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Kantilal Babulal and Bros. Vs. H.C. Patel, Sales Tax Officer, Surat and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtGujarat High Court
Decided On
Judge
Reported in[1965]16STC973(Guj)
ActsBombay Sales Tax Act, 1946 - Sections 12A, 12A(1), 12A(2) and 12A(4); Constitution of India - Articles 19(1), 32, 32(1), 226 and 286(1); Bombay Sales Tax Act, 1953 - Sections 21(4); Madras General Sales Tax Act, 1939 - Sections 8B, 8B(1) and 8B(2); Uttar Pradesh Sales Tax Act, 1948
AppellantKantilal Babulal and Bros.
RespondentH.C. Patel, Sales Tax Officer, Surat and ors.
Appellant Advocate K.H. Kaji, Adv. for M.M. Vakil, Adv.
Respondent Advocate J.M. Thakore, Adv.-General, i/b., M.M. Thakore & M.G. Doshit, Additional Government Pleader
Cases ReferredM. Kuppuswami Naicker v. Commercial Tax Officer
Excerpt:
sales tax - taxable turnover - sections 12a and 12a (4) and article 286 (1) of constitution of india - petitioners effected various sales outside state of bombay - sales not taxable under act by reason of article 286 (1) - during assessment impugned sales included in taxable turnover of petitioner - petitioners challenged inclusion of sales - partial relief granted - tribunal held impugned sales outside state exempt from tax - sales tax officer instructed to modify assessment of petitioner - whether notice issued by respondent valid - on true construction of section 12a (4) notice was not within scope and ambit of impugned section. - - 1. this petition raises an interesting question relating to the construction of section 12a(4) of the bombay sales tax act. the petitioners challenged.....bhagwati, j. 1. this petition raises an interesting question relating to the construction of section 12a(4) of the bombay sales tax act. 1946, and in the event of the construction contended for on behalf of the state being accepted, challenges the validity of the section the ground of infraction of article 19(1)(f) of the constitution of india. in order to appreciate the various questions arising in the petition, it is necessary to briefly recapitulate the facts on which the petition is founded. the facts are few and for the most part undisputed and may be briefly stated as follows :- 2. the petitioners are dealers carrying on business in art silk, cotton and handloom cloth and at all material times they held a certificate of registration under the bombay sales tax act, 1946 (hereinafter.....
Judgment:

Bhagwati, J.

1. This petition raises an interesting question relating to the construction of section 12A(4) of the Bombay Sales Tax Act. 1946, and in the event of the construction contended for on behalf of the State being accepted, challenges the validity of the section the ground of infraction of Article 19(1)(f) of the Constitution of India. In order to appreciate the various questions arising in the petition, it is necessary to briefly recapitulate the facts on which the petition is founded. The facts are few and for the most part undisputed and may be briefly stated as follows :-

2. The petitioners are dealers carrying on business in art silk, cotton and handloom cloth and at all material times they held a certificate of registration under the Bombay Sales Tax Act, 1946 (hereinafter referred to as the Act). During the period 26th January, 1950, to 31st March, 1950, which we shall for the sake of convenience describe as the first period, the petitioners effected various sales outside the State of Bombay. Being sales outside the State of Bombay, these sales were not taxable under the Act by reason of Article 286(1) of the Constitution; but in the assessment of the petitioners for the period 1st April, 1949. to 31st March, 1950, they were included in the taxable turnover of the petitioners and a sum of Rs. 4,494-3-9 was paid by the petitioners as tax on such sales. The petitioners challenged the inclusion of these sales in their taxable turnover in the appeal filed by them before the Assistant Collector of Sales Tax but the appeal was unsuccessful. The matter was then carried in revision to the Additional Collector of Sales Tax, who by his order dated 30th April, 1958, excluded certain sales as outside State sales and made an order for refund of Rs. 2,238-0-6 being the amount of tax paid by the petitioners in respect of those sales. Pursuant to this order, a refund payment order was sent by the Sales Tax Officer to the petitioners on 11th June, 1958, and the amount of the refund was received by the petitioners. In the meanwhile, the Additional Collector of Sales Tax by his letter dated 17th May, 1958, gave notice to the petitioners that unless they furnished to the Sales Tax Officer proof of their having refunded the amount of Rs. 2,238-0-6 to the purchasers within a period of three months from the date of the order, the amount of the refund would be liable to be forfeited under section 21(4) of the Bombay Sales Tax Act, 1953. No action was, however, taken on this notice and no forfeiture of the amount of Rs. 2,238-0-6 was made until the filing of the petition. Resuming the narration, of the history of the assessment, the petitioners, not being content with the partial relief granted by the Additional Collector of Sales Tax, preferred a revision application before the Tribunal. The Tribunal held that all the sales in respect of which claim for exclusion was made by the petitioners were outside State sales and were, therefore, exempt from tax under Article 286(1) and consequently, they were not liable to be included in the taxable turnover of the petitioners. The Tribunal accordingly by an order dated 26th November, 1958, directed that the assessment of the petitioners be modified in accordance with this decision. The assessment of the petitioners was, however, not modified by the Sales Tax Officer pursuant to this order of the Tribunal and the consequential relief of refund of Rs. 2,256-2-6 which would have followed on such modification was not granted to the petitioners. The net summary of the position which obtained at the date of the petition in regard to the first period, therefore, was that out of the tax of Rs. 4,494-3-0 paid by the petitioners in respect of the outside State sales, a sum of Rs. 2,238-0-6 ordered to be refunded by the Additional Collector of Sales Tax was received by the petitioners, but there was a notice of forfeiture in respect of that amount issued by the Additional Collector of Sales Tax under section 21(4) of the Bombay Sales Tax Act, 1953, and that so far as the balance of Rs. 2,256-2-6 was concerned, there was the order of the Tribunal directing a modification of the assessment of the petitioners which would result in the granting of refund of the said amount to the petitioners, but that order remained unexecuted by the Sales Tax Officer.

3. During the period 1st April, 1950, to 31st March, 1951, also the petitioners effected various sales outside the State of Bombay. We shall, for the sake of convenience, describe this period as the second period. These sales being outside State sales were exempt from tax by reason of Article 286(1) of the Constitution, but in the mistaken belief that they were taxable, the petitioners initially paid a sum of Rs. 23,806-3-6 as tax in respect of such sales along with the quarterly returns at the time of the assessment. The petitioners thereafter, realising that these sales were not taxable, submitted revised returns excluding these sales from their taxable turnover and claimed refund of Rs. 23,806-3-6. This claim was negatived by the Sales Tax Officer on 31st March, 1957. The petitioners thereupon carried the matter in appeal and the Assistant Collector of Sales Tax by his order dated 10th April, 1958, excluded certain sales as outside State sales and granted refund of Rs. 12,154-15-0 to the petitioners. The Assistant Collector of Sales Tax by his letter dated 27th May, 1958, forwarded to the petitioners his order sanctioning refund of Rs. 12,154-15-0 and asked the petitioners to approach the Sales Tax Officer for refund payment order for the said amount. The Assistant Collector of Sales Tax by his said letter also gave notice to the petitioners that if the petitioners failed to refund the amount of Rs. 12,154-15-0 to the purchasers and to produce proof showing such payment before the Sales Tax Officer, the said amount would be forfeited under section 12A(4) of the Bombay Sales Tax Act, 1946. It is not clear from the petition whether pursuant to this order of the Assistant Collector of Sales Tax a refund payment order was obtained by the petitioners; but it is admitted that the petitioners received refund of the amount of Rs. 12,154-15-0 as directed by this order of the Assistant Collector of Sales Tax. The petitioners being aggrieved by the refusal of refund in respect of the balance of tax paid by them, preferred a revision application to the Additional Collector of Sales Tax. The Additional Collector of Sales Tax by his order dated 1st November, 1958, granted further relief by ordering refund of Rs. 3,588-1-9 to the petitioners. Though this order was made by the Additional Collector of Sales Tax as far back as 1st November, 1958, the Sales Tax Officer did not give effect to it and did not issue any refund payment order to the petitioners in obedience to it with the result that until the filing of the petition, the refund of this amount of Rs. 3,588-1-9 was not received by the petitioners. The petitioners, to continue the narration further, then preferred a revision application to the Tribunal claiming the balance of the refund which was refused to them by the Additional Collector of Sales Tax. The Tribunal in revision accepted the plea of the petitioners that all the sales claimed by the petitioners were outside State sales and accordingly by an order dated 4th May, 1959, asked the Sales Tax Officer to modify the assessment of the petitioners so as to exclude these sales from the assessment. The State thereupon applied to the Tribunal for a reference and Reference No. 2 of 1961 was accordingly made by the Tribunal to this Court. This reference was pending at the date of the petition. The net summary of the position which obtained in regard to the second period at the date of the petition, therefore, was that out of the tax of Rs. 23,806-3-6 paid by the petitioners in respect of outside State sales, a sum of Rs. 12,154-15-0 ordered to be refunded by the Assistant Collector of Sales Tax was received by the petitioners but a notice of forfeiture in respect of that amount issued by the Assistant Collector of Sales Tax under section 12A(4) was pending; a further sum of Rs. 3,588-1-9 was ordered to be refunded by the Additional Collector of Sales Tax but neither any refund payment order was issued nor was refund of the said amount given to the petitioners and so far as the balance of Rs. 8,063-2-9 was concerned, the Tribunal had by its order directed modification of the assessment of the petitioners which would result in the grant of refund of the said amount to the petitioners, but Reference No. 2 of 1961 directed against the order of the Tribunal was pending in this Court.

