TMI Blog1984 (12) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(a) or (b) cannot be declared to be invalid or beyond legislative competency. For the aforesaid reasons I hold and declare that the impugned Acts, that is section 6B of the Bengal Finance (Sales Tax) Act, 1941 and section 4AAA of the West Bengal Sales Tax Act, 1954 which was introduced by 1979 Amendment Act to be a valid piece of legislation. However, I hold and direct that in calculation of the gross turnover, the sales referred to in section 27 of the said Act and article 286 of the Constitution are not to be taken into consideration. The applications are disposed of accordingly, all interim orders are vacated...............". Against such determination and more particularly against inclusion of non-taxable sales in gross turnover, it has been stated that the appellants before us moved a Special Leave Petition (Civil) before the Supreme Court of India and according to the prayers as made, on 6th August, 1982 the following order: "Stay confirmed on the condition that if the appellants fail in this Court, he will pay the whole amount with interest at the rate of 12% per annum from the date of admission of appeal. Let this case be listed for hearing in 1st week of September, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in para 3 of the Departmental Circular No. 523 until the injunctions/ interim orders are vacated by the High Court. The said para 3 lays down that in view of the interim orders in specific cases (the terms of which will have to be ascertained by the assessing officer from the respective dealers or from the Law Section) the assessing officers will have to complete the assessments under the respective Acts, but they cannot assess the turnover tax payable by the concerned dealers. If the appeals before the Division Bench of the High Court or the Supreme Court are eventually decided in favour of the Government, all such assessments have to be reviewed. In order to keep track of all such cases, it is advised that an unofficial register should be maintained in each charge for noting all such cases for future reference. In terms of Departmental Circular No. 413 dated 14th May, 1965 each charge was required to maintain one such register. Any Commercial Tax Officer who completes such assessments will invariably enter in this register names of the dealers, period of assessments, name of the Act under which assessment has been made, the date of order and short particulars of dealers' liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 5 of the Act, that if the gross turnover of such dealer exceeds rupees 5 lakhs in a year, he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10 per centum of the tax as may be provided. The liability to pay a surcharge is not on the gross turnover including the transactions covered by article 286, but is only on inside sales and the surcharge is sought to be levied on dealers who have a position of economic superiority. The definition of "gross turnover" in section 2(j) of the Act is adopted not for the purpose of bringing to surcharge inter-State sales or outside sales or sales in the course of import into, or export of goods out of the territory of India, but is only for the purpose of classifying dealers within the State and to identify the class of dealers liable to pay such surcharge. The underlying object is to classify dealers into those who are economically superior and those who are not. That is to say, the imposition of surcharge is on those who have the capacity to bear the burden of additional tax. There is sufficient territorial nexus between the persons sought to be charged and the State seeking to tax them. Sufficienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on to the buyer, and the provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the Legislature. It was claimed by Mr. Dutt that in view of the determinations of the Supreme Court as indicated above, the concerned Departmental Circular No. 523 and the addendum thereto, the appropriate particulars whereof have been mentioned hereinbefore had to be issued and according to him further, that the writ petitioners objected to the said addendum, as by such, they became taxable to turnover tax. In fact, it has been stated that on 22nd June, 1984 the learned trial judge was pleased to issue a rule in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and that too on a reference to the interim order as made by the Supreme Court, the particulars whereof have been mentioned hereinbefore, and so also the determinations in Hochest Pharmaceuticals Limited's case [1984] 55 STC 1 (SC), that the notifications as impeached, were made on fresh application of mind and in fact, he claimed that they had to be issued or made on the change of law. Mr. Dutt stated that section 6B of the said Act, firstly lays down the class of transactions, which would be deemed to be considered, to find out the turnover and the amount which is required to be paid and secondly, the items which are to be excluded at the time of imposition of the tax. Mr. Dutt's submission on the basis of arriving at the turnover of a dealer in terms of section 2(j), have been indicated hereinbefore. The question of determination of turnover or the manner and means to determine the same under the Travancore-Cochin General Sales Tax Act, came up for consideration in the case of A.V. Fernandez v. State of Kerala [1957] 8 STC 561 (SC); AIR 1957 SC 657 to which reference was made both by Mr. Dutt and Mr. Chakraborty, the Supreme Court in that case has laid down a broad distinct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ petitioners along with necessary and due interest. In that view of the matter, Mr. Dutt claimed that the balance of convenience, as indicated hereinbefore, would entirely be in favour of making the order as asked for. It should be noted that while making the order the learned trial judge