E.S. Venkataramiah, J.
1. The petitioners in these writ petitions are dealers in cardamom carrying on business at Sakaleshpur. They are registered dealers under the provisions of the Karnataka Sales Tax Act (hereinafter referred to as the 'Act'). In these of the turnover relating to the purchase of cardamom made by them, they were assessed to tax under the Act, under sub-section (4) of section 5 read with item 5(b) in the Fourth Schedule of the Act. Aggrieved by the orders of assessment made by the Commercial Tax Officer, the petitioners have filed these petitions.
2. The principal contention urged in support of the writ petitions by the petitioners is that the orders of assessment which are made on the basis of sub-section (2) of section 6-A of the Act, which according to the petitioners, is an unconstitutional provision, are liable to be quashed. It is contended on behalf of the petitioners by Sri K. Srinivasan that sub-section (2) of section 6-A is not merely violative of article 19(1)(g) of the Constitution, but also inconsistent with the letter and spirit of section 15 of the Central Sales Tax Act.
3. At this stage it is necessary to refer to some of the provisions of law in order to appreciate the contentions of the petitioners.
The assessments in question relate to the period prior to 31st March, 1973. Until 1st April, 1973, cardamom was included as one of the declared goods under section 14 of the Central Sales Tax Act. Clause (a) of section 15 of the Central Sales Tax Act provided that :
'Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely :-
(a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage.....'
Section 5(4) of the Act was enacted in conformity with the provisions of section 15 of the Central Sales Tax Act. Section 5(4) of the Act reads as follows :
'(4) Notwithstanding anything contained in sub-section (1) a tax under this Act shall be levied in respect of the sale or purchase of any of the declared goods mentioned in column (2) of the Fourth Schedule at the rate and only at the point specified in the corresponding entries of columns (4) and (3) of the said schedule on the dealer liable to tax under this Act on his taxable turnover of sales or purchases in each year relating to such goods :
Provided that where tax has been paid in respect of the sale or purchase of any of the declared goods under this sub-section and such goods are subsequently sold in the course of inter-State trade or commerce, the tax paid under this Act shall be refunded to such person in such manner and subject to such condition as may be prescribed..... Explanation. - The expression 'declared goods' means goods declared under section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), to be of special importance in inter-State trade or commerce.'
4. Item 5(b) in the Fourth Schedule of the Act provides that tax shall be levied at three per cent of the turnover of the first purchaser or the earliest of the successive dealers in the State liable to tax under the Act. Sub-section (2) of section 6-A provides that :
'(2) Notwithstanding anything contained in this Act or in any other law, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser, as the case may be, of such goods and shall be liable to pay tax accordingly on his turnover of sales or purchases, relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act.'
The petitioners have no grievance about sub-section (4) of section 5 of the Act which is the charging section. They however contend that by reason of the enactment of sub-section (2) of section 6-A, it has been made possible for the taxing authorities under the Act to levy purchase tax on the turnover relating to the cardamom which was one of the declared goods during the relevant time, at more than one point within the State contrary to clause (a) of section 15 of the Central Sales Tax Act. It is contended that the presumption which is permitted to be raised under sub-section (2) of section 6-A of the Act, in respect of the taxability of the turnover of a dealer in declared goods, imposes an unreasonable burden on the dealer which would be violative of article 19(1)(g) of the Constitution. Sri Srinivasan gave the following illustration in support of the contention of the petitioners : If a registered dealer purchases any of the declared goods from another registered dealer, there may not be much difficulty in establishing the fact that the turnover relating to the goods in question has suffered tax at the hands of the vendor, but when a registered dealer sells any of the declared goods to an unregistered dealer and another registered dealer purchases the same goods from the unregistered dealer who has purchased from a registered dealer, it may not be possible at all for the second registered dealer to collect necessary information regarding the fact whether the turnover relating to the goods in question has suffered any taxation at the hands of the first registered dealer because the unregistered dealer who sells the goods to the second registered dealer is not under any legal obligation under the Act or the Rules framed thereunder to furnish information to the second registered dealer that he had purchased the goods from the first registered dealer. In that situation, by virtue of the presumption arising under sub-section (2) of section 6-A, the purchase turnover of the declare goods in the hands of the second registered dealer would be liable to tax because he would be deemed to be the first purchaser as he has not been able to place any reliable material before the assessing authority showing that the turnover in respect of the goods in question had suffered taxation earlier in the hands of the first registered dealer. The consequence of such assessment on the second registered dealer would be in direct violation of clause (a) of section 15, which says that the turnover of any of the declared goods shall not be subject to sales tax under the sales tax law of the State at more than one point. According to Sri Srinivasan, the above illustration would establish both the grounds on which the petitioners rely, namely, that sub-section (2) of section 6-A is contrary to article 19(1)(g) of the Constitution and is also violative of clause (a) of section 15.
