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TMI Blog2005 (2) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the rules and regulations and direction of tax authorities showing willingness to deposit Rs. 2.5 lakhs as bank guarantee and remaining deposits in installments. According to the petitioner, no order in respect of registration was communicated by the Commissioner of Taxes except the approval given on the file on July 15, 2004 of the proposal of the Superintendent of Taxes to the following effect: "The applicant may be asked to deposit an amount of Rs. 10 lakhs only as security money by challan at a time for getting registration certificate for doing transport business if kindly approved". 2.. The relevant provisions of "the Act" and "the Rules" are quoted as follows: "29. Offences and penalties.--Whoever (1) carries on business as a dealer and acts in contravention of any of the provisions of this Act; or (2) fails, without reasonable cause, to submit in due time any return as required by or under the provisions of this Act, or submits a false return; or (3) fails, when required by or under the provisions of this Act, to keep accounts or records of sales; or (4) fails, when required by or under the provisions of this Act to produce an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of goods transported to or outside Tripura through it in the manner prescribed and shall on demand by the Commissioner be liable to furnish in the prescribed manner such information as the Commissioner may require relating to the transportation of such goods and shall also be bound to produce books of accounts for inspection and examination by the Commissioner." The transporter has to make a declaration in form XXIV, which is an obligation cast on such transporter by virtue of section 38(2) read with sub-rule (3) of rule 46A, which requires the transporter to obtain form XXIV from the Superintendent of Taxes on payment of such fees as may be specified by the Commissioner. Transporter is further obliged to maintain a register of the accounts of such forms serially. Section 38: "38. Erection of check-post.--(1) The State Government may, by notification, set up and erect, in such manner as may be prescribed, check-posts and barriers at any place in the State with a view to prevent the evasion of tax payable under this Act. (2) Every person transporting taxable goods shall, at any checkpost or barrier referred to in sub-section (1) and before crossing such check-po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransporter and the other copy shall be retained by the officer-in-charge: Provided that a transporter who has obtained a permit at the first check-post or barrier under sub-rule (2) shall not be required to make any further declaration at other check-post or barrier in respect of only so much of the consignments to which the permit relates. (3) The transporter shall obtain form XXIV from the Superintendent of Taxes concerned on payment of such price as may be specified by the Commissioner. The form shall be serially numbered and account shall be maintained in register. No other form XXIV except those supplied from the office of Superintendent of Taxes shall be entertained with effect from such date as the Commissioner may notify by publication in the local newspapers and official gazette." Rule 63-A: "63-A. Power to search at any place by officer-in-charge of a check-post, Superintendent of Taxes or any officer specially empowered by the Commissioner.--(1) Notwithstanding anything contained in any other provision of these Rules, at every check-post or barrier or at any other place, when so required by the officer-in-charge of such check-post or barrier, by any Superint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, made or processed by him in Tripura or brought by him into Tripura from any place outside Tripura for the purpose of sale in Tripura and include the Government and any person making a sale under section 3A. Sections 5 and 6 of "the Act" provides for registration of dealers who shall carry on business of taxable goods. Section 7 of the Act has provided for demanding security from the dealer who has been registered. The section 7 of the Act reads as follows: "7. Certificate of registration.--(1) A dealer registered under section 5 or section 6 shall be granted a certificate of registration in such form as may be prescribed, which shall specify the name or names of goods in which at the time of the grant of the said certificates the dealer carries on business, and such other particulars as may be prescribed: Provided that the Commissioner may for good or sufficient reasons demand from a dealer who has been registered or a person who has applied for registration under section 5 or a person who has been required to get himself registered under section 6, reasonable security for proper payment of tax." 3.. According to the petitioners, the decision of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, it can do everything which is ancillary to and necessary for the full and effective exercise of its power of legislation. (3) It cannot abdicate its legislative functions, and therefore while entrusting power to an outside agency, it must see that such agency acts as a subordinate authority and does not become a parallel Legislature." The above decision of the honourable Supreme Court has been summarized in Rajnarain Singh v. Chairman, Patna Administration [1955] 1 SCR 290 (299) by indicating that Legislature cannot delegate essential legislative function which consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. 