Tripura
Goods Transport Association & Anr Vs. Commissioner of Taxes & Ors
[1998] INSC 634 (18
December 1998)
K.Venkataswami
Misra, J.
Leave
granted.
The
appellant-Association which is doing the business of transporting goods within
and outside the State of Tripura, is aggrieved by the judgment of the Gauhati
High Court dismissing the writ Appeal challenging the constitutional validity
of the Tripura Sales Tax [11th Amendment] Rules, 1994, (for short the Rules)
and Sections 29, 32 and 36A of the Tripura Sales Tax Act, 1976, (for short the
Act) including notifications dated 23rd September, 1994 and 15th October, 1994.
By means of the aforesaid 11th Amendment, sub-rule (3) has been inserted after
sub-rule (2) of Rule 46-A of the Tripura Sales Tax Rules, 1976, (for short
Principal Rules), sub-rule (1A) has been inserted after sub-rule 63A (1),
sub-rule (2) in Rule 63A has been substituted in place of old sub-rule (2) of
the principal Rules and Rule 64A has been substituted for the old sub-rule 64A.
The resultant effect of such amendment is that the appellants, who are working
as Transporters in Tripura, are required to obtain a Certificate of
Registration and to comply with various other formalities as prescribed under
the Act and the Rules, viz., to maintain accounts according to the prescription
made by the respondents under Section 36A of the Act for carrying on transport
business while entering into or going outside the State of Tripura including
making the declaration in Form XXIV, which is challenged to be beyond the
legislative competence of the State Legislature and ultra vires the
Constitution offending Articles 14, 19 (1)(g), 246, 265, 286, 300A and 301 of
the Constitution of India. The challenge is based on the ground that the
appellants are Transporters and are not dealers within the meaning of Section 2
(b) of the said Act, hence obligation cast on them under the Act and Rules are
beyond the legislative competence of the State legislature.
By a
reasoned order, the learned Single Judge was pleased to dismiss the writ
petition of the appellants, except the challenge to the validity of Rule 63A
(2) of the principal Rules. However, the challenge made by the appellants
regarding constitutional validity of Section 36A, which requires a carrier to
maintain proper accounts of goods transported to or outside Tripura in the
manner prescribed, was not entertained by the learned Single Judge.
In
appeal before the Division Bench, though foundation was laid but specific
prayer for declaration of Section 36A as ultra vires was not made due to
inadvertence, hence the appellants sought amendment to the prayer at the
appellate stage which was granted, accordingly it was incorporated at the
appellate stage. The Division Bench also dismissed the appeal of the
appellants. Aggrieved by the same, the present appeal is filed.
Learned
counsel for the appellants, Mr. M.L. Lahoty, made two- fold submissions in
support of the challenge.
First,
the obligation cast under it on the Transporters could only be on a dealer and since
the Transporters are neither trading in sale nor purchase of any goods hence
not a dealer as defined under Section 2(b) of the Act, hence the impugned
provisions lack legislative competence. Secondly, when it further casts an
obligation on such transporters to obtain certificate of registration under the
said Act, when any good is brought within or sent outside the State of Tripura and further to fill Form XXIV, it
impedes free flow of trade and business of the appellants, hence violative of
Article 301 of the Constitution of India.
In
support of his first submission, he submitted that Sec. 29 refers to offences
and penalties not confined to dealers as it begins with the word whoever, which
includes the transporters. As per sub-clause (4) whoever fails, when required
by or under the provisions of this Act to produce any accounts, evidence or
documents or to furnish any information, are liable for conviction by a
Judicial Magistrate, punishable with imprisonment which may extend to six
months or with fine not exceeding one thousand rupees or with both. Composition
of offences is conferred under Section 32. The Commissioner may, under it,
either before or after institution of criminal proceedings, accept from the
person who has committed or is reasonably suspected of having committed an
offence under the Act or the Rules made thereunder, by way of composition of
offence on such terms and conditions as prescribed, and on payment of such sum
as determined by the Commissioner, no further proceeding is to be taken against
such person in respect of the such offence.
Reference
was also made to Section 36A, which requires maintenance of accounts by a
carrier including Transporter, the class to which the appellants belongs. This
puts an obligation on the Transporter to maintain proper account of goods
transported to or outside Tripura in the manner prescribed and is liable to
furnish in the prescribed manner such information as the Commissioner may
require relating to the transportation of such goods. Reference is also made to
Section 38B, which requires the Transporter, Carrier or Transporting Agent
operating its transport business relating to taxable goods in Tripura to obtain
a Certificate of Registration in the prescribed manner from the Commissioner of
Taxes on payment of such fees as may be prescribed.
To
appreciate this controversy, Section 29(1) and (4), Sections 30, 32, 36A and
38B are quoted hereunder:
Section
29 :
29.
