in the case of an undivided Hindu family, association, club, society, firm or company or in the case of a person who carries on business as a guardian or trustee or otherwise on behalf of another person, the furnishing of a declaration stating the name of the person who shall be deemed to be the manager in relation to the business of the dealer in the State and the form in which such declaration may be given; (g) the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished. (5) ................................" 7.. Coming now to the relevant provisions of the M.P. Sales Tax (Central) Rules, 1957, the said Rules have been made by the State Government in exercise of the powers conferred on it by sub-sections (3) and (4) of section 13 of the Central Act, already referred to above. As per clause (a) of rule 2 of the said Rules, "the Act" means the Central Sales Tax Act, 1956. Part IV of the said Rules deals with "authority from which declaration forms may be obtained, use, custody and maintenance of records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fee payable therefor under clause (a): Provided that where the fee payable does not exceed rupees ten at any one time, the payment may be made in cash in the office of the appropriate Sales Tax Officer. (d) On receipt of the application under clause (b), the Sales Tax Officer shall with due regard to the requirements of the dealer supply the declaration forms to the dealer on furnishing an acknowledgment thereof. (e) If for reasons to be recorded in writing the Sales Tax Officer is not satisfied that the applicant has made bona fide use of the declaration forms previously issued to him or that the requirements of the declaration forms applied for are not bona fide, he shall reject the application. (f) If the Sales Tax Officer is satisfied that the applicant at the time of making the application has defaulted in furnishing the return under the Act or under the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959), for any quarter of the year during which such application is made or is in arrears of tax under the Act or under the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959), in respect of any period for which he has been assessed to tax he may withhold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Central Act and the rules made by the Central Government under sub-section (1) of the said Act and second that the said rules have to be made for carrying out the purposes of the Central Act. Under sub-section (4), "in particular and without prejudice to the powers conferred by sub-section (3)", particular topics have been enumerated in respect of which the State Government may make rules. It is obvious that the particularisation of topics under sub-section (4) is merely illustrative of the general power conferred on the State Government by sub-section (3) and, as such, the rules made by the State Government under sub-section (4) are also subject to the two qualifications stated above. We are specifically concerned in the present case with the particular topic mentioned in clause (e) of subsection (4), which relates to making of rules by the State Government for the following purpose: "the authority from whom, the conditions subject to which and the fees subject to payment of which any form of declaration prescribed under sub-section (4) of section 8 may be obtained, the manner in which the form shall be kept in custody and records relating thereto maintained, the manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prescribed form duly filled and signed by a duly authorised officer of the Government. In the above connection, the rules made by the Central Government, in exercise of its power under section 13(1) of the Central Act, are relevant. The said rules are called "The Central Sales Tax (Registration and Turnover) Rules, 1957". Rules 3 to 8 provide for registration and issue of certificate of registration. Rule 5(1) provides for registration of a purchasing dealer and grant of certificate of registration in form B to him. By rule 12, the declarations referred to in sub-section (4) of section 8 of the Act have to be in forms C and D respectively. The scheme of the Act in the above connection, read with the rules, is that the purchasing dealer as well as the selling dealer must register themselves under the Central Act. If declared goods are specified in the certificate of registration of the purchasing dealer and if it be certified that the goods are intended for resale by him, the sale is subject to the concessional rate of tax under section 8(1). In respect of sales of other class of goods specified in the certificate of registration of the purchasing dealer, if the goods are purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold and to which authority the form is to be furnished. Their Lordships pointed out that the phrase in question does not take in the time-element and that, in other words, the section does not authorise the rule-making authority to prescribe a time-limit within which the declaration is to be filed by the registered dealer. The phrase "in the prescribed manner" occurring in section 8(4) of the Central Act has, therefore, to be understood in the abovesaid restricted sense while deciding the question of vires of rule 8(1-A)(f) of the M.P. Sales Tax (Central) Rules, 1957, in the present case. 11.. The next question that arises for consideration is where does the State Government figure in under the Central Act in question ? In the said regard, the provisions of section 9 of the Central Act are relevant. Section 9(1) of the Central Act states that the tax payable by any dealer under the Central Act on sales of goods effected by him in the course of inter-State trade or commerce shall be levied by the Government of India and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the effect of enlarging the content of tax and the content of penalty payable under the Central Act. Their Lordships pointed out that "the Central Act contains specific provisions for penalty". Those are the only provisions for penalty available against the dealer under the Central Act. Each State Sales Tax Act contains provisions for penalties. These provisions in some cases are also for failure to submit return or failure to register. It is rightly said that those provisions cannot apply to dealers under the Central Act because the Central Act makes similar provisions. The Central Act is a self-contained code which by the charging section creates liability for tax and which by other sections creates a liability for penalty and imposes penalty. Section 9(2) of the Central Act creates the State authorities as agencies to carry out the assessment, reassessment, collection and enforcement of tax and penalty payable by a dealer under the Act. 12.. From the above discussion as regards the scheme and purpose of section 8(1) of the Central Act, read with the relevant rules framed thereunder, and as regards the role of the State Government as merely an agency of the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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