4. This was broadly the position at the date when the petition came to be filed and, as will be seen from what is stated above, the petitioners had considerable grievance against the Sales Tax Authorities since they were not carrying out the orders of the superior Tribunals granting relief to the petitioners. But what precipitated the filing of the petition was the issue of a notice by the Sales Tax Officer on 27th June, 1962, by which the Sales Tax Officer called upon the petitioners to remain present in his office on 2nd July, 1962, with particulars of amount recovered by the petitioners by way of sales tax from purchasers in other States during the period 26th January, 1950, to 31st March, 1951, and to show cause why the said amount should not be forfeited to the Government. On receipt of this notice, the petitioners filed the present petition against the Sales Tax Officer, the Commissioner of Sales Tax and the State of Gujarat as the respondents. The two main grounds set out in the petition were, first, that the respondents Were under a statutory obligation to carry out the orders of refund made by the Additional Collector of Sales Tax and the Tribunal and to refund to the petitioners a sum of Rs. 5,844-4-3 made up of Rs. 2,256-2-6 being the amount of refund claimed under the order of the Tribunal in respect of the first period and Rs. 3,588-1-9 being the amount of refund claimed under the order of the Additional Collector of Sales Tax in respect of the second period and that a writ of mandamus should, therefore, issue compelling the respondents to carry out this statutory obligation and, secondly, that the notice dated 27th June, 1962, issued by the Sales Tax Officer was not warranted by the terms of section 12A(4) and that in any event it was illegal and void since section 12A(4) was ultra vires and violative of Article 19(1)(f) of the Constitution and that a writ of mandamus should accordingly issue to quash and set aside the said notice and a writ of prohibition should issue prohibiting the respondents from acting upon the said notice or taking any proceedings in enforcement of it. On the petition being admitted, a rule was issued and in opposition to the rule an affidavit made by the first respondent was filed on behalf of the respondents. It is not necessary to refer to this affidavit in detail beyond stating that in effect and substance all that it said was that the grounds on which the petitioners claimed relief in the petition were unjustified and that the first respondent was entitled to proceed against the petitioners under section 12A(4) and to withhold payment of the amount of refund to the petitioners until the proceedings under section 12A(4) were concluded. Since the vires of section 12A(4) was challenged in the petition, a notice was issued to the Advocate-General, and the learned Advocate-General, therefore, appeared at the hearing of the petition not only on behalf of the respondents but also in response to the notice issued to him.

5. When Mr. Kaji, learned Advocate appearing on behalf of the petitioners, opened his arguments, the first complaint that he made on behalf of the petitioners, was against the refusal of the Sales Tax Officer to carry out the order of the Tribunal directing the modification of the assessment of the petitioners in respect of the first period. Though the order was made by the Tribunal as far back as 26th November, 1958, the Sales Tax Officer had failed to carry it out by making the necessary modification in the assessment which would result in the granting of refund to the petitioners of the balance of Rs. 2,256-2-6. Mr. Kaji contended that the order of the Tribunal was final and binding on the parties and the Sales Tax Officer was, therefore, under a statutory obligation to carry it out and since the Sales Tax Officer had failed to comply with this statutory obligation and the petitioners had no other remedy to compel performance of it, the petitioners were entitled to have a writ of mandamus issued requiring the first respondent to carry out the order of the Tribunal by making modification in the assessment of the petitioners in accordance with such order and granting consequential refund of Rs. 2,256-2-6 to the petitioners. An identical contention was also advanced by Mr. Kaji in regard to the order of the Tribunal in respect of the second period. We may point out that, subsequent to the filing of the petition, Reference No. 2 of 1961 which was directed against the order of the Tribunal in respect of the second period was disposed of against the State and the order of the Tribunal, therefore, remained intact and unaffected. Mr. Kaji contended that the Sales Tax Officer was, therefore, bound to carry out the order of the Tribunal by making modification in the assessment of the petitioners and granting consequential refund of Rs. 8,063-2-9 to the petitioners and that a writ of mandamus should, therefore, issue compelling him to perform this statutory obligation. Mr. Kaji in support of this contention relied on a decision of the Supreme Court in Bhopal Sugar Industries Ltd. v. Income-tax Officer, Bhopal ([1960] 40 I.T.R. 618). Now it is undoubtedly true, as held by the Supreme Court in this case, that when an order is made by a superior Tribunal and it has become final and conclusive, there is a statutory obligation on the subordinate authority to carry out the order and that if the subordinate authority refuses to carry out the order, it can be compelled to do so by a writ under Article 226. It is equally true that in accordance with this principle the first respondent was under a statutory obligation to carry out the orders of the Tribunal and to modify the assessment of the petitioners as directed by the said orders and since the first respondent admittedly failed to do so, a writ could justifiably issue against the first respondent requiring the first respondent to carry out the statutory obligation, but we are afraid this relief cannot be granted by us to the petitioners since no such relief is claimed in the petition. In regard to the order of the Tribunal in respect of the second period, no relief is claimed at all in the petition since at the date of the petition, Reference No. 2 of 1961 was pending in this Court and the order of the Tribunal had, therefore, not become final and conclusive. So far as the order of the Tribunal in respect of the first period is concerned, it had undoubtedly become final and conclusive at the date of the petition; but in respect of this order also, we find that no relief is claimed in the petition. Mr. Kaji drew our attention to prayer (a) of the petition, but that prayer is for compelling the respondents to comply with the order of refund and to refund to the petitioners the sums of Rs. 2,256-3-6 and Rs. 3,588-1-9. Of course the sum of Rs. 2,256-2-6 represented the amount of refund which the petitioners were entitled to get as a necessary consequence of the order of the Tribunal but as yet there was no order of refund in respect of that amount and unless such an order of refund was made by the first respondent as a result of modification of the assessment of the petitioners in pursuance of the order of the Tribunal, the petitioners could not claim any relief requiring the respondents to refund that amount to the petitioners. The only relief which the petitioners could claim in this connection was that the first respondent be required to modify the assessment of the petitioners in accordance with the direction contained in the order of the Tribunal. This relief was, however, not claimed in the petition and we cannot, therefore, grant it. Realizing this difficulty in his way on the petition as it is stands, Mr. Kaji at the fag-end of his argument applied for leave to amend the petition by adding paragraph 25A after paragraph 25 of the petition and prayer (bb) after prayer (b) of the petition. By this amendment, Mr. Kaji sought to include in the petition a prayer for revision of the assessment of the petitioners pursuant to the orders of the Tribunal in respect of both the periods and the necessary averments in support of such prayer. The amendment was opposed by the learned Advocate-General appearing on behalf of the respondents and the grounds which he urged against granting the amendment were : (1) that the petition was filed as far back as 8th August, 1962, whereas the amendment was applied for more than a year after the date of the filing of the petition, and (2) that the amendment was sought almost at the close of the arguments on behalf of the petitioners. These grounds were, in our opinion, valid grounds for refusing to grant the amendment and we, therefore, rejected the application for amendment.

