TaxTMI 
TaxTMI 
1973 (4) TMI 122
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....quor. Section 4 of the Punjab General Sales Tax Act, 1948 (hereinafter called the Act) provides that every dealer, except one dealing exclusively in goods declared tax-free under Section 6, whose gross turnover during the year immediately preceding the commencement of the Act, exceeds the taxable quantum, shall be liable to pay tax, under this Act after coming into force of this Act. This came: into force on 1st of May, 1949. Section 5 of the Act' provides the rate of sales tax to be paid by a dealer. This section further provides a higher rate of tax on the sale of luxury goods as specified in Schedule 'A' of this Act. This section makes a provision that the State Government after giving by notification not less then twenty days notice of its intention to do so, may by like notification add to or delete items from Schedule 'A'. Section 6 of the Act provides, that no tax shall be payable on the sale of goods specified in the first column of Schedule 'B' subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which are declared tax-free from....
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....or objections or suggestions within a period of 20 days of the publication of the notification. The State Government,--vide its notification No. S.O. 3/P.A. 46/48/S. 6/Amd/72, dated 18th January, 1972, substituted entries of Items- 44, and 54 of Schedule 'B', as under:-- "44. Fertilizer except oil cakes. 54. Fodder of every type (dry or green) except oil cakes." The State of Punjab then issued an ordinance (Punjab Ordinance No. 2 of 1972) called the Punjab General Sales Tax (Amendment and Validation) Ordinance of 1972, published in the Punjab Government Gazette (Extraordinary) dated November 15, 1972, and made an amendment in the provisions of the Punjab General Sales Tax Act through this Ordinance, giving retrospective effect to the amendment made by notification dated 18th January, 1972, in Item Nos. 44 and 54 in the matter of charging sales tax on the oil cakes. This ordinance was taken replaced by an Act, called the Punjab, General Sales Tax (Amendment and Validation) Act, 1972, which act came into operation as Act No. 3 of 1973, on 4th of January, 1973. Section 10 of this Act is in the following terms:-- "10(1) The amendments made in Sched....
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....ect of any period after the commencement of the principal Act, but not assessed, may be assessed and collected in the matter provided in the principal Act, notwithstanding the period of limitation provided therein. (3) For the removal of doubts, it is hereby declared that nothing in sub-section (1) shall be construed as preventing any person-- (a) from questioning in accordance with the provisions of the principal Act and rules made thereunder, the assessment, re-assessment, levy or collection of such tax; (b) from claiming refund of any tax paid by him in excess of the amount due from him under the principal Act as amended by the Punjab General Sales Tax (Amendment and Validation) Act, 1972." In all the writ petitions the petitioners have challenged Ordinance No. 2 of 1972 and Punjab Act No. 3 of 1973, claiming that the said law is ultra vires of the Constitution and it violates Article 19(1)(f) & (g) of the Constitution of India and that the State Legislature abdicated its functions in favour of the State Government by not applying its own mind in amending the Punjab General Sales Tax Act, retrospectively. 2. On the other hand, the stand taken by ....
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....s "except Indian made foreign liquor" shall be inserted." 4. In view of these amendments, sales tax was payable on the sale of liquor (foreign liquor and Indian made foreign liquor) at the rate of 10 per cent, as this item having been included in Schedule 'A' as luxury goods. On March 6, 1967, the State Government again issued two notifications Nos. S.O. 20/PA-46/48/S-5/67 and S.O. 21/PA-46/48/S-5/67, exhibiting its intention to propose amendment in Schedules 'A' and 'B' of the Act regarding the aforementioned items. The proposal was to substitute Item No. 24 in Schedule 'A' of the Act, as under:-- "Foreign liquor as defined in sub-para (2) of paragraph 2 of the Punjab Excise Definitions, 1954". The proposal to amend entry 37 in Schedule 'B' was as under:-- "All goods, except foreign liquor as defined in sub-para (2) of paragraph 2 of the Punjab Excise Liquor Definitions, 1954, on which duty is or may be levied under the Punjab Excise Act, 1914, or the Opium Act, 1878" 5. It may be pointed out that the said notifications were published by the State Government under Sections 5 and 6 of the principal Act, so as ....
