Gauhati High Court
Sailen Konwar Dutta vs The State Of Assam & Ors on 25 July, 2011
Author: T Vaiphei
Bench: Madan B Lokur, T Vaiphei
IN THE GAUHATI HIGH COURT
(The High Court of Assam, Nagaland, Meghalaya, Manipur, Tripura,
Mizoram and Arunachal Pradesh)
W.P.(C) No. 7807 of 2004
W.P.(C) No. 7808 of 2004
W.P.(C) No. 7810 of 2004
Sri Sailen Konwar Dutta
Son of Late Surendra Nath Dutta,
Proprietor of M/s SD Enterprise,
Resident of Mumtaz Mension,
Dighalipukhuri Par, Guwahati,
Kamrup, Assam : Petitioner
-Vs-
1. The State of Assam,
represented by the Commissioner &
Secretary to the Government of
Assam, Finance (Taxation)
Department, Dispur, Guwahati.
2. The Commissioner of Taxes,
Assam, Guwahati.
3. The Superintendent of Taxes,
Unit-D, Guwahati.
4. The Commissioner & Secretary to
the Government of Assam, Excise
Department, Dispur, Guwahati.
5. The Commissioner of Excise,
Assam, Silpukhuri, Guwahati : Respondents
BEFORE
HON'BLE THE CHIEF JUSTICE MR. MADAN B LOKUR
THE HON'BLE MR JUSTICE T VAIPHEI
For the Petitioner :Mr N Dutta, Sr Advocate,
Mr AN Choudhury, Adv.
For the Respondents :Mr R Dubey, Advocate
Date of hearing : 12.05.2011
Date of Judgment : 25.07.2011
WP(C) No. 7807 of 2004
WP(C) No. 7808 of 2004
WP(C) No. 7810 of 2004 Page 1 of 33
JUDGMENT AND ORDER
T Vaiphei, J.
The constitutional validity of Explanation (ii) to Section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002 and the legality of
(i) the assessment order dated 30-7-2004 of the Superintendent of Taxes, Unit-D, Assam (respondent No. 3) assessing an amount of ` 1,25,46,326/- (ii) the assessment order bearing the same date assessing an amount of ` 7,25,034/- and (iii) the assessment order bearing the same date assessing an amount of ` 99,297/- for payment by the petitioner by way of sales taxes due and the accrued interests thereon for the period between 1-4-2002 and 31-3-2003 issued by the Superintendent of Taxes, Unit-D, Guwahati (respondent 3) on the basis of best judgment assessment are called into question in this batch of three writ petitions filed by the same petitioner.
2. As there is virtually a common question of facts and of law in the three writ petitions, suffice it to refer to the controversy involved in WP(C) No. 7807 of 2004 and our decision thereon will govern the remaining cases. The case of the petitioner in WP(C) No. 7807 of 2004 is that he is carrying on the business of contractual works under various Departments of the Government of Assam and the Central Government through his proprietorial concern, namely, M/s. S.D. Enterprise having its office at Bharali Complex, G.S. Road, Guwahati. The Government of Assam, through the open tender process and in accordance with the provisions of the Assam Excise Rules, 1945, awarded the contract for wholesale supply of potable alcohol/rectified spirit (Grade) to the Excise Warehouse located at Jorhat for a period commencing from 13-9-2000 to 12-9-2003, for which the agreement dated 7-9-2000 was executed by WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 2 of 33 him with the Government of Assam. This was followed by the issuance of License at Annexure-B to him so as to enable him to carry out the terms of the said agreement. Immediately after execution of this agreement and the issuance of the license in this behalf, he started importing potable alcohol/rectified spirit from different distilleries to the Excise Warehouse, Jorhat at his own cost and against payment of the cost price of the country spirit. Thereafter, a Gazette Notification bearing dated 10-5-2002 (Annexure-H) was issued by the State-respondents notifying the Assam General Sales Tax (Amendment) Act, 2002, which came into force immediately, to the effect that in the case of country spirit mentioned in serial number 27A of Schedule-II, the licensed contractor who sells or supplies such item to a licensed retail vendor shall be deemed to be the first point seller who shall be liable to pay tax on the sale price of the item as defined in clause (34) of Section 2 including still head duty payable thereon . It was further provided therein that the retail vendor while depositing the cost price and duty shall also deposit the tax payable under the Act in the designated Bank by challan and hand over one copy of the challan to the contractor. It is another matter that another Notification was issued on 3-5-2003 notifying the Assam General Sales Tax (Amendment) Act, 2003, which substituted the impugned provision herein thereby making the Officer-in-Charge of the country spirit warehouse, instead of the licensed contractor, liable to pay the said tax: this amendment came into force immediately. Following the impugned notification dated 10-5-2002, the respondent No. 5 vide his letter dated 19-3-2002 (Annexure-G) informed the Superintendent of Excise, Jorhat, inter alia, that the Government had imposed sales tax surcharge @ 20% on IMFL/country liquor with effect from 19-2-2002, WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 3 of 33 and the sale tax surcharge was payable on any country spirit issued from the Excise warehouse and the same is to be deposited in the Government Treasury in the appropriate Head of Account with a request to instruct the retail licensees to deposit the sale tax, who had received stock on or after 19-2-2002. A copy of this letter was also forwarded to the Officer-in- Charge, Excise Warehouse, Jorhat.
