COMMERCIAL TAX OFFICER Vs. SWASTIK ROADWAYS

JUDGEMENT

(1.) These two civil appeals raise an important question of constitutional significance centering around Entry 54 of List II of the Seventh Schedule to the Constitution of India as also the extent and purport of the ancillary power vested in the State Legislature which has enacted the Madhya Pradesh Commercial Tax Act, 1994 (hereinafter referred to as "the Act"). The said Act levies tax on sale and purchase of goods. Purportedly, under the ancillary powers/powers incidental to the levy of tax on sale and purchase of goods Sections 57, 58 and 59 are enacted. Under Section 57 the Commissioner is empowered to call for information from clearing and forwarding agents to give certain particulars in respect of transaction with any dealer. By the impugned judgment, the Madhya Pradesh High Court has struck down the provisions of Sections 57, 58 and 59 of the said Act on the ground of lack of legislative competence, relying on, the following the judgment of this Court in the case of State of Haryana v. Sant Lal and another, reported in ((1993) 4 SCC 380).

(2.) The original petitioners Swastik Roadways were carrying on business of clearing and forwarding agents. They used to receive goods for being consigned to places outside the area of their operation. They also used to receive goods from place to place outside their principal place of business for delivery to consignees. In short, they were clearing and forwarding agents engaged in the business of transporting goods.

(3.) On 1st April, 1995, the Madhya Pradesh Commercial Tax Act, 1994 came into force. It received the assent of the President on 7th January, 1995. In the present case as stated above Sections 57, 58 and 59 have been challenged. As per the said three sections the petitioners were required to furnish information including the statement of accounts to the Commissioner as he may require in respect of transactions of any dealer with them (clearing and forwarding agents) provided clearing and forwarding agents handled the documents of title to the goods or provided they transported the goods. By virtue of Section 57(2), in case of failure to furnish information a penalty is provided of an amount equal to three times the amount of tax payable in respect of the goods involved in the transaction and which appear to have been evaded by the owner of the goods. Section 58 speaks of control on clearing and forwarding agents to prevent or check evasion of tax. Further the State Government is empowered to issue directions in that regard, in order to ensure that such persons maintain registers concerning their business and send intimation about such business in a pro forma.