State Taxation Tribunal - Rajasthan
Amritpal Singh And Anr. vs State Of Rajasthan And Ors. on 20 September, 1996
Equivalent citations: [2003]133STC428(TRIBUNAL)
JUDGMENT
Milap Chandra Jain, J. (Chairman)
1. The aforesaid applications were filed under Section 8(1) of the Rajasthan Taxation Tribunal Act, 1995, challenging the vires of the third proviso to Section 22A(7), Rajasthan Sales Tax Act, 1954 (in short, "the Act"). In view of the stay order passed by the honourable Rajasthan High Court in DB Civil Writ Petition No. 3449 of 1995, (Dalpat Raj Bhandari v. Union of India) the Tribunal did not pass any order on these applications. As such the petitioners filed the aforesaid writ petitions in the honourable Rajasthan High Court. After the operation of the said stay order was stayed by the honourable Supreme Court, the writ petitions were transferred to this Tribunal and the Tribunal proceeded further in all these cases. As the facts are similar and law involved is same, these cases are being disposed of by this common judgment.
2. In his application and writ petition, the petitioner Amrit Pal Singh has averred, in short, as follows. He is the owner of the Truck No. HR-26/0492. He has given it on hire to M/s. Bombay Gill Goods Corporation, Mori Gate, Delhi who carries on the business of transportation of goods. While the said truck was carrying goods, it was intercepted on February 24, 1995 by the Assistant Commissioner, Flying Squad, Jaipur, suspecting evasion of tax. The truck and the goods contained therein were seized by him. Notice was issued under Section 22A(7) of the Act for showing the cause as to why the penalty may not be imposed and a penalty of Rs. 96,228 was imposed. Subsequently, the matter was referred to the respondent No. 3 as collusion was suspected in between the transporter and the dealer. On April 17, 1995, notice was issued by the respondent No. 3 to the petitioner and the transporter for the confiscation of the truck. Reply was filed taking several objections but with no avail. By order dated September 29, 1995 (annexure-1), the truck has been confiscated.
3. In their said application and the writ petition, the petitioners M/s. Gill Sandhu Haryana Transport Company, Jaipur has averred, in short, as follows. The petitioner is the owner of the Truck No. HR-26A/1625. It has been given on hire to Ram Lal S/o. Tikku Ram, Vigyan Nagar, Kota. On March 7, 1995, it was intercepted by the ACTO, Flying Squad-I, Jaipur, suspecting evasion of tax. The truck and the goods contained therein were seized. Notice for imposition of penalty was issued and penalty of Rs. 57,000 was imposed under Section 22A(7) of the Act. Thereafter, the ACTO, Flying Squad-I, Jaipur referred the matter to the respondent No. 3 for taking action against the transporter as collusion in between the transporter and the traders was suspected. By order dated September 29, 1995 (annexure-1), the said truck was confiscated.
4. In all these cases, it has been averred that appeals against the orders of confiscation have been filed before the Deputy Commissioner (Appeals) and they are pending. It has further been averred that the Legislature was not competent to provide provisions for confiscation in the Rajasthan Sales Tax Act, 1954, the third proviso to Sub-section (7) of Section 22A of the Act is ultra vires to the Constitution and confiscation is neither ancillary nor incidental to the prevention of evasion of tax.
5. In the replies, the respondents admit almost all the averments of the applications and the writ petitions except that the third proviso to Sub-section 22A(7) of the Act is ultra vires to the Constitution. It has further been averred that the State Legislature was fully competent to provide the provisions regarding confiscation of the vehicles in the Act and penalties have rightly been imposed. It has also been averred that the said transporter has repeatedly been watched up and penalties have been imposed against him every time for aiding the evasion of tax.
6. It has been contended by the learned counsel for the petitioners that the Rajasthan Sales Tax Act, 1954, was enacted by the State Legislature under entry No. 54 List II of the Seventh Schedule of the Constitution of India and this entry did not empower the State Legislature to enact provisions for confiscation of vehicles. He also contended that in Sub-section (5) of Section 22A of the Act the expression "confiscation" was appearing and after the decision of the honourable Supreme Court given in Check-post Officer, v. K.P. Abdulla and Bros. [1971] 27 STC 1, it was deleted by the Rajasthan Act No. 10 of 1972 with effect from June 15, 1972. He further contended that in the said case the honourable Supreme Court has categorically held that entry 54 of List II of the Seventh Schedule of the Constitution does not empower the State Legislatures to provide for the confiscation of goods in their Sales Tax Act. He also relied upon State of Haryana v. Sant Lal [1993] 91 STC 321 (SC).