5. The argument prima facie looks alternative. But on a deeper consideration of the contentions urged on behalf of the petitioners, it would be clear that the impugned provision is neither violative of article 19(1)(g) of the Constitution nor inconsistent with clause (a) to section 15 of the Central Sales Tax Act.
6. Sub-section (2) of section 6-A is a machinery provision and it is not a charging section. It is well-settled that the machinery provisions in a fiscal statute should as far as possible be interpreted in such a way as to make the charge effective. In India United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay : 27ITR20(SC) , the Supreme Court was concerned with the interpretation of section 15 of the Excess Profits Tax Act, 1940, which read as follows :
'If, in consequence of definite information which has come into his possession, the Excess Profits Tax Officer discovers that profits of any chargeable accounting period chargeable to excess profits tax have escaped assessment, or have been under-assessed, or have been the subject of excessive relief, he may at any time serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section 13, and may proceed to assess or reassess the amount of such profits liable to excess profits tax and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section.'
It was contended on behalf of the assessee in that case that the discovery for the purpose of section 15 of that Act must be of facts which were in existence during the chargeable accounting period and that facts which came into existence subsequently could not form the basis of reassessment. Rejecting the above contention, the Supreme Court observed as follows :
'We must accordingly examine what indications there are in the Act, which will show that precise connotation of the word 'discovers' in section 15 of the Act. That section is, it should be emphasised, not a charging section, but a machinery section. And a machinery section should be so construed as to effectuate the charging sections. Section 15 is intended to vest in the Excess Profits Tax Officer a power to amend the assessment, when it is found that the relief granted is in excess of what the law allows..........'
Ultimately, the Supreme Court was of the opinion that the said section referred to discovered of not merely the facts which were in existence during the chargeable accounting period but also those which came into existence subsequent to the chargeable accounting period.
7. The above statement of law as to the interpretation of a machinery provision was reiterated by the Supreme Court in Gursahai Saigal v. Commissioner of Income-tax, Punjab : 1ITR48(SC) . In that case, the Supreme Court had occasion to construe sub-section (6) of section 18A of the Income-tax Act, 1922, which read :
'Where in any year an assessee has paid tax under sub-section (2) or sub-section (3) on the basis of his own estimate, and the tax so paid is less than eighty per cent of the tax determined on the basis of regular assessment..........simple interest at the rate of six per cent. per annum from the 1st day of January in the financial year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent.'
In that case, the assessee had not paid any tax at all. It was urged on his behalf before the court that the said section referred to only those persons who had made payment of a part of the tax but did not refer to a person who had not paid any amount by way of tax. It was therefore contended that a person who had not paid tax at all was not liable to pay interest. The Supreme Court while rejecting the above contention, relied upon the observations made by the Supreme Court in the India United Mills' case : 27ITR20(SC) , referred to above, and the observations of Lord Dunedin in Whitney v. Commissioner of Inland Revenue ((1926) 10 Tax Cas. 88 at 110), which reads as follows :
'My Lords, I shall now permit myself a general observation. Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable and the interpretation thereof by a court should be to secure that object unless crucial omission or clear direction makes that end unattainable. Now, there are three stages in the imposition of a tax : there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay.'
