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V.B. Patil Vs. the Commercial Tax Officer, Haveri and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 5921 of 1969
Judge
Reported in[1970]25STC449(Kar)
ActsMysore Sales Tax Act, 1957 - Sections 18-A, 18(1) and 18(2); Bihar Sales Tax Act, 1947 - Sections 14-A; Constitution of India - Articles 19(1), 20 and 226
AppellantV.B. Patil
RespondentThe Commercial Tax Officer, Haveri and ors.
Appellant AdvocateD.R. Venkatesh Iyer and ;B.V. Katageri, Advs.
Respondent AdvocateS.R. Rajasekhara Murthy, High Court Government Pleader
Excerpt:
- labour & servicesappointment on compassionate grounds: [p.d.dinakaran, c.j. & v.g.sabhahit,j] karnataka civil services (appointment on compassionate grounds) rules, 1966, rule 6(4) - compassionate appointment - claim for higher post authorities overlooked qualification of applicant already possessed at time of his appointment and also ignored representation of applicant held, merely because authorities have passed an appointment order to a lower post, it will not take away the right of petitioner to claim the higher post. rule 6(4) is not attracted. .....motor (india) limited ([1953] 4 s.t.c. 133) had held that such transactions were not exigible to state sales tax. the assessment on the respondent in the said case was made after the decision of the supreme court in state of bombay v. united motors (india) limited ([1953] 4 s.t.c. 133), and the turnover in respect of the sale transactions was exempted from sales tax. the sales tax authorities levied penalty on the ground that the dealer had contravened the provisions of section 14-a of the bihar act in making the collection. the supreme court held that where a dealer was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside section 14-a and be otherwise unjustified or improper; but it does not.....
Judgment:
ORDER

Govinda Bhat, J.

1. This writ petition preferred under article 226 of the Constitution of India is directed against the notice No. DR/CT/W-35/B dated 3rd July, 1969, issued by the Commercial Tax Officer, Haveri, respondent 1, under section 18-A of the Mysore Sales Tax Act, 1957, hereinafter called the Act, proposing to levy a levy a penalty up to Rs. 13,080.93. The petitioner is a dealer under the Act carrying on business on its own account and also as a commission agent on behalf of its known principals. At the time of making the assessment for the period from 5th November, 1964, to 24th October, 1965, the petitioner objected to the levy of sales tax on the turnover of sales of chillies effected as commission agents of agricultural producers. The assessing authority rejected the objection on the ground that the assessee had not filed a list of its principals alleged to be agriculturists and that it had merely asserted that they were agriculturists. On appeal preferred by the petitioner to the Deputy Commissioner of Commercial Taxes, the objection of the petitioner was accepted and the turnover in dispute was exempted from sales tax. Under the Act, sales by agriculturists of their agricultural produce is not taxable whether sale is effected by the producers or through commission agents.

2. The petitioner had collected from the purchasers of chillies a sum of Rs. 8,720.62 during the aforesaid period from 5th November, 1964 to 24th October, 1965, on the assumption that the transactions were exigible to sales tax.

3. Respondent 1 issued the impugned notice alleging that the petitioner has collected a sum of Rs. 8,720.62 during the period from 5th November, 1964, to 24th October, 1965, by way of tax on the sales of chillies effected on behalf of grower principals, that the said amount represents collections by way of tax or purporting to be by way of tax, but as the sales in question are not liable to tax, the said collection is in contravention of section 18(1) of the Act. Therefore, the notice proceeds to state that under the provisions of section 18-A a penalty up to Rs. 13080.93 is liable to be imposed on the petitioner, and before levying the penalty the petitioner was afforded an opportunity of being heard on 19th July, 1969. On receipt of the said notice, the petitioner has approached this court for relief under article 226 of the Constitution of India.

4. The petitioner was challenged the impugned notice on a number of grounds. One of the grounds is that section 18-A is unconstitutional, being violative of articles 19(1)(f), 19(1)(g) and 20 of the Constitution of India and, further, that the provisions of section 18-A are beyond the legislative competence of the State Legislature. Even assuming that section 18-A is valid, it is urged that the condition precedent to the exercise of jurisdiction under section 18-A is non-existent in the instant case since on the facts stated in the impugned notice there is no contravention of section 18(1) of the Act.

5. In the view which we propose to take, it is unnecessary to deal with the contention that section 18-A is unconstitutional. In our opinion, the petitioner is entitled to succeed on the ground that the provisions of section 18-A are not attracted as there is no contravention of the provisions of sub-section (1) of section 18 of the Act.