6.. According to the petitioners demand for Rs. 10 lakhs in cash as security deposit for registration of the transporter is in conflict with the guidelines/legislative policy of "the Act" inasmuch as the Legislature has taken a policy decision that the Commissioner of Taxes may demand security deposit from the dealers only and not from the transporters, more so, the Commissioner could demand "fees" (as mentioned in section 38-B of the Act) from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and that which would really be a deterrent to a trade but the distinction, if it has to be drawn, is real and clear. For the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. So long as a tax remains compensatory or regulatory it cannot operate as a hindrance." According to the petitioner in the above decision the Supreme Court has also considered its earlier judgment in Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232, where, the validity of the Assam Taxation (on Goods carried by Roads or Inland Waterways) Act, 1954 was challenged on the ground that it violates the provisions of article 301 and was not saved by article 304(b) of the Constitution where the Supreme Court had upheld "the Act" under challenge declaring the same as void. 10.. According to the petitioners though the validity of section 38-B of "the Act" and rule 64-A of the Rules have been upheld in Tripura Goods Transport Association v. Commissioner of Taxes in [1999] 112 STC 609 (SC); AIR 1999 SC 719 but this decision was in consideration of the fact that the honourable Supreme Court did not find any of the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a ground for legislative competence? This provision is only to see that the correct statement of facts are brought out. One is punished only if he knows or believes to be false, yet does not disclose it or even does not believe to be true, but still makes statement to the contrary. Under section 29(4) and section 30, the offences in case committed by transporter are relatable to checking of evasion of tax, then composition of offence under section 32, would also confine itself within this sphere. We do not find any of these provisions in any way placing any liability on the transporter which is otherwise on a dealer under this Act. Similarly, as aforesaid, the maintenance of account by the transporters, carriers, etc., under section 36A is only to render help to the authorities in checking the evasion of tax. This does not put any such obligation on the transporter to hold that these provisions transgress the legislative competence of the State Legislature." 11.. On the other hand Mr. U.B. Saha, learned Senior Government Advocate appearing for the State-respondents, has submitted that in connection with the issuance of certificate of registration, Superintendent of Taxes had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 2, 2003. These documents were shown to the court along with other materials on record; however, these were not placed by way of affidavit. According to the learned counsel for the respondents there was no provision of demanding the security money in installments, more so, when the transporters intending to carry transport business have to be financially sound as the trade and business is expensive. According to the learned counsel for the respondents the demand of Rs. 10 lakhs as security money is in consonance to the requirement of section 38 of the Act and such is legal and reasonable as the words "in such manner as he may direct" mentioned in "rule 64A" provide sufficient power and wide scope to the Commissioner of Taxes for making the demand of security in question which is well within his power being derived under the Act. No material has been brought for and on behalf of the petitioners which could indicate that the firm has been discriminated vis-a-vis other transporters in respect of the demand of security money, moreso, the petitioners were expected to fulfil the requirements and the lapses still exist on their part despite the fact that learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of para 11 of the decision reported in AIR 2004 SCW 3682 (Ramesh Singh Photti v. State of A.P.) the inference by the Commissioner of Taxes has been drawn not in isolation but in the totality of the facts and circumstances and on the existing grounds and on the records of the case. (B) In view of the decision of the Supreme Court in AIR 1991 SC 672 (Orient Paper and Industries Ltd. v. State of Orissa) it is the ratio decidendi which is binding and not some observations only made in the judgment. (C) In view of the decision of AIR 2002 SC 3633, para 28 (Gangadhar Behera v. State of Orissa) the words of judgment are to be understood in the facts of a particular case as the same word may give different meaning in different situation. "28. Above being the position, we find no substance in the plea that evidence of eye witnesses is not sufficient to fasten guilt by application of section 149. So