Offences and penalties (1) Whoever –
(1)
Carries on business as a dealer and acts in contravention of any of the
provisions of this Act; or
(2) fails,
without reasonable cause, to submit in due time any return as required by or
under the provisions of this Act, or submits a false return; or
(3) fails,
when required by or under the provisions of this Act to keep accounts or
records of sales; or
(4) fails,
when required by or under the provisions of this Act to produce any accounts,
evidence or documents or to furnish any information; or
(5) fails
or neglects to comply with any requirement made of him under the provisions of
this Act; or
(6)
knowingly produces incorrect accounts, registers or documents, or knowingly
furnishes incorrect information; or xxx xxx xxx shall, on conviction before a
Judicial Magistrate and in addition to any tax including interest if any, or
penalty or both that may be due from him, be punishable with imprisonment which
may extend to six months or with fine not exceeding one thousand rupees or with
both, and when the offence is a continuing one, with a daily fine not exceeding
fifty rupees during the period of continuance of the offence.
2. xxx
xxx xxx
Section
30 :
30.
False statement in declaration : Whoever makes statement in verification or
declaration in connection with any proceedings under this Act which is false,
and which he either knows or believes to be false, or does not believe to be
true, shall on conviction before a Judicial Magistrate, be punishable with
simple imprisonment which may extend to six months or with fine which may
extend to one thousand rupees, or with both.
Section
32.
32.
Composition of offences :
(1)
Subject to such conditions as may be prescribed, the Commissioner may, either
before or after institution of criminal proceedings under this Act, accept from
the person who has committed or is reasonable suspected of having committed an
offence under this Act or the rules made there under, by way of composition of
such offence
(a)
Where the offence consists of the failure to pay, or the evasion of any tax
recoverable under this Act, in addition to the tax including interest if any or
penalty or both so recoverable, a sum of money not exceeding one thousand
rupees or double the amount of the tax recoverable, whichever is greater, and
(b) in
any other case a sum of money not exceeding one thousand rupees in addition to
tax recoverable. (2) On payment of such sum as may be determined by the
Commissioner under Sub section (1) no further proceeding shall be taken against
the person concerned in respect of the same offence.
Section
36A.
36A.
Maintenance of Accounts by Carriers :
(1)
Notwithstanding anything contained in any other Act, any transporter, carrier
or transporting agent operating its transport business in Tripura, shall
maintain proper account of goods transported to or outside Tripura through it
in the manner prescribed and shall on demand by the commissioner be liable to
furnish in the prescribed manner such information as the Commissioner may
require relating to the transportation of such goods and shall also be bound to
produce books of accounts for inspection and examination by the Commissioner.
Section
38B.
38B. For
carrying out the purposes of section 38 every Transporter, carrier of
Transporting Agent operating its transport business relating to taxable goods
in Tripura shall be required to obtain a Certificate of Registration in the
prescribed manner from the commissioner of Taxes on payment or such fees as may
be prescribed.
The
Transporter has to make a declaration in Form XXIV, which is an obligation cast
on such Transporter by virtue of Section 38 (2) read with sub-rule (3) of Rule
46A, which requires the Transporter to obtain Form XXIV from the Superintendent
of Taxes on payment of such fees as may be specified by the Commissioner.
Transporter is further obliged to maintain a register of the accounts of such
forms serially. Rule 63A read with Section 38(3) confers power to search at any
place on the Officer-in-charge of a check post, Superintendent of Taxes or any
officer specially empowered by the Commissioner to intercept, detain and search
any vehicle or place suspected of being used for contravening provisions.
Sub-rule (1A) of this Rule 63A read with Section 38(4) gives power of seizure
on the aforesaid officer at the check post when goods are being carried in
contravention of any provision of the Act or the Rules. Under sub-rule (2) the
person, from whom such goods are seized, has to make a declaration of the value
of such seized taxable goods. Such declaration is to be submitted to the
Superintendent of taxes with copies of the relevant bills, invoice, and
consignment note issued by the consignor and other documents in support of the
basis on which the value is declared. Sub-rule (3) gives an option to the
person from whom such goods are seized to opt for composition of such offence under
Section 32 and then to pay for the composition of the offence so determined
within seven days from the date of composition of the offence. In case he does
not opt, then such goods are liable to be auctioned in terms of sub-rule (4).
Next reference was to Rule 64A which requires registration of Transporter.
Rules 46-A, Rule 63A and Rule 64A are quoted hereunder: Rule 46-A: 46-A. (1)
Every declaration to be given under sub- section(2) of section 38 shall contain
a correct and complete accounts of the goods carried by the transporter and
shall be in Form XXIV in duplicate, and duly signed by him: Provided that if
the space provided in Form XXIV is not sufficient for making the entries,
separate annexure may be attached to the form for the purpose which should be
duly signed by him.
