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Commercial Taxes Officer and anr. Vs. Haricharanlal and Sons and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case Number F.B. Reference No. 1 of 1979 in D.B. Civil Sales Tax Reference Case No. 10 of 1977 and F.B. Referen
Judge
Reported in[1986]62STC282(Raj)
AppellantCommercial Taxes Officer and anr.
RespondentHaricharanlal and Sons and anr.
Appellant Advocate G.S. Bafna, Adv.
Respondent Advocate V.K. Singhal and; R.C. Ghiya, Advs.
Cases ReferredShama Rao v. Union Territory of Pondicherry
Excerpt:
.....law' is used in sections 6, 8 and 15 which deal with substantive matters like liability to tax on inter-state sales, rates of tax on such sales and restrictions and conditions in regard to tax on sale or purchase of declared goods within a state. in enacting further portions of the sub-section, which have been restated in the form of clauses (iii) and (iv) above, parliament clearly intended to remove doubts and emphasise that the assessing authorities appointed under the general sales tax law of the state, while making assessment and collection of tax on inter-state sales, may exercise all or any of the powers they have under the general sales tax law of the state and that such powers also include the power of the assessing authority to make an application for reference in accordance..........(for short, the central act), for the assessment, collection and enforcement of payment of tax on inter-state sales leviable under the central act, is competent to make an application under section 15(1) of the rajasthan act, requiring the board of revenue to refer to the high court any question of law arising out of the order passed by the board of revenue under section 14 of the rajasthan act 2. in the case of the assessee, m/s. haricharanlal & sons, the assessing authority, by its order dated 3rd june, 1969, determined that a sum of rs. 6,910.63, which had already been deposited by the assessee towards tax for the assessment year 1958-59 under the central act, was not payable, and that, therefore, it will be refunded under section 23-b of the rajasthan act, but only to the person.....
Judgment:

1. The only question which, in our opinion, arises for determination on the basis of two separate orders, dated 27th August, 1979, by a Division Bench of this Court, consisting of Kudal and Kasliwal, JJ., in the Sales Tax References listed above, may be formulated as follows :

Whether the assessing authority under the Rajasthan Sales Tax Act, 1954 (for short, the Rajasthan Act), acting as the assessing authority under Section 9 of the Central Sales Tax Act, 1956 (for short, the Central Act), for the assessment, collection and enforcement of payment of tax on inter-State sales leviable under the Central Act, is competent to make an application under Section 15(1) of the Rajasthan Act, requiring the Board of Revenue to refer to the High Court any question of law arising out of the order passed by the Board of Revenue under Section 14 of the Rajasthan Act

2. In the case of the assessee, M/s. Haricharanlal & Sons, the assessing authority, by its order dated 3rd June, 1969, determined that a sum of Rs. 6,910.63, which had already been deposited by the assessee towards tax for the assessment year 1958-59 under the Central Act, was not payable, and that, therefore, it will be refunded under Section 23-B of the Rajasthan Act, but only to the person from whom the assessee had realised it. On appeal by the assessee from this order, the Deputy Commissioner (Appeals) modified it directing that the refund may be made to the assessee himself. A single Bench of the Board of Revenue set aside the order of the Deputy Commissioner (Appeals) and restored the order of the assessing authority. The assessee carried the matter to the Division Bench of the Board of Revenue in further appeal under Section 14 of the Rajasthan Act. The Division Bench of the Board of Revenue allowed the appeal, set aside the order of the single Bench and restored that of the Deputy Commissioner (Appeals). Thereafter, the assessing authority made the application dated 3rd May, 1976, to the Board of Revenue under Section 15(1) of the Rajasthan Act stating that the Board is in error in holding that Section 23-B of the Rajasthan Act would not govern the matter of refund of tax deposited under the Central Act, and requiring the Board to refer to the High Court for its opinion the question of law as to whether Section 23-B of the Rajasthan Act is applicable to a matter of refund of tax arising under the Central Act. The Board rejected the application and refused to make the reference as requested. The assessing authority thereupon made an application dated 22nd January, 1977, to the High Court under Section 15(2) of the Rajasthan Act against the rejection of its application under Section 15(1). The application dated 22nd January, 1977, was registered in the High Court as Sales Tax Reference Case No. 10 of 1977.