far as the observations made in Kamaksha Rai's case AIR 2000 SC 53 it is to be noted that the decision in the said case was rendered in a different factual scenario altogether. There is always peril in treating the words of a judgment as though they are words in a legislative enact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le discretion of a prudent man based on rationality as the discretion has been applied on the basis of materials available on record. In order to elaborate the discretion applied in the present case, following decisions have been referred: According to paragraph 19 of (1981) 1 SCC 80 [Ramji Dayawala & Sons (P.) Ltd. v. Invest Import]: (a) "If the application is under section 151, C.P.C., invoking inherent jurisdiction of the court to grant stay, the burden will be on the party seeking stay to establish facts for exercise of discretion in favour of such party. How, the discretion vested in the court to grant or refuse the stay of suit would be exercised in a given case would, however, depend upon various circumstances, although to grant the stay would still be a matter within the discretion of the court." (b) In (2001) 1 SCC 182, para 22 (Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant) the Supreme Court has held as below: "22. The performance of those duties entails the exercise of the Minister's discretion, and I think what was said by Lord Halsbury in Sharp v. Wakefield [1891] AC 173; 60 LJMC 73; 64 LT 180 (HL) is important to consider with reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as rule 64-A of the Rules in Tripura Goods Transport Association case [1999] 112 STC 609 (SC); AIR 1999 SC 719 the Supreme Court has approved the validity of above two provisions along with declaring the legislative competency of sections 29, 30, 32, 36-A of the Act and rules 46-A, 36-A of the Rules. The Supreme Court has also considered different provisions of sections 29, 30, 32, 36, 37, 38 and in view of the judgment of Tripura Goods Transport Association [1999] 112 STC 609; AIR 1999 SC 719 the procedure adopted by the Commissioner in respect of prescribing any direction as indicated in rule 64-A was left to the wisdom of the Commissioner of Taxes as contended by the learned Senior Government Advocate for the respondents, the petitioners cannot be allowed to say now that the demand of security money is unreasonable when they are ready on their own to pay Rs. 2.5 lakhs and are asking for payment of remaining amount of security in installments. 18.. As observed by the Supreme Court in Tripura Goods Transport Association [1999] 112 STC 609; AIR 1999 SC 719 the provisions of "the Act" as mentioned in foregoing paragraphs (2) above are only to streamline assessment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant taxing statute. For this purpose it is necessary to fix a dealer, the taxable goods, place of sale or purchase of such goods and the quantum of tax. If a dealer in taxable goods transaction of sale or purchase escapes attention of the taxing authority, tax on such goods escaped with resultant loss to the State revenue. To overreach this possible escape, a mechanism is invariably brought in a statute to seal such loopholes of escape, of course prescribing some conditions or casting obligations on some to perform certain acts to reach this objective. Thus, maintaining accounts of goods transported into outside Tripura in the prescribed manner and to furnish in the prescribed manner such information, demand of security before granting certificate of registration, as the Commissioner requires, including filling of form XXIV are only for the said objective to be achieved with the help and aid of such transporter or carrier, etc. Such obligations and conditions by way of demanding security are only for identifying the consignor or consignee to fix liability on them in correlation with the goods carried by such transporter further requiring the disclosure of such goods with its qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 38B and under the power of Commissioner in reference to rule 64A. By such demand of security for registration of transporters or carriers it becomes feasible for the tax authorities to trace out such dealer escaping tax, through such transporters. The payment or deposit of fees prescribed under section 38B is a statutory requirement which does not put an embargo or does not curb the power of imposition of any condition including the demand of security in the interest of revenue or to check evasion or escapement of tax, as such, demand of security money is not barred under rule 64-A. 21.. The submission of the petitioners in reference to reliance to the case of Atiabari Tea Company Ltd. AIR 1961 SC 232, and Automobile Transport (Rajasthan) Ltd. AIR 1962 SC 1406; [1963] 1 SCR 491 that the demand of security money in question is a restriction on the transport business as it directly and immediately affects free movement and transportation of goods and accordingly bring article 301 into play and non-compliance of any procedure in article 304(b), and conditions are unconstitutional and the demand of security money by Commissioner of Taxes is unauthorised and imposing burd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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