Section 18-A inserted by Mysore Act 7 of 1966 with retrospective effect reads thus :

'18-A. Penalty for collection in contravention of section 18. - If any person collects any amount by way of tax or purporting to be by way of tax in contravention of the provisions of sub-section (1) or sub-section (2) of section 18, or if any registered dealer or licensed dealer collects any amount by way of tax or purporting to be by way of tax in excess of the amount payable by him, whether or not any tax is due from such person or dealer under this Act in respect of the transaction in which he collects such amount, the assessing authority may, after giving such person or dealer a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times such amount ........' (Provisos omitted as being unnecessary for the purpose of this case).

6. AOn a reading of section 18-A, it is clear that the penalty provided under the said section can be levied only where any person contravenes the provisions of sub-section (1) or sub-section (2) of section 18. The impugned notice states that the petitioner has contravened sub-section (1) of section 18 of the Act. The question, therefore, is, whether on the facts stated in the impugned notice there is contravention of sub-section (1) of section 18. Sub-section (1) of section 18 as it stood during the relevant period 1964-65 read thus :

'18. (1) No person who is not a registered dealer shall collect any amount by way of tax under this Act, nor shall a registered dealer make any such collection except in accordance with such conditions and restrictions, if any, as may be prescribed : Provided that the amount which may be collected by way of tax shall not exceed the rate of rates of tax specified in respect of the sale or purchase of goods under this Act .......'

7. Sub-section (1) of section 18 consists of two parts, both of which are put in the negative form. We are concerned with the second part which deals with a registered dealer. The second part, in effect, means nothing more than that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be prescribed. If the transaction is not exigible to tax, or where a dealer is not liable to pay any tax on the transaction and as such is not entitled to make any corresponding collection, then the collection made by him would fall outside the scope of section 18, but it does not amount to contravention of any provision of sub-section (1) or (2) of section 18.

8. Section 18(1) and 18(2) correspond to section 14-A of the Bihar Sales Tax Act, 1947, which came up for consideration before the Supreme Court in The State of Bihar v. H.R.M.L. Jute Mills ([1960] 11 S.T.C. 17). In the said case, the respondent had collected certain amount from the purchasers in respect of sales of jute products. The sale were in the course of inter-State trade. At the time of the sale transactions there was doubt as to whether the transactions were exigible to tax. The Supreme Court in The State of Bombay v. United Motor (India) Limited ([1953] 4 S.T.C. 133) had held that such transactions were not exigible to State sales tax. The assessment on the respondent in the said case was made after the decision of the Supreme Court in State of Bombay v. United Motors (India) Limited ([1953] 4 S.T.C. 133), and the turnover in respect of the sale transactions was exempted from sales tax. The sales tax authorities levied penalty on the ground that the dealer had contravened the provisions of section 14-A of the Bihar Act in making the collection. The Supreme Court held that where a dealer was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside section 14-A and be otherwise unjustified or improper; but it does not amount to the contravention of any provisions of section 14-A as such.

9. The principles laid down in The State of Bihar v. H.R.M.L. Jute Mills ([1960] 11 S.T.C. 17) were followed by this court in M. Kuppuswamy Naicker v. Commercial Tax Officer, First Circle, Bangalore and Another ([1963] 14 S.T.C. 894) while dealing with sub-section (3) of section 18 as it was in force before 1963. This court held that the collection which is not made by way of tax is outside the scope of section 18(3) and therefore the penalty of forfeiture cannot be imposed upon a dealer under the proviso to the said section and that in order to impose the penalty of forfeiture it must be shown that the dealer has acted contrary to the conditions and restrictions prescribed by the rules and that it is not enough to show that the collection of the amounts in question by the dealer is otherwise illegal or improper.

10. Where the transaction is not exigible to tax under the Act and the dealer makes any collection, then such a collection does not fall under sub-section (1) of section 18, and therefore the dealer cannot be said to have contravened the provisions of the said sub-section by making such collection. In order to attract the penalty provided under section 18-A, the pre-requisite condition is that the dealer should have contravened the provisions of sub-section (1) or sub-section (2). On the undisputed facts, the sale of chillies by the petitioner as commission agent of grower principals was not exigible to tax under the Act and it was so held by the appellate authority under the Act. The collection made by the petitioner from the purchasers fall outside the scope of section 18. There is no contravention of section 18. Consequently, the first respondent had no jurisdiction to take action under section 18-A of the Act as against the petitioner.

11. In the result, this writ petition succeeds and the impugned notice No. DR/CT/W-35/B dated 3rd July, 1969, is hereby quashed. No costs.

12. Petition allowed.


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