On the basis of the classification of the provisions of a fiscal legislation made by Lord Dunedin in the above case, the Supreme Court held that while interpreting a machinery provision of a fiscal legislation, the court must take the charge effective and the statute workable. In that view of the matter the words 'from the 1st day of 1st day of January in the financial year in which the tax was paid' appearing in sub-section (6) of section 18A were interpreted to mean 'from the first day of January in the financial year in which the tax ought to have been paid'.
8. The object of enacting sub-section (2) of section 6-A of the Act is to see that the turnover relating to any of the declared goods mentioned in the Fourth Schedule of the Act, does not escape tax under Act at the prescribed point in the State. It is quite obvious that the information regarding the question whether the turnover of any of the declared goods has suffered taxation at any earlier point of time is either within he knowledge of the dealer or even if it is not within his knowledge, it would be easier for him than for the department to collect the necessary facts in support of his case that the turnover of the goods has suffered tax earlier. In that situation, if the law casts the burden on the dealer to establish that the turnover in respect of any of the declared goods in which he is dealing has suffered tax earlier in order to claim exemption from liability to pay tax, it cannot be said that it is an unreasonable restriction on the right to carry on business. In order to determine whether a provision of the statute is contrary to article 19(1)(g) of the Constitution, the court has to take into account all the surrounding circumstances. It has also to take into consideration whether the restriction is of that magnitude as would have the effect of seriously interfering with the business carried on by the citizen. In the instant case, the tax payable at the purchase point is three per cent of the turnover. Although there is no express provision for recovering the amount paid by way of purchase tax from a person who purchases the goods from the dealer, it has to be presumed that in the usual course of business, the said amount which is paid by way of tax, would be passed on to the purchaser. It is further to be seen that as between the departmental officials and the dealer, the dealer is in a better position to furnish information regarding the question whether the turnover in respect of the goods in question has suffered tax earlier or not. In the above context, if the legislature has though it fit to enact sub-section (2) of section 6-A, which according to me, is a rule of evidence and forms an integral part of the machinery provision of the Act, it cannot be said that the legislature has imposed an unreasonable restriction on the dealer.
9. The next contention urged on behalf the petitioners is based on the observations of the Supreme Court in Bhawani Cotton Mills Ltd. v. State of Punjab ( 20 S.T.C. 290 (S.C.)). In that case, the validity of section 5(2)(a)(vi) of the Punjab General Sales Tax Act was questioned. The said provision related to the liability of the dealers dealing in the declaration goods. It provided that the purchase turnover of declared goods which were 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 in the course of export out of the territory of India, should be excluded from the turnover. In other words, wherever the goods in question were sold after six months, the turnover in respect of them became liable to payment of tax. Similarly a person who purchased the goods from a dealer after six months from the date of his purchase, would also be liable to pay purchase tax if he sold the goods after six months from the close of the succeeding year. The Punjab Sales Tax Act, apart from making the above provision, did not say with definite precision or definition at what stage the tax had to be levied although it provided that the tax should be levied at only one point. It was contended on behalf of the assessee that in single point taxation, it was necessary that the legislature should lay down in clear and unequivocal terms the point or the stage at which the tax should be levied and that it should also make provision to ensure that the turnover in respect of the declared goods did not suffer taxation at more than one point.
10. On an interpretation of the relevant provisions of the Punjab Act, the Supreme Court was of the view that if a person did not dispose of the goods bought by him within a period of six months, there was every possibility of the turnover in respect of the goods being subjected to sales tax even though under similar circumstances they had suffered tax earlier in the hands of another dealer. In that view of the matter, the Supreme Court was of the opinion that the impugned provisions did not effectively prevent the contravention of section 15(a) of the Central Sales Tax Act.
