TaxTMI 
TaxTMI 
1982 (5) TMI 173
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.... Sometimes when the journey of the vehicles is too long from one State to another State, the goods brought in by the vehicles are unloaded in the State of Uttar Pradesh and reloaded on different vehicles and despatched to the destination States. For the goods booked by the petitioners from various places outside the State of Uttar Pradesh the petitioners issue chalans containing the details of the goods booked by them to be delivered to different places in different States. The goods transported by the petitioners do not belong to them and they do not carry on the business of purchase or sale of the goods directly or indirectly, through the agents or otherwise. The petitioners are paid only transportation charges. They are not dealers within the meaning of the Act and have no turnover of any kind as contemplated by the Act and consequently the petitioners are neither required to get themselves registered in the manner prescribed nor are liable to tax under the Act. The petitioners have been made liable to tax under the Act by enacting section 28-B and rule 87 which are beyond the legislative competence of the State Legislature or unreasonable and unworkable and hence violative of a....
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....ied topic includes power to legislate in respect of matters which may fairly and reasonably be said to be comprehended therein." A taxing entry, therefore, confers power upon the legislature to legislate for matters ancillary or incidental including provisions for preventing evasion of tax. Section 28 enables the State Government to establish check posts or erect barriers with a view to prevent evasion of tax under the Act. In a case falling under section 28-B the driver or other person-in-charge of such vehicle is required to 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 last check post or barrier before his exit from the State. Rule 87 requires the driver or other person-in-charge of a vehicle, in order to obtain a pass under section 28-B, to submit an application in triplicate in form XXXIV to the officerin-charge of the entry check post or barrier. The officer-in-charge of the entry check post is required, after examining the documents and after making such enquiries which he deems necessary, to issue a pass on the duplicate and triplicate....
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....consideration observed thus: "That section is, it should be emphasised, not a charging section, but a machinery section. And a machinery section should be so construed as to effectuate the charging sections." This principle was followed by the Supreme Court in later decisions and recently reiterated in Associated Cement Company Limited v. Commercial Tax Officer, Kota [1981] 48 STC 466 (SC); (1981) 4 SCC 578 in these words: "It is the duty of the Court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purposes having a full view of it. Wherever the intention to impose liability is clear, courts ought to have no hesitation in giving what we may call a common sense interpretation to the machinery sections so that the charge does not fail." It cannot, therefore, be successfully urged that section 28-B and rule 87, in so far as they require the driver or other person-in-charge of the vehicle to obtain a transit pass, are beyond the legislative competence. The next line of challenge to the validity of section 28-B is based on the reasoning that in the latter part of the provisions a presumption of sale is raised on the fa....
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....B, then a rule prescribing either a rebuttable presumption or an irrebuttable presumption in that behalf would be a rule of evidence. On the other hand, if fact A is inherently not relevant in proving the existence of fact B or has no probative value in that behalf and yet a rule is made prescribing for a rebuttable or an irrebuttable presumption in that connection, that rule would be a rule of substantive law and not a rule of evidence. Therefore, in dealing with the question as to whether the given rule prescribing a conclusive presumption is a rule of evidence or not, we cannot adopt the view that all rules prescribing irrbuttable presumptions are rules of substantive law." It cannot be seriously contended that when goods have been brought in a vehicle into the State of Uttar Pradesh under a transit pass but the goods are not accounted for when the vehicle carrying the goods passes through the exit check post, this fact is inherently irrelevant in accepting that the goods have been sold within the State of Uttar Pradesh. Such a presumption is a rule of evidence and not a rule of substantive law. In fact that would be a natural and relevant inference to be drawn in those circu....
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....not by law make it recoverable simply because it had been wrongly collected by the dealer. This cannot be done directly for it is not a tax at all within the meaning of entry 54 of List II nor can the State Legislature under the guise of incidental or ancillary power do indirectly what it cannot do directly. Section 11(2) was held to be beyond the competence of the State Legislature. In the case of Bhopal Sugar Industries Ltd. v. D.P. Dube [1963] 14 STC 406 (SC); AIR 1964 SC 1037 the question for consideration was whether the consumption by a retail dealer himself for his own use falls within the definition of "retail sale". The Supreme Court took the view that in the expression "sale of goods" four elements must exist: (1) parties competent to contract; (2) mutual assent; (3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) a price in money paid or promised. A transaction which does not conform to this traditional concept of sale cannot be regarded as one in respect of which the State Legislature is competent to enact an Act imposing liability for payment of tax. Consump tion by an owner of goods in which he deals is therefore....
