TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 417
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....rayer is to declare that section 15(2)(xi) of the KVAT Act requiring the hallmarking units to obtain registration under the KVAT Act to be unconstitutional. I shall deal with the second prayer first. 4. Section 15(1) of the KVAT Act occurring in Chapter IV provides for registration of dealers and states that every dealer, whose total turnover in a year is not less than Rs. 5 lakhs, shall and any other dealer may, get himself registered under the Act. Sub-section (2)(xi) provides that notwithstanding anything contained in sub-section (1) "any hallmarking unit" shall get itself registered under the Act. 5. The case of the petitioner is that in a hallmarking unit, there is no sale or delivery of any goods and that therefore, it is not liable to get itself registered under the Act. In support of this contention, learned counsel for the petitioner relied on the principles laid down in the apex court judgment in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 6 RC 276; [2006] 3 SCC 1. On the other hand, learned Government Pleader contended that the validity of the provisions should be judged in the light of entry....
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....e and indivisible and there was no separate agreement for sale of goods justifying the levy of sales tax by the Provincial Legislatures. 'Under the law, therefore, there cannot be an agreement relating to one kind of property and a sale as regards another.' Parties could have provided for two independent agreements one relating to the labour and work involved in the execution of the work and erection of the building and the second relating to the sale of the material used in the building in which case the latter would be an agreement to sell and the supply of materials thereunder, a sale. Where there was no such separation, the contract was a composite one. It was not classifiable as a sale. The court accepted the submission of the assessee that the expression 'sale of goods' was at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale of goods and must be interpreted in entry 48 in List II of Schedule VII of the 1935 Act (now entry 54 of List II of the Seventh Schedule to the Constitution) as having the same meaning as in the Sale of Goods Act, 1930. According to this decision if the ....
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.... of the 46th Amendment chose three specific situations, a works contract, a hire-purchase contract and a catering contract to bring within the fiction of a deemed sale. Of these three, the first and third involve a kind of service and sale at the same time. Apart from these two cases, where splitting of the service and supply has been constitutionally permitted in clauses (b) and (f) of clause (29A) of article 366, there is no other service which has been permitted to be so split. For example the clauses of article 366(29A) do not cover hospital services. Therefore, if during the treatment of a patient in a hospital, he or she is given a pill, can the sales tax authorities tax the transaction as a sale? Doctors, lawyers and other professionals render service in the course of which can it be said that there is a sale of goods when a doctor writes out and hands over a prescription or a lawyer drafts a document and delivers it to his/her client? Strictly speaking with the payment of fees, consideration does pass from the patient or client to the doctor or lawyer for the documents in both cases. 46. The reason why these services do not involve a sale for the p....
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....re, in spite of its disability in the matter of the imposition of sales tax by virtue of the provisions of Act, article 286 of the Constitution may for the purposes of the registration of a dealer and submission of the returns of sales tax include these transactions in the dealer's turnover. Such inclusion, however, for the purposes aforesaid would not affect the non-liability of these transactions to levy or imposition of sales tax by virtue of the provisions of article 286 of the Constitution and the corresponding provision enacted in the Act, as above." 10. This judgment was followed by the apex court in Hoechst Pharmaceuticals Ltd. v. State of Bihar [1984] 55 STC 1 (SC); [1985] 154 ITR 64 (SC); [1983] 4 SCC 45, wherein it has been held thus (page 38 in 55 STC): "In the penultimate paragraph in A.V. Fernandez's case [1957] 8 STC 561 (SC); AIR 1957 SC 657, the court after laying down that the non obstante clause in section 26 had the effect of taking sales in the course of inter-State trade and outside the State out of the purview of the Act with the result that the dealer was not required nor entitled to include them in computation of the turno....
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....w in this regard is well-settled, if any Legislature makes any ancillary or subsidiary provision which incidentally transgresses over its jurisdiction, for achieving the object of such legislation then it would be a valid peace of legislation. In Express Hotels Private Ltd. v. State of Gujarat [1989] 74 STC 157 (SC); [1989] 178 ITR 151 (SC); [1989] 3 SCC 677, this court held: 'We are dealing with an entry in a legislative List. The entries should not be read in a narrow or pedantic sense but must be given their fullest meaning and the widest amplitude and be held to extend to all ancillary and subsidiary matters which can fairly and reasonably be said to be comprehended in them.' In Elel Hotels and Investments Ltd. v. Union of India [1989] 74 STC 146 (SC); [1989] 178 ITR 140 (SC); [1989] 3 SCC 698, this court held: '. . . In interpreting expressions in the legislative Lists, a very wide meaning should be given to the entries. In understanding the scope and amplitude of the expression "income" in entry 82, List I, any meaning which fails to accord with the plenitude of....
