RAMGOPAL AND SONS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THIS petition under Article 226 of the Constitution raises a 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 vires of the section on the ground of lack of legislative competence on the part of the State to enact it. In order to appreciate the questions arising in the petition it is necessary to set out briefly the facts giving rise to the petition it is necessary to set out briefly the facts giving rise to the petition. The facts are few and for the most part undisputed and may be briefly stated as follows :- The petitioners are dealers carrying on business in 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 1st January, 1950, to 31st March, 1951, the petitioners effected various sales outside the State of Bombay. Those 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. 17,786-2-9 as tax in respect of such sales. The petitioners thereafter realising that these sales were not taxable, made an application for refund of the sum of Rs. 7,788-2-9 on 15th May, 1953. The Sales Tax Officer assessing the petitioners to sales tax accepted the claim of the petitioners to the extent of Rs. 10,361-5-6 and by an order dated 19th June, 1956, granted refund of the sum of Rs. 10,361-5-6 to the petitioners. Pursuant to this order of the Sales Tax Officer a refund order dated 26th July, 1956, for Rs. 10,361-5-6 was issued in favour of the petitioners and the petitioners obtained payment of the said amount. Since the relief granted by the Sales Tax Officer was only a partial relief, the petitioners preferred an appeal to the Assistant Collector of Sales Tax seeking relief in respect of the balance of the amount claimed by way of refund. The Assistant Collector of Sales Tax by his order dated 4th September, 1958, granted further relief to the petitioners but that relief was also partial and was confined to a sum of Rs. 4,000-1-3. No refund order was, however, issued in favour of the petitioners pursuant to this order of the Assistant Collector of Sales Tax. Before we proceed further to state what happened in regard to this amount of Rs. 4,000-1-3 which was ordered to be refunded as aforesaid, we may point out that the petitioners being dissatisfied with the disallowance of the balance of the claim for refund by the Assistant Collector of Sales Tax, preferred a revision application to the Additional Collector of Sales Tax on 29th December, 1958, and that revision application is still pending. We are, however, not concerned with the balance of the claim for refund which is pending adjudication in that revision application. In the meantime on 14th October, 1958, the petitioners received a notice from the Sales Tax Officer calling upon them to show cause why the sum of Rs. 10,361-5-6 refunded to the petitioners should not be forfeited under section 21(4) of the Bombay Sales Tax Act, 1953, as the petitioners had not produced receipts from their purchasers showing that the amount returned had been refunded to them by the petitioners. THIS was followed by a notice dated 19th November, 1958, by which the Sales Tax Officer pointed out to the petitioners that the refund of Rs. 4,000-1-3 was being withheld as the same was to be adjusted against the amount of Rs. 10,361-5-6 which was proposed to be forfeited. The petitioners by their letters dated 28th November, 1958, and 16th December, 1958, challenged the right of the Sales Tax Officer to forfeit the amount of Rs. 10,361-5-6 refunded to the petitioners. The Sales Tax Officer, however, did not accept the contentions of the petitioners and by an order dated 24th March, 1958, forfeited the amount of Rs. 10,361-5-6 and adjusted the sum of Rs. 4,000-1-3 in part payment of the said amount. The petitioners complained against this order of forfeiture by preferring an appeal to the Assistant Commissioner of Sales Tax but the appeal was dismissed by the Assistant Commissioner of Sales Tax by an order dated 28th August, 1961. The petitioners thereupon preferred a revision application to the Deputy Commissioner of Sales Tax and that revision application, we are told, is still pending before the Deputy Commissioner of Sales Tax. It may be pointed out that in the meantime the petitioners were compelled under the coercive machinery of recovery provided by the Act to pay the balance of Rs. 6,361-4-3 in pursuance of the order of forfeiture with the result that the entire amount of Rs. 10,361-5-6 was recovered by the State from the petitioners. The Sales Tax Officer also initiated proceedings for forfeiture of the sum of Rs. 4,000-1-3 by issuing a notice dated 22nd June, 1962. The petitioners replied to the notice contending that the Sales Tax Officer had no right to forfeit the sum of Rs. 4,000-1-3 but it appears that the Sales Tax Officer was not prepared to stay his hands and the petitioners thereupon filed the present petition against the Sales Tax Officer and the State of Gujarat as respondents. The two main reliefs claimed in the petition were, first, that the notice dated 22nd 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 as being beyond the legislative competence of the State Legislature 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 acting upon the said notice or taking any proceedings in enforcement of it and, secondly, that the respondents were under a statutory obligation to refund the sum of Rs. 10,361-5-6 wrongfully and illegally recovered from the petitioners and that a writ of mandamus should, therefore, issue compelling the respondents to carry out this statutory obligation and to refund the sum of Rs. 10,361-5-6 to the petitioners. 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 the 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) or in the alternative under section 21(4) which was the corresponding provision under the Bombay Sales Tax Act, 1953, and to forfeit the sums of Rs. 10,361-5-6 and Rs. 4,000-1-3 under that provision. Since the vires of section 12A(4) were 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.

(2.) IT will be seen from what is stated above that the main question involved in the petition is whether the forfeiture of the sum of Rs. 10,361-5-6 effected by the revenue authorities and the notice to forfeit the sum of Rs. 4,000-1-3 issued by the first respondent are valid. Now the forfeiture was purported to be made by the revenue authorities under section 21(4) of the Bombay Sales Tax Act, 1953, and so far as the notice of forfeiture is concerned, it was not stated under what provision of law it was issued, but having regard to the fact that during the relevant assessment period it was section 12A(4) which was in force, it was common ground between the parties at the hearing of the petition that the forfeiture and the notice were both under section 12A(4) or, if they were not so justified, they were bound to fall. The attack of Mr. Kaji against the validity of the forfeiture and the notice was, therefore, confined to the applicability of section 12A(4). The attack was a twofold one. In the first instance he contended that on a true construction of section 12A(4), the forfeiture and the notice were not within the scope and ambit of section 12A(4) and if this claim of his was negatived, he submitted in the alternative that section 12A(4) was beyond the legislative competence of the State Legislature and was, therefore, void. The first contention raised a question of construction of section 12A(4) while the second raised a question of its vires.

(3.) MR. Kaji then contended that, in any event, by a 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 collection made by a dealer by way of tax on sales which were outside State sales. He relied very strongly on the words :- "Nothing contained in this Act or the rules made thereunder shall be deemed to apply to any sale or purchase of any goods, where such sale or purchase takes place outside the State of Bombay."