3. Pursuant to the said Notifications dated 10-5-2002 and 10-5-2002, the Sales Tax Department, Government of Assam started demanding payment of sales tax from the petitioner on account of the sale of the country spirit transported by him as indicated earlier. Contending that the contractual assignments undertaken by him in transporting the country spirit did not constitute a sale exigible to sales tax but is only a transportation contract, he approached the Commissioner of Excise, Assam (respondent 5) for appropriate action. The respondent No. 5 accordingly by his letter dated 23-7-2002 (Annexure-I) informed the Commissioner and Secretary, Government of Assam in the Excise Department that the spirit supply contractors were not supplying country spirit directly to the licensed retail vendors and, as such, they were not required to realise sales tax and the sales tax is to be paid by such vendors and deposited with the Treasury with the further information that the Officer-in-Charge of the Warehouse would issue the spirit from bottling plant after verification of Treasury Challan for sales tax and forwarded a copy of the same to the respondent No. 2 for information and necessary action. Subsequently, the respondent No. 5 by his letter dated 12-9-2002 (Annexure-J), inter alia, informed the respondent No. 2 that sales tax was to be realized from the lessees of country spirit, but the practice of issuing Road Permits to contractors WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 4 of 33 was still in vogue thereby implying the liability of contractors to pay sales tax and, therefore, to remove possible confusion, had requested him to issue necessary orders for allowing the contractors to bring spirit from outside on the strength of export and import permits issued by the Excise Authority only and to exempt the practice of issuing Road Permits to these contractors. Thereafter, the Joint Commissioner of Taxes, Assam by his letter dated 13-9-2002 directed the respondent 3 to allow the vehicles of the contractors carrying the consignment of spirit on behalf of the State of Assam to cross the Check Gates subject to verification of documents and ensuring that the goods belonged to the Excise Department of Assam. The net effect of the said letters dated 12-9-2002 and 13-9-2002 is that the authorities had stopped demanding payment of sales tax by the petitioner in connection with the said sales and that the petitioner accordingly submitted monthly supply statements/returns of country spirit without enclosing any sales tax deposit challans to the respondent No. 3.
4. In the year 2003, the State Government issued the Gazette Notification dated 3-5-2003 notifying the Assam General Sales Tax (Amendment) Act, 2003 amending Section 8 of the Assam General Sales Tax Act, 1993 by inserting Explanation 3(ii) after Explanation 3(i) to Section 8(1) of the Assam General Sales Tax Act, 1993 declaring that in the case of country spirit mentioned in serial number 27A of Schedule-II, the Officer-in-Charge of the country spirit excise warehouse who sells or supplies such items to a licensed retail vendor shall be deemed to be the first point seller who shall be liable to pay tax on the sale price of the items as defined in clause (34) of Section 2 including excise duty, vend fee, bottling charges and other duty or fee by whatever name called, WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 5 of 33 payable thereon. The retail vendor while depositing cost price and excise duty shall also deposit the tax payable under this Act into the Government account in the manner prescribed by a separate challan and hand over one copy of the challan to the Officer-in-Charge of such warehouse. According to the petitioner, the aforesaid Notification has clarified the settled position of law that a transport contractor like him is not a first point seller of country spirit and is not, therefore, liable to pay sales tax against the supply of country liquor made by him and that it is rather the Officer-in-Charge of the Country Spirit Excise Warehouse, who is the first point seller of the spirit and is thus liable to pay the sales tax on such sale price. However, contrary to this settled law, contends the petitioner, the respondent No. 3 issued notice to him to show cause as to why the submitted returns should not be rejected and assessment should not be completed under Section 17(5) including taking action as per the provisions of the Assam General Sales Tax Act, 1993. The application of the petitioner for extending the time to submit his show cause reply was not granted by the respondent No. 3, who, instead, proceeded to issue the impugned assessment order on the basis of the best judgment assessment. It is contended by the petitioner that the impugned assessment order is unconstitutional, illegal arbitrary, unfair and unreasonable and is liable to be quashed. It is also the contention of the petitioner that Section 4 of the Assam General Sales Tax Act, 1993, in so far as it seeks to bar a person from calling into question the jurisdiction of the revenue authorities before the High Court under Article 226 of the Constitution, has encroached upon the field of judicial review, which is the basic structure of the Constitution and is, therefore, ultra vires the Constitution and is liable to be struck down. The WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 6 of 33 petitioner also alleges that there are a number of excise warehouses in the State of Assam, which were also leased out on similar terms and conditions to other contractors for the same period, but they were not assessed for payment of sales tax like him, and he has been singled out for hostile discrimination thereby denying him equality before the law or of equal protection of law: his fundamental right to equality guaranteed under Article 14 of the Constitution has thus been infringed. This is how these writ petitions have been filed by the petitioner.
