RATTAN LAL & CO. & ANR. v. THE ASSESSING AUTHORITY & ANR.
Citation: [1969] 2 S.C.R. 544; 1968 INSC 282
Court: Supreme Court of India
Bench: M. HIDAYATULLAH , J.C. SHAH, V. RAMASWAMI, K.S. HEGDE, A.N. GROVER
Judgment date:
Case summary
1968 INSC 282. Supreme Court of India judgment dated 1968-10-29. RATTAN LAL & CO. & ANR. v. THE ASSESSING AUTHORITY & ANR. Read the judgment and case...
Judgment text
546 SUPREME COURT REPORTS [1969] 2 s. c. R. RATTAN J,AL & CO. & ANR. v. THE ASSESSING AUTHORITY & ANR. October 29, 1968 [M. HlDAYATULLAH, C. J. , J. C. SHAH, V. R. AMASWAMr. • K. S. HEGDE AND A. N. GROVER, JJ. ] Punjab General Sa/es Tax Act. 1948 as amended by Punjab Act 7 of 1967 and Haryaua Act 14 of 1967, ss. 5, llAA-Fixation of stage of tax-A111end111ents if contravene s. 15 Central Sc;les Tax Act, 1955-[j discrilninato1y-Constitution of India, Art. 304. In Bhawani Cotton Mills v. State of Punj"/1, 11967] 3 S. C. R. 577 this Court struck down s. 5(1) second proviso and ss. 5(2) (a)(vi) of the Punjab General Sales Tax Act, 1948 as contravening s. 15 of the Central Sales Tax- Act, 1955, because, neither the Punjab Act nor the rules made thereunder indicated, as required by the Central Act the stage at which tax was to be levied.
After the formation of the new States of Punjab and Haryana, the Act was amended by the legislatures of the •• two States by Act 7 of 1967 and 14 of 1967 respectively. The amend- -' ments fixed it at the stage of sale or purchase of goods by the last dealer liable to pay tax. In a writ petition before this Court the petitioners contended that (i) the position had not altered at all even after the an1endn1ents and the liability to taxation at different stages still remained and therefore the Act con. tinued to be in conflict with the Central Sales Tax Act; (ii) the legislatures of the two States were not competent to amend retrospectively an act passed by the composite State; (iii) by leaving it free to the execlltivc to impose the tax within the maximun1 fixed there was excessive delegation of legislative functions; (iv) there Yl'as discrimination in the new s.
1 lAA and the opportunity given to a dealer to ask for reassessment or to submit to the old assessment and (v) the Act discriminated between imported goods and local goods and therefore contravened the equality clause and Art. 30. of the Constitution. HELD : Disn1issing the petition. (1) The Act by specifying the stage as the last purchase or sale by a dealer liable to pay the tax makes the stage quite clear. The matter is no\V in the hands of the dealer and he has to find out for himself \vhether he is liable to pay the tax or not. A dealer knows what he has done \\'ith his goods or is going to do with them. By providin_g that he need not include in his turnover any transaction except when he is the last dealer. the positfon is no\V made clear. f553 F. G] t (2) The competency of the legislatures of Punjab and Haryana to an1end an Act passed by the con1posite State cannot be questioned.
After the reorganisation the Act applied as an independent Act: to each of the areas and is subject to the legislative competence of the legislature i:n that area. [556 BJ ( 3) There is no abdication of legislative functions in favour of the administrative aulhority as the Central Act itself gives poVl'er to the legislature to choose a rate of tax at not more than 3% of the taxable tul·novcr. ~rhc tax levied is '. \'cl! \vi thin. that. lin1it and therefore the Legislature has chO'scn the n1axin1un1 nnd has left it free to the RATTAN & CO. V. ASSESSING AUTHORITY 545 authorities to impose the tax within that maximun1 regard being had to the requirements of revenue and the expenditure necessary for the State. [555 GJ (4) The opportunity given to a dealer in s. llAA to ask for re-assessment or to submit to the old assessment does not result in discrimination. 'fhis is open to every dealer an purchaser. " This Court then referred to s.
12 where there is a provision for refund which taken with rules 48-58 allowed for r()fund to be claimed, and found the provisions insufficient to get over the difficulty. This Court observed : "Even in the matter of obtaining refunds, there can be no controversy, that the appellant will have to place, before the officer concerned, particulars of transactions connected with the commodity, in question and also the RATTAN & co. v. ASSESSING AUTHORITY (Hidayatullah, C. J. ) 551 basis on which it claims the relief. It will be absolutely difficult, if not impossible, for persons like the appellant, to collect materials in this behalf, because, there is no provision, contained either in the Act or the rules, on the basis of which it will be entitled to be supplied with all the material information, relevant, for sustaining a request for refund.