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....ssuing notifications, dated 18th July, 1967, a clerical mistake crept in whereby instead of printing sub-para (2) of paragraph 2 of the Punjab Liquor Definitions, 1954, in the above-mentioned amendments to Schedules A and B, in advertantly it was mentioned 2(a) of paragraph 2 of the Punjab Liquor Definitions, 1954. It is contended by the State Government that the word (a) printed along with sub-para (2) of para 2 of the Punjab Excise Liquor Definitions, 1954, as printed in the; Amended Schedules A and B, referred to above, was in fact, superfluous and the intention of the Government was to levy sales tax on the sale of foreign liquor as defined in sub-para (2) of paragraph 2 of the Punjab Liquor Definitions, 1954. In order to achieve this end, the State Government issued two Notifications, dated 11th August, 1967, purporting to be a corrigendum to correct a typographical mistake which had crept in the notifications, dated 18th July, 1967. The said notifications were to the following effect:-- "Omit the letter and brackets '(a)' in the first line of item (24) as substituted by that notification" and "omit the letter and brackets '(a)' in the second line of i....
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....ph 2 of the Punjab Excise Liquor Definitions, 1954 on which duty is or may be levied under the Punjab Excise Act, 1914, or the Opium Act, 1878". By issuing the abovementioned two Notifications, under sections 5 and 6 of the Principal Act, the State Government levied sales tax on the Indian made foreign liquor prospectively. Subsequently, in order to cover the assessments and the recovery of the sales tax on the sale of liquor from 18th July, 1967 to 14th February, 1971, which according to the State Government was to be levied in keeping with the intention of the Legislature, but could not be levied in view of the judgment of the learned Single Judge of this Court, reported in M/s. Krishan Lal Bajaj & Co's case 1970 Rev. L.R. 831, (Supra), the State of Punjab issued Ordinance No. 2 of 1972 on 15th November, 1972, which Ordinance has now been replaced by Act No. 3 of 1973, published in the Punjab Government Gazette (Extra.), of January 4, 1973. Section 10 of the said Act, which is relevant for the present purposes also has already been reproduced in the earlier part of the judgment. This section validates the levy and collection of the sales tax retrospectively on the oil cake....
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.... also not be denied that it is always open to the Legislature to remove a particular defect in an enactment because of which a particular law was declared invalid by a Court of law, and by doing so to nullify the effect of the judgments of the Courts. Reference in this connection may be appropriately made to Supreme Court decisions in M/s. Krishnamurthi & Co., etc. v. State of Madras and another A.I.R. 1972 S.C. 2455, and in Rai Ramkrishna and others, etc. v. State of Bihar A.I.R. 1963 S.C. 1667. 13. I fail to understand how the petitioners can successfully contend that the amending Act has violated Article 19(1)(f) & (g) of the Constitution of India. The State Government throughout interpreted the intention of the State Legislature that the sales tax is leviable on the sales of oil cakes and foreign liquor as defined in Punjab Liquor Definitions, 1954, as from 19th April, 1958, onwards when item No. 43 was deleted from Schedule 'B' of the Act in the case of oil cakes and with effect from 18th July, 1967 in case of Indian made foreign liquor. "The State Government throughout held the view that sales tax was chargeable on these goods. It is averred in the writ petitions b....
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....the dealer is liable to pay the sales tax and he cannot take the plea that he had not charged the appropriate price from the customer so as to enable him to pay the sales tax out of his margin of profit. 14. There is no merit in the second contention of Mr. Siri Chand Goyal also. No doubt while issuing Notification, dated 18th January, 1972, the State Government could levy sales tax on the sale of oil cakes provisionally as the power given to the State Government under sub-section (2) of section 6 is to that effect, but it is equally clear that the State Legislature can amend the Act retrospectively for which it has legislative competency. It is by an Act of the Legislature by section 10 of the Amending Act that entries 44 and 54 are being given to the State Government under sub-section 2 of section 6 cannot be confused with the Legislative competence to overhaul and make minor repairs to the Act itself. The plea that section 10 of the Amending Act gives retrospective effect to the notification, dated 18th of January, 1972, issued by State Government and, therefore, the Legislature abdicated its functions in favour of the State Government is also without any merit. It is only th....
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....f the amending Act are given effect to, the entries in the original Act, Schedule 'B' as entered in 1948 would become as follows:-- "43--Oil cakes; 44--Fertilizers; 54--Fodder every type (dry or green)". If these entries are read as they are, there is no conflict in the entries. It is clear that under entry No. 43, the oil cakes will not be subjected to the sales tax and oil cakes will not be covered either by Fertilisers--entry No. 44 or entry No. 54, i.e., Fodder. This position will continue till 18th April, 1958, when entry No. 43 was deleted from Schedule 'B'. From 19th April, 1958, the entries in the Schedule 'B' will read as follows:-- "44--Fertilisers, except oil cakes. 54--Fodder of every type (dry or green) except oil cakes." From these entries as they are in the amending Act, it would be clear that the sales tax on the sale of the oil cakes will be leviable from 19th April, 1958. To similar effect are my observations regarding the entries relating to liquor and there does not appear to be any conflict in the entries of Schedule B if full effect is given to the provisions of Section 10 of the impugn....
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....the Act), as in force in the State of Madras, immediately before the commencement of this Act extend to and come into force in the Union Territory of Pondicherry subject to the following modifications and adaptations--". 19. There was a provision made in the Pondicherry Act that Pondicherry Government will issue a notification specifying the date of the enforcement of the Act. As provided in Section 1, subsection 2, the Pondicherry Government issued a notification, dated March 1, 1966, bringing into force Madras Act, as extended by the Act of Pondicherry from April 1, 1966. In the meantime the Madras Legislature has amended the Madras Act and consequently it was Madras Act, as amended up to April 1, 1966, which was brought into force under the said Notification. The Act passed by the Pondicherry Assembly was quashed by the Supreme Court, on the ground that the Pondicherry Legislature not only adopted Madras Act as it stood on the date when it passed the principal Act but also enacted as if Madras Legislature were to amend its act prior to the date when the Pondicherry Government would issue its notification, it would be the amended Act which would apply. It was held by their Lor....
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....971, i.e., from the date of the decision of the learned Single Judge of this Court, quashing the notifications of the State Government, dated 11th August, 1967 and till the notifications issued by the State Government under section 5 and 6 of the principal Act on 15th February, 1971 the dealers could not charge sales tax from their customers, and, therefore, for this period atleast they could not pass on the levy of the sales tax to the purchasers which they would have ordinarily done if it was known that the sales tax was leviable for that period also. It is,' therefore, contended that the profit earned by the petitioners during this period had become their property and the levy of the sales tax for this period by the amending Act is not justified and is ultra vires of Article 19(1)(f) & (g) of the Constitution. In my opinion, this contention of the learned counsel for the petitioners cannot prevail. A similar argument was raised before their Lordships of the Supreme Court in M/s. Krishnamurthi and Co., etc. v. State of Madras and another A.I.R. 1972 S.C. 2455, which was repelled in the following terms:-- "Mr. Setalvad has referred to the fact that the appellants did ....
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.... after the judgment of the learned Single Judge of this Court reported in M/s. Krishan Lal Bajaj & Co's case, (supra) was pronounced, declaring that no sales tax was leviable on the sale of Indian made foreign liquor and between the issuance of the notification under Sections and 6 of the principal Act, in the month of February, 1971, the petitioners did not pass on the sales tax to the customers. Para No. 9 of the Civil Writ No. 429 of 1973, which has been referred to by the learned counsel for the petitioners, is a general averment and no specific averment regarding this period has been made. There is no allegation to the effect that because of the judgment of this Court reported in M/s. Krishan Lal Bajaj & Co's case (supra), the petitioners could not pass on the sales tax to the customers. It has further to be seen that when a particular section is struck down by the Court, it naturally takes some time to pass the, validating law. In the nature of things, sometimes bound to lapse between the striking down of a particular section and the validating law being passed. It would be observed that the State Government continued pursuing its remedies by filing Letters Patent App....
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....x as arrears of land revenue though the amount was not due as tax under the Act. It was held that Section 11(2) has nothing to do with the trade and commerce under Entry 26 of List II, and, therefore, the State Legislature was incompetent to enact a provision like Section 11(2) and thus the action of the authorities in recovering the tax, which was not exigible under the Act, which was sought to be recovered under Section 11(2) of the Amending Act, was struck down. To the similar effect are my observations regarding the decision of the Supreme Court in Kanti Lal Babulal's case relied upon by Shri Tirath Singh. In that case also with provisions of section 12(a)(4) of the Bombay Sales Tax Act, 1946, which authorised the authorities to recover the tax as arrears of land revenue from the assessee who had charged the tax from the customers in contravention of the provisions of sub-section (1) or (2) of the said section, which prohibits the charging of the sales tax by the dealers on the goods declared tax free, were struck down by the Supreme Court and in this view of the matter, the amount realised as arrears of land revenue under these provisions was held to be payable back to the....
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....vision, is, in any manner, illegal. The authority relied upon by the learned counsel for the petitioners is not of any assistance to him in this connection. In that case the direction given in the Act was to the Courts, which included the High Courts. In this view of the matter, it was held that since the Legislature derives its power to legislate from Article 245 of the Constitution and that Article specifically makes the power subject to the provisions of the Constitution which include Article 226, therefore, it is not open to the Legislature to enact any law which either directly or indirectly, affects the powers conferred by Article 226 of the Constitution, on the High Court. It was on this ground that the provision of the amending Act was set aside as it encroached upon the powers of the High Court under Article 226 of the Constitution. In the present case, I have already pointed out that there is no direction given to the Courts at all. The impugned section only gives jurisdiction to the Assessing Authority to bring the Assessments and re-assessments in conformity with the Amendment and Validation Act, 1972. No other point has been pressed by Mr. Munjral in support of) his pe....
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.....R. 1961 S.C. 552, suffice it to say that in that case, the petitioner in Petition No. 42 of 1958, before their Lordships of the Supreme Court, was owner of forest which before the re-organisation of the State, was situated in the State of Madras. After the re-organisation of the State, this area was transferred to the State of Kerala. The said area was governed by the Madras Preservation of Private Forests Act, 1949. Under the provisions of this Act, no owner of the Forest could remove the wood from the forest except with the permission of the District Collector. The petitioner in that case was allowed by the Collector to cut certain trees from the forest and the petitioner derived an income of Rs. 3,100 per year from the sale of the said trees. The case of the petitioner was that even though he earned a sum of Rs. 3,100 per year, a tax to the tune of Rs. 50,000 per year was being claimed. On these facts it was held that the impugned Act being discriminatory, imposes unreasonable restriction on the fundamental right of the petitioner. This decision has nothing to do with the facts of the present case. No other argument has been advanced by Mr. R.N. Narula. 26. For the reasons r....
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.... (ii) that the Legislature was competent to separate processed or split foodgrains from unsplit or unprocessed food-grains and treat them as two separate and independent goods; (iii) that by enacting the amending Act, the Legislature had not usurped legislative power but had only made its legislative intent clear; (iv) that Explanation II to section 3-D(1) did not violate article 14 of the Constitution of India; (v) that the retrospective levy was not violative of article 19(1)(f) or (g); the amendment was necessitated because of the Legislature's failure to bring out clearly in the principal Act its intention to separate processed or split foodgrains from unprocessed or unsplit foodgrains and the retrospective amendment became necessary as otherwise the State would have had to refund large sums of money; (vi) that the fact that the retrospective levy did not afford an opportunity to the dealers to pass on the tax to the consumers had no relevance in considering the legislative competence of the levy; (vii) that Explanation II clearly brought to tax with retrospective effect split or processed foodgrains as well; (viii) t....