6. The only two contentions of Mr. Kaji which thus survived were, first, that the first respondent had failed to comply with the order of refund of Rs. 3,588-1-9 made by the Additional Collector of Sales Tax in respect of the second period and that a writ of mandamus should, therefore, issue to compel the first respondent to comply with the said order of refund and to refund to the petitioners the sum of Rs. 3,588-1-9 in compliance with the same and secondly, that the notice of forfeiture dated 27th June, 1962, issued by the first respondent was illegal and void and that a writ of mandamus should, therefore, issue to quash and set aside the said notice and a writ of prohibition should issue prohibiting the respondents from enforcing the same. Now, to these contentions, a preliminary objection was raised by the learned Advocate-General on behalf of the respondents. He pointed out that the relief under Article 226 was a discretionary relief and that unless justice of the case demanded, the Court should not grant it, even if there was an error of law committed by the subordinate Tribunal. He contended that in the present case the petitioners having unjustly enriched themselves by collecting from their purchasers amounts by way of sales tax, when no sales tax was payable by them to the State on those sales, were seeking to protect the spoils of such unjust enrichment and that the Court should not, therefore, interfere by way of granting relief under Article 226 even if the legal contentions raised by them were well-founded. The argument was, to put it briefly, that justice was not on the side of the petitioners and that they should not, therefore, have relief under Article 226. The learned Advocate-General relied on three decisions of the Supreme Court, namely, G. Veerappa Pillai, Proprietor Sathi Vilas Bus Service v. Raman and Raman Ltd. (A.I.R. 1952 S.C. 192) Sangram Singh v. Election Tribunal, Kotah and Another (A.I.R. 1955 S.C. 425), and A. M. Allison and Another v. B. L. Sen & Others (A.I.R. 1957 S.C. 227), and also referred to a decision of the Allahabad High Court in Lala Kailashpat Singhania v. Income-tax Officer, Kanpur ([1963] 47 I.T.R. 453). Now, it is true that as a general principle granting of relief under Article 226 is discretionary and that ordinarily a writ will not issue unless the justice of the case requires it; but there is no such hard and fast rule which limits the discretion of the Court in all cases and besides, different considerations prevail in case of different writs and particularly in the case of writ of prohibition. We shall examine that presently, but before we do so, we must point out that in the present case, if the legal contentions of the petitioners are correct, we do not see any reason why relief should be refused to them. There are no considerations of justice which should prevail with us in denying to the petitioners the relief which they claim. Let us see what is the relief claimed by them. In the first instance, what they claim is that the first respondent should carry out the order of refund passed by the Additional Collector of Sales Tax. The refund claimed is a refund of tax paid by them in excess of the amount due under the Act. Is there any inequity if the taxpayer demands refund of the excess tax paid by him and if the order of refund is made in his favour, he asks the Court to compel the authorities to carry it out Can it be said that any injustice would result from granting such relief Do the basic principles of administration of justice not require that once an order is passed by a superior Tribunal and it has become final and conclusive, it must be carried out by the subordinate authorities If the subordinate authorities do not carry out the order for a period of about 3 1/2 years, should the court not interfere under Article 226 The answer is clearly provided by the decision of the Supreme Court in Bhopal Sugar Industries Ltd. case ([1960] 40 I.T.R. 618) to which we have already referred. The only argument put forward by the learned Advocate-General was that the petitioners had collected an amount equivalent to the amount of refund by way of tax from purchasers in respect of sales on which refund was granted and that the effect of carrying out the order of refund passed by the Additional Collector of Sales Tax would be to enable the petitioners to retain the benefit of the said amount improperly collected by them. But this argument overlooks the fact that the refund which is claimed by the petitioners is the refund of the excess tax paid by them and it has nothing to do with the amount, if any, collected by the petitioners from the purchasers by way of tax in respect of sales on which refund has been granted. If any such amount has been collected by the petitioners from the purchasers, the purchasers have their remedy against the petitioners and they can, if they so choose, claim to recover that amount from the petitioners and even the State may forfeit that amount if it has the power to do so under section 12A(4) but that can be no ground for refusing to carry out the order of refund made by the Additional Collector of Sales Tax for a period of about 3 1/2 years. We do not, therefore, see any reason why, if the petitioners are otherwise entitled to the relief claimed by them, they should not be granted relief in respect of the order of refund made by the Additional Collector of Sales Tax.

7. So far as the relief in respect of the notice dated 27th June, 1962, is concerned, there are two reasons why such relief should not be refused to the petitioners. The first is that here what the petitioners complain of is a threatened infringement of their fundamental rights and they seek interposition of the Court with a view to protection of those rights. Where a citizen goes to the Court under Article 226 for protection of his fundamental rights guaranteed to him under the Constitution, there is a duty laid on the Court to protect such rights by issuing an appropriate writ and the Court will be failing in its duty if it refused to protect such rights on the ground that the petitioner had another remedy available to him or that he had acquiesced in the breach of such rights or that justice was not on his side. These are grounds which may legitimately be taken into account while deciding whether a writ under Article 226 should issue to enforce any other legal rights of the petitioner; but when it is a question of enforcement of fundamental rights, such considerations should not be allowed to influence the decision of the Court. The fundamental rights are, to quote the words of Mahajan, C.J., in Behram Khurshid Pesikaka v. The State of Bombay (A.I.R. 1955 S.C. 123 at page 146) :

'...... a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for individual benefit though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy.'

8. These observations were fully endorsed by N. H. Bhagwati, J., in Basheshar Nath v. Commissioner of Income-tax, Delhi and Rajasthan and Another (A.I.R. 1959 S.C. 149), Subba Rao, J., also quoted these observations with approval and added :

'...... fundamental rights created by the Constitution are transcendental in nature, conceived and enacted in national and public interest, and therefore, cannot be waived.'

9. If fundamental rights are sacrosanct having been enacted in national and public interest as a matter of constitutional policy, their protection and enforcement must alike be a matter of national and public interest and whenever, it is brought to the notice of the Court by a petitioner that his fundamental rights are being violated, the Court must readily interfere and protect and uphold those fundamental rights whatever be the other facts and circumstances of the case. It can be no answer in such a case that justice is not on the side of the petitioner. On the contrary, there is no higher justice than that which requires that fundamental rights which are enshrined in the Constitution, which are transcendental in nature and which constitute the bulwark of the citizen against all forms of power and despotism should be preserved and upheld. This must always be a paramount consideration with the Court and nothing should be allowed to countervail it, for it is of the utmost importance in a democratic society where the Constitution is founded on the rule of law that fundamental rights of the citizen are not trampled upon by the State, whether he be honest or dishonest. We are, therefore, of the view that where a petitioner complains of infraction of his fundamental rights, the Court must interfere under Article 226 to protect such fundamental rights and should not refuse protection on the ground that he has other remedy available to him or that justice is not on his side. This view, we find, is supported not only by the observations of Chagla, C.J., in United Motors Ltd. v. The State of Bombay ((1953) 55 Bom. L.R. 246; 4 S.T.C. 10), but also by the observations of Mahajan, C.J., in Himmatlal Harilal Mehta v. The State of Madhya Pradesh and Others ([1954] S.C.R. 1122 at page 1125; 5 S.T.C. 115).

