TMI Blog1995 (2) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... a small portion of section 29A(2B) of the Act. It was thus found that the only provision to be struck down is the authorisation given in section 29A(2B) to detain the goods and deal with them in the manner provided for as if the transport of goods was an attempt to evade payment of tax in cases where the officer has reason to believe that the dealer has at any time defaulted payment of any tax. To that extent, the portion of section 29A(2B) was struck down as unconstitutional. In all other respects all the original petitions were dismissed by the learned single Judge. Appeals have been filed by all the petitioners reiterating the contentions raised in the original petitions and rejected by the learned single Judge. 3.. W.A. No. 1392 of 1991 is an appeal filed by the State specifically against the judgment in O.P. No. 3904 of 1990, to the extent it has partially struck down the provisions in section 29A(2B) of the Act. 4. Sub-section (2B) of section 29A is in the following terms: "(2B) If such officer has reason to believe that the tax payable for the sale or purchase of the goods under transport is not paid or the dealer whose goods are transported has not paid any tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t inspector should allow the transport, without collection of advance tax........... (b) In the case of goods taxable at the sale point advance tax need be collected only when a request is received by the check-post inspector from the assessing authority showing that the dealer is in default and requesting him to realise the advance tax or if the dealer has no sales tax registration or if the registration details shown are incorrect or suspicious and when the turnover exceeds the assessable limit." 6.. All the appellants are dealers in goods taxable at the last purchase point. Goods involved in all cases are of that kind. In respect of such goods, admittedly, liability for tax under the Act will arise only when the quality of last purchase attaches to the transaction of purchase effected within the State. In the light of the provisions contained in sections 2(xxvi) and 8 of the Act, such quality of last purchase will attach to the transaction of purchase when the goods are exported or despatched out of the State or used for some purpose within the State which would make the purchase by the concerned dealer to be the last purchase. In all these appeals, the claim of the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Act and Rules. It is also stated that on enquiry, Government has found out various instances where transportation of huge quantities of goods on which tax was payable at the point of last purchase, have taken place clandestinely using either unauthorisedly printed forms or documents forged in the name of bogus or reputed dealers. In many cases, it was found that the dealers in whose name the bills were produced denied the transactions claiming that somebody had clandestinely transported the goods in their name, without their knowledge. It is also stated that existing provisions in the Act incorporated with the object of checking evasion of tax were found to be totally insufficient for the purpose. 7.. Mainly the appellants have raised the following common contentions: (1) The impugned provisions imposed unreasonable restriction on the free movement of goods in the course of trade and commerce by insisting upon payment of tax at the check-posts when goods are taken out of the State even before tax in respect of such goods becomes payable in accordance with the procedure prescribed under the Act. The provision contained in section 29A(2A) and (2B) goes against the scheme of levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he officer empowered has reason to believe (i) that the tax payable for the sale or purchase of goods under transport is not paid; or (ii) that the dealer, whose goods are transported, has not paid any tax in accordance with the procedure prescribed; or (iii) that the dealer has, at any time, defaulted payment of any tax for any period. The appellants are mainly aggrieved by the power of detention conferred by the first part of the sub-section. It was submitted that in the case of goods on which tax is payable at the point of last purchase such as rubber, pepper, arecanut, etc., the first part of the sub-section compels payment of tax even before it becomes payable after assessment when goods are sought to be transported through check-post and authorises detention on default of such payment. 11.. In order to appreciate properly the contentions, it is necessary to understand the scheme of the provisions contained in the Act before incorporation of the impugned provisions in the Act and the precise legal effect of those provisions especially sub-section (2B) of section 29A of the Act. A close scrutiny of the relevant provisions of the Act dealing with levy, assessment and payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upport for the above view which we are taking, in the following observation of the Supreme Court in State of Rajasthan v. Ghasilal [1965] 16 STC 318; AIR 1965 SC 1454. "Section 3, the charging section, read with section 5 makes tax payable, i.e., creates a liability to pay the tax. That is the normal function of a charging section in a taxing statute. But till the tax payable is ascertained by the assessing authority under section 10, or by the assessee under section 7(2), no tax can be said to be due within section 16(1)(b) of the Act, for till then there is only a liability to be assessed to tax. " (Emphasis* added) In a very early decision reported in [1962] 13 STC 746 (Mad.); ILR 1962 Mad. 1125 (A.P. Mariappa