(2)
The Officer-in-charge of the check post or the barrier on being satisfied about
the correctness of the statements made and particulars contained in the
declaration in Form XXIV, shall seal it with his official seal and give a permit.
One copy of the permit shall there upon be returned to the transporter and the
other shall be retained by the Officer-in-charge: Provided that a transporter
who has obtained a permit at the first check post or barrier under sub-rule (2)
shall not be required to make any further declaration at other checkposts or
barrier in respect of only so much of the consignments to which the permit
relates.
(3)
The transporter shall obtain Form XXIV from the Superintendent of Taxes
concerned on payment of such price as may be specified by the Commissioner. The
Form shall be serially numbered and account shall be maintained in register. No
other Form XXIV except those supplied from the office of Superintendent of
Taxes shall be entertained with effect from such date as the Commissioner may
notify by publication in the local newspapers and Official Gazette.
Rule
63A:
63A.
(Power to search at any place by Officer-in- charge of a check post,
Superintendent of Taxes or any officer specially empowered by the Commissioner:
(1)
Notwithstanding anything contained in any other provision of these Rules, at
every check post or barrier or at any other place, when so required by the
Officer- in-charge of such check post or barrier, by any Superintendent of
Taxes or by any officer empowered by the Commissioner of Taxes in this behalf
for the purpose of preventing the evasion of taxes payable under the Act, the
driver or any other persons in charge of goods vehicles shall stop the vehicle
and keep it stationary as long as may be required by such officer to search the
goods vehicle or part thereof, examine the contents therein and inspect all
records relating to the goods carried which are in the possession of such
driver or other person in charge thereof, who shall, if so required, give his
name and address and the name and address of the owner of the vehicle as well
as those of the consignor and consignee of the goods.
1A -
On search, as aforesaid, if it is found that the goods are being carried in
contravention of any provision of the Act or the Rules, such officer conducting
search may seize the goods found in the vehicle alongwith any container or
materials used for packing.
(2)
When any taxable goods are seized, the person from whom such goods are seized
shall make a declaration in respect of the value of the seized taxable goods
and this value shall be the retail prices or the aggregate of retail prices of
such goods at which these are likely to be sold in Tripura at the relevant
time. Such declaration shall be submitted to the Superintendent of Taxes with
copies of the relevant bills, invoice, and consignment note issued by the
consignor and other documents in support of the basis of the value declared.
The copies so furnished may be returned to the person after the Superintendent
satisfies himself about the value of the goods declared.
(3)
When the person from whom the taxable goods are seized opts for composition of
such offence under Section 32 within a period of 15 days from the date of
seizure of the goods, the amount of composition money so determined shall be
payable within 7 days from the date of composition of the offence by payment
into Government treasury. Upon production of the receipted copy of the challan
in support of payment to the Superintendent the seized goods be released.
(4) If
the person from whom the goods are seized does not opt for composition of the
offence within a period of 15 days from the date of seizure or having
compounded the offence, does not pay the amount in due time as provided in
sub-rule (3) the Superintendent with the previous sanction of the Commissioner,
shall issue a proclamation in form No.XXI for auction for sale of such seized
goods on a fixed date, place and time. The description of the taxable goods
shall be mentioned in the proclamation. The proclamation shall be published in
at least one local newspaper. The auction shall be conducted by the
Superintendent or any other official authorised by the Commissioner.
(5)
The auction shall be governed by the conditions laid down in the proclamation
(Form No. XXI).
Rule
64A 64A. Registration of Transporter etc.
(1) No
transporter, carrier, or transporting agent shall operate its transport
business in Tripura relating to taxable goods without being registered with the
Commissioner of Taxes in such a manner as he may direct.
(2) A
transporter, carrier, or transporting agent already operating transport
business in Tripura relating to taxable goods shall, within a period of 30
(thirty) days from the date of commencement of these rules (Eleventh Amendment)
apply to the Commissioner of Taxes for registration.
(3) If
a transporter, carrier or a transporting agent carries or transports any
taxable goods in contravention of the provisions of the Act or the rules, his
registration shall be liable to be cancelled or suspended for such period as
may be determined by the Commissioner of Taxes after giving him a reasonable
opportunity of being heard.
(4)
Every transporter, carrier or transporting agent operating its transport
business in Tripura shall maintain a Register in Form No. XXII a true and
correct account of every consignment of goods transported into Tripura, and in
Form No. XXIII of goods transported outside Tripura, through it.
(5) No
taxable goods shall be delivered by the transporters carriers or transporting
agents unless the requirements laid down in Rule 46 and 47 have been complied
with.
(6) No
delivery of taxable goods shall be given by the transporter without obtaining a
copy of declaration in Form XVIII signed by the superintendent of Taxes/Inspector
of Taxes.