10. The learned Advocate-General attempted to combat this view by relying on the decision of the Supreme Court in Hurmat s/o Satwa v. The State of U.P. & Others (A.I.R. 1961 S.C. 1457). In that case one of the questions raised before the Supreme Court was whether relief under Article 32 is a discretionary relief and whether the Supreme Court can refuse to issue appropriate writ in favour of the petitioner even if the petitioner proves his fundamental rights and their unconstitutional infringement. The contention advanced before the Supreme Court was that the right to move the Supreme Court 'which is guaranteed by Article 32(1) does not impose on this Court an obligation to grant the relief, because as in the case of Article 226 so in the case of Article 32 also the granting of leave is discretionary'. This contention was granted by the Supreme Court in the following words which were strongly relied on by the learned Advocate-General as supporting the view contended for by him :-

'We are not impressed by the argument that we should deal with the question of the applicability of the rule of res judicata to a petition under Article 32 on the basis that like Article 226, Article 32 itself gives merely a discretionary power to the Court to grant an appropriate relief.'

11. Now it must be remembered that this observation was made by the Supreme Court in reference to the contention which was urged before it and it cannot be spelt out from this observation that the Supreme Court intended to lay down the proposition that even where there is infraction of fundamental rights, relief under Article 226 is discretionary. The contention urged before the Supreme Court assumed that relief under Article 226 is discretionary and the highest that can be said in favour of the learned Advocate-General is that this assumption was not negatived by the Supreme Court but that is a very much different thing from saying that what the Supreme Court held was that relief under Article 226 is discretionary even in case of infraction of fundamental rights. The Supreme Court in that case was not dealing with the scope and ambit of relief under Article 226 and we cannot, therefore, regard this observation as in any way militating against the view we are taking, which view is supported by the aforesaid observations of Chagla, C.J., in United Motors' case ([1953] 4 S.T.C. 133) and of Mahajan, C.J., in Himmatlal Harilal Mehta's case ([1954] 5 S.T.C. 115).

12. The learned Advocate-General also relied on a decision of K. K. Desai, J., in an unreported judgment delivered by the learned Judge on 25th November, 1958, in the case of Pashabhai Patel and Company Private Ltd. v. Shri H. N. Date and Another, in Miscellaneous Petition No. 115 of 1958. That decision, however, cannot help us since the petitioner in that case did not complain of any infraction of his fundamental rights and the learned Judge actually emphasized the fact that the petitioner had not referred to fundamental rights of any kind in the petition. Of course the learned Judge did observe in passing that even if the case before him involved violation of fundamental rights, he would still in the exercise of his discretion refuse to interfere by way of a writ under Article 226, but this observation was clearly obiter and in any event, for reasons we have already given, we cannot accept it as a correct exposition of the law.

13. There is also another reason why we do not think we should refuse relief to the petitioners in respect of the notice dated 27th June, 1962, if we find that they are otherwise entitled to the same. That reason is that the writ of prohibition which is claimed by the petitioners is a writ which must issue almost as a matter of course. Once it is shown by the petitioners that the first respondent is acting without jurisdiction which would be the case if the notice dated 27th June, 1962,is not justified by the terms of section 12A(4) or if section 12A(4) is ultra vires as offending Article 19(1)(f) of the Constitution, a writ of prohibition must issue almost as a matter of course. In this connection we need not do anything more than refer to the decision of the Division Bench of this Court in Chhanalal A. Patel v. The State of Gujarat ([1960] 1 G.L.R. 260). Having regard to this decision, it is clear that we must grant relief to the petitioners under Article 226 of the Constitution, if the petitioners can show that what the first respondent proposes to do is without jurisdiction and the preliminary objection of the learned Advocate-General must be rejected.

14. We must, therefore, proceed to consider the merits of the contentions urged on behalf of the petitioners. The first contention related to the failure of the first respondent to carry out the order of refund made by the Additional Collector of Sales Tax. Now, it is true and it could not with any colour of reason be disputed by the learned Advocate-General that the order of refund passed by the Additional Collector of Sales Tax having become final and conclusive, the first respondent was bound to give effect to it and to grant refund of the sum of Rs. 3,588-1-9 to the petitioners; but it was said by the learned Advocate-General that the petitioners having collected an equivalent amount from the purchasers by way of tax, such amount was forfeitable to the State under section 12A(4) and proceedings for forfeiture of the said amount had already been taken by issuing the notice dated 27th June, 1962, but they could not be continued further owing to the filing of the petition. If the said amount was liable to be forfeited, which in the submission of the learned Advocate-General it was, there was no point in paying over the amount of refund to the petitioners, for, in that event, the State would be paying over with one hand and recovering with another. The learned Advocate-General stated that as soon as the petition is disposed of, the first respondent will immediately proceed with the notice dated 27th June, 1962, and determine whether any and if so what amount is liable to be forfeited to the State under section 12A(4) and if the amount forfeited to the State under section 12A(4) is found to be less than the amount of the refund, the first respondent will assuredly refund the balance to the petitioners. Having regard to this statement made by the learned Advocate-General on behalf of the respondents, it is not necessary to issue any writ of mandamus against the respondents as prayed for by the petitioners in so far as the order of the Additional Collector of Sales Tax is concerned.

15. That takes us to the main question involved in the petition, namely, whether the notice dated 27th June, 1962, issued by the first respondent is valid. Now, the notice does not state under what provision of law it is issued but it was common ground between the parties that it was issued under section 12A(4) of the Bombay Sales Tax Act, 1946. The attack against the validity of the notice was, as we have pointed out above, a twofold attack. Mr. Kaji in the first instance contended that on a true construction of section 12A(4), the notice was not within the scope and ambit of section 12A(4) and it was only if this claim of his was negatived that he submitted that section 12A(4) was violative of Article 19(1)(f) and was, therefore, void. The first contention raises the question of construction of section 12A(4) while the second raises the question of vires of the section.

16. Section 12A was introduced in the Act by Bombay Act 1 of 1949. Sub-section (2) of section 12A was subsequently amended by Bombay Act XVIII of 1951, but during the two periods with which we are concerned in this petition, it was the unamended section which was in force. That section was in the following terms :-

'12A. Prohibition against collection of lax in certain cases - (1) No person shall collect any amount by way of tax under this Act in respect of sales or supplies of any goods which are declared, from time to time, under section 7 as sales or supplies on which the tax is not payable.

(2) No person who is not a registered dealer shall in respect of sales or supplies of any goods collect from the purchaser any amount by way of tax under this Act except in cases where he is required to do so in order to comply with the conditions and restrictions imposed on him under the provisions of any law for the time being in force.

(3) * * * (4) If any person collects any amount by way of tax in contravention of the provisions of sub-section (1) or (2) or if any registered dealer collects any amount by way of tax in excess of the amount payable by him under this Act, the amount so collected shall, without prejudice to any prosecution that may be instituted against such person or dealer for an offence under this Act, be forfeited to the Provincial Government and such person or dealer, as the case may be, shall within the prescribed period, pay such amount into a Government treasury and in default of such payment, the amount shall be recovered as an arrear of land revenue.'