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....ach this objective. Thus, maintaining accounts of goods transported into or outside Tripura in the prescribed manner and to furnish in the prescribed manner such information as the Commissioner requires including filling of form XXIV is only for the said objective to be achieved with the help and aid of such transporter or carrier, etc. Such obligation is cast only for identifying the consignor or consignee to fix liability on them in correlation with the goods carried by such transporter further requiring the disclosure of such goods with its quantity, value, weight to help the taxing authorities to assess such goods on such escaping dealer. This helps the taxing authorities in collecting taxes, imposing penalties including punishing one for the offences committed. If such an obligation is not cast on such transporters then any dealer under a false name, can despatch his taxable goods to another person through a transporter escaping his sales tax liability on such goods. It cannot be denied that some such dealers and transporters do indulge in such illegal practices. This fact is brought in through the counter-affidavit filed by the respondents-State that some such consignments ar....
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.... declaration is made in connection with any proceedings under this Act, which he either knows or believes to be false, or does not believe to be true. Again, the conviction under it is only for making false declaration which is within his knowledge. How can this constitute to be a ground for legislative competence? This provision is only to see that the correct statement of facts are brought out. One is punished only if he knows or believes to be false, yet does not disclose it or even does not believe to be true, but still makes statement to the contrary. Under section 29(4) and section 30, the offences in case committed by transporter are relatable to checking of evasion of tax, then composition of offence under section 32 would also confine itself within this sphere. We do not find any of these provisions in any way placing any liability on the transporter which is otherwise on a dealer under this Act. Similarly, as aforesaid, the maintenance of account by the transporters, carriers, etc., under section 36A is only to render help to the authorities in checking the evasion of tax. This does not put any such obligation on the transporter to hold that these provisions transgress th....
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.... under section 30. The fear expressed by the learned counsel is without substance and is mere imaginary. We have already observed that the offence is only drawn when there is false declaration, knowing the fact to be false, makes a declaration, not believing to be true yet makes declaration to the contrary. By making truthful declaration, believing the statement to be true based on information of the consignor, the offence is not drawn unless there is connivance between the transporter and the consignor. He also referred to sub-rule (1A) of rule 63A under which the goods are being carried in contravention of the provisions of the Act or the Rules, is liable for seizure and under sub-rule (3) the transporter is made liable to pay for the composition of such offence in view of section 32. The aforesaid submissions for the appellants are without any force. So far as the fear with reference to form XXIV, as we have said above, he is aware of the same and the same is based on the information given by the consignor. The purpose of this form rightly is to ascertain the consignor and consignee and the details of the goods for the purpose of taking such goods under....
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....in the context of the provisions of the Assam General Sales Tax Act where section 42 and 44 of the Act provide for furnishing of information by clearing and forwarding agents and also for production, inspection and seizure of accounts, documents, goods etc. These provisions were also challenged as lacking in legislative competence. The Apex Court examined the question and rejected the challenge thus:- "In our view, the transporters are not strangers to the sale or purchase of goods; to the contrary are parts and parcels and are directly involved in storing the goods purchased or sold by and in many cases such transactions are fictitiously carried on in false name and address besides false classifications vis-a-vis transportation of such goods in and outside of the State making themselves party to the episode of such fictitious transactions for the sole purpose of evasion of tax by the dealers purchasing and selling such goods. The judgment of this court in Tripura Goods Transport Association</I> v. Commissioner of Taxes [1999] 112 STC 609 (SC); [1999] 2 SCC 253 was cited before us. In that judgment, this court has specifically....
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....ach by him of such obligation and to a reasonable penalty.' Thus it is seen that sections 42 and 44 of the Act do not impose any liability upon the transporter, carriers, etc., to pay any sales tax under the Act. The said sections are basically meant to check the tax evasion. Thus the requirement of maintenance of document and the certificate of registration by a transporter or any such agent is only for similar purpose as incorporated under sections 36A and 38B of the Tripura Sales Tax Act, 1976 which has been held to be a valid piece of legislation by this court in the case of Tripura Goods Transport Association v. Commissioner of Taxes [1999] 112 STC 609 (SC); [1999] 2 SCC 253. In our view, the present case is fully covered by the said judgment of this court." 13. A reading of the aforesaid principles laid down by the apex court in the last two judgments where provisions of the Tripura and Assam Acts were upheld by the apex court show that the apex court found that the maintenance of accounts in the prescribed manner and furnishing such information as the Commissioner requires, were for achieving the object of ceiling loopholes of escape from the l....