directed securing the payments @ 50% by way of bank guarantee and 50% by cash. Mr. Chakraborty placed the two notifications/circulars as mentioned hereinbefore and stated that by the first one, the determination as made by B.C. Basak, J., in Associated Pigments Limited's case 1983 (16) STA 409 was directed to be given effect to, but strangely enough that by the subsequent notifications, the authorities have been directed not to follow such law as declared by B.C. Basak, J., but asked the authorities to follow the determination of the Supreme Court in Hoechst Pharmaceuticals Limited's case [1984] 55 STC 1 (SC). Since under article 141 of the Constitution of India, the law as declared by the Supreme Court is a law of the land, so in case the said Hoechst Pharmaceuticals Limited's [1984] 55 STC 1 (SC) has an application, then it would be very difficult to hold that the authorities concerned h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was then contended by Mr. Chakraborty that the present application is not bona fide, as the respondents in the Rule who are the appellants herein, have not applied for setting aside or challenging the orders dated 15th October, 1982, 8th December, 1982, 24th February, 1984 and 5th September, 1984 as made by this Court in other proceedings on the same facts. In fact, he claimed that on the basis of those orders which have been disclosed along with his client's affidavit-in-opposition, the order for securing 50% by cash and 50% by bank guarantee should be deemed to be due, proper, justified and legal. It was then submitted by Mr. Chakraborty that in A.V. Fernandez's case [1957] 8 STC 561 (SC), which has also been interpreted in Hoechst Pharmaceuticals Limited's case [1984] 55 STC 1 (SC), three stages have been indicated and those stages, in fact, have not been disagreed by the Supreme Court in their later decision. In any event, for the reasons as indicated hereinbefore and since the determination in Hoechst Pharmaceuticals Ltd. v. State of Bihar [1984] 55 STC 1 (SC); AIR 1983 SC 1019 was on surcharge, but not on turnover tax. Mr. Chakraborty restated that the said determinations w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinary alternative of passing a palpably illegal order with full knowledge and realisation that this was an illegal order. If administrative tribunals could ignore the law declared by the highest Court in the State in such deliberate and nonchalant manner, that would be the severest possible blow to the administration of law and justice in the country. In such a case, writ petition cannot be dismissed summarily and rule nisi must be issued, and then Mr. Chakraborty referred to another determination in the case of Mahadayal Premchandra v. Commercial Tax Officer, Calcutta [1958] 9 STC 428 (SC). On the basis of the determinations as indicated above, it was Mr. Chakraborty's specific submissions that administrative authorities would not be authorised to direct the quasi-judicial authorities, by issue of any circular as in this case, to modify and nullify the effect of the determination as made by this Court and such direction, according to him, would clearly be mala fide. On the submission as above and so also on the basis of the determinations as indicated hereinbefore, Mr. Chakraborty claimed that the issue of the notifications/circulars were improper, illegal, mala fide and voi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be held and observed that the present case is fully covered by section 613 as mentioned above and the determinations in Hoechest Pharmaceuticals Limited's case [1984] 55 STC 1 (SC). The points as put forward by the learned Advocates for the respective parties are not substantial and we feel that at this interlocutory stage, we shall not be justified in making a final determination of them. Thus we are left with the consideration of prima facie case and balance of convenience. So far prima facie case is concerned, we cannot at this stage hold or observe that there has been no prima facie case for a rule and as such the said point is answered in favour of the writ petitioners. Then, comes the question of balance of convenience, which according to us, should receive our utmost consideration, on the basis of a determination of the Supreme Court dated 30th November, 1984, in the case of Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. (Civil Appeals Nos. 4742-43 of 1984) [since reported in [1985] 4 ECC 103 (SC) arising out of Special Leave Petitions (Civil) Nos. 12312-13 of 1984. In that Dunlop's case [since reported in [1985] 4 ECC 103 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that we should make the order as indicated hereafter, as by granting interim relief, no Court should in fact give the final relief as claimed in the petition and that too without considering, amongst others, the question of balance of convenience and public interest. While making the present determination, we are also taking into consideration the observations of the Supreme Court in cases of collection of public revenue or that the same should not be jeopardised or put to a precarious position, by the issue of an interim order and the fact that the Government requires liquid cash for the country smoothly and efficiently. We further feel that no incurable harm should be caused to such revenue by the interim orders of the Court and the Courts, in ordinary circumstances, should be slow to issue such interim orders, the effect whereof would be of great dimensions or cause administrative inconvenience or such orders should not also be passed, which would prevent collection of revenue. Mr. Chakraborty wanted to distinguish the determinations and observations in the above mentioned unreported* case on facts. But we feel that such determinations on bank guarantee or the norms as laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X
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