17. Mr. Kaji contended that on a true construction of the various provisions of section 12A all that the section dealt with was collection of tax by a dealer which was lawfully leviable under the Act and that since in the present case the sales were outside State sales and were, therefore, not taxable under the Act, the section could not operate so as to entitle the State to forfeit any amount collected by the petitioners from the purchasers by way of tax in respect of those sales. Mr. Kaji emphasized the words 'by way of tax' occurring in sub-sections (1), (2) and (4) of section 12A and contended that these words clearly showed that the section was intended to refer to collections of tax lawfully leviable under the Act. Mr. Kaji also relied on several decisions of various High Courts in support of this contention. Now the question raised by this contention being a question of construction, the safer and more correct course of dealing with such a question would be to take the words of the section itself and to arrive at a possible meaning without referring to cases. If the words of the section are themselves clear and unambiguous, then no more is necessary than to expound them in their ordinary and natural sense. In such a case the words themselves best declare the intention of the law giver and the task of interpretation can hardly be said to arise. That is the position in the present case. When we examine the words of section 12A, we find that the legislative intent revealed by those words is clear and simple and does not admit of any doubt. Sub-section (1) provides that no person which would include a dealer, registered as well as unregistered, shall collect any amount by way of tax under the Act in respect of sales or supplies of any goods which are declared under section 7 to be sales or supplies on which tax is not payable. This provision is obviously intended to secure that since no tax is payable on such sales or to use the words of Mr. Kaji, no tax is lawfully leviable on such sales, no amount by way of tax shall be collected by the dealer from the purchasers in respect of such sales. If contrary to this provision any such amount is collected by the dealer, it shall not remain with him but shall be forfeited to the State under sub-section (4). Sub-section (2) makes provision in regard to an unregistered dealer. Now an unregistered dealer is not liable to pay tax on the sales effected by him. No tax is lawfully leviable under the Act on such sales. But an unregistered dealer may yet collect an amount by way of tax on such sales from the purchasers. To prevent this and to ensure that in this case also no amount is collected by way of tax on sales on which tax is not lawfully leviable under the Act, the Legislature enacted sub-section (2) which provides that no unregistered dealer shall in respect of sales of any goods collect from the purchasers any amount by way of tax under the Act except in certain specified cases with which we are not concerned in this petition. If he collects any such amount in contravention of sub-section (2), then under sub-section (4) it is liable to be forfeited to the State. Turning to the case of a registered dealer we find that apart from the prohibition contained in sub-section (1), there is no prohibition imposed by the Act on a registered dealer against collection of any amount by way of tax from the purchasers. Whether tax is lawfully leviable under the Act on a sale or not, a registered dealer can, without committing a breach of any provision of the Act, collect an amount by way of tax from the purchaser in respect of such sale. The collection of such amount would be a matter of contract between the dealer and the purchaser. If the sale is such that on it tax is lawfully leviable under the Act, then there is nothing wrong or improper in the dealer collecting it from the purchaser. He can retain it. But if tax is not lawfully leviable under the Act on the sale, the dealer would be collecting an amount by way of tax though no tax is payable by him and that would not be right or proper. Sub-section (4), therefore, provides that if a registered dealer collects any amount by way of tax from the purchasers in excess of the tax payable by him under the Act, such amount shall be forfeited to the State. This analysis of the provisions of sub-sections (1), (2) and (4) shows that these sub-sections are intended to secure that no amount is collected by a dealer by way of tax from a purchaser in respect of sales on which tax is not payable by him and that if any such amount is collected, it shall not be retained by him but shall be forfeited to the State. These sub-sections, therefore, far from being confined to cases of collection of tax by a dealer which is lawfully leviable under the Act, deal with exactly opposite type of cases, namely, where collection is made by a dealer of an amount by way of tax when tax is not lawfully leviable under the Act. This is the only plain and natural construction of the language used in these sub-sections. Even if an unregistered dealer collects an amount by way of tax in respect of sales on which tax is not lawfully leviable under the Act, such as outside State sales, he would still be within the words of the prohibition enacted in sub-section (a) and equally the words 'if any registered dealer collects any amount by way of tax in excess of the amount payable by him under this Act' in sub-section (4), according to their ordinary and natural sense, comprehend within their scope and ambit collection of an amount by way of tax on a sale on which tax is not lawfully leviable under the Act, for such a collection would be in excess of the amount payable as tax under the Act. There is no reason why these words should be read in a narrow and constricted manner or a construction should be put on them which defeats the object and purpose of the enactment of the provision. The construction suggested by Mr. Kaji on behalf of the petitioner cannot therefore be accepted and it must be held that sub-section (4) applies to all cases where an unregistered dealer collects any amount by way of tax from the purchasers or a registered dealer collects any amount by way of tax in excess of the amount payable by him as tax under the Act, irrespective of the fact whether the sales on which such amount is collected are sales on which tax is lawfully leviable under the Act or not.

18. Turning now to the authorities we find that several authorities were cited by Mr. Kaji in support of the construction contended for by him, but in our opinion, none of them helps him. The authority on which Mr. Kaji relied most was the decision of the Madras High Court in Tata Iron and Steel Co. Ltd. v. State of Madras ([1954] 5 S.T.C. 382). But that decision was based on the construction of a provision which was materially different from section 12A and cannot, therefore, be relied upon as an authority supporting the contention of Mr. Kaji. The section which came up for consideration in that case was section 8B of the Madras General Sales Tax Act, 1939, and the question that arose was whether amounts collected by a registered dealer by way of tax on sales effected outside the State of Madras - which sales were not taxable under the Act - were liable to be paid over to the State under sub-section (2) of section 8B. The Madras High Court held that under sub-section (2) of section 8B a dealer was required to pay over to the State only those amounts which were lawfully collected by him from the purchasers under sub-section (1) of section 8B and the only amounts which he could lawfully collect from the purchasers under sub-section (1) of section 8B were amounts in respect of sales on which tax was lawfully leviable under the Act and that sub-section (2) of section 8B did not, therefore, require him to pay over to the State amounts collected by him by way of tax in respect of sales on which tax was not lawfully leviable under the Act. This decision of the Madras High Court was followed by the Mysore High Court in Minerva Mills Ltd., and Another v. State of Mysore and Another ([1956] 7 S.T.C. 148), but when the decision of the Mysore High Court was taken on appeal to the Supreme Court, the Supreme Court in a decision reported in State of Mysore v. Mysore Spinning and . ([1960] 11 S.T.C. 734), did not decide the question of construction of that section and expressly left it open. Two other High Courts, namely, the Andhra Pradesh High Court in Golla Venkata Subramanyam v. The State of Andhra ([1956] 7 S.T.C. 599), and the Hyderabad High Court in Cement Marketing Company v. A. V. R. Krishnamurthy ([1956] 7 S.T.C. 762), also followed the Madras decision and took the same view of the construction of the relevant provision in the sales tax laws of their respective States as the Madras High Court. The Travancore-Cochin High Court, however, took a different view in K. J. Mathew v. The Sales Tax Officer, Alwaye ([1954] 5 S.T.C. 58), and adhered to that view in Kunju Moideen Kunju v. State of Travancore-Cochin ([1954] 5 S.T.C. 462), notwithstanding the Madras decision given in the meantime. It is, therefore, evident that there is a conflict between the High Courts of Madras, Mysore, Andhra Pradesh and Hyderabad on the one hand and the High Court of Travancore-Cochin on the other in regard to the construction of the relevant provision which is in identical terms in the respective sales tax laws of all those States. It is, however, not necessary for the purpose of the present petition to decide which of the two views is correct, for even if the view taken by the Madras High Court and followed by the High Courts of Mysore, Andhra Pradesh and Hyderabad be assumed to be the correct view, we do not see how that can help us at all in the interpretation of section 12A of the present Act. The scheme of sub-sections (1) and (2) of section 8B which was the section construed by the Madras High Court is radically different from the scheme of sub-sections (1), (2) and (4) of section 12A which we have already discussed. The considerations which weighed with the Madras High Court in construing sub-sections (1) and (2) of section 8B in the manner it did were mainly three. First, sub-section (1) of section 8B conferred authority on a registered dealer to collect amount by way of tax from the purchaser and such authority was obviously limited to collection of tax lawfully leviable under the Act, for the Legislature could not have intended to confer on a registered dealer a right higher than that it conferred on the State, namely, the right to collect tax lawfully leviable under the Act. The expression 'by way of tax under this Act' in sub-section (1) of section 8B could, therefore, mean only amounts lawfully leviable and levied under the Act. Since the same phraseology namely 'by way of tax under this Act' was also used in sub-section (2) of section 8B, it must according to the normal rules of interpretation bear the same interpretation as in sub-section (1) of section 8B and refer only to tax lawfully leviable under the Act. Secondly, sub-section (2) of section 8B was complementary to sub-section (1) of section 8B and the extent of the liability imposed on the registered dealer under sub-section (2) of section 8B was correlated to the right conferred on him under sub-section (1) of section 8B. The registered dealer was required to pay over to the State under sub-section (2) of section 8B what he collected by way of tax from the purchaser under sub-section (1) of section 8B. Thirdly, the amounts required to be paid over to the State under sub-section (2) of section 8B were amounts collected in excess of the tax, if any, paid by him and not in excess of the tax, if any, payable by him under the Act. All these three considerations are absent when we turn to section 12A. As a matter of fact the entire scheme of section 12A is different. What section 12A aims at achieving is that no amount should be collected by a dealer from the purchaser by way of tax in respect of sales on which no tax is payable by him and that if he collects any such amount, he should not be allowed to retain it but it should be paid over to the State and this result is clearly brought about by the use of clear and unambiguous language which leaves no doubt as to the true intention of the Legislature. The language of the various provisions of section 12A clearly negatives the applicability of the reasoning adopted by the Madras High Court and shows that the basis of the Madras decision cannot apply when we have to interpret the provisions of section 12A.

