HANSRAJ BAGRACHA Vs. STATE OF BIHAR

JUDGEMENT

(1.) These four writ applications were heard together on the request of the parties because common questions of law are involved in all of them, and this judgment will govern all of them. The various petitioners are dealers in raw jute and they have filed applications under Articles 226 and 227 of the Constitution of India challenging Section 3A read with Sections 5A and 42 and 46 of the Bihar Sales Tax Act, 1959 (Bihar Act 19 of 1959) (hereinafter referred to as 'the Bihar Act') and Rule 31B of the Bihar Sales Tax Rules, 1959 (hereinafter referred to as 'the Bihar Rules') which rule was introduced after filing of the application in C. W. J. C. 520. During the pendency of the hearing of the applications the State of Bihar have further amended the Bihar Rules by inserting Rule 8C published in Notification No. LSH-2058/67-3482-F. T. issued by the State of Bihar in the Bihar Gazette dated the 6th of April 1968. The petitioners have challenged the said Rule 8C also.

(2.) In order to appreciate the questions involved in these applications it will be necessary to summarise the facts mentioned in the application in C. W. J. C. 520. As indicated above, the petitioners are dealers in raw jute. In this application the business of Hansraj Bagrecha has been stated to be mainly of two categories, viz., (a) buying raw jute from the agriculturists or Farinas in West Bengal bringing it to Bihar at Kishanganj Railway Station and re-exporting it to West Bengal to the purchasers there who are either merchants or mill owners; and (b) buying goods from jute growers in Bihar and exporting it to the merchants or mill owners in West Bengal. Under the Bihar Act, which came into force with effect from 1-7-59, there was no provision for charging purchase tax from, the dealers in jute, but two new sections, namely, Sections 3A and 5A were introduced with effect from 1-4-67 by Sections 16 and 18 respectively of the Bihar Finance Act, 1966, and certain changes were also made in other sections like Sections 2 and 38 of the Bihar Act, Sections 3A and 5A run as follows :--

(3.) Mr. A. K. Sen, learned Counsel appearing on behalf of the petitioners in all the cases, has contended : (i) the levy of purchase tax on jute by Sections 3A and 5A of the Bihar Act contravenes Section 15 of the Central Sales Tax Act, 1956 (No. 74 of 1956) (hereinafter referred to as 'the Central Act') inasmuch as it involves a multi-point tax on a declared commodity. Hence, he submitted that Sections 3A and 5A of the Bihar Act are void and inoperative, (ii) The purchase tax, even if valid, cannot be levied on outside sale and on purchases made in Bihar in the course of inter-State trade. (iii) The assessment was done" in any event without giving opportunity to the petitioner to prove that the transactions were outside sale and inter-State sale and not liable to tax. (iv) In cases where there is no assessment the demand for tax from these persons and directing them for getting themselves registered as dealers was illegal and void, (v) Rules 31B and 8C of the Bihar Rules are ultra vires and void because (a) they are in excess of Section 42 of the Bihar Act, and (b) they constitute unreasonable restriction on the freedom, of trade and commerce inter-State.