Learned
counsel for the appellants vehemently urged that the appellants are mainly the
Transporters carrying goods of the consignor to the consignee and are neither a
dealer nor doing any business of sale or purchase of any goods, hence the
aforesaid obligations cast on the transporters including punishment for the
said offences are beyond the legislative competence of the State Legislature
under List II of Entry 54 of the Seventh Schedule of the Constitution of India.
Learned
senior counsel for the respondents, Mr. Rakesh Dwivedi, submits that none of
the said provisions require the appellants (Transporter) to perform any of such
obligations so as to construe it to be that which could only be on a dealer.
The aforesaid provisions are only to streamline assessment and to check the
evasion of sales tax.
The
said obligation casts on the Transporters to achieve such purpose, is a
necessary concomitant of any taxing statute. He submits that the offence and
penalties referred to in Section 29 (4), which is strongly relied by learned
counsel for the appellants, when read with other sub-clauses of that Section
and further read with Section 30, reveal that it is only a mechanism to make
collection of tax more effective and purposeful. Sub-section (4) of Section 29
constitutes offence only when one fails to produce such account or form as he
is required under the law when required by the concerned authority. This is a
necessary corollary for which an obligation is cast on the Transporters to do
certain thing. This threat of offence is only to keep him on guard so that he
may not fail to produce such documents as required, but for this the very
objective to trace a real dealer for tax and penalty would be defeated. Thus
this obligation cast on the Transporter is really in aid to the taxing
authorities. Section 30 constitutes offence when a false statement is declared.
This
is followed by the composition of offences under Section 32. Section 36A
requires the maintenance of accounts. Similar is the position with respect to
the aforesaid Rules. They are all in aid of the mechanism evolved to check
evasion of tax. Next requirement of obtaining a Certificate of Registration
under Section 38B and making declaration on Form XXIV under sub-Rule 3 of Rule
46-A could not be construed as to constitute an inference that it impedes any
free flow of trade or business while entering into and going out of the State
of Tripura.
Thus,
the question for consideration with respect to the first submission is, whether
such provisions could be held to be beyond the legislative competence of the
State Legislature? The law in this regard is well-settled, if any legislature
makes any ancillary or subsidiary provision which incidentally transgresses
over its jurisdiction, for achieving the object of such legislation then it
would be a valid peace of legislation.
& Anr.,
1989 (3) SCC 677, this Court held:
We are
dealing with an entry in a Legislative List.
The
entries should not be read in a narrow or pedantic sense but must be given
their fullest meaning and the widest amplitude and be held to extend to all
ancillary and subsidiary matters which can fairly and reasonably be said to be
comprehended in them.
Union
of India, 1989 (3) SCC 698, this Court held:
In
interpreting expressions in the legislative lists a very wide meaning should be
given to the entries. In understanding the scope and amplitude of the
expression income in Entry 82, List I, any meaning which fails to accord with
the plenitude or the concept of income in all its width and comprehensiveness
should be avoided. The cardinal rule of interpretation is that the entries in
the legislative lists are not to be read in a narrow or restricted sense and
that each general word should be held to extend to all ancillary or subsidiary matters
which can fairly and reasonably be said to be comprehended in it. The widest
possible construction, according to the ordinary meaning of the words in entry,
must be put upon them.
& Anr,
1995 Suppl. (2) SCC 187, this Court held:
The
legislature derives its power under Article 246 and other related articles in
the Constitution. The language of an entry should be given the widest meaning
fairly capable to meet the need of the Government envisaged by the
Constitution. Each general word should extend to all ancillary or subsidiary
matters which can fairly and reasonably be comprehended within it. When the vires
of an enactment is impugned, there is an initial presumption of its
constitutionality. If there exists any difficulty in ascertaining the limits of
the legislative power, it must be resolved, as far as possible in favour of the
legislature, putting the most liberal construction on the legislative entry so
that it is intra vires.
It is
now necessary to scrutinise the impugned provisions to see what are the
obligations cast on the transporters, what is the purpose of such obligation,
is it in any way taxing such transporters or impeding the transport business to
make it beyond the legislative competence and ultra vires Article 301 of the
Constitution of India? Whenever any goods is sold or purchased inside or
outside the State, the incidence of tax and the quantum of tax has to be
ascertained under the provisions of the relevant taxing statute. For this, it
is necessary to fix a dealer, the taxable goods, place of sale or purchase of
such goods and the quantum of tax. If a dealer in taxable goods transaction of
sale or purchase escapes attention of the taxing authority, tax on such goods
escapes with resultant loss to the State revenue. To over reach this possible
escape a mechanism is invariably brought in a statute to seal such loopholes of
escape, of course casting obligations on some to perform certain acts to reach
this objective.