19. Another decision cited by Mr. Kaji was a decision of the Allahabad High Court in Sales Tax Commissioner, U.P. v. Sada Sukh Vyopar Mandal ([1959] 10 S.T.C. 57). Bat we do not see how this decision can at all help us in the task of interpretation of section 12A. What happened in that case was that a certain amount was collected by a registered dealer by way of tax on forward contracts which by a fiction enacted in U.P. Sales Tax Act, 1948, were considered as sales. This fiction was held to be invalid and the question arose whether the amount collected by the registered dealer was liable to be forfeited to the State under section 8A(4) of the U.P. Act which was similar to section 12A(4) of our Act. The Allahabad High Court held that the amount realised by the registered dealer from the customers in connection with forward contracts could not be said to be an amount collected by way of tax on sale of goods and was, therefore, not covered by the provision enacted in section 8A(4). The question which has arisen before us in the present case was not involved in the case before the Allahabad High Court and this decision of the Allahabad High Court is, therefore, of no help to us.

20. The last decision on which Mr. Kaji relies was the decision, of the Supreme Court in The State of Bihar v. Rai Bahadur Hurdut Roy Motilal Jute Mills and Others ([1960] 11 S.T.C. 17). This decision involved a question of construction of section 14A of the Bihar Sales Tax Act, 1947, which provided that no dealer who is not a registered dealer shall realise any amount by way of tax on sale of goods from purchasers nor shall any registered dealer make any collection of tax except in accordance with such restrictions and conditions as may be prescribed. The proviso to that section enacted that if any dealer collects any amount by way of tax in contravention of the provision of the section or the conditions and restrictions prescribed thereunder, the amount so collected shall be liable to be forfeited to the State. The question which arose was whether the amount collected by the petitioners who were registered dealers by way of tax from purchasers on sales which were outside the State of Bihar could be forfeited. It was contended on behalf of the State that the amount was collected by the petitioners in contravention of the conditions and restrictions prescribed in the Rules framed under the Act and was, therefore, liable to be forfeited under the proviso. This contention was negatived by the Supreme Court which held that in collecting the amount by way of tax on outside State sales, the petitioners had not acted in contravention of any conditions and restrictions prescribed in the Rules. The State then contended that in any event there was a contravention of the second part of section 14A and the amount collected by the petitioners was, therefore, liable to be forfeited to the State. The Supreme Court was called upon to construe section 14A for the purpose of dealing with this contention and construing that section, the Supreme Court observed :

'Section 14A consists of two parts both of which are put in a negative form. The second part with which we are concerned in effect means nothing more than this, 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 argument is that the first respondent 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 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of section 14A as such '.

21. It would be seen from the aforesaid discussion that this decision was based on the language of section 14A which was materially different from the language of section 12A of our Act and it cannot, therefore, be regarded as an authority for construing section 12A in the manner suggested on behalf of the petitioners.

22. Mr. Kaji then contended that in any event by reason of section 30 introduced in the Act with retrospective effect from 26th January, 1950, by the Bombay Sales Tax (No. 1) Ordinance, 1952, section 12A could not operate in respect of collections made by a dealer by way of tax on sales which were outside State sales. Mr. Kaji relied very strongly on the words :-

'Nothing contained in this Act or the Rules made thereunder shall he deemed to apply to any sale or purchase of any goods where such sale or purchase takes place outside the State of Bombay.'

23. He contended that the expression 'nothing in this Act shall be deemed to apply' to any outside State sales included section 12A and section 12A was, therefore, by virtue of section 30 deemed not to apply to outside State sales and collections by way of tax on outside State sales were, therefore, outside the scope and ambit of section 12A. This contention assumed that section 12A enacted a provision which applies to sales of goods, for then only could section 30 operate to make it inapplicable to outside State sales, but this assumption itself is in our opinion incorrect. Section 12A does not contain a provision which applies to any sales of goods. It does not operate on any sales of goods. It merely imposes a prohibition on a dealer to collect any amount by way of tax on sales under certain circumstances and provides that if the dealer collects any such amount it shall be liable to be forfeited to the State. Section 30 does not, therefore, in any way affect the operation of section 12A in regard to amounts collected by way of tax by a dealer in respect of outside State sales and the contention of Mr. Kaji based on that section must be rejected.

24. Mr. Kaji lastly contended that in any view of the matter section 12A must be held applicable only to collections of amounts by way of tax made by a dealer in respect of sales which were within the legislative competence of the State to tax, since any other construction would render the section void as being beyond the legislative competence of the State. He relied on the following observations of N. H. Bhagwati, J., in Bengal Immunity Co. Ltd. v. State of Bihar and Others ([1955] 6 S.T.C. 446; A.I.R. 1955 S.C. 661 at page 710) :

'All the provisions contained in the Bihar Sales Tax Act with regard to the registration of the outside dealer, the maintenance of the books of account, submission of returns by him to the Sales Tax Authorities of the State of Bihar, the production and inspection of books of account before the Sales Tax Authorities, the search of the premises of the outside dealer by them and the imposition of penalties on him by reason of his non-compliance with the various provisions contained in the Act amongst others are unwarranted and illegitimate exercise of the powers incidental to the power of taxing sales or purchases conferred upon the State of Bihar by Article 246(3) and the Entry 54 in List II, Schedule 7, to the Constitution and do not affect non-resident businessmen who are outside the territories of the State of Bihar.'

25. These observations, however, do not in any way support the contention urged by him. All that these observations mean is that since the State has no power to tax outside State sales, any provisions incidental or ancillary to recovery of tax on such sales would also be illegal and void as constituting illegitimate exercise of the powers incidental to the power of taxing sales conferred on the State under Article 246(3) read with Entry 54 in List II of the Seventh Schedule to the Constitution. These observations have no application in the present case, since even if section 12A is construed as applicable to collections by way of tax in respect of outside State sales, it cannot be said to contain any provisions incidental or ancillary to the levy of tax on outside State sales and would not, therefore, be beyond the legislative competence of the State. The provisions enacted in section 12A are, as we shall point out a little later, necessary provisions for the purpose of preventing abuse of the provisions of the Act which seeks to tax only those sales which are within the legislative competence of the State and they have been enacted not with a view to aiding the levy of tax on outside State sales but only with a view to preventing misuse of the provisions of the Act in regard to sales which are taxable by the State. This contention of Mr. Kaji must also, therefore, be rejected.