If the Central Act makes it man-datory that the tax can be collected only at one stage, in our opinion, it is not enough for the State to say that a person, who is not liable to pay tax, must nevertheless, pay it in the first instance, aud then claim refund, at a later stage. We may state that the question as to how far a party can ask for refund, without the order of assessment being set aside, by appropriate proceedings, is highly doubtful; because at the time when the actual order of assessment is passed, in certain cases, it may not be possible for a party to say whether he is entitled to exemption, or not, under sub-cl. (vi) of s. 5 ( 2) of the Act. If a person is not liable for payment of tax at all, at auy time, the collection o.
f a tax from him, with a possible contingency, of refund at a later stage, will not make the original levy valid; because, if particular sales or purchase are exempt from taxation altoge-ther, they can never be taken into account, at any stage, for the purpose of calculating or arriving at the taxable turnover and for levying tax. " Relying upon the observations in A. V. Fernandez v. State of Kera/a(') this Court concluded: " ...... the provisions contained in a statute with respect to exemptions of tax or refund or rebate, on the F one hand, must be distinguished from the total non-liability or non-imposition of tax, on the other. These observations, also, in our opinion, effectively provide an answer to the stand taken by the State, in this case that s. 12 of the Act provides an adequate relief, by way • o. f refund, even if tax is collected at an earlier stage. " • The Amending ~cts which are now challenged set about re-movmg these ~1fficulttes.. These a.
mendments are again challenged on the same Imes .. It 1s convement to take the two Amending Acts. separately. Frrst we shall take up for consideration the Punpb amendments. Here, we are concerned only with a few of the amendments made by the Amending Act 7 of 1967. Sec--tion 5 was amended retrospectively from different dates. In sub-section (1), in the sec? nd proviso, the words "as defined in cl. ( c) (! ) [1957] S. C. R. 837. ·of s. 2 of the Central Sales Tax Act, 1956, and such tax shall not be levied on the purchase of sale of such goods at more than one stage" are now omitted. After the second proviso another proviso is introduced : In sub-s. IA, the words "in respect of such . goods other than declared goods" are substituted retrospectively from 16th December, 1965 for the words "in respect of such goods. " After sub-s. (2) a new sub-section (3) is introduced from October l, 1958.
We may now set out the 5th sub-section as it emerges from the amendment before we deal with the ·objections : "Section 5-Rate of tax ( 1) Subject to the provisions of this Act. there shall be levied on the taxable turnover of a dealer a tax at such rates not exceeding six naye paise in a rupee as the State Government may by notification direct. " ( 2) In this Act the expression 'taxable turnover' means that part of a dealer's gross turnover during any period which remains after deducting therefrom- ( a) his turnover during that period on- (i) (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter-State J!! trade or commerce, or in the course of export out of the territory of India; Provided that in the case of such sale to a registered dealer, a declaration, in the prescribed form and duly filled and signed by the registered dealer to whom the go?
party to intimate in writing that he has no objection to the assessment or reassessment already made. If any objection can be taken it will be by those whose cases are pending and not by those whose cases have been closed. The option to submit to the assessment is open to every one alike and there is no discrimination if a party wants that his case need not be reconsidered. He has only to state that in writing and that would be the end of the matter. If he wants his case to be reconsidered then he can go before the Tribunal and get his case reconsidered. It is also urged in this connection that there is a discrimination between the imported goods and local goods. 1t is said that • the discrimination is also between the first purchase in the case of ' imported goods and last sale in the case of local goods. Since the imported goods might be more expensive by reason of freight etc.
or intermediary sales having taken place, it is said, that the burden of tax will be heavier and therefore this will offend against the equality clause and Art. 304 of the Constitution. In our opinion this argument is without any Sllbstance. The rate of tax is same in every case. In State of Madras v. N. K. Nataraja Mudaliar('), this Court stated that the essence of Arts. 301 and 303 is to enable the State by a law "to impose on goods imported (1) [1969] 1 S. C. R. RATTAN & co. v. ASSESSING AUTHORITY (Hidayatul/ah, C. J. ) 557 from other States or the Union territories any tax to which similar goods manufactured or produced in the State are subject, so, however as not to discriminate between goods so imported and goods so manufactured or produced. " It was pointed out by this Court that "imposition of differential rates of tax by the same State on goods manufactured or produced in the State and similar goods imported in the State is prohibited by that clause.
But where the taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced, Art. 304 has no application". Here also the tax is at the same rate and therefore the tax cannot be said to be higher in the case of imported goods. It may be that when the rate is applied the resulting tax is somewhat higher but that does not offend against the equality contemplated by Art. 304. That is the consequence of ad valorem tax being levied at a particular rate. So long as the rate is the same Art. 304 is satisfied. Even in the case of local rnanufactures if their cost of production varies, the net tax collected will be more or less in some cases but that does not create any inequality because inequality is not the result of the tax but results from the cost of production of the goods or the cost of their importation. This ground, therefore, has also no substance.
We do not think it necessary to set down here the provisions of the Haryana Amendment Act because they follow the scheme of the Punjab Amendment Act in substance and what we have said in regard to the Punjab Amending Act applies mutatis mutandis to Haryana Amendment Act also. In the result these petitions have no substance. They are dismissed with costs. One set of hearing fee . Y. P. Petitions dismissed . • ' • 4Sup. C. l. /69--J
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