7. In reply, it was contended by the learned counsel for the department that the petitioner-transporter has repeatedly been found in collusion with traders to avoid or evade tax. He referred Gill Sandhu Haryana Transport Co. v. State of Rajasthan (1986) RLR 49 (Raj) confirmed in appeal (1988) 25 STL 26 (Raj) in support of his contention.
8. It is not in dispute that the Rajasthan Sales Tax Act, 1954, was enacted by the Rajasthan State Legislature under entry 54 of List II of the Seventh Schedule to the Constitution. It is well-settled law that power to legislate on a specified topic includes the power to legislate in respect of matters which may fairly and reasonably be said to be comprehended therein. The said entry conferred power upon the Rajasthan Legislature to legislate for matters ancillary or incidental including the provision for preventing evasion of tax. The power to confiscate vehicle carrying goods cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sales or purchase of goods. It has been observed in Check Post Officer v. K.P. Abdulla and Bros. [1971] 27 STC 1 (SC) at pages 3 and 4 as follows :
"Entry 54 of List II of the Seventh Schedule to the Constitution authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods. A legislative entry does not merely enunciate powers : it specifies a field of legislation and the widest import and significance should be attached to it. Power to legislate on a specified topic includes power to legislate in respect of matters which may fairly and reasonably be said to be comprehended therein : see the United Provinces v. Mst. Atiqa Begum [1940] FCR 110, Navinchandra Mafatlal v. Commissioner of Income-tax [1954] 26 ITR 758 (SC) and Balaji v. Income-tax Officer [1961] 43 ITR 393 (SC). A taxing entry therefore confers power upon the Legislature to legislate for matters ancillary or incidental including provisions for preventing evasion of tax. Sub-sections (1) and (2) of Section 42 are intended to set up machinery for preventing evasion of sales tax. But, in our judgment, the power to confiscate goods carried in a vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods. By Sub-section (3) the officer-in-charge of the check-post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three sub-clauses. Sub-section (3) assumes that all goods carried in a vehicle near a check-post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arisen, and authorises the Check-Post Officer, unless the specified documents are produced at the check-post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation. A provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted. In any event power conferred by Sub-section (3) to seize and confiscate and to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax. A person carrying his own goods even as personal luggage from one State to another or for consumption, because he is unable to produce the documents specified in clauses (i), (ii) and (iii) of Sub-section (3) of Section 42, stands in danger of having his goods forfeited. Power under Sub-section (3) of Section 42 cannot be said to be ancillary or incidental to the power to legislate for levy of sales tax."
9. Section 38 of the Haryana General Sales Tax Act, 1973, imposes a duty on clearing/forwarding agents, dalals and other persons transporting goods to furnish particulars and information regarding the consignment handled by them and also requiring them to take out a licence before carrying on the business. In State of Haryana v. Sant Lal [1993] 91 STC 321 (SC), the provisions of Section 38 of the Haryana General Sales Tax Act have been held to be ultra vires to the Constitution on the same ground.
10. Reference of eight cases in which penalty under Section 22A(7) of the Act was imposed against the petitioner-transporter in the impugned orders and decisions reported in (1986) RLR 49 (RHC) (SB) and (1988) 25 STL 26 (RHC) (DB) (Gill Sandhu Haryana Transport Co. v. State of Rajasthan) go to show that the petitioner, transporter was repeatedly found in collusion with traders to avoid or evade tax during the course of the movement of the goods through his vehicles. They cannot go to validate the said provisions of confiscation which are beyond the legislative competence of the Rajasthan Legislature.
11. Accordingly, both the applications moved under Section 8(1) of the Rajasthan Taxation Tribunal Act and the writ petitions are allowed. It is declared that the third proviso to Section 22A(7), Rajasthan Sales Tax Act, 1954, was ultra vires of the Constitution of India. Orders (annexure-I in all cases) dated September 29, 1995 confiscating the said trucks are quashed. No order as to costs.