26. That takes us to the next question, namely, whether section 12A(4) is ultra vires as offending Article 19(1)(f). Article 19(1)(f) guarantees to every citizen the right to hold, acquire and dispose of property and Article 13 declares every law inconsistent with this right to be void to the extent of the inconsistency unless it is saved by Article 19(5) which permits the State to make a law imposing reasonable restrictions on the exercise of this right in the interest of the general public. The argument of Mr. Kaji based on Article 19(1)(f) was that even if any amount were collected by a registered dealer in excess of the amount payable by him as tax under the Act, such amount on collection would be the property of the registered dealer subject only to a claim for refund at the instance of the purchaser and section 12A(4) in so far as it provides for forfeiture of such amount without extinguishing the liability of the registered dealer to refund such amount to the purchaser, is violative of the fundamental right of the registered dealer to hold such amount under Article 19(1)(f) and is not saved by Article 19(5) since the restrictions imposed by it on the exercise of the right cannot be said to be reasonable. The learned Advocate-General combated this contention and gave a twofold answer. The first answer he gave was that when a registered dealer collects any amount by way of tax from the purchaser, such amount does not become the property of the registered dealer and the law which provides for expropriation of such amount cannot, therefore, be said to be violative of the fundamental right of the registered dealer under Article 19(1)(f). The learned Advocate-General also contended in the alternative, and that was the second answer given by him, that in any event, even if such amount becomes the property of the registered dealer, section 12A(4) is yet saved by Article 19(5) since the restrictions it imposes are reasonable restrictions in the interest of the general public. These were broadly the rival contentions of the parties relating to the applicability of Article 19(1)(f).

27. The first point that must arise for determination on these contentions is as to whether the amount collected by a registered dealer in excess of the amount of tax payable by him under the Act can be said to be an amount belonging to him, for unless that is so there can be no question of invoking the protection of Article 19(1)(f). When the registered dealer collects any amount by way of tax from the purchaser, does it become the property of the registered dealer If it does not, then to whom does it belong Does it continue to belong to the purchaser or does it become the property of the State These are the questions which we must ask ourselves and the answer to them depends on the true nature and character of the receipt. Let us first consider the case of a registered dealer who recovers an amount by way of tax from the purchaser in respect of a sale on which he is liable to pay tax to the State. When the registered dealer collects such amount from the purchaser, he does so as a matter of contractual bargain between him and the purchaser. Section 12A does not confer any statutory authority on the registered dealer to collect any such amount from the purchaser and it is not in virtue of any statutory authority that the registered dealer recovers such amount from the purchaser. Section 12A by not imposing any prohibition on the registered dealer to collect any amount by way of tax from the purchaser leaves it open to him, if he so chooses, to collect the amount by way of tax from the purchaser and when he collects it, he does so as a result of a contract between him and the purchaser. When he pays tax on the sale to the State, he does so on account of and in discharge of his liability under the Act and that liability exists and has to be discharged by him irrespective of the fact whether he has received any corresponding amount from the purchaser. The amount collected by him from the purchaser, therefore, belongs to him as much as the price. This is also clear from the fact that the amount so collected is includible in his turnover as part of the sale price and on it tax is payable by him to the State (vide George Oakes Private Ltd. v. The State of Madras (A.I.R. 1962 S.C. 1352; 13 S.T.C. 98; A.I.R. 1962 S.C. 1037; 12 S.T.C. 476). The position is no different when a registered dealer collects an amount by way of tax from the purchaser in respect of a sale on which he is not liable to pay tax under the Act. In this case also there is no express prohibition imposed by section 12A on the registered dealer from collecting such amount from the purchaser and such amount when collected would become the property of the registered dealer since the purchaser would have paid it over to him with a view to transferring the property to him and the purchaser would have no legal or beneficial interest in the amount. All that the purchaser would have would be a claim against the registered dealer for recovery of such amount on the ground of moneys paid under a mistake of law or moneys had and received. In both these cases, therefore, the amount collected by way of tax from the purchaser by a registered dealer, whether in respect of a sale taxable under the Act or in respect of a sale not taxable under the Act, would become the property of the registered dealer and the registered dealer would be entitled to invoke the protection of Article 19(1)(f) against section 12A(4) unless the validity of section 12A(4) is saved by Article 19(5). The learned Advocate-General sought to repel this view by relying on a decision of the Supreme Court in Orient Paper Mills Ltd. v. State of Orissa ([1961] 12 S.T.C. 357), where Shah, J., delivering the judgment of the Court observed while dealing with section 9B of the Orissa Sales Tax Act, 1947, that the amount collected by the assessees from the purchasers belonged primarily to the purchasers and not to the assessees, but that observation was made in the context of a provision of which the language and scheme were entirely different from the language and scheme of section 12A and it cannot, therefore, be regarded as throwing any light on the question as to whether under section 12A the amount collected by the registered dealer from the purchaser belongs to the registered dealer or to the purchaser.

28. We must then proceed to consider whether section 12A(4) in so far as it provides for forfeiture of the amount collected by a registered dealer by way of tax from the purchaser in respect of a sale on which no tax is payable by him under the Act is saved by Article 19(5) which authorizes imposition of reasonable restrictions in the interest of the general public. Mr. Kaji contended that total deprivation of the amount collected by the registered dealer which would necessarily result when such amount is forfeited under section 12A(4) cannot be regarded as a restriction on the right of the registered dealer to hold such amount and such deprivation would, therefore, in any case be outside the saving provision of Article 19(5). Now whatever might have been the plausibility of this contention at one time, it no longer survives in view of the decision of the Supreme Court in Narendrakumar & Others v. The Union of India and Others (A.I.R. 1960 S.C. 430), where Das Gupta, J., after referring to three earlier decisions of the Supreme Court said :-

'The Court considered the real question to be whether the interference with the fundamental right was 'reasonable' or not in the interests of the general public and that if the answer to the question was in the affirmative, the law would be valid and it would be invalid if the test of reasonableness was not passed. Prohibition was in all these cases treated as only a kind of 'restriction'. Any other view would, in our opinion, defeat the intention of the Constitution.'

29. The only question which, therefore, requires to be considered is whether the restrictions imposed by section 12A(4) though they amount to nothing short of total deprivation can be said to be reasonable restrictions in the interest of the general public. Now what is the concept of reasonableness for the purpose of Article 19(5) is explained by Patanjali Sastri, C.J., in the State of Madras v. V. G. Row (A.I.R. 1952 S.C. 196), in the following passage which has now become classical :-

'It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.'

30. Bearing these observations in mind we must examine whether section 12A(4) satisfies the objective test of reasonableness, In order to judge the reasonableness of the restraint we must take into account the nature of the evil which it was the purpose and object of the restraint to curb or eliminate and the ratio of the harm caused to the individual dealer by the restraint to the beneficial effect reasonably expected to result to the general public. We must also consider whether the restraint imposed by the section trenches upon the rights of the individual dealer more than is necessary in the interest of the general public or in other words whether the restraint is excessive (vide Narendrakumar v. Union of India (A.I.R. 1960 S.C. 430)).