5. The State-respondents resisted the writ petitions and filed their affidavit-in-opposition through the Joint Commissioner of Taxes in the Office of the Commissioner of Taxes, Assam. According to the answering respondent, Annexure-A and Annexure-B, which are the copies of the agreement executed between the petitioner and the Excise Department and the Deed of License granted by the latter in pursuance of the said agreement unambiguously shows that the petitioner is the seller of the country spirit lifted by the retail vendors from the concerned warehouses. It is the contention of the answering respondent that the submissions of the petitioner in paragraphs 6 and 7 of the writ petition clearly establish beyond any doubt that he has been supplying country spirit to various retail vendors though the modus operandi of the supply is being controlled and regulated by the Excise Department keeping in mind public interest. It is denied that the petitioner is a mere transporter of the country spirit. He procures or purchases the country spirit to be eventually supplied to the retail vendors in his own name, for which he obtained registration certificates under both the Assam General Sales Tax Act, 1993 and the Central Sales Tax Act, 1956 from the jurisdictional assessing officer, on the strength whereof, he proceeded to WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 7 of 33 obtain C.S.T. declaration forms "C" as well as delivery notes from the same assessing officer from time to time. It is explained by the answering respondent that "C" forms are issued by a registered dealer of one State to a selling dealer of another State only when the former undertakes to utilize goods so purchased for the purpose of re-sale or use in the manufacture for sale of the result and finished goods. Similarly, delivery notes in Form 24 of the Act are utilized for importing goods into Assam for the purpose of sale by the concerned importing dealer. Consequently, the conclusion is inevitable that he has been supplying the country spirit to the retail vendors within the meaning of the charging provisions of the extant sales tax legislation thereby making him liable to pay sales tax irrespective of whether he realizes such taxes from his buyers or not.
6. The answering respondent further asserts that the Sales Tax Department rightly proceeded to levy and recover exigible sales tax on the country spirit supplied by the petitioner. The letter dated 23-7-2002 of the Commissioner of Excise is in the form of an individual opinion expressed by him, which cannot be held out against the Revenue as some kind of promissory estoppel as accepting such contention would amount to nullifying the mandatory requirements of the law apart from providing a license to Government or other body to ignore binding provisions of law: that would render mandatory provisions of law superfluous and meaningless. The answering respondent flatly denies that the tax authority stopped insisting payment of the tax by the petitioner as the proceeding for the assessment and recovery thereof were never suspended: the date of assessment was, however, extended to comply with the principles of natural justice before finalization of the proceedings. By the Notification dated 3-5-2003, the Officer-in-Charge of WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 8 of 33 the Country Spirit Excise Warehouse has been made liable as the first point seller only with effect from 3-5-2003 and as for the period from 19- 5-2002 to 2-5-2003, the liability to pay the sales tax remains squarely with the petitioner. According to the answering respondent, the petitioner seems to have misconception about the intent and scope of Section 4 of the Act, which can at best be regarded as a machinery provision facilitating easy and smooth administering of the Act without affecting in any way the substantial rights of the subjects. Since the amount of tax assessed against him is a statutory liability, any question of sufferance of loss or injury would not entitle him to any claim of exemption. Of course, it would be open to him to proceed against his buyers for realizing the chargeable tax if not already factored by him in his bills of cost submitted to the controlling Department. It is further contended by the answering respondent that all similarly situated dealers are equally amenable to the charging provisions of the Act and there can simply be no question of any discrimination on the part of the Revenue while discharging its function. The petitioner could have availed of the appellate and revisional fora provided for in the Act itself for redressal of his grievance against the assessing officers before approaching this Court. These are the sum and substance of the contentions of the answering respondent.
7. Having heard the learned counsel appearing for the rival parties, it is obvious that the question which, therefore, falls for consideration is whether the supply of the country spirit in the circumstances set forth above can constitute a sale or not. In other words, what is the nature of WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 9 of 33 the transaction which was actually undertaken by the petitioner in supplying the country spirit to the specified warehouses of Assam during the relevant period? It is contended by Mr. N. Dutta, the learned senior counsel for the petitioner, that after procurement of the country spirit in the aforesaid manner from different distilleries/bonded warehouses against payment of cost and other duties payable thereon and transportation of the same to the Excise Warehouse, the petitioner did not have any access to the same and it was the Officer-in-Charge, Excise Warehouse, who took over the control of the country spirit transported by him till issue of the same to the retail vendors and although he transported the country spirit to the Excise Warehouse at his own cost, the same was ultimately issued to the retail vendor by the Officer-in- Charge, Excise Warehouse. Thus, according to the learned senior counsel, the petitioner cannot be regarded as the seller of the country spirit, but is merely a transporter of the country spirit. It is the contention of the learned senior counsel that as the petitioner never sold country spirit to the retail vendors but merely transported the same to the warehouse, the impugned Explanation 3(ii) to Section 8(i)(a) of the Act under the guise of levying sales tax is in fact imposing a tax on the income earned by the petitioner in carrying out his transport business and is, therefore, without any