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....n form XXXIV, as the case may be, in duplicate; (ii) cash memo, bill of sale or chalan; and (iii) a trip sheet in triplicate. The owner, driver or any other person-in-charge of any vehicle or vessel shall in respect of all other goods carry with him a trip sheet in triplicate. The provisions contained in rule 87 have already been set out. The learned counsel contended that under section 28-B the driver or other person-in-charge of the vehicle is required to obtain a transit pass. In the transit pass the name and address of the owner, driver of truck and the number of the vehicle are noted. The particulars of the consignment carried by the vehicle are also detailed. The scheme of transit pass becomes unworkable because the truck may be carrying goods meant for various destinations situate in different States. The modus operandi of the petitioners being that goods brought from outside the State of Uttar Pradesh are unloaded at some place in Uttar Pradesh and transferred to a number of vehicles meant for destinations outside the State of Uttar Pradesh. It is therefore, not possible for the driver or owner of the vehicle which entered the State of Uttar Pradesh and obtained a transit p....
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....e of its legitimate dues but also put honest businessmen in a disadvantageous position. These provisions aimed at checking evasion of tax are part of the incidental or ancillary powers to the power of taxation. There is no arbitrariness, unreasonableness or excessiveness in the measure adopted. There appears to be no substance in the contention that the impugned provisions are violative of article 19(1)(g) and article 301 of the Constitution. Section 28-B and rules 83 and 87 do not create any impediment, restriction or prohibition to carry on business or trade or exercise of right to trade, commerce or intercourse throughout the territory of India. Vehicles carrying goods from outside the State can freely enter and pass through the territory of Uttar Pradesh without any restriction or discrimination. They have only to observe the formality of obtaining the transit pass and carrying necessary documents with them pertaining to the goods transported by the vehicles. These measures are only regulatory in character. As observed by the Supreme Court in Automobile Transport Ltd. v. State of Rajasthan AIR 1962 SC 1406 the concept of freedom of trade, commerce and intercourse postulated ....
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....hough they may superficially appear to restrict the freedom of movement, in fact provide the necessary conditions for the free movement." It was on the finding that the two provisos in fact restricted transport of forest produce that the Supreme Court struck them down. Niether section 28-B nor rules 83 and 87 place any such restriction on the movement of goods. They are neither discriminatory nor arbitrary or unreasonable and are not violative of articles 14, 19(1)(g) and 301 of the Constitution. It was lastly contended that the petitioners not being dealers as defined in section 2(c) of the Act they could not be subjected to sales tax. This argument too is without any substance. Since under section 28-B presumption of sale is validly drawn, it has to be taken to its logical conclusion and that would make the petitioners dealers within the meaning of the Act. Section 2(c) as it stood prior to the amendment introduced by U.P. Act No. 12 of 1979 read as follows: "'Dealer' means any person or association of persons carrying on the business of buying or selling goods in Uttar Pradesh whether for commission, remuneration or otherwise and includes any firm or Hindu joint family and....
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.... by the Constitution in the exercise of such a power, it will be competent for the legislature to enact a law, which is either prospective or retrospective. On this principle the Supreme Court upheld the validity of the U.P. Sales Tax (Validation) Act, 1958 (U.P. Act 15 of 1958) in J.K. jute Mills Co. Ltd. v. State of Uttar Pradesh [1961] 12 STC 429 (SC); AIR 1961 SC 1534 following its earlier decisions reported in Union of India v. Madan Gopal Kabra AIR 1954 SC 158 and M.P.V. Sundararamier and Co. v. State of Andhra Pradesh [1958] 9 STC 298 (SC); AIR 1958 SC 468. The petitioners squarely fall within the definition of the word "dealer" in the Act. Under the Act what is sought to be taxed is the transaction of the sale of goods. The petitioners had the custody of the goods when the sale is presumed to have taken place within the State of Uttar Pradesh. There is a close and direct connection between the transaction of sale and the person made liable for the payment of sales tax. The statutory provision providing for such levy of sales tax would not offend entry 54. We may in this connection refer to the decision of the Supreme Court in Chowringhee Sales Bureau (P.) Ltd. v. Commiss....