31. Now as we have already pointed out above, section 12A was introduced in the Act by Bombay Act I of 1949. The reasons for its introduction were obvious and it is necessary to refer to them in order to understand what was the evil for remedying which the section was enacted. The Act levied tax on sales of goods by dealers whose taxable turnover exceeded certain limits varying according to the business carried on by them and provided for registration of such dealers. But it is a matter of common knowledge - and it has been accepted as a fact both by economists and Courts - that the ultimate incidence of the tax always falls on the consumer. The dealer who is liable to pay tax always passes it on to the consumer and it is the consumer who has ultimately to bear the burden of the tax. Now that may be alright when tax is actually payable by the dealer to the State on the sale. He may in such a case pass it on to the purchaser and recover it from the purchaser. But under the guise of tax a dealer may recover from the purchaser amounts which he is not liable to pay to the State as tax and may make illegal profits for himself. An unregistered dealer would not be liable to pay any tax to the State on the sale effected by him and yet he may recover amounts from the purchaser in the name of tax and thus abuse the provisions of the Act by making illegal gain for himself. A registered dealer may also not be liable to pay tax on any particular sales effected by him either because they are exempt under the Act or because they are not taxable under the Constitution and yet he may unjustly enrich himself by collecting from the purchaser amounts by way of tax when in fact no tax is payable by him on those sales. In such cases the result would be that the Act would be utilised by the dealer as an instrument of exploitation of the consumer for extracting from the consumer under the guise of tax moneys which are in fact not payable by the dealer to the State and which will only go to fill the pockets of the dealer. This situation would indeed be intolerable and the State cannot possibly sit with folded hands and allow its statute to be abused by dealers exploiting the consuming public in this manner under the cloak of the Act. To suffer illegal payments to be recovered in the name of tax would be nothing short of permitting extortion. The Legislature, therefore, intervened and amended the Act by introducing section 12A. The object obviously was to ensure the proper working of the Act and to prevent the law from being abused by dealers who might collect from the unwary and illiterate consuming public moneys by way of tax when in fact no tax was payable by them. The Legislature first enacted a prohibition in sub-section (1) of section 12A in regard to collection by way of tax in respect of sales exempt from tax under section 7 and made it penal to contravene the provisions of that sub-section. The Legislature then enacted in sub-section (2) of section 12A a prohibition against an unregistered dealer collecting any amount by way of tax since no tax would be payable by him to the State and made the contravention of the provisions of that sub-section too, an offence. The Legislature also provided in addition, in both these cases, another penalty, namely, the penalty of forfeiture in sub-section (4) of section 12A. This penalty of forfeiture provided by sub-section (4) of section 12A was without prejudice to any prosecution which might be launched by the State against the offending dealer who contravened the provisions of sub-section (1) or (2) of section 12A. The Legislature also provided in sub-section (4) of section 12A the penalty of forfeiture in the case of a registered dealer who might collect any amount by way of tax from the purchaser in excess of the tax actually payable by him under the Act. The provision enacted in sub-section (4) of section 12A was thus a provision imposing a penalty of forfeiture and we find that this view of the character of the provision is supported by the decision of the Supreme Court in the State of Bihar v. Rai Bahadur Hurdut Roy Motilal Jute Mills and Others (A.I.R. 1960 S.C. 378; 11 S.T.C. 17), where Gajendragadkar, J. (as he then was), also characterized a similar provision in section 14A of the Bihar Sales Tax Act, 1947, as imposing a penalty of forfeiture. The sanction of this penalty of forfeiture was imposed by the Legislature for the purpose of preventing dealers from abusing the provisions of the Act and we do not see how it can be contended that a section providing such sanction constitutes unreasonable restraint. The only ground on which Mr. Kaji contended that the restraint imposed by section 12A(4) was unreasonable was that a dealer might bona fide under a mistaken belief as to the true legal position recover amount by way of tax from the purchaser even though be is not liable to pay tax on such sale to the State and if section 12A(4) is held to be a valid piece of legislation, such amount collected by him would be liable to be forfeited while he in his turn would remain liable to refund such amount to the purchaser as moneys paid under a mistake of law or moneys had and received. But we do not see any unreasonableness in this position. If the dealer is liable to refund the amount collected by him to the purchaser he must refund such amount to the purchaser. By refunding such amount to the purchaser he would be doing what is right and just to the purchaser and in that event there would be no question of forfeiture, for the State can forfeit only that amount which is with the dealer and if the amount is returned to the purchaser, there would be nothing to forfeit. The dealer can, therefore, refund the amount collected by him to the purchaser and avoid forfeiture. But if he does not return the amount to the purchaser and the State consequently forfeits it under section 12A(4), then, obviously, he cannot have any cause for complaint. The restrictions imposed by section 12A(4), therefore, in our opinion, satisfy the objective test of reasonableness and the validity of the section must be sustained.

32. Before we part with this point we must refer to two decisions cited by Mr. Kaji. Out of the two decisions the strongest reliance was placed by Mr. Kaji on the decision of the Supreme Court in Bombay Dyeing and . v. The State of Bombay (A.I.R. 1958 S.C. 328). This decision raised a question of vires of section 3(1) read with section 3(2)(b) of the Bombay Labour Welfare Fund Act, 1953, under which unclaimed wages due by the employers to the employees which had not been paid for a period of three years from the date on which they became due were statutorily transferred to the Bombay Labour Welfare Fund constituted under the Act. The Supreme Court held that this provision was ultra vires Article 19(1)(f) and was not saved by Article 19(5) since the restrictions imposed by it on the right of the petitioners who were employers to hold moneys was unreasonable restriction. The main ground on which the restriction was held to be unreasonable was that the employers were made liable to pay over the moneys represented by unclaimed wages to the Bombay Labour Welfare Fund notwithstanding the bar of limitation without any corresponding extinguishment of their liability to pay the same to the employees. Mr. Kaji contended relying on this decision that just as in that case the Supreme Court struck down the law which provided for taking over of moneys due by the employers to the employees without extinguishing the liability of the employers to pay the same to the employees, so also in the present case section 12A(4) which provides for forfeiture of the amount collected by way of tax from the purchasers should be held to be ultra vires since it does not extinguish the corresponding liability of the dealer to refund such amount to the purchasers. The analogy sought to be drawn by Mr. Kaji is, in our opinion, entirely unfounded. There is in the present case no question of forfeiture of any amount which always belonged to the dealer and which he was liable to pay to the purchasers, without corresponding extinguishment of the liability of the dealer to the purchasers. Here what the Legislature has sought to do is to impose a penalty of forfeiture on a registered dealer who collects any amount by way of tax in excess of the tax payable by him under the Act with a view to securing that no amount is collected by way of tax by a registered dealer from a purchaser in respect of a sale on which no tax is payable by him under the Act and that if he collects any such amount, he must refund it to the purchaser on pain of forfeiture. In the Bombay Dyeing case (A.I.R. 1958 S.C. 328) there was no question of any penalty of forfeiture which is the only question dealt with by section 12A(4). The decision of the Supreme Court in the Bombay Dyeing case (A.I.R. 1958 S.C. 328) cannot, therefore, have any application in determining the reasonableness of the restrictions imposed by section 12A(4).

33. The next decision on which Mr. Kaji relied was the decision of the Mysore High Court in M. Kuppuswami Naicker v. Commercial Tax Officer, IVth Additional Circle, Bangalore and Another ([1962] 13 S.T.C. 322). In that case, a Division Bench of the Mysore High Court struck down section 18(3) of the Mysore Sales Tax Act, 1957, which was in terms similar to section 12A(4) of our Act, on the ground that it contravened the provisions of Article 19(1)(f). This decision is of course a direct authority on the point before us but we are unable to accept the correctness of this decision for two reasons. In the first instance the entire basis of the decision appears to be that when a dealer collects from his customer an amount equal to the amount of tax payable in respect of the sale, what he actually does is to transfer his liability to pay the tax over to the customer and the customer, as a part of the bargain, undertakes himself to discharge the liability to pay the tax which in normal circumstances would rest upon the dealer. This basis is, with great respect to the learned Judges of the Mysore High Court who decided this case, erroneous, for it is not correct to say that when a dealer collects and amount by way of tax from his customer, the customer undertakes to discharge the liability to pay tax on the sale. The liability to pay tax on the sale remains that of the dealer and the dealer merely recovers an amount equal to the amount of tax from the customer. But apart altogether from this fallacy, we find that there is another fallacy affecting this decision and it is that Article 19(5) has not been considered at all by the Mysore High Court. This decision which declares a law to be bad as violating Article 19(1)(f) without considering the question whether the law is saved by Article 19(5) cannot be accepted by us as an authority on the problem before us.

34. In this view of the matter, we are of the opinion that there is no substance in the contentions urged no behalf of the petitioners and the petition, therefore, fails and the rule is discharged with costs. Costs fixed at Rs. 500.

35. Petition dismissed.


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