Mudaliar v. State of Madras) a Division Bench has stated the legal position lucidly in the following words: "Section 3, the charging section, of the principal Act provides that every dealer shall pay for each year a tax on his total turnover for that year calculated at two per cent of such turnover. The taxable event under the Act is either sale or purchase and the scheme of the Act is that each transaction of sale or purchase by a dealer attracts tax at the point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd "payable" used in sub-section. According to the Supreme Court, the word "payable" is somewhat indefinite in import and its meaning must be gathered from the context in which it occurs (see New Delhi Municipal Committee v. Kalu Ram AIR 1976 SC 1637). A Full Bench of the High Court of Madras has also held that the word payable has "both a primary and a secondary meaning" or a "basic" and "extended meaning". After referring to the several dictionary meanings, the Full Bench has held that the term "payable" has two meanings (i) owing, and (ii) payable at a particular point of time, and when the term is used without any qualification, payable means "payable at once" (see Narayanan Chettiar v. Annamalai Chettiar AIR 1961 Mad. 313). The meaning of the word "payable" has been given in "Black's Law Dictionary" as thus: "Payable-Capable of being paid; suitable to be paid; admitting or demanding payment; justly due; legally enforceable. A sum of money is said to be payable when a person is under an obligation to pay it. Payable may therefore signify an obligation to pay at a future time, but, when used without qualification, term normally means that the debt is payable at once, as oppose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed when a particular enactment and a general enactment in the same statute is contended to be contradictory. This is especially relevant in view of the specific contentions raised by the appellants that sub-section (2B) of section 29A is contradictory to the other provisions in the Act regarding assessment and collection of tax. The relevant rule has been stated thus in "Craies on Statute Law": "The rule is, that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply." (5th Edition, page 205) The rule ofcourse as pointed out by Maxwell on "Interpretation of Statutes" can be applied only when there is no intention to the contrary expressed in the general enactment either expressly or impliedly (see 11th Edition, pages 168 and 169). It is also relevant to note what Lord Coke has stated in In re Heydon's case (1584) 3 Co Rep 7a which is to the following effect: "To arrive at the real meaning, it is always necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... future time". In that view, we are inclined to accept the contention of the learned Government Pleader that the sub-section (2B) is a special provision which makes the tax payable in the normal course only after assessment, immediately payable, in cases where goods are sought to be transported beyond the limits of the State before assessment and payment of tax in the normal course and authorising officers at the check-post to demand and collect such tax if not already paid. It is a provision which directs payment of tax even before assessment in cases coming within the purview of the sub-section subject to the condition that the tax paid is to be credited to the account of the dealer to be adjusted at the time of assessment. In that sense alone it can loosely be called advance tax. As a necessary corollary, we have also to accept the contention of the appellants that the provision authorises realisation of tax contrary to the normal procedures prescribed for assessment and collection of tax under the Act. 17.. If that be the legal effect of the impugned provision, whether it will be bad in law for any of the reasons stated in the original petitions and the memorandum of appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch payment of tax and endorsement on delivery note can be made only on Government working days and during office working hours. Thus, no transport of goods can be made on holidays which sometimes will happen 4 or 5 days at a stretch. Entrustment of cash to the drivers of the transporting vehicle and payment of cash at the check-post by the vehicle driver involves difficulties and risk and is also not in the interests of Revenue particularly by reason of the corrupt practices prevailing at the check-post in the State. The impugned provisions and the circular gives uncontrolled and unguided power on the check-post officials to detain the goods even in cases where no attempt is made to evade payment of tax. There is no warrant for the assumption made while issuing exhibit P2 circular that the impugned provisions authorise collection of advance tax. The impugned provision as such has no such legal effect. If the impugned provision has such a legal effect, it will be discriminatory and violative of article 14 of the Constitution of India so long as such collection of tax is authorised only in respect of goods taxable at the last purchase point. In a case where tax has not become act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x payable in the normal course after assessment and the tax payable immediately on incurring of liability. 