SHYAMA CHARAN SHUKLA Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) THE petitioner by this petition under Article 226 of the Constitution seeks to challenge an order of assessment of sales tax passed by the Sales Tax Officer, Chhindwara Circle, on 23rd April, 1960. The period for which the tax was assessed by this order is from 1st October, 1953, to 26th December, 1968. The sales assessed relate to manganese ore raised from the mines of the petitioner which are situated in Balaghat District of Madhya Pradesh and Nagpur District of Maharashtra. But as regards sales of manganese ore raised from the mines in Nagpur District, the period covered is up to 31st October, 1956, i. e. , the sales subsequent to this date of manganese ore raised from the mines of Nagpur District have not been included in the assessment. The Sales Tax Officer determined the turnover in a lump sum at Rs. 10,42,153. 75. On this turnover the petitioner was assessed to Rs. 31,580 as tax and a sum of Rs. 5,000 was imposed as penalty for failing to apply for registration. The petitioner filed appeals against the order of assessment which were dismissed inlimine, because tax was not deposited as required by the Rules. Thereafter, the present petition was filed for challenging the assessment.

(2.) BEFORE 1st November, 1956, Balaghat and Nagpur Districts were both in the erstwhile State of Madhya Pradesh. The new States of Madhya Pradesh and Bombay (now Maharashtra) were constituted by the States Reorganisation Act, 1956, which came into force on 1st November, 1956. Nagpur District is now included in the State of Maharashtra, whereas Balaghat District is in the State of Madhya Pradesh. The relevant sales tax law for the entire period of assessment is the Central Provinces and Berar Sales Tax Act, 1947. The petitioner did not register himself as a dealer before 1958. He was not assessed to any tax before the coming into force of the States Reorganisation Act. The petitioner applied for registration as a dealer sometime in 1958 and was registered as a dealer on 27th December, 1958, by the Sales Tax Officer, Chhindwara, exercising jurisdiction over Balaghat, and Chhindwara Districts. His principal place of business in the application for registration as a dealer was shown to be Katangjhiri in Balaghat District. Katangjhiri is probably the place where the mines of the petitioner in Balaghat District are situated. The State of Madhya Pradesh claimed to assess and recover the tax for a period prior to 1st November, 1956, under Section 78 of the States Reorganisation Act. The assessment for the entire period from 1st October, 1953, to 26th December, 1958, was made under Section 11 (5) of the Central Provinces Sales Tax Act, for which notice was issued to the petitioner on 18th July, 1959.

(3.) WHEN the petition first came up before this court (Dixit, C. J. , and Bhave, J.), one of the contentions raised was that Section 78 of the States Reorganisation Act was not applicable in the present case. It was argued that Section 78 conferred jurisdiction to recover tax of a period prior to its commencement only when the tax due could be called arrears of tax and as sales tax becomes due and can be said to be in arrears only when an assessment is made, there were no arrears against the petitioner on 1st November, 1956, to which Section 78 could apply, as no assessment of tax had till then been made. This argument was accepted by this court and, as theassessment made by the Sales Tax Officer was a composite assessment covering periods prior to and subsequent to the States Reorganisation Act, the entire assessment was quashed by an order passed on 12th September, 1967. The State of Madhya Pradesh went up in appeal to the Supreme Court against this order. The Supreme Court did not agree with this court on the meaning of the word "arrears" in Section 78 and it was held that under the scheme of sales tax laws taxes become due the moment a dealer makes either purchases or sales which are subject to taxation, although the tax liability cannot be enforced till the quantification is effected by assessment proceedings. In this view of the matter, the order of 12th September, 1967, was set aside and the petition was remanded for redeciding the same.