Thus,
maintaining accounts of goods transported into or outside Tripura in the
prescribed manner and to furnish in the prescribed manner such information as
the Commissioner requires including filling of Form XXIV is only for the said
objective to be achieved with the help and aid of such transporter or carrier
etc. Such obligation is cast only for identifying the consignor or consignee to
fix liability on them in corelation with the goods carried by such transporter
further requiring the disclosure of such goods with its quantity, value,
weight, to help the taxing authority to assess such goods on such escaping
dealer.
This
helps the taxing authorities in collecting taxes, imposing penalties including
punishing one for the offences committed. If such an obligation is not cast on
such Transporters then any dealer under a false name, can despatch his taxable
goods to another person through a Transporter escaping his sales tax liability
on such goods.
It
cannot be denied that some such dealers and transporters do indulge in such
illegal practices. This fact is brought in through the counter-affidavit filed
by the respondents-State that some such consignments are booked with consignee
as self, without disclosing the name, registration number and address of the
consignee in the appropriate column of Form XXIV. By incorrect, incomplete
declaration in such forms, if not made punishable, would defeat the very
purpose of enacting these provisions and would help such clandenstile dealers
to escape the liability of tax. So each of these provisions are brought in to
help the authorities to check the evasion of tax.
The
maintenance of accounts by the Transporter under Section 36A is only to help
the taxing authority to trace the dealer, fix the goods transported corelating
with such dealers transporting such goods for fixing taxable liability in this
regard. There is no provision, which fixes any liability on the transporters,
carriers etc., which is on a dealer. Liability, if at all, is only if such
transporters, carriers etc. do not disclose what is required and what is within
his knowledge to help the authorities to collect the tax from escaping dealers
which, but for this, would escape.
Section
29 speaks of offences covering both dealers and non-dealers as is evident by
the opening word whoever.
Sub-section
(4), to which learned counsel referred to, obligates a person to produce any
accounts, evidence or documents or to furnish any information as required by
the concerned authority. Of course, all this would be what one is required to
maintain and in the case of transporters, carriers etc. what the relevant
provisions require him to do. If he is required to maintain or produce some
document which he has to maintain under a statute, and if he does not produce
it then of course he should be made liable for offence. It is only on his
failure to do this, it is treated as an offence, punishment as it is one of the
legitimate weapons to enforce one to help the authorities.
Such
information and documents sought are either with or within the knowledge of
Transporter. As aforesaid, this is for the sole objective of ascertaining a
consignor and consignee of the taxable goods which the transporter is carrying.
Such requirement has no co-relation with the sale and purchase of the goods or
to treat a Transporter as dealer and consequently, no obligation is cast on him
to pay any tax, interest or penalties which a dealer is required to pay.
Similarly Section 30 refers to offence only when a false declaration is made in
connection with any proceedings under this Act, which he either knows or
believes to be false, or does not believe to be true. Again, the conviction
under it is only for making false declaration which is within his knowledge.
How can this constitute to be a ground for legislative competence? This
provision is only to see that the correct statement of facts are brought out.
One is punished only if he knows or believes to be false, yet does not disclose
it or even does not believe to be true, but still makes statement to the
contrary. Under Section 29 (4) and Section 30, the offences in case committed
by Transporter are relateable to checking of evasion of tax, then composition
of offence under Section 32 would also confine itself within this sphere. We do
not find any of these provisions in any way placing any liability on the
Transporter which is otherwise on a dealer under this Act. Similarly, as
aforesaid, the maintenance of account by the transporters, carriers etc. under
Section 36A is only to render help to the authorities in checking the evasion
of tax. This does not put any such obligation on the Transporter to hold that
these provisions transgress the legislative competence of the State
legislative.
Further
Rule 46A read with Section 38 (2) requires every person transporting taxable
goods at any check post or barrier referred to in sub-section (1), to file
before the Officer-in-charge of such check-post or barrier a correct and
complete declaration of the goods in such form and in such manner as may be
required. It is by virtue of this Rule 46A a Transporter is required at the
check post to disclose complete accounts of the goods carried by him in Form
XXIV. The question is why such requirement? Form XXIV, which is the main plank
of attack by the learned counsel for the appellants is really based on the
offence under Section 29 (4) or Section 30 in case declaration under it is
found to be false. Now, we proceed to examine what is required to be filled by
the transporters in Form No. XXIV.
