ALKA AGARWAL Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) IN this writ petition, the petitioners have questioned the validity of rule 62-A (introduced by notification dated 31st October, 1986) of the Rajasthan Sales Tax Rules, 1955, framed under section 26 of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the State Act ). It raises a short question of law. IN order to arrive at a proper determination, it is necessary to consider this question in its proper perspective and, therefore, a broad constellation of facts, in which the question arises, may be briefly stated thus : Petitioner No. 1, Miss Alka Agarwal, is not a dealer under the provisions of the State Act. Petitioner No. 2 is M/s. Lohia Machines Ltd. , a private limited company, which is manufacturing scooters in the technical collaboration with the foreign firm, namely, Piaggio & CSPA of Italy. The scooters so manufactured are being sold under the brand names - LML Vespa XE, LML Vespa 150 and LML Vespa 150 NV. M/s. Sanghi Traders and INvestments Pvt. Ltd. is the authorised representative of petitioner No. 2, at Jaipur. Petitioner No. 2 is having its registered officer at C-3, Panki INdustrial Estate, Kanpur, in Uttar Pradesh. The factory of the petitioner for manufacturing of scooter is also at Panki INdustrial Estate, Kanpur in Uttar Pradesh. Petitioner No. 1 has placed an order for purchase of Vespa scooter with M/s. Lohia Machines Ltd. , Kanpur in 1983. It is the case of the petitioners that petitioner No. 2 announced a scheme for booking of scooters by the intending purchasers from the general public and by the debenture holders of the company, under which the intending purchasers were required to make an application/place an order for booking of scooters to the petitioner-company in a prescribed form along with payment of Rs. 500, by way of booking advance. The applications made by the intending purchasers were thereafter scrutinised and valid applications were accepted by petitioner No. 2. The contention of the petitioners is that thus a contract came into existence between petitioner No. 2 and petitioner No. 1 for purchasing a scooter. The company sells scooters directly from Kanpur to the individual customers who have placed their orders with the company. It is further stated by the petitioners that after acceptance of the booking by the company, a delivery card was sent by the company from Kanpur directly to the purchaser mentioning therein the booking/delivery No. , as allotted by the company to the individual customers whose orders were accepted by the company. It is also stated that this delivery No. was to be mentioned in all future correspondence between the petitioner-company and the customers concerned. As and when the turn of a customer matures for delivery of scooter, the petitioner-company informs the customer for making initial payment of a sum of Rs. 1,000 through a demand draft drawn in favour of the petitioner-company payable at Kanpur and to give the option of the said customer with regard to the colour to the scooter and the design and the model. The customer thereafter conveys to the petitioner-company his choice of colour and model and remits the initial payment of Rs. 1,000 to the petitioner-company, which is at Kanpur. It is thereafter that the company allots a particular scooter to the particular customer, by earmarking the same. Such allotment and earmarking are done at company's factory at Kanpur. The scooter allotted to a particular customer is identified and earmarked that particular customer with reference to engine No. and chassis No. and colour and only that particular scooter is to be delivered to that particular customer. All documents such as, excise gate pass, invoice, goods receipt, sale letters, etc. , are simultaneously prepared and sent from Kanpur in the name of the individual customer by specifying the scooter sold to the customer. IN all the relevant documents sent from Kanpur, engine No. , chassis No. , colour of the scooter and the name and address of the customer are specifically mentioned. The case of the petitioners is that the sales of scooters are thus made by the company directly to the customers and the movement of scooters from Kanpur to the customers in the State of Rajasthan was thus made as an inter-State sale which took place in the course of inter-State trade and commerce. It is further stated that the movement of scooter from Kanpur is, thus, in pursuance of the contract entered into between the petitioner-company and the customer and a particular scooter has to be delivered only to its allottee-customer and, thus such movement/sale is clearly covered under section 3 (a) of the Central Sales Tax Act (for short, the Central Act ).

(2.) THE Government of Rajasthan has issued a notification dated 31st October, 1986, under which the provisions of rule 62-A have been amended and it has made compulsory for any customer importing in the State of Rajasthan, the motor vehicles including scooter, etc. , the value of which exceeds Rs. 1,000, to produce a declaration in new form No ST-18 at the check post in the State of Rajasthan, failing which the scooter is liable to be seized in terms of section 22-A of the Rajasthan Sales Tax Act. Petitioner's challenge is that the provisions of rule 62-A are ultra vires as the requirement of furnishing of form No. ST-18 as per rule 62-A by a person receiving the goods for his personal use is beyond the provisions of section 22-A of the Act and is also beyond the State's power to make laws as covered by entry 54 of List II of the Seventh Schedule of the Constitution of India.

(3.) THE next controversy that remains to be resolved is about the validity of rule 62-A of the Rajasthan Sales Tax Rules. Shri Jain, learned counsel for the petitioners, submitted that the provisions of the Rajasthan Sales Tax Act are applicable on the dealers carrying on the business in the State of Rajasthan in respect of any sale or purchase made by them in the State of Rajasthan and, if an inter-State sale is effected by any dealer from the State of Uttar Pradesh to a customer in Rajasthan, the State of Rajasthan has no jurisdiction, authority or right to impose any tax and the purchase by a customer of any commodity from an outside dealer in the course of inter-State trade and commerce is not covered by entry 54, List II of the Seventh Schedule of the Constitution. Shri Jain further submitted that the State Government has no right, authority or jurisdiction to restrict the use/consumption of a commodity which has been purchased by a customer. Shri Jain also urged that when the State has no power, the State Government as a delegated authority cannot have such power. Shri Jain also submitted that the provisions of rule 62-A and the requirement of furnishing of form No. ST-18 by a person receiving the goods for personal use are beyond the provisions of section 22-A of the Act and also beyond the State's powers to make laws as conferred by entry 54 of List II of the Seventh Schedule of the Constitution of India. Shri Jain further contended that the provisions of section 3 (a) of the Central Act have overriding effect on the provisions of the Rajasthan Sales Tax Act and, if the transaction is an inter-State sale, as in the present case, then the State of Rajasthan has no jurisdiction or authority to levy any tax. Section 26 of the Rajasthan Sales Tax Act does not authorise the State Government to make any rule or issue any notification thereunder by which the right of a citizen, who is not a dealer under the provisions of the Rajasthan Sales Tax Act, could be curtailed in any manner.