3. The assessee in the second case is M/s. Associated Cement Companies Ltd., Lakheri. The matter of its assessment for the assessment year 1971-72 went in appeal to the Division Bench of the Board of Revenue under Section 14 of the Rajasthan Act. By its judgment dated 22nd April, 1976, the Division Bench of the Board held that a portion of the sale price consisting of the component of freight, 'not covered by the declaration in form C under Section 8(4)(a) of the Central Act, will be taxed at 3 per cent, and not at 12 per cent as assessed by the assessing authority. Aggrieved by this order, the assessing authority made an application before the Board of Revenue under Section 15(1) of the Rajasthan Act requiring it to make a reference to the High Court for its opinion on the question whether the Board is justified in holding that taxable sales in the course of inter-State trade and commerce, not covered by declaration form C, shall be taxed at 3 per cent under Section 8(1) instead of ]2 per cent under Section 8(2)(b) of the Central Act. The Board did not decide this application within the time prescribed by law. The assessing authority therefore made an application to the High Court under Section 15(3A) of the Rajasthan Act for an order directing the Board of Revenue to state the case and refer it to the High Court. This application was registered in the High Court as Sales Tax Reference Case No. 38 of 1977.

4. Both the cases (No. 10 of 1977 and No. 38 of 1977) mentioned above came up for consideration before a Division Bench of this Court consisting of Kudal and Kasliwal, JJ., on 22nd August, 1979. The assessee raised the preliminary objection to the effect that the assessing authority is not competent to file and maintain the application under Section 15(1) of the Rajasthan Act and that therefore the reference applications should be rejected on that ground alone. Their Lordships of the Division Bench are of the opinion that the assessing authority is competent to make the applications mentioned above, but it felt difficulty in finally deciding the reference applications by reason of a contrary opinion on this point expressed by an earlier Division Bench of this Court in Commercial Taxes Officer, Jaipur v. Man Industrial Corporation Ltd. [1970] 26 STC 169. The Division Bench therefore caused the matter to be referred to the Full Bench for resolving the conflict and giving an authoritative opinion as to the competence of the assessing authority to make an application under Section 15(1) of the Rajasthan Act in a matter of assessment of tax on inter-State sales under Section 9 of the Central Act. In its two orders dated 27th August, 1979, the Division Bench did not formulate any question of law as such for decision by the Full Bench. As we see it, the question which the Division Bench would like us to answer is the one which has been stated in paragraph 1 of this judgment.

5. In order to be able to correctly appreciate the controversy relating to the question of law formulated as aforementioned, we may briefly notice the relevant provisions of the Central Act and the Rajasthan Act and the effect and inter-effect of those provisions. The Central Act was placed on the statute book on 21st December, 1956. This Act with the exception of Sections 6 and 15, came into force on and from 5th January, 1957. Section 6, which charges inter-State sales to tax came into force on 1st July, 1957. Section 15, which deals with rate of tax on such sales came into force from 1st October, 1958. Section 8 also deals with rate of tax on inter-State sales. Section 9 is a procedural section, which provides for machinery of assessment, collection and enforcement of payment of tax on inter-State sales. Section 2(i) defines 'sales tax law' and 'general sales tax law' separately. The definition reads :

'Sales tax law' means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf, and 'general sales tax law' means the law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally.