This
Form requires to disclose the name and address of the consignor, whether a
registered dealer or not, place of despatch and destination of the goods, lorry
number, description of consignment, quantity, weight, value, Consignors invoice
number and date, railway receipt or bill of lading and in case goods are sent
outside the State, the permit number and date authorising such export under
Rule 47C. First, the question is why such information is required, if
necessary, what possibly is the difficulty of the transporters, finally whether
any objection by them is sustainable in law? As we have said that these informations
are required solely for the purpose for checking the evasion of tax. Next, we
do not find any difficulty for any transporter to disclose the names and
addresses of the consignor and the consignee, the place of destination, he
would also be knowing the description of consignment being transported its
quantity, weight and value also from the description as disclosed by the
consignor. The information, which the Transporter has to give so far with
reference to the quantity, weight and value of the good, would be based on the
basis of the documents, paper etc. as disclosed by the consignor. The fear
expressed by the learned counsel for the appellants that in case such
description, specially with reference to its weight or value, is found to be
wrong about which he would never be certain as he has to depend on what is
disclosed by the consignor, he would be liable for punishment under Section 30.
The fear expressed by learned counsel is without substance and is mere
imaginary. We have already observed that the offence is only drawn when there
is false declaration, knowing the fact to be false, makes a declaration, not
believing to be true yet makes declaration to the contrary. By making truthful
declaration, believing the statement to be true based on information of the
consignor, the offence is not drawn unless there is connivance between the
transporter and the consignor.
He
also referred to sub-rule (1A) of Rule 63A under which the good are being
carried in contravention of the provisions of the Act or the Rules, is liable
for seizure and under sub-rule (3) he is made liable to pay for the composition
of such offence in view of Section 32. The aforesaid submissions for the
appellants are without any force. So far as the fear with reference to Form
XXIV, as we have said above, he is aware of the same and the same are based on
the information given by the consignor. The purpose of this form rightly is to
ascertain the consignor and consignee and the details of the goods for the
purpose of taxing such goods under the Act. No Transporter can escape this
declaration as this is one of the essential mechanisms evolved to help the
taxing authorities to check the evasion. Submission of the learned counsel,
expressing the fear, if ultimately statement in case found to be incorrect as
per his disclosure in Form XXIV, that he would be held liable for offence is
also unfounded. Apart from what we have recorded above, Column 13 (i) of the
said form directs the declaration to be made in the following terms:
I/We
hereby declare that the above statements are true to the best of my/our
knowledge and belief.
This itself
clearly indicates when the liability of the offence punishable under Section 29
or Section 30 would be drawn. It only arises when such Transporter deliberately
makes false declaration and not when such declaration is true to his knowledge
and belief. Learned senior counsel for the respondents fairly stated that the
purpose mainly is to get the disclosure of the name and address etc. of the
consignor and consignee. The rest of the columns from 7 to 13 are primarily to
be filled in on the basis of the information given by the consignor. Every
taxing statute has charging sections. It lays down the procedure to assess tax
and penalties etc. It also provides provisions to cover pilferage of such
revenue by providing such mechanism as it deem fit, in other words, to check
evasion of tax and in doing so if any obligation is cast on any person having
connections with consignor or consignee in relation to such goods, may be other
than a dealer, to perform such obligation in aid, to check evasion and in case
he is made liable for any offence, for his dereliction of duty or deliberate
false act contrary to what he is obligated to do.
In our
opinion, it cannot be construed to be beyond the competence of States
Legislature. The impugned provisions are not charging Sections, no tax
liability is placed on the transporters. We find neither Sections 29, 30, 32,
and 36A nor Rules 46A, 63A and 64A lack any legislative competence.
They are
within the legislative competence of the State and would fall under List II of
Entry 54 of the Seventh Schedule of the Constitution of India. In Sodhi
Transport Co. & challenge was made to the provisions of Section 28-B of the
U.P. Sales Tax Act, which requires a Transporter while entering the State of
Uttar Pradesh to obtain transit pass for its delivery at the exist barrier
where the Transporter leave the State of Uttar Pradesh and on its failure a
presumption is drawn the goods carried inside the State have been sold within
the State either by the owner or person incharge of the vehicle. The Court held
that such goods carried have been sold within the State is a rebuttable
presumption. The persons concerned have the opportunity to discharge the
presumption by getting a finding recorded in his favour. Thus, if the person
proves the presumption to the contrary, no liability is fasten on him. However,
in case he fails to avail this opportunity or fails to prove to the contrary
then he would be a dealer even according to the definition of the word dealer
subject to other conditions, hence it was held that there is no
unconstitutionality of this provision. This Court held:
The
words it shall be presumed in Section 28-B only require the authorities
concerned to raise a rebuttable presumption, that the goods must have been sold
in the State if the transit pass is not handed over to the officer at the
check-post or the barrier near the place of exit from the State. A statutory
provision which creates a rebuttable presumption as regards the proof of a set
of circumstances which would make a transaction liable to tax with the object
of preventing evasion of the tax cannot be considered as conferring on the
authority concerned the power to levy a tax which the legislature cannot
otherwise levy. A rebuttable presumption has the effect of shifting the burden
of proof. The authority concerned before levying sales tax arrives at the
conclusion by a judicial process that the goods have been sold inside the State
and in doing so relies upon the statutory rule of presumption contained in
Section 28B of the Act which may be rebutted by the person against whom action
is taken under Section 28B. The person concerned having opportunity to displace
the presumption by leading evidence, there is no unconstitutionality in it.
