TaxTMI 
TaxTMI 
1986 (3) TMI 303
X X X X Extracts X X X X
X X X X Extracts X X X X
....Writ Petition No. 1561, Writ Petition No. 5226, Writ Petition No. 9987 of 1983, Civil Misc. Writ Petition No. 363, Civil Misc. Writ Petition No. 339, Civil Misc. Writ Petition No. 546, Civil Misc. Writ Petition No. 301, Civil Misc. Writ Petition No. 362 of 1981, Civil Misc. Writ Petition No. 544 of 1980. E.C. Aggarwala, S.K. Sinha, Madan Lokur, C.S. Vaidyanathan, Sushil kumar, N.S. Das Behl, P.H. Parekh, S.C. Jain, O.P. Sharma, L.P. Aggarwala, Ganga Dev, Bishamber Lal, Mehta Dave & Co., Uma Dutta, S.N. Mehta, Ashok Grover, Rishi Kesh, R.P. Singh, H.M. Singh, D.P. Mohanty, Mrs. Rani Chabbra, B.P. Maheshwari and Badridas Sharma, Advocates, for some taxpayers in some appeals. Mrs. Shobha Dixit, Advocate, for the respondents in those appeals. C.S. Vaidyanathan, B.P. Singh and L.P. Aggarwala & Co., Advocates, for the appellants in C.A. Nos. 3136-3139 of 1982. S.N. Kacker, Senior Advocate (R.B. Mehrotra, Advocate, with him) for the appellant in C.A. No. 3140 of 1982. G.L. Sanghi, Senior Advocate (C.S. Vaidyanathan, Advocate, with him) for the appellants in C.A. Nos. 3376-3380 and 3382 of 1982. Gopal Subramanium, Mrs. Shobha Dixit and C.V. Subba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....check posts and barriers. It was substituted by an amended section 28 by U.P. Act 11 of 1972 which inter alia provided for the establishment of check posts and barriers at the boundaries of the State and also for inspection of goods while in transit. Even this provision was found to be inadequate. Therefore by U.P. Act 1 of 1973, the State Legislature substituted the said amended section 28 by a new section 28 and also added sections 28-A, 28-13, 28-C and 28-D to deal with the problems of evasion arising out of transactions in which goods imported into the State from outside were involved. Section 28-A deals with the provisions governing a person who imports goods by road into the State from any place outside the State. Section 28-C deals with the regulation of delivery and carrying away of the goods which are brought into the State by rail, river or air. We are not concerned with sections 28-A and 28-C in these cases. Similarly section 28-D is not material for us as it deals with cases governed by section 28-A and section 28-C. Section 28 and section 28-B which are material for these cases as they now stand read thus: "28. Establishment of check posts and barriers.-The State Gove....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which pass had been obtained. The officer-in- charge of the Exit Check Post shall issue a receipt on the triplicate copy of the pass for the duplicate copies surrendered by the driver or other person-in-charge of the vehicle. (4) The officer-in-charge of the Exit Check Post shall have powers to detain, unload and search the contents of the vehicle for the purpose mentioned in sub- rule (3)." The relevant part of form No. XXXIV which is issued in triplicate reads thus: "TRIPLICATE FORM XXXIV Application for issue of transit pass (To be submitted in triplicate) [See rule 87(1) of the U.P. Sales Tax Rules, 1948] To The Officer I/c, ............ Check Post, .............................. Sir, I,..............................................s/o Sri...................................................... r/o.................................... (full address).................................... hereby declare that I am the *owner/driver of *vebicle/truck No............................................... belonging to.............................................................(name and address of the owner/transporting agency). 2.. I hereby decla....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provides that when a vehicle coming from any place outside the State of Uttar Pradesh and bound for any other place outside the State passes through the State, the driver or other person. in-charge of such vehicle shall obtain in the prescribed manner a transit pass from the officer-in-charge of the first check post or barrier after his entry into the State and deliver it to the officer-in-charge of the check post or barrier before the exit from the State. If he fails to do so, it shall be presumed that the goods carried thereby have been sold within the State by the owner or the person-in-charge of the vehicle. Such presumption when drawn against the owner or the person-in-charge of the vehicle and he is held to have sold the goods inside the State of Uttar Pradesh all the liabilities under the Act which arise in the case of a person who sells goods inside the State would arise. Rule 87 provides that a person who wishes to get a transit pass shall make an application in form No. XXXIV to the officer-in-charge of the check post concerned. It also provides for the issue of the transit pass in triplicate and for inspection of the documents, consignments and goods to ensure that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay." These observations are quoted with approval by our Court in Gursahai Saigai v. Commissioner of Income-tax, Punjab [1963] 3 SCR 893 at 900. The provisions of section 28-B of the Act and rule 87 of the Rules which are impugned in these cases as mentioned above are just machinery provisions. They impose no charge on the subject. They are enacted to ensure that a person who has brought the goods inside the State and who has made a declaration that the goods are brought into the State for the purpose of carrying them outside the State should actually take them outside the State. If he hands over the transit pass while taking the goods outside the State then there would be no liability at all. It is only when he does not deliver the transit pass at the exit check post as undertaken by him, the question of raising a presumption against him would arise. We shall revert to the question of presumption again at a later stage, but it is sufficient to say here that these provisions are enacted to make the law workable and to prevent evasion. Such provisions fall ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rds would become clear if we read the definitions of the words "may presume", "shall presume", and "conclusive proof" given in section 4 of the Indian Evidence Act, 1872, although the said Act is not directly attracted to this case. These words mean as follows: "4. 