legislative competence: tax on income can be levied only with the authority of Parliament and not by the State Legislature. Drawing our attention to the letter dated 13-9-2002 of the Joint Commissioner of Taxes, Assam (Annexure-K), the learned senior counsel also submits that this letter informing the Superintendent of Taxes, inter alia, that the Excise Department had been importing spirit from outside the State on behalf of the State Government through the WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 10 of 33 petitioner and the vehicles carrying the above consignment should be allowed to cross the check gate subject to verification of documents, would go show that the goods belonged to the Excise Department of Assam: because of this letter, the authority concerned stopped demanding payment of sales tax by the petitioner. The learned senior counsel also points out that the Assam General Sales Tax (Amendment) Act, 2003 enacted and enforced subsequently has further amended Explanation 3(ii) to Section 8 of the Assam General Sales Tax Act, 1993 (as amended in 2002) to the effect that in case of country spirit mentioned in serial number 27A, in Schedule II, the Officer-in-Charge of the country spirit warehouse selling or supplying such items to a licensed retail vendor should be deemed to be the first point seller who should be made liable to pay tax on the sale price of the item as defined in clause (34) of section 2 including excise duty, vend fee, bottling charges and other duty or fee by whatever named called, payable thereon and submits that this amendment has clarified the settled position that a contractor is not a first point seller of country spirit and is not liable to realise the sales tax against supply of country spirit. It is thus contended by the learned senior counsel that impugned amendment and the assessment order dated 30-7-2004 made thereunder are unconstitutional, arbitrary, illegal, unfair, unreasonable and bad in law and should be struck down and quashed accordingly. Lastly, he submits that Section 4 of the Act debarring any person from invoking the jurisdiction of this Court under Article 226/227 of the Constitution to call into question the jurisdiction of the taxing authority thereby ousting judicial review is against the basic feature of the Constitution of India and is, therefore, liable to be declared unconstitutional. In support of his WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 11 of 33 contentions, heavy reliance is placed by him upon the following decisions:- (a) Navnit Lal C. Javeri v. IT App. Asst. Commr., AIR 1965 SC 1375; (b) Govt. of A.P. v. Guntur Tobacco, AIR 1965 SC 1396; (c) Salar Jung Sugar Mills Ltd. v. State of Mysore, (1972) 1 SCC 23; (d) Vishnu Agencies (P) Ltd. v. Commercial Tax Officer, (1978) 1 SCC 520; (e) State of Punjab and others v. Dewan's Modern Breweries Ltd., (1979) 2 SCC 210; (f) Assessing Authority-cum- Excise and Taxation Officer v. East India Cotton Mfg. Co. Ltd., (1981) 3 SCC 531; (g) Tripura Goods Transport Association and another v. Commissioner of Taxes and others, (1999) 2 SCC 253 and (h) Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & Etio and others, (2007) 5 SCC 447.
8. On the other hand, Mr. R. Dubey, the learned counsel appearing for the Taxation Department, Government of Assam, supports the impugned amendment as well as the assessment order and submits that it is none but the petitioner who sold the country spirit lifted from the concerned warehouses by the retail vendors, and he alone has the duty to pay the sales tax for the spirit so lifted. According to the learned State counsel, the petitioner purchased or procured the country spirit, which were eventually supplied to the retail vendors in his name, obtained registration certificates both under the Assam General Sales Tax Act, 1993 and the Central Sales Tax Act, 1956 from the jurisdictional assessing officers and on the strength of such certificates, he also obtained Central Sales Tax (CST) declaration forms "C" as well as delivery notes from the assessing officer from time to time, which clearly indicates that he was supplying the country spirit to the retail vendors within the WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 12 of 33 meaning of the charging section of the Act: the activities so carried on by him cannot be treated as purely job work of some type of intermediary. Or else, how could one view his act of obtaining "C" form as a registered dealer from respondent 3 (Superintendent of Taxes, Unit-D, Guwahati) and thence making over these items to sellers all in his own name, he questions. These are the sum and substance of the contentions of the learned standing counsel.
9. A perusal of the agreement dated 7-9-2000, executed by the petitioner with the State-respondents, which is at Annexure-A and the License issued by the State-respondents to the petitioner, which is at Annexure-B may provide a key to understanding the whole controversy. The agreement granted the petitioner the contract for wholesale supply of potable alcohol/rectified spirit (Grade-I) to the districts of Jorhat, Golaghat and Karbi Anglong in accordance with the terms of the license issued by the Commissioner of Excise. The said agreement and the License visualized, among others, (i) the payment by the petitioner of monthly rent of the excise warehouse from time to time, (ii) the fixation of the price per London Proof Litre of potable alcohol/rectified spirit by the Government from time to time, (iii) the responsibility of the petitioner to procure, supply and transport, at his own cost, the potable alcohol/rectified spirit from the place of manufacture, which may be anywhere in India under Import permits to be issued by the Commissioner of Excise, Assam to the warehouse, (iv) the sale of the spirit only to licensed vendors producing passes in the prescribed form and (v) the obligation of the petitioner to supply to the licensed vendors by way of sale at any warehouse at which the sale of the spirit under the license was permitted. The aforesaid terms and conditions have been WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 13 of 33 made strictly in accordance with the provisions of the Assam Excise Rules, 1945 and the Instructions relating to Liquor. Therefore, the agreement can be said to statutory in nature or, at any rate, have a statutory flavour. Admittedly, the supply of the spirit contemplated by the Rules and the said agreement is restrictive in nature. In other words, the freedom of contract exercised by the petitioner is not exactly free.
