TaxTMI 
TaxTMI 
1959 (11) TMI 39
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....y the State of Bihar (hereinafter called the appellant) against three separate registered dealers with a certificate issued by the Patna High Court under Article 132(1) of the Constitution that they involve a substantial question of law as to the interpretation of Article 20(1) of the Constitution. The facts in each one of the three appeals are similar, though not exactly the same, but they raise a common question of law under the proviso to section 14A of the Bihar Sales Tax Act, 1947 (Act XIX of 1947) (hereinafter called the Act). Orders of forfeiture have been passed against the three registered dealers in the three appeals respectively, and they raise a common question of law in regard to the validity of the said orders. By consent Civil Appeal No. 678 of 1957 has been argued before us as the principal appeal and it has been conceded that our decision in that appeal will govern the two other appeals. We would, therefore, set out the facts in Civil Appeal No. 678 of 1957 and deal with the merits of the points raised for our decision in that appeal. Rai Bahadur Hurdut Roy Motilal Jute Mills, Katihar (hereinafter called the first respondent) was at the material time regi....
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.... deduction of the said amount from the amount of the total turnover shown by the first respondent in the return submitted by him according to the provisions of the Act. Subsequently the second respondent proceeded against the first respondent under section 14A of the Act and issued a notice in that behalf on June 18, 1954. By this notice the first respondent was called upon to show cause why the entire amount of Rs. 2,11,222-9-6 which had been recovered by him as sales tax from the dealers should not be forfeited to government. The first respondent showed cause but the second respondent was not satisfied with the explanation given by the first respondent, and so he directed the first respondent to deposit the said amount into the government treasury and produce the proof of payment before him within a month of the receipt of his order. This order was passed on February 10, 1955. It shows that the second respondent thought that the matter raised for his decision was simple; the first respondent had collected the amount in question as tax under the Act from his customers for and on behalf of the appellant, and so he could not retain the said amount; it must go to the State ....
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....first be clarified and ascertained with a view to determine whether the impugned statutory provisions are attracted; if they are, the constitutional challenge to their validity must be examined and decided. If, however, the facts admitted or proved do not attract the impugned provisions there is no occasion to decide the issue about the vires of the said provisions. Any decision on the said question would in such a case be purely academic. Courts are and should be reluctant to decide constitutional points merely as matters of academic importance. Before considering the preliminary point raised by the first respondent it is necessary to refer briefly to the relevant scheme of the Act. The Act was originally passed in 1947 because the Legislature thought it necessary to make an addition to the revenue of Bihar, and for that purpose to impose a tax on the sale of goods in Bihar. The provisions of the Act as well as the statutory rules framed under it have been subsequently modified from time to time. In our present discussion we would refer to the provisions and the rules which were in operation at the material time. The goods the sale of which is taxed under the Act are def....
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....ng any period which remains after deducting therefrom the items specified in clauses (a) and (b) of the explanation. The sale of any goods declared from time to time as tax-free goods under section 6 is one of those items. Section 6 empowers the State Government to exempt sale of any goods or class of goods from the levy of tax under this Act subject to the conditions specified in the section, whereas section 7 empowers the Government to exempt dealer from tax, and section 8 authorises the Government to prescribe points at which goods may be taxed or exempted. Section 9 deals with the question of registration of dealers and provides that no dealer who is liable to pay tax under section 4 shall carry on business unless he has been registered under the Act and possesses a registration certificate. Under section 11 a list of registered dealers is published, and by section 12 such registered dealers are required to furnish such returns by such dates and to such authorities as may be prescribed. Section 13 prescribes the procedure for assessment, and section 14 requires that the tax payable under the Act shall be paid in the manner hereinafter provided at such intervals as may....
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.... collection of the amounts in question by the dealer is otherwise illegal or improper. The contravention of the statutory provision contained in section 14A or of the Rules prescribing conditions and restrictions in that behalf alone can form the basis of the imposition of the penalty under the proviso. This position is not disputed before us. The appellant contends that the proviso is attracted to the present case because the first respondent has contravened the conditions and restrictions imposed by the proviso to rule 19, whereas the first respondent argues that a proper construction of this latter proviso does not justify the appellant's plea. It would thus be seen that the decision of the preliminary point raised by the first respondent involves the narrow question of the construction of the proviso to rule 19. Before constructing the said proviso it is, however, necessary to refer to section 33 of the Act. This section was enacted on April 4, 1951, but it has been expressly made retrospective as from January 26, 1950. Therefore at the material time this section must be deemed to have been in operation. Section 33(1)(a)(i) provides that notwithstanding anyt....
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....t of the first respondent in collecting amounts by way of tax from his purchasers amounts to a breach of section 14A itself. It is also contended that having regard to the provisions of section 33(1)(a)(i) the first respondent was entitled to claim a deduction of the transactions in question from his gross turnover under the latter part of the proviso, and that clearly means the first part of the said proviso applies to his case and it prohibited him from realising the said amounts. His conduct in collecting the amounts, therefore, constitutes a breach of the conditions specified in the proviso to rule 19. In appreciating the validity of these arguments it would be relevant to remember that at the material time there was considerable confusion in the minds of the public as well as the State authorities about the true scope and effect of the provisions of Article 286(1) of the Constitution. It is not disputed that during the material period and in the years preceding it registered dealers used to pay tax in respect of transactions which were really not liable to be taxed under section 33(1)(a)(i) and such tax was being received by the appellant. In fact, as we ha....
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....f sections 6, 7 and 8 of the Act. This position would be clear beyond all doubt if we read the material words in the proviso in the light of the explanation to section 5 of the Act. The explanation in terms enumerates deductions which have to be made in determining the taxable turnover of the registered dealer and it is to these deductions which are allowable under the three sections specified in the explanation to which the latter part of the proviso to rule 19 refers. A claim for the exclusion of a part of the first respondent's turnover on the strength of section 33(1)(a)(i) cannot, therefore, be said to be an allowable deduction under the proviso. This question can be considered from another point of view. The provisions which allow deductions to be made or grant exemptions in respect of certain transactions obviously postulate that but for them the transactions in question would be liable to tax under the Act; and so when such transactions are included in the return the registered dealer is allowed to claim appropriate deductions in respect of them. But, the position with regard to section 33 is entirely different; trans- actions which attract the provisions of the s....
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....ansactions which are outside the scope of the Act. Then as to the argument about the contravention of section 14A itself it is difficult to appreciate how any provision of section 14A can be said to have been contravened. Section 14A consists of two parts both of which are put in a negative form. The second part with which we are concerned in effect means nothing more than this, that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be prescribed. If the argument is that the first respondent was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside section 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of section 14A as such. In fact section 14A itself refers to the restrictions and conditions which may be prescribed, and, as we have already seen, these conditions and restrictions are prescribed by the Rules in general and by rule 19 in particular. So the argument urged under section 14A takes us back to the question as to whether the provis....