1956 (8) TMI 32 - HC - VAT and Sales Tax

Retrospective amendment deemed unconstitutional; Sales Tax Superintendent lacked authority to forfeit tax

Rai Bahadur Hurdut Roy Moti Lall Jute Mills Versus The State of Bihar and Another

Rai Bahadur Hurdut Roy Moti Lall Jute Mills Versus The State of Bihar and Another - [1956] 7 STC 609 (Pat) Issues Involved:1. Authority of the Superintendent of Sales Tax to forfeit the amount collected.2. Constitutionality of the amendment to Section 14A of the Bihar Sales Tax Act.3. Applicability of Article 20(1) of the Constitution regarding retrospective penalties.4. Nature of 'forfeiture' as a penalty under Article 20(1) of the Constitution.5. Applicability of Article 31(2) of the Constitution regarding deprivation of property.Issue-wise Detailed Analysis:1. Authority of the Superintendent of Sales Tax to forfeit the amount collected:The petitioner, a registered dealer under the Bihar Sales Tax Act, had collected Rs. 2,11,222-9-6 as sales tax from dealers outside Bihar during the period from 1st April 1950 to 31st March 1951. The Superintendent of Sales Tax initially decided that the petitioner was not liable to pay sales tax on these sales. However, later proceedings under Section 14A led to an order for forfeiture of the collected amount. The court found that the Superintendent of Sales Tax had no authority to order the forfeiture of the sales tax collected by the petitioner.2. Constitutionality of the amendment to Section 14A of the Bihar Sales Tax Act:The Bihar Legislature amended Section 14A in 1955 to make it expressly retrospective. The amendment stated, 'after the word 'collects', the words 'or has or had collected' shall be inserted and shall be deemed to have always been so inserted.' The court held that this amendment was unconstitutional as it violated Article 20(1) of the Constitution, which prohibits ex-post facto laws.3. Applicability of Article 20(1) of the Constitution regarding retrospective penalties:Article 20(1) of the Constitution states, 'No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.' The court agreed with the petitioner that the amendment to Section 14A imposed a retrospective penalty, which is unconstitutional under Article 20(1).4. Nature of 'forfeiture' as a penalty under Article 20(1) of the Constitution:The court rejected the Advocate-General's argument that forfeiture was not a penalty. It noted that the proviso to Section 14A creates an offence and provides the punishment of forfeiture for contravention. The court cited legal definitions and precedents to establish that forfeiture is indeed a form of penalty, thus falling under the purview of Article 20(1).5. Applicability of Article 31(2) of the Constitution regarding deprivation of property:The court also considered that if forfeiture is not seen as a penalty, it would still be unconstitutional under Article 31(2), which deals with the deprivation of property without compensation. The court referenced the Supreme Court's decision in Dwarkadas Shrinivas v. Sholapur Spinning and Weaving Co. Ltd., which stated that any form of deprivation of property by the State without compensation is unconstitutional unless it falls within the exceptions of Article 31(5).Conclusion:The court held that the amendment to Section 14A by Bihar Act IV of 1955 is unconstitutional and void as it imposes a retrospective penalty in violation of Article 20(1) of the Constitution. Consequently, the order of the Superintendent of Sales Tax dated 10th February 1955, directing the petitioner to deposit the amount in the Government Treasury, is legally invalid. A writ in the nature of certiorari was issued to quash the proceedings and the order of forfeiture. The petition was allowed with costs.