10. The leading authority on this issue is the decision of a seven-Judge Bench of the Apex Court in Salar Jung Sugar Mills Ltd (supra). The question raised therein was as to whether transactions subjected to statutory controls can still be deemed to be a contract came up for consideration before the Apex Court. In that case, the appellants challenged the demand and collection made against them for large sums of money as and for purchase tax and penalty on the purchase of sugarcane from the growers for the period April 1, 1962 to June 30, 1967 and further asked for refund of large sum of money collected as purchase tax. In the fifties, practically all the States in which sugarcane was grown for the purpose of manufacturing sugar used to levy cess on sugarcane brought into the premises of sugar factories. The Mysore State Legislature imposed tax on purchase of sugarcane purchased by sugar factories with the result that the appellants were subjected to levy of tax on purchase of sugarcane. Three principal contentions were raised before the Apex Court, namely, there was no mutual assent by and between the appellants and the growers of sugarcane in regard to supply of sugarcane by the growers and of the acceptance by the factories and therefore there was no purchase and sale of sugarcane. Secondly, the appellants were not dealers within the meaning of Section 2(k) of the Mysore Sales Tax Act. Thirdly, the levy of tax on purchase of sugarcane at different rates in WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 14 of 33 different states was discriminatory and in violation of Article 14 of the Constitution. In the instant case, we are not concerned with the third contention. After reviewing a number of the earlier decisions so rendered, the Apex Court held at paragraphs 38, 39, 41 and 44 which read thus:
"38. These decisions establish that statutory orders regulating the supply and distribution of goods by and between the parties under Control Orders in a State do not absolutely impinge on the freedom to enter into contract. Legislative measures or statutory provisions fixing the price, delivery, supply, restricting areas for transactions are all within the realm of planning and basic necessities of community. The recent trends in these legal rules delimit the variety of structure of rights and duties which individuals may create by such acts and transactions. The complexity of modern activities and the consequent difficulties of providing for every eventuality have shaken fervour for freedom of contract as there was during the nineteenth century. The economic environment has changed. The individual freedom is to be reconciled with adequate performance by the Government of its functions in a highly organised society. Delimiting areas for transactions or parties or denoting price for transactions are all within the area of individual freedom of contract with limited choice by reason of ensuring the greatest good for the greatest number by achieving proper supply at standard or fair price to eliminate the evils of hoarding and scarcity on the one hand and availability on the other.
"39. In the present case, the parties are certain. The parties are defined, namely, that the sugarcane grower is delivering and supplying and the factory is accepting the goods. The property in the goods is transferred from the grower to the factory. The transaction is not a gift nor an exchange or hypothecation nor a loan. There is consideration for the transfer. Counsel for the appellants contended that there was no mutual assent because the price was fixed, the quantity for supply and delivery was determined, the parties had no choice to go to strangers or outsiders in the open market. In Benjamin on Sale, 8th Ed. at page 68 the law as to mutual assent is stated as this: "The assent need not as a general rule be express. It may be implied from their language or from their conduct; may be signified by a nod or a gesture, or may even be inferred from silence in certain cases; as if a customer takes up wares off a tradesman‟s counter and carried them away and nothing is said on other side, the law presumes an agreement of sale for the reasonable worth of the goods. But the assent must in order to constitute a valid contract, be mutual and intended to bind both sides. It must also co-exist on the same amount of time". The assent must be mutual and bind both sides. The proposal by one man must be accepted by another and this acceptance must be unconditional. The assent must be communicated to the other party or some act must be done which the other party has expressly or impliedly offered to treat as a communication. Judged by these standards in WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 15 of 33 the forefront exists the agreement between the parties in the present case. The statutory orders required the parties to enter into agreement. The parties did enter into agreements. The agreement contains intrinsic evidence that the growers agreed to sell and the factory agreed to buy the goods.
"41. The agreement between the factory owner and the sugarcane grower furnishes the guide to ascertain the real character of the transaction between the parties. These are the features. The factory agrees to buy. The grower agrees to sell. It is true that 95 per cent of the sugarcane will be sold. The parties have the choice to increase the quantity above 95 per cent. The quantity to be bought and sold is cultivated or to be cultivated by the grower. The delivery is to be at the factory. Delivery will be in such lots, on such dates and at such time as shall be agreed upon. The mode of delivery may also be within the scope of agreement. The price will be the controlled price. The grower can bargain for a higher price. The sugarcane grower can ask for payment in advance. Payment may be in cash or in kind. The sugarcane will be accepted after inspection. There is scope for rejection of goods. Various columns in the agreement indicate the villages where sugarcane is to be cultivated, the names of the varieties of sugarcane to be cultivated. The last two columns are estimated quantity offered to be delivered and the period of delivery. All these features indicate with unerring accuracy that there is offer, inspection and appropriation of goods to the contract. The goods will be accepted by the factory after inspection and price will be paid on delivery. The mutual assent is not only implicit but is also explicit.