When
once a finding is recorded that a person has sold the goods which he had
brought inside the State, he would be a dealer even according to the definition
of the word dealer as it stood from the very commencement of the Act subject to
the other conditions prescribed in this behalf being fulfilled. There is,
therefore, no substance in the contention that a transporter was being made
liable for the first time after 1979 with retrospective effect to pay sales tax
on a transaction which is not a sale.
This
is also a case where obligation is cast on the Transporter to fill up the
transit form and, on his failure, an inference was drawn holding such
transporter liable to pay the tax like that by a dealer. However, in the case
in hand, at no stage the transporter is held liable to pay the tax as payable
by a dealer. We have already referred to sub-rule (1A) to Rule 63A as to when
the goods could be seized. Sub-rule (3) of Rule 63A gives an option to the
Transporter in case goods carried by him is in contravention of any provisions
of the Act and the Rules, if he so desires, to opt for composition of offence.
A Transporter can always intimate within the time specified under sub-rule (3)
to a dealer or owner of the goods to come and pay the amount fixed under
Section 32. In case not, it is open to a Transporter not to opt for composition
of offence. No liability is fastened on him, then the authorities may proceed
to take action under sub-rule (4). By following the procedure therein, the
seized goods are auctioned to recover the liability of a dealer of tax, penalty
etc. under the Act. It is significant that sub-section (1) of Section 38A
records that in case any balance amount is left after the said auction, the
same to be returned to the person from whom such goods are seized or to the
owner of such goods.
It is
coherent with the scheme of the Act, to collect the tax and penalty by this
mechanism, what otherwise would have escaped assessment. Finally, the second
submission is with reference to the requirement of obtaining Certificate of
Registration under Section 38B which, according to the learned counsel, impedes
the free flow of trade and business of a Transporter hence violative of Article
301 of the Constitution. For ready reference Section 38B is quoted hereunder:
For carring out the purposes of section 38 every Transporter, or Trnasporting
Agent operating its transport business relating to taxable goods in Tripura
shall be required to obtain a Certificate of Registration in the prescribed
manner from the Commissioner of Taxes on payment of such fees as may be
prescribed.
This
section, itself indicates, has been brought in for carrying out the purposes of
Section 38, which basically is to check evasion of tax. Under it, the barriers,
check-post are set up, the officers are empowered to check any vehicle, seized
goods being carried in contravention of any provision of the Act and the Rule.
Thus, the requirement of Certificate of Registration by a transporter is also
for the same purpose. It only applies to such transporters doing transport
business relating to taxable goods in Tripura only. This certainly cannot be
construed to be violative of Article 301 of the Constitution of India. Article
301 provides freedom of trade, commerce and intercourse. This Article is
subject to the other provisions of this part, namely, part XIII which covers
Articles 301 to 307. Article 304 (b) empowers the State Legislature to impose
such reasonable restriction on the freedom of trade, commerce or intercourse
with or within the State as may be required under the public interest. When a
provision is made for a Certificate of Registration which in the present case
is brought in by amendment as aforesaid is really for checking the evasion of
tax. By such registration of transporters or carriers it becomes feasible for
the authorities to trace out such dealers escaping tax, 1989 such transporters.
Ors.,
1989 (2) SCC 192, challenge is to the notification issued under Section 31 (2-
a) of the Bihar Finance Act, 1981, urging the requirement that a person
transporting goods exceeding the quantity notified under Section 35 on a goods
carrier to carry permits in prescribed Form {XXVIII-A or XXVIII- B} in respect
of the goods have brought into or sent out of the State to be restrictive to
free flow of trade and hence violative of Articles 301 and 304. This Court
rejected the submission and upheld the notification by holding that insistence
on permits was intended to prevent evasion and to facilitate assessment of
sales tax. The stoppage of transporting vehicle for checking the permit for
this purpose would not constitute to be violative of free trade. Finally,
learned counsel for the appellants strongly relied on a decision of this Court
in State of Haryana & this Court held that Section 38 of Haryana General
Sales Tax Act to be ultra vires. This section requires that every clearing or
forwarding agent, dalal or any other person transporting goods (including
manager, agent, driver and employee of the owner) who handles documents of
title to goods for or on behalf of any dealer to furnish to the assessing
authority particulars and information in respect of transaction of the goods
and to obtain licence from the assessing authority and on contravention
provided high rate of penalty. The section 38 is quoted hereunder:
38.