11. Relying upon the above decision, it is contended by Sri Srinivasan, that by reason of sub-section (2) of section 6-A, there is every possibility of the declared goods suffering tax at more than one point. The argument of Sri Srinivasan overlooks one essential distinction between the case on hand and the case before the Supreme Court. In the case before it the Supreme Court was concerned with the charging section but not with a provision which laid down a rule of evidence. As already mentioned, the validity of the charging section in the Act is not questioned by the petitioners. It is no doubt true that ordinarily the burden of establishing the liability under a fiscal statute is on the revenue. It is however open to the legislature in appropriate cases, in order to avoid evasion of the tax, to place the burden on the assessee himself. When once such a provision passes the test of constitutionality, then it would not be open to the assessee to contend that his liability should not be assessed on the basis of the true of evidence laid down by the statute. It may be that in certain rare cases, there is a remote possibility of the transaction in respect of the same goods suffering tax more than once on account of paucity of proof. That however would not invalidate either the charging section or the rule of evidence indicated by the legislature. At this stage, it has to be observed that the words 'unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act' have to be understood as 'unless he proves that the sale or purchase as the case may be of such goods has already become liable to payment of tax under the Act'. It is not necessary that the dealer should prove that there has been an order of assessment already passed in respect of the turnover relating to the said goods before he can claim exemption under sub-section (2) of section 6-A. It is enough if he proves that the turnover in respect of the said goods is liable to payment of tax in the hands of an earlier purchaser.
12. In the view that I have taken, it cannot be said that sub-section (2) of section 6-A suffers from any of the infirmities suggested on behalf of the petitioners.
13. It was however argued by Sri Srinivasan that sub-section (1) of section 6-A was sufficient for the purpose of making the charge effective and that here was no necessity for the legislature to enact sub-section (2). Sub-section (1) of section 6-A provides that for the purpose of assessment of tax under the Act, the burden of proving that any transaction is not liable to tax lies on such dealer. It may be that the case covered by sub-section (2) of section 6-A may also fall under sub-section (1) of section 6-A. But on that ground it cannot be said that sub-section (2) is unconstitutional. Presumably, sub-section (2) of section 6-A has been enacted by way of abundant caution to prevent the possibility of the tax being evaded.
14. It is next urged that in the absence of any express provision in the Act or the Rules compelling an unregistered dealer to give a certificate to the registered dealer who purchases goods from him, the burden placed on the dealer under sub-section (2) of section 6-A should be held to be onerous. In other words, it is argued that the statute has imposed a burden on the dealer which he cannot at all discharge. I do not think that there is any substance in the above contention also. The dealer always known the vendor from whom he has purchased the goods. It is possible for him to ascertain from his vendor the person from whom the vendor acquired goods so that he may adduce evidence before the authorities concerned in support of his case.
15. It is lastly urged by Sri Srinivasan relying upon a decision of Malimath, J., in B. J. Jeevendriah v. State of Mysore ( 35 S.T.C. 104), W.P. No. 2023 of 1971 and connected writ petitions, decided on 9th November, 1973, that sub-section (2) of section 6-A should receive the same interpretation placed by him Lordship on sub-section (1) of section 6-A of the Act, namely, that whereas the burden of proving necessary ingredients regarding the liability of a dealer is always on the revenue, the onus of certain special facts exclusively without the knowledge of the assessee to claim the benefit of any exemption under the statute is alone on the assessee. I do not think that such a construction can be placed on sub-section (2) of section 6-A. Sub-section (2) of section 6-A clearly states that in the absence of any acceptable evidence adduced on behalf of the dealer who is liable to pay tax on the first sale or first purchase, his turnover in respect of the declared goods in question should be presumed to be taxable under the relevant provisions of the statute. The authorities are bound to give effect to the said presumption while passing orders of assessment notwithstanding the fact that ordinarily the burden of proof regarding the liability of tax under a fiscal statute is on the revenue.
16. No other point is urged. In the result, these petitions fail and they are dismissed. No costs.
17. Petitions dismissed.