It will be seen that the expression 'sales tax law' is of wider import inasmuch as its definition also includes What is covered by the definition of the narrower expression 'general sales tax law'. A statute dealing with particular goods or class of goods may also provide for levy of tax on the sale of such goods. This may be so in a State which has on its statute book a general statute dealing with levy, assessment and collection of tax on sale of goods generally. In such a situation, the expression 'sales tax law' will be used to refer to the first category of statute to distinguish it from the second category which will fall within the purview of the definition of 'general sales tax law'. A perusal of the Central Act will show that the expression 'sales tax law' is used in Sections 6, 8 and 15 which deal with substantive matters like liability to tax on inter-State sales, rates of tax on such sales and restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. The expression 'general sales tax law' is used in Section 9 which, as already stated, deals with procedural matters inasmuch as it sets up the machinery of assessment, collection and enforcement of payment of tax, on inter-State sales. Section 9, Sub-section (1), lays down inter alia that the tax payable by a dealer under the Central Act on inter-State sales shall be collected in accordance with the provisions of Sub-section (2) of that section in the State from which the movement of goods commenced. Sub-section (2) of Section 9 which provides the machinery for assessment, collection and enforcement of payment of such tax is important for our present purpose and should therefore be reproduced herein fully. Omitting the concluding proviso, it reads :

(2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to return, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, rebates, penalties, charging or payment of interest, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly.

6. We may analyse Section 9, Sub-section (2), by enumerating its essential elements as follows:

(i) The tax on inter-State sales shall be assessed and collected on behalf of the Government of India by the assessing authorities appointed under the 'general sales tax law' of the appropriate State;

(ii) The assessing authorities aforementioned are empowered to assess and collect the tax on inter-State sales as if such tax is a tax payable under the 'general sales tax law' of the State;

(iii) For making assessments and enforcing payments of the tax so assessed, the assessing authorities may exercise all or any of the powers they have under the 'general sales tax law' of the State;

(iv) The provisions of the 'general sales tax law' of the State relating to...appeals, reviews, revisions, references, refunds, rebates and penalties shall apply to assessment, collection and enforcement of payment of tax on inter-State sales.

It will thus be seen that Section 9(2) of the Central Act lays down in express terms, and indeed three times over in its portions restated as Nos. (ii), (iii) and (iv) above, that the provisions of the 'general sales tax law', which, in our case, is the Rajasthan Act, shall apply in the matter of assessment, collection and enforcement of payment of the tax on inter-State sales. Perhaps, the purpose and object in that behalf would have been served even if Parliament had stopped short at what is restated here in Clauses (i) and (ii) above. In enacting further portions of the sub-section, which have been restated in the form of Clauses (iii) and (iv) above, Parliament clearly intended to remove doubts and emphasise that the assessing authorities appointed under the general sales tax law of the State, while making assessment and collection of tax on inter-State sales, may exercise all or any of the powers they have under the general sales tax law of the State and that such powers also include the power of the assessing authority to make an application for reference in accordance with the general sales tax law of the State concerned.

7. This interpretation of Section 9(2) of the Central Act is not disputed by the learned counsel for the assessee. The contention raised by the learned counsel for the assessee, however, is that the assessing authority appointed under the Rajasthan Act is not competent to make an application for reference under Section 15(1) of the said Act because there is nothing in the language of Section 9(2) of the Central Act, as reproduced and analysed above, which may reasonably be construed as incorporating or adopting Section 15(1) as amended by Amendment Act No. 2 of 1963 of Rajasthan. Counsel argued that Section 15(1), as it originally existed in the Rajasthan Act since the enforcement of the said Act from 1st April, 1965, did not empower the assessing authority to make an application for a reference, and that the assessing authority in Rajasthan was empowered for the first time to make such an application by Amendment Act No. 2 of 1963, which came into force on 29th March, 1963. He further argued that Section 9(2) of the Central Act, as reproduced and analysed above, came into existence by replacing the original section, on 1st June, 1969, by virtue of the Central Sales Tax (Amendment) Act (No. 28 of 1969), and that if it had been the intention of Parliament in 1969 to adopt and incorporate the Rajasthan amendment of Section 15(1) as made in 1963, Parliament would have used appropriate language in Section 9(2), as amended by it in 1969, to make its intention clear, and would have made provision in amended Section 9(2) to the effect that Section 15(1), as amended by the legislature of the State of Rajasthan in 1963, would apply in the matter of assessment and collection of tax on inter-State sales relating to this State. In other words, the contention raised by the assessee's learned counsel is that since Section 15(1) of the Rajasthan Act, as amended with effect from 29th March, 1963, has not been adopted or incorporated by Section 9(2) of the Central Act, an assessing authority in the State of Rajasthan while making assessment and collection of tax on inter-State sales, will exercise only such powers as it had under Section 15(1) before its amendment in 1963, and that since the assessing authority had no power to make an application for reference under Section 15(1) before its amendment in 1963, it still does not have any such power in matters arising under the Central Act.