'May presume'. Whenever it is provided by this Act that the court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it; 'Shall presume'. Whenever it is directed by this Act that the court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved; 'Conclusive proof'. When one fact is declared by this Act to be conclusive proof of another, the court shall, on proof of the one fact, regard the other as proved, and shall not allow evidence to be given for the purposes of disproving it." In the Indian Evidence Act, 1872, there are three cases where conclusive presumption may be drawn. They are sections 41, 112 and section 113. These are cases where law regards any amount of other evidence will not alter the conclusion to be reached when the basic facts are admitted or proved. In Woodroffe & Amir Ali's Law of Evidence (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, i.e., "shall presume" are being used in Indian judicial lore for over a century to convey that they lay down a rebuttable presumption in respect of matters with reference to which they are used and we should expect that the U.P. Legislature also has used them in the same sense in which Indian courts have understood them over a long period and not as laying down a rule of conclusive proof. In fact these presumptions are not peculiar to the Indian Evidence Act. They are generally used wherever facts are to be ascertained by a judicial process. The history of the rules regarding presumptions is succintly given in W.S. Holdsworth's "A History of English Law" (Vol. IX) at page 140 thus: "From time to time the ordinary process of reasoning have suggested various inferences, which have been treated by the courts in different ways. Sometimes they are treated as more or less probable inferences of fact; and it is possible, though by no means certain, that in the remote past most presumptions originated as mere presumptions of fact. just as in the case of judical notice, the courts, as a matter of common sense, assumed the existence of matters of common knowledge without further proof; s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....value in that behalf may be weighed by a judicial mind after it is proved and before a conclusion is reached as to whether fact B is proved or not. When the law of evidence makes a rule providing for a rebuttable presumption that on proof of fact A, fact B shall be deemed to be proved unless the contrary is established, what the rule purports to do is to regulate the judicial process of appreciating evidence and to provide that the said appreciation will draw the inference from the proof of fact A that fact B has also been proved unless the contrary is established. In other words, the rule takes away judicial discretion either to attach the due probative value to fact A or not and requires Prima faice the due probative value to be attached in the matter of the inference as to the existence of fact B, subject, of course, to the said presumption being rebutted by proof to the contrary.........." In our opinion a statutory provision which creates a rebuttable presumption as regards the proof of a set of circumstances which would make a transaction liable to tax with the object of preventing evasion of the tax cannot be considered as conferring on the authority concerned the power to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rospective effect to pay sales tax on a transaction which is not a sale. Tax becomes payable by him only after a finding is recorded that he has sold the goods inside the State though with the help of the presumption which is a rebuttable one. The levy of sales tax on goods which are held to have been sold inside the State cannot be considered as contravening article 301 of the Constitution. The restrictions imposed are not also shown to be unreasonable. They do not unduly hamper trade. On the other hand they are imposed in the public interest. The contentions based on article 301 and article 19(1)(g) of the Constitution are, therefore, without substance. The foregoing discussion disposes of the contentions regarding legislative competence or unreasonale character of the provisions contained in section 29-B of the Act and rule 87 of the Rules. They are introduced, as stated earlier, to check evasion and to provide a machinery for levying tax from persons who dispose of goods inside the State and avoid tax which they are otherwise liable to pay. The law provides enough protection to them and makes provision to enable them to show that they are in fact not liable to pay any tax. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....old the constitutional validity of section 28-B of the U.P. Sales Tax Act and rule 87 of the U.P. Sales Tax Rules. A large number of writ petitions have been filed under article 32 of the Constitution of India challenging the constitutional validity of section 28-B of the U.P. Sales Tax Act. 2.. In the Civil Appeals, this Honourable Court was pleased to pass an interim order staying the recovery of sales tax for the period prior to 1-6-1979. This Honourable Court was pleased to clarify that there would be no stay of payment of tax after 1-6-1979. 3.. During the hearing of these appeals, learned counsel for the appellants, pointed out that some difficulties and hardships were being faced by the genuine transporters. Keeping in view the submissions made by the learned counsel for the appellants, this Honourable Court was pleased to suggest to the counsel appearing for the State to evolve a suitable method to ensure that the Act and the provisions would not operate unjustly or harshly against bona fide transporters. 4.. Counsel appearing for the State of U.P. has agreed on behalf of the respondents to re-examine all the assessments in respect of the period prior to 1-6-1979 (the da....