21.. In the light of our finding regarding the precise legal effect of the provisions in sub-section (2B), we cannot also agree with the submission of the learned counsel for the appellants that the circular authorises something to be done contrary to the sub-section and that it is not in consonance with it. The circular in the circumstances can only be considered as one issued for the effective implementation of the authorisation given as per the sub-section and is fully within the powers of the Board under section 3(1A) of the Act. 22.. There is also no contention that any new tax burden is imposed as per the sub-section. The challenge levelled against the sub-section that it imposes a tax on consignment sale has no basis whatsoever and has only to be rejected as has been rightly done by the learned single Judge. 23.. The sub-section only authorises collection of tax for which liability has already been incurred even before assessment. As directed in the circular, tax so collected is to be immediately accounted to the credit of the dealer whose goods are transported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is reason to believe that tax has not been paid, the provision can be invoked legally. The direction in the circular also makes the position clear. The different modes in which tax can be paid by the dealer are indicated in the circular. As regards the second limb of the sub-section, the circular makes it clear that only on the basis of the instructions received from the assessing authority [clause 5(ii)(b) of the circular] goods can be detained. The provisions in clause 5(i)(a) of the circular direct dealers to pay the tax as far as possible in the office of assessment itself so that it can easily be credited in the account of the dealers. Collection by the check-post authorities is authorised only in the event of default in payment of tax to the assessing authority. Taking note of the object and reasons for incorporating the impugned provisions in the Act, the authorisation given for collection of tax before assessment in the case of goods taxable at the last purchase point at the time when such goods are sought to be transported outside the limit of the State cannot be treated as discriminatory or arbitrary. The differentiation made in the manner of collection of tax in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t tax payable has not been paid as far as the first limb of the sub-section is concerned. As such, if sufficient evidence regarding payment of tax is produced before the officials, they cannot justifiably detain the goods in such cases. "Reason to believe" is a well-known term in the law of taxation, the meaning and content of which has never been understood as nebulous or vague and as such the condition precedent for the exercise of power mentioned in the sub-section cannot be held to be vague or indefinite so as to make the sub-section exposed to the constitutional vice of arbitrariness. The circular also contains only instructions as to how the officials should satisfy themselves as to whether the tax payable has been paid. The instructions contained in the circular regarding the manner in which and the offices in which the tax has to be paid and how the endorsements regarding payment of tax have to be made, etc., can only be treated as guidelines and cannot be treated as invariable rules from which no departure is possible. The endorsement regarding payment of tax in the delivery note insisted by the circular can only be treated as one of the effective means by which payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the learned single Judge. 28.. As regards the second limb of sub-section (2B) also, no serious contentions were advanced and we find no reason to interfere with the view taken by the learned single Judge in this regard also. 29.. Contention No. 3: In the view which we have taken regarding contention Nos. 1 and 2, prima facie, we cannot hold that the detention of the goods by the check-post officials was unauthorised and illegal in cases where tax was payable in the sense that goods have suffered tax and no tax was in fact paid at the time when goods were sought to be transported through the checkpost. Detention of goods can be considered as illegal or unauthorised only in cases where the dealer has produced evidence regarding payment of tax or put forward a claim that no tax is payable under the Act on the goods sought to be transported. In such cases, the officials concerned may have to take an independent decision. It is open to the parties affected by such decision to question such decision in appropriate forums in accordance with law as already indicated. 30.. Some of the appellants have a case that goods transported by them and detained by the check-post official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as vehemently challenged the sustainability of the finding by the learned single Judge in this regard, we find no reason to interfere with the said finding also. Learned Judge has given valid reason for holding the said sub-section as offending articles 14, 19(1)(g) or 301 of the Constitution. Apart from the reasons given by the learned single Judge, we find that the said provision that is clearly violative of article 14 of the Constitution inasmuch as the provision in effect authorises detention of goods only in the case of dealers who are in arrears and who wanted to transport their goods through check-post and not of goods belonging to those defaulters who confines, their business activities exclusively within the State and do not want to take their goods outside the State. Such a classification of dealers who have kept tax in arrears and enforcement of a provision authorising detention of goods and compulsory sale of detained goods only in the case of a particular group of dealers may not be constitutionally justifiable. It is difficult to find any reasonable nexus between such a classification and the object sought to be achieved. We also find that it cannot be considered as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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