Furnishing of information by clearing and forwarding agents etc. –
(1)
Every clearing or forwarding agent, Dalal or any other person transporting
goods, within the State, who, during the course of his business, handles
documents of title to goods for or on behalf of any dealer, shall furnish to
the assessing authority the particulars and information in respect of the
transactions of the goods in such form and manner, as may be prescribed.
(2) No
clearing or forwarding agent, Dalal or any other person transporting goods
within the State shall carry on his business unless he obtains from the
assessing authority, on payment of a fee not exceeding fifty rupees, a license
in the form and manner and subject to such conditions as may be prescribed.
(3) If
any clearing or forwarding agent or Dalal or person transporting goods within
the State contravenes the provisions of sub-section (1) or sub-section (2) the
Commissioner or any person appointed to assist him under sub-section (1) of
Section 3 may, after giving the person concerned a reasonable opportunity of
being heard, direct him to pay by way of penalty, an amount equivalent to
twenty per centum of the value of goods in respect of which no particulars and
information has been furnished under sub-section (1).
Explanation
- For the purpose
of this section-
(i) Dalal
shall include a person who renders his services for booking of, or taking
delivery of, consignments of goods at a Railway Station, booking agency, goods
transport company office, or any place of loading or unloading of goods or
contrives, makes and concludes bargains and contracts for or on behalf of any
dealer for a fee, reward, commission remuneration or other valuable
consideration or otherwise;
(ii)
person transporting goods shall, besides the owner, include the manager, agent
driver, employee of the owner or person incharge of a place of loading or
unloading of goods or of a Railway out-agency, city booking office or city
booking agency, when run by a private person under a contract with the Railways
but excluding a rail head or a post office, or of a goods carrier carrying such
goods, for despatch to other places or gives delivery of any consignment of
such goods to the consignee.
(Emphasis
supplied) Sub-section (1) of Section 38 of the Haryana Act requires every
clearing or forwarding agent etc. transporting goods within the State who
handles documents of title to goods to be transported within the State for or
on behalf of any dealer to furnish to the assessing authority such particulars
and information as may be prescribed.
Sub-section
(2) debars all clearing or forwarding agents etc. from carrying on their
business unless they are licensed. It is held that a clearing, forwarding agent
or dalal etc. transporting goods within the State, even though may not be
handling documents of titles to goods, is obliged to take a licence though he
may not be liable to a penalty.
Hence,
it was held to be beyond the competence of the State legislature as it could
not be in respect of any matter ancillary or subsidiary to the legislative
entry which entitles the State Legislature to impose such tax. This section
further imposes a penalty equivalent to 20% of the value of goods in respect of
which no particulars and information have been furnished. But this decision
holds that such clearing or forwarding agent has to be within a reasonable and
proximate connection between the transaction of sale of such goods before the
State Legislature would have competence to levy tax. The Court held: If a
clearing or forwarding agent or dalal or person transporting goods is indeed
reasonably and proximately connected with the sale occasioning the liability to
the sales tax, it is legitimate to require him to licence himself under the Act
and maintain and furnish such information and particulars to the assessing
authority thereunder as he would in the course of his business come to possess.
It is legitimate then to make him liable for such escapement of tax as has
resulted from the breach by him of such obligation and to a reasonable penalty.
..However,
inasmuch as the said Act does not define what precisely it means by the
expression documents of title to goods, it is unclear which class of forwarding
or clearing agents or dalals or persons transporting goods it intends to bring
within the ambit thereof. To clearing and forwarding agents, dalals and other
persons transporting goods who do not handle documents of title to goods for or
on behalf of any dealer, the provisions of the said Act can have no application
at all. In respect of such persons the State Legislature has no power of
legislation under the legislative entry concerned. Qua them the legislation is
not in respect of any matter ancillary or subsidiary to the legislative entry
which entitles the State Legislature to impose a tax on the sale of goods.
We
find that this decision would render no help to the appellants. The impugned
provisions of the Haryana General Sales Tax were different than the provisions
we are considering in this case, namely, the impugned Tripura Act and the
Rules. We further find that sub-para (ii) of the Explanation to Section 38 of
the impugned Haryana Act specifically excluded, a goods carrier carrying such
goods, for despatch to other places or gives delivery of any consignment of
such goods to the consignee.
Hence,
we hold that the requirement of Section 38B for a transporter operating its
transport business relating to taxable goods in Tripura to obtain Certificate
of Registration from the Commissioner of Taxes, is not violative of Article 301
of the Constitution.
In
view of the aforesaid findings, we hold that the impugned provisions of the Tripura
Sales Tax Act and the Rules of 1976 are valid pieces of legislation. The appeal
is, accordingly, dismissed. Costs on the parties.
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