8. Having considered the above argument of the assessee's learned counsel from all possible angles, we find it to be wholly devoid of force. We have already discussed the provisions of Sub-section (2) of Section 9 of the Central Act, as amended in 1969, and pointed out that this sub-section repeatedly uses the expression 'general sales tax law' in the context of the machinery set up by it for the assessment, collection and enforcement of payment of tax on inter-State sales, making it clear thereby that such assessment, etc., of the tax on inter-State sales shall be made as if the same is a tax payable under the 'general sales tax law' of the State, and that for this purpose the assessing authority of the State may exercise all or any of the powers it has under the general sales tax law of the State, including the power to make an application for reference. Now, the definition of the expression 'general sales tax law' as given in Section 2(i) of the Central Act which has already been noticed in an earlier part of this judgment means the law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally. Reading this definition into the provisions of Section 9, Sub-section (2), of the Central Act, and then construing the same, Sub-section (2) would mean that the tax on inter-State sales may be assessed and collected by the assessing authority of the appropriate State in accordance with the law for the time being in force in State which provides for the levy of tax on the sale and purchase of goods generally in that State.

9. The expression 'for the time being in force' as used in the definition of 'general sales tax law' would show that Parliament had in view not merely the State law, as existed at the time of coming into force of Section 9(2) of the Central Act, but also future amendments, alterations and modifications of such law to be made after the commencement of Section 9(2). Section 9(2) of the Central Act, as amended in 1969, is retrospective in operation inasmuch as the amending Act No. 28 of 1969 expressly lays down that Section 9 including Sub-section (2) 'shall be and shall be deemed always to have been substituted' from the date of commenceme'nt of the Central Act, i.e., from 5th January, 1957. This means that Section 9(2) which shall be deemed to have come into force with effect from 6th January, 1957, incorporates not merely Section 15(1) of the Rajasthan Act as it stood on the even date, but also the amendment of that section as effected by Act No. 2 of 1963 as well as the amendments made after 1963. In construing the expression 'for the time being in force' in the manner aforementioned, we find support from Union of India v. Ramdas Oil Mills AIR 1968 Pat 352 and Auto Pins (India) v. State [1970] 26 STC 466 (P & H); AIR 1970 P & H 333. In both these rulings, it has been held that the expression 'for the time being in force' refers to enactments existing at the time of the commencement of the statutory provision in which the said expression is used as well as those which may be enacted thereafter.

10. Mr. Bafna, learned counsel for the revenue, cited State of Tamil Nadu v. K. A. Ramudu Chettiar & Co. AIR 1973 SC 2230 in support of his argument that Section 15(1) of the Rajasthan Act, as amended by Act No. 2 of 1963, applies in the instant case by reason of the fact that Section 9(2) of the Central Act, as amended in 1969, takes effect from the date of commencement of the Central Act, i.e., from 5th January, 1957. This authority supports the arguments made by Mr. Bafna. In the cited case, the Appellate Assistant Commissioner was incompetent to enhance the tax levied by the Sales Tax Officer, if the case were to be decided applying the provisions of Madras General Sales Tax Act, 1939, which had been replaced by the Madras General Sales Tax Act, 1959. Before the Act of 1959 had replaced the Act of 1939, the Central Act had already come into force in 1957. Relying on Section 9(2) of the Central Act, as amended by Act No. 28 of 1969, the Supreme Court held that though the Madras General Sales Tax Act, 1959, which empowered the Appellate Assistant Commissioner to enhance the tax levied by the Sales Tax Officer was not in force at the time when the Central Act came into force, the amendment of Section 9(2) in 1969 with retrospective effect from 5th January, 1957, vested the Appellate Assistant Commissioner with the power to enhance the tax on inter-State sales immediately on the commencement of the Madras General Sales Tax Act, 1959. On the analogy of this ruling, it would be reasonable to hold that though the assessing authority was incompetent to make an application for reference under Section 15(1) of the Rajasthan Act, as it existed when the Central Act came into force, the power to make such application came to be vested in the assessing authority immediately on the coming into force of Act No. 2 of 1963 with effect from 29th March, 1963; and the assessing authority may therefore exercise the same power to make an application for reference in the matter of assessment, collection and enforcement of payment of tax on inter-State sales by virtue of the provisions of Section 9(2) as amended by Act No. 28 of 1969, which has been given retrospective effect from 5th January, 1957.

11. Mr. Bafna, learned counsel for the revenue, also submitted that the amendment of Section 15(1) of the Rajasthan Act by Act No. 2 of 1963 whereby the assessing authority has been empowered to make an application for reference would apply to pending matters, no matter if such matters arose out of assessment for assessment years prior to the amendment came into force. He cited Tikaram & Sons Ltd. v. Commissioner, Sales Tax, U.P. AIR 1968 SC 1286 in support of his argument as mentioned above. This authority supports the proposition that an amendment empowering a particular officer to make an application for reference of a question to the High Court does not affect any vested or substantive right of the assessee, and that such an amendment is of a procedural character. Their Lordships further observed in the cited case that the presumption against retrospective construction has no application to enactments which affect only procedure and practice of courts.

12. Lastly, reference may also be made to International Cotton Corporation (P.) Ltd. v. Commercial Tax Officer, Hubli AIR 1975 SC 1604, wherein the Supreme Court upheld the constitutional validity of Section 8(2)(a) of the Central Act, holding that the adoption of rate of local sales tax for the purpose of Central sales tax does not show that the Parliament has in any way abdicated its legislative functions. Their Lordships pointed out that the Central Act, by incorporating within itself the necessary provisions of the local sales tax law of various States in respect of rate of sales tax, enables Parliament to carry out effectively its objective, namely, to prevent evasion of Central sales tax and to plug loopholes. In the instant case, the incorporation is of procedural provisions of general sales tax law of various States so that the authorities in the States could effectively assess and collect inter-State sales tax by applying the procedure applicable in their respective States for the assessment and collection of inter-State sales tax. If the legislative tool of enacting a provision by incorporation from another law is valid in respect of a substantive provision like Section 8(2)(a) of the Central Act without violating the rule against abdication of legislative functions, as it is certainly valid according to the law laid down by their Lordships of the Supreme Court, there cannot possibly be any valid objection to the incorporation of procedural provisions relating to the machinery for assessment and collection of inter-State sales tax, as adopted by Section 9(2) of the Central Act.

13. We have perused the Division Bench judgment of this Court reported in Commercial Taxes Officer v. Man Industrial Corporation Ltd. [1970] 26 STC 169, in which a contrary view has been taken to the effect that since there is no provision in the Central Sales Tax (Amendment) Act, 1969, laying down that the Rajasthan Act as it stood on the date of coming into force of the Central Sales Tax (Amendment) Act, 1969, will be applicable, therefore the Rajasthan Act as it stood in 1969 is not applicable in disposing of cases under the Central Sales Tax Act, 1956. There is no discussion in the cited judgment of the relevant provisions of law contained in the Rajasthan Act and the Central Act. The Division Bench seems to have arrived at the aforementioned conclusion on the basis of the decision of the Supreme Court in Shama Rao v. Union Territory of Pondicherry [1967] 20 STC 215 (SC). We have carefully studied the judgment in Shama Rao's case [1967] 20 STC 215 (SC) and find that the ratio of that case is not applicable to the facts of the Man Industrial Corporation's case [1970] 26 STC 169 (Raj). We are therefore of opinion that the Man Industrial Corporation's case [1967] 26 STC 169 (Raj) was not decided correctly.

14. For all these reasons, our answer to the question stated in the first paragraph of this judgment is in the affirmative. Both the reference cases will therefore be returned to the Division Bench for adjudication according to law.


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