TMI Blog1968 (10) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... d outside the State of Punjab. Both these commodities are essential commodities to which the Central Sales Tax Act applies. Certain provisions of these Amending Acts are challenged on the ground that they offend Section 15 of the Central Act and are also unconstitutional being in violation of Articles 14 and 19. 3. The Punjab General Sales Tax Act was passed in 1948. It was amended from time to time. The Act as it stood on April 1, 1960, was challenged in Bhawani Cotton Mills Ltd. v. State of Punjab and Anr., [1967]3SCR577 On April 10, 1967 this Court by majority struck down certain portions of the Act on the ground that they were in conflict with the provision of Section 15 of the Central Act. On November 1, 1966 the former State of Punjab bifurcated and the States of Punjab and Haryana came into existence. On December 29, 1967, the Punjab Legislature enacted Act 7 of 1967 amending the original Act, and the following day the President's Act intimated the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967 (Act No. 14 of 1967) was passed for Haryana, Both the Acts were preceded by Ordinances which they replaced. It is not necessary to refer to the Ordinance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther that the rate of tax shall not exceed two naye paise in a rupee in respect of any declared goods as defined in Clause (c) of Section 2 of the Central Sales Tax Act, 1956. and such tax shall not be levied on the purchase or sale of such goods at more than one stage : Provided. . . (2) In this Act the expression taxable turnover means that part of a dealer's gross turnover during any period which remains after deducting therefrom- (a) his turnover during that period on- (i). . . (ii) sales to a registered dealer of goods declared by him in a prescribed form........ . . . (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter-State trade or commerce, or in the course of export out of the territory of India : Provided that in the case of such a sale to a registered dealer a declaration in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction. 6. It was contended in that case that Section 2(ff), 5(1) second proviso and 5(2)(a)(vi) were in conflict with Section 15 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay tax in respect of the same goods at different stages. That is quite opposed to the provisions of Section 15(a) of the Central Act. Even otherwise, it is pointed out that if a person has purchased cotton and sells it after the period provided for in Section 5(2)(a) (vi), that party is liable to pay sales tax and would have also paid the same. Another purchaser from the said party will also be liable to pay tax. on the same commodity, if he sells the goods, after the period mentioned in, Clause (vi). That is, two persons are made liable for payment of tax in respect of the same commodity. In other words the purchases of the same item of declared goods, by the persons indicated above, are made liable for tax, whereas under the Central Act, there can be only one levy and collection of tax at one stage, either on sale or on purchase 9. Learned counsel in that case showed by way of contrast how the Madras, Mysore, Antihra Pradesh and UP. had avoided such a consequence. In answer, it was pointed out by the State that since the tax was levied, whether on sale or purchase, at the very first transaction, the stage was fixed and that the dealer could always claim exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmodity, in question and also the basis on which it claims the relief. It will be absolutely difficult, if not impossible, for persons like the appellant, to collect materials in this behalf, because, there is no provision, contained either in the Act or the rules, on the basis of which it will be entitled to be supplied with all the material information, relevant, for sustaining a request for refund. If the Central Act makes it mandatory that the tax can be collected only at one stage, in our opinion, it is not enough for the State to say that a person, who is not liable to pay tax, must nevertheless, pay it in the first instance, and then claim refund, at a later stage. We may state that the question as to how far a party can ask for refund, without the order of assessment being set aside, by appropriate proceedings, is highly doubtful; because at the time when the actual order of assessment is passed, in certain cases, it may not be possible for a party to say whether he is entitled to exemption, or not, under Sub-clause (vi) of Section 5(2) of the Act. If a person is not liable for payment of tax at all, at any time, the collection of a tax from him, with a possible contingency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...... (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter-State trade or commerce, or in the course of export out of the territory of India; Provided that in the case of such sale to a registered dealer, a declaration, in the prescribed form arid duly filled and signed by the registered dealer to whom the goods are sold, 'is furnished by the dealer claiming deduction. (3) Notwithstanding anything contained in this Act,--- (a) in respect of declared goods tax shall be levied at one stage and that stage shall be - (i) in the case of goods liable to sales tax, the stage of sale of such goods by the last dealer liable to pay tax under this Act; (ii) in the case of goods liable to purchase tax, the stage of purchase of such goods by the last dealer liable to pay tax under this Act; (b) the taxable turnover of any dealer for any period shall not include his turnover during that period on any sale or purchase of declared goods at any stage other than the stage referred to in Sub-clause (i), or as the case may be, Sub-clause (ii) of Clause (a). 13. In addition, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which Bhawani Mills case proceeded. It is argued that the amendments have been made retrospective but no machinery is provided to enable the dealer to discover that the goods had been taxed before and the single stage at which the tax is to be levied is still not clearly discernible. This is the main argument but there are many supplementary arguments which we shall notice later. For the present we confine our attention to the main point. 15. The stage of tax is now stated in Section 5(3) (i) and (ii). In the case of sales-tax, the stage of tax is the sale of such goods by the last dealer liable to pay the tax and in the case of purchase tax the stage is purchase by the last dealer liable to pay the tax. It is also provided that the turnover of any dealer for any period shall not include his turnover during that period of any sale or purchase of declared goods at any other stage than the stage so mentioned. 16. It will be seen that the matter is now in the hands of the dealer. He has to find out for himself whether he is liable to pay the tax or not. A dealer knows what he has done with his goods or is going to do with them. If he knows that he is not the last dealer having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhawani Mills case. But that defect no longer exists. 19. It is argued further that there is a discrimination between the two kinds of manufacturers. In the definition of 'dealer' in Section (2)(d) and in the proviso to Section 11AA it is submitted discrimination arises because of the opportunity given to a dealer to ask for reassessment or to submit to the old assessment. This is open to every dealer and the intention is to give an opportunity to the dealer himself leaving it to his own will whether to ask for a refund or not. This hardly can be said to create a discrimination. 20. Lastly it is contended that there is a delegated legislation in that the maximum has been provided without indication of the circumstances under which the tax-is to be levied. This, it is said, creates unguided delegation to administrative authority, the function of the legislature. It is to be noticed that the Central Act itself gives power to the legislature to choose a rate of tax at not more than 3 per cent of the taxable turnover. The tax levied is well within that limit and therefore the legislature has chosen the maximum and has left it free to the authorities to impose the tax wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase reconsidered. 23. It is also urged in this connection that there is a discrimination between the imported goods and local goods. It is said that the discrimination is also between the first purchase in the case of imported goods and last sale in the case of local goods. Since the imported goods might be more expensive by reason of freight etc. or intermediary sales having taken place, it is said, that the burden of tax will be heavier and therefore this will offend against the equality clause and Article 304 of the Constitution. In our opinion this argument is without any substance. The rate of tax is same in every case. In State of Madras' v. N. K. Nataraja Mudaliar, [1969] 1 S.C.R this Court stated that the essence of Articles 301 and 303 is to enable the State by a law to impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in the State are subject, so, however as not to discriminate between goods so imported and goods so manufactured or produced. It was pointed out by this Court that imposition of differential rates of tax by the same State on goods manufactured or produced in the State and sim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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