"44. The Control Orders are to be kept in the forefront for appreciating the true character of transactions. It is apparent that the area is restricted. The parties are determined by the order. The minimum price is fixed. The minimum quantity of supply is also regulated. These features do not complete the picture. The entire transactions indicate that the parties agree to buy and sell. The parties choose the terms of delivery. The parties have choice with regard to obtaining supply of a quantity higher than 65 per cent of the yield. The parties can stipulate for a price higher than the minimum. The parties can have terms for payment in advance as well as in cash. A grower may not cultivate and there may not be any yield. A factory may be closed or wound up and may not buy sugarcane. A factory can reject goods after inspection. The combination of all these features indicates that the parties entered into agreement with mutual assent and with volition for transfer of goods in consideration of price. Transaction of purchase and sale may be regulated by schemes and may be liable to restrictions as to the manner or mode of sale. Such restrictions may become necessary by reason of co-ordination between production and distribution in planning the economy of the country. The contention of the appellants fails. The transactions amount to sales within the meaning of the Mysore Sales Tax Act."
(Underlined for emphasis) WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 16 of 33
11. That statutory sale under a control order is nevertheless held to be a sale so long as mutual assent, expressed or implied, is not totally excluded from the transaction and amounts to sale, can also be seen from the decision of another seven-Judge Bench of the Apex Court in Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax Officer (supra). That was a case where cement being a controlled commodity in the State of West Bengal, its distribution was regulated by the West Bengal Cement Control Act, 1948 and by the Orders made under Section 3(2) of the Act. Section 3(1) provides, inter alia, for regulation of production, supply and distribution thereof at a fair price. By the Cement Control Order, 1948 framed under the Act no sale or purchase of cement can be made except in accordance with the conditions contained in the written order issued by the Director of Consumer Goods, West Bengal or the Regional Honorary Adviser to the Government of India at Calcutta or by officers authorised by him at prices not exceeding the notified price. Under the Andhra Pradesh Procurement (Levy) Order, paddy growers in the Andhra Pradesh State were under an obligation to sell the paddy to licensed agents appointed by the State Government at the prices fixed by it and the rice millers were also under an obligation to sell the milled rice to the wholesale and retail dealers at a price fixed by the Government. On the question whether the transactions amount to sales under the respective Sales Tax Acts, a seven-Judge Bench of the Apex Court was unanimous in holding that sales by the allottees of cement to the license holders in the State of West Bengal and the transactions between the growers and procuring agents as also those between the rice millers on the one hand and the wholesalers or retailers on the other in the State of Andhra Pradesh are sales exigible to sales tax in the respective States. In WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 17 of 33 our opinion, the law has been succinctly explained by Hon'ble Justice Beg, C.J. (Retd.) in his concurring judgment at paragraphs 48 to 52, the summary whereof is found at the head note of the law report at page 521 as under:
"It is not really the nomenclature involved but the substance of the transaction under consideration which matters in such cases. It is true that a considerable part of the field over which what are called „sales‟ took place under either regulatory orders or levy orders passed or directions given under statutory provisions, is restricted and controlled by such orders and directions. Deprivation of property for compensation which may even be described as "price" does not amount to sale when all that is done is to carry out an order so that the transaction is substantially a compulsory acquisition. On the other hand, a mere regulatory law even if it circumscribes the area of free choice does not take away the basic character or the core of sale from the transaction. Such a law which governs a class, may oblige sellers to deal only with parties holding licenses who may buy particular or allotted quantities of goods at specified prices but an essential element of choice is still left to the parties between agreement took place. The agreement despite considerable compulsive element regulating or restricting the area of free choice may still retain the basic character of transaction of sale. In the former type of case the binding character of the transaction arises from the order directed to particular parties asking them to deliver specified goods and not from a general order or law applicable to a class. In the latter type of cases the legal tie, vinculum juris, which binds the parties to perform their obligations remains contractual. The regulatory law merely adds other obligations such as the one to enter into a tie between the parties indicated there. Although the regulatory law might specify the terms such as price or parties the regulation is subsidiary to the essential character of the transaction which is consensual and contractual. The basis of a contract is "consensus ad idem". The parties to the contract must agree upon the same thing in the same sense. Agreement on mutuality of consideration ordinarily arising from an offer and acceptance imparted to it enforceability in courts of law. Mere regulation or restriction of the field of choice does not take away this contractual or essentially consensual binding core or character of the transaction."
(Underlined for emphasis)
12. It is against the backdrop of the legal principles enunciated above that we propose to examine the present controversy. To recapitulate the legal position, the limitations imposed by a statute or control orders on WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 18 of 33 the normal right of dealers and consumers to supply and obtain the goods, of the obligations imposed upon the parties and the penalties prescribed do not militate against the position that eventually the parties must be deemed to have completed the transactions under an agreement by which one party has bound itself to supply the stated quantity of the goods to the other party at a price not higher than the notified price and the other consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority. Offer and acceptance need not always be in the elementary form nor indeed does the law of contract or the sale of goods require that consent to a contract must be express. It is common place that offer and acceptance could be spelt out from the conduct of the parties which covers not only their acts, but omissions as well. Law does not require offer and acceptance to conform to any set pattern or formula. In the instant case, the sales tax so demanded is with respect to the period commencing from 10-5-2002 to 3-5-2003. In the year 2002, the Assam General Sales Tax Act, 1993 had been amended by the Assam General Sales Tax (Amendment) Act, 2002, which was published in the Gazette Notification dated 10-5-2002 and had come into force immediately. By this amendment, Explanation 3(ii), among others, to Section 8 had been inserted, which were in the following terms:
"(ii) in case of country spirit mentioned in serial number 27A, in Schedule II, the licensed contractor who sells or supplies such items to a licensed retail vendor shall be deemed to be the first point seller who shall be liable to pay tax on the sale price or the item as defined in clause (34) of section 2 including still head duty payable thereon. The retail vendor while depositing the cost price and duty shall also deposit the tax payable under this Act in the designated bank by challan and hand over one copy of the challan to the contractor."WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 19 of 33
13. At this stage, it may be useful to have a bird‟s eye view of the relevant provisions of the Rules and the Instructions relating to Liquor. Rules 96 to 105 of the Rules deal with the contract for supplying country spirit to warehouses, while Rules 106 to 132 deals with establishment of warehouses by the Government. Rules 133 to 141 provides for issue of spirits from distilleries and warehouses. Under this set of Rules, the contractor is required to import the potable alcohol/rectified spirit from different distilleries/bonded warehouses and then transport the same to the Excise Warehouse at his own cost. In terms of Rule 97 of the Rules, he is entitled to receive only the cost price of the potable alcohol/rectified spirit imported by him. Under Rule 97(i), all retail vendors, to ensure that the contract price of the spirit is never exceeded and for the convenience of the contractor, are required to pay into treasury the contract price of the spirit together with the still head duty payable thereon. In terms of Rule 97(2), the contractor is entitled to receive every month the total amount deposited in his favour as the cost price during the preceding months. Rule 98 says that the contractor shall not have any interest, direct or indirect, in any retail shop for the vend of liquor within the area covered by his license, and is bound to observe these and all other rules for the management of the warehouse as may be framed from time to time by the Government. Rule 99 is important, which says that the contractor will be required to maintain such establishment in each warehouse as may be deemed necessary by the Excise Commissioner for the storage, reduction and issue of spirit. Then comes Rule 103, which provides that on the expiry of his license (unless a fresh license has been granted to him) or if his license be cancelled or suspended, the contractor shall be bound to leave, if so ordered by the Excise WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 20 of 33 Commissioner, in each of the warehouses the quantity of spirit prescribed therein, but such quantity so left shall be paid for at the rate at which the new contractor shall have agreed to supply country spirit to such warehouse, or, if such rate be not accepted by him or if there be no such license then at such rate as may be fixed by the Government: the outgoing contractor shall within ten days of the receipt of the notice from the District Collector, remove the excess quantity from the warehouse on payment of full duty or under bond for payment of duty unless he can arrange its disposal with the incoming contractor. If he fails to remove or dispose of all surplus spirits within ten days of the receipt of the written notice from the District Collector, the cost of any establishment which it may be necessary to employ at any of the warehouses may be recovered from him, and in default of his so doing within one month, the spirit shall be liable to forfeiture of the discretion of the Excise Commissioner.
14. Rule 104 is also important, which says that the spirit supplied to the warehouses shall be of good quality according to the standard for the time being prescribed by the Government and shall be the produce of materials specified in the license. If any spirit supplied is found to be of inferior quality or otherwise unsuitable for issue to licensed vendors, the Officer-in-Charge stop its issue and submit a sample to the Excise Commissioner and it may, after analysis, be rejected or destroyed or otherwise dealt with under the orders of the Excise Commissioner. Then comes Rule 106, according to which, the contractor is required to maintain at each warehouse such minimum stock of spirits as may from time to time be fixed by the Excise Commissioner and notified by him in writing to the contractor. There are, of course, penalties including payment of compensation by the contractor for not complying with this WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 21 of 33 requirement. Under Rule 108, the contractor is required to supply the vessels for storage, blending, reducing or issue of spirit in the warehouse. Section 111 provides that the contractor shall supply weighing machines, which are approved by the Excise Commissioner for use in warehouses, for ascertaining the capacities and contents of casks, drums received from the distillery. Then Rule 113 requires that the outer door of a spirit warehouse shall be locked by two locks, one being supplied by the Government and the other by the contractor, the keys being retained by the Officer-in-Charge of the warehouse and by the contractor or his authorized representative. Under Rule 115, the contractor is to maintain regular accounts showing the quantity and strength of spirits received in, issued from and remaining in the warehouse and such accounts shall be open at all times to the inspection of the Officer-in-Charge of the warehouse and of all superior Excise Officers. Then, Rule 135(2) provides that the spirit may be removed from distilleries or excise warehouse on payment of duty. Rule 137, however, says that no spirit is to be removed from any distilleries or warehouse without a cover of a pass issued by the Collector or Officer-in-Charge, or in the case of issues to licensed retail vendors of country spirit, under cover of endorsement by the Officer-in-Charge on the duplicate copy of the retail vendor‟s license. If the contractor has executed a bond in the prescribed form, the Officer-in-Charge may issue passes for removal of spirits up to the quantity covered by the bond.
15. Coming now to Instruction relating to Liquor, under Clause 58, licensed retail vendors in contract supply areas are required to pay into treasury the duty and cost price and, in the case of settlement under the WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 22 of 33 vend-fee system, for the quantity of spirit which they require. The challans are to be prepared in quadruplicate, one copy to be kept in the treasury and the remaining three copies to be presented by the vendor or his agent to the Officer-in-Charge of Excise at the District Headquarters after completion in the treasury. The Officer-in-Charge will endorse on one copy of the challan order authorising the issue of the quantity of spirit on which duty, cost, cost price, etc. have been paid and is required to enter on a second copy a note that the costs price has been entered in the register of certificate for issue of country spirit and then to hand over these copies to the vendor or his agent and to keep the third copy in his office. Thereafter, the vendor is required to present the said two copies of the challans to the Officer-in-Charge of the Spirit Warehouse, who is then required to issue the spirit and make over the other copy of the Contractor for supply of liquor. The cost price and other duties are deposited in the treasury through treasury challan in the Government Head of Account. The procedure for payment of cost price of the potable alcohol/rectified spirit to the contractor is that the Deputy Commissioner of the concerned district sends a statement showing realization of total cost price of country spirit per month to the Excise Department, Government of Assam with a request to sanction the amount in favour of the contractor and accordingly, the Excise Department, Government of Assam sanctions the said total cost price and issues order to that effect to the Accountant General, Assam Treasury for necessary action, as evidenced by the letters dated 20-8-2003 and 26-9-2003 (Annexure-D and Annexure-E to the writ petition).
16. We have to extensively refer to the various rules and instructions for better appreciation of the issue as to whether the contract entered WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 23 of 33 into between the petitioner and the State-respondents constitutes a mere transportation arrangement or a sale. As already indicated by us earlier, a controlled/regulated sale can nevertheless be a sale. The limitations imposed by a statute or control orders on the normal right of dealers and consumers to supply and obtain the goods, of the obligations imposed upon the parties or of the penalties prescribed for violation of the contract do not militate against the position that the transaction in question is one of sale. From the Rules and Instructions extracted above, it becomes apparent that the contract in question is not purely a contract for transportation. If that were so, nothing more need be done by the petitioner once he has supplied the spirit to the warehouse. Webster defines the term „transport‟ as to carry or convey from one place to another; again, to remove from one place to another; and throughout all the deviation of the word „transport‟, we find the same part of the definition „to remove‟. To recapitulate, the task assigned to the petitioner by the contract in question was one of transporting the country spirit purchased by him at his own cost from Bihar to the warehouse, for which he was even required to maintain an establishment for the storage, reduction and issue of spirit and to maintain at the warehouse such minimum stock of spirits as from time to time fixed by the Excise Commissioner. In other words, after transporting the spirits to the warehouse, his contractual duties did not end. On the contrary, he continued to have the custody of the spirits, albeit indirect or remote, as the warehouse was put under the joint lock of the Officer-in-Charge of the Warehouse and himself. Even after transporting the spirits to the warehouse, he was required to keep regular accounts showing the quantity and strength of the spirits received in, issued from and WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 24 of 33 remaining in the warehouse. Though the contract cost price of the spirits together with the still head duty payable thereon were required to be paid by the retail vendors into treasury, the petitioner was the ultimate recipient of the cost price and was entitled to receive every month the total amount deposited in his favour as the cost price thereof during the preceding months. The cost price was the fixed whole sale rate, which was determined by tender. It may also be noted that the cost price also included the cost of carriage from the distillery to the warehouses.
17. As for the method of payment of duty and cost price, the licensed vendors were required to pay into treasury the duty (still head duty) and cost by challans, which were to be in quadruplicate, one copy whereof kept in the treasury while the three remaining copies after completion in the treasury were presented by the vendor or his agent to the Officer-in- Charge of Excise at the District headquarters, who then endorsed on one copy of the challan order authorising the issue of the quantity of the spirit on which duty and cost price have been paid and entered on a second copy a note that the cost price had been entered in the register certificate for issue of the country spirit. The Officer-in-Charge handed over these two copies to the vendor or his agent and kept the third copy in his office. The vendor then presented two copies of the challan to the Officer-in-Charge of the spirit warehouse, who issued the spirit and retained in his office the copy of the challan authorising the issue of the spirit and made over the other copy of the contractor for the supply of liquor. It is true that there was no direct payment of the cost price of the country spirit between the petitioner and the licensed vendors and that the payments were routed through treasury. This was to ensure that there was no excess payment of the contract cost price by the licensed WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 25 of 33 retail vendors and also for the convenience of the petitioner. The manner in which the contract was carried out by the petitioner as indicated above, in our judgment, is an indication of the transactions so carried out by the petitioner being impregnated with the character of a sale, albeit a controlled or regulated sale as provided for in the statute: it cannot, therefore, be said that it was a case of transportation contract simpliciter. What is worthy of notice in the aforesaid transaction is that there continued to be a relationship, may be inchoate, between the petitioner and the State respondents as seller and buyer. Here, the State respondents collected on behalf of the petitioner the price of the country spirit from the licensed retail vendors the contractual price of the spirits. In the words of the Apex Court, it is not really the nomenclature involved but the substance of the transaction under consideration, which matters in a case of this nature. It is true that consent makes a contract of sale (or what is known as consensus ad idem"), but such consent can be expressed or implied, total or partial and it cannot be said that unless the offer and acceptance are there in an elementary form, there can be no taxable sale.
18. In the instant case, there was undoubtedly an element of compulsion or regulation in both the selling and buying, perhaps more for the supplier than for the licensed retail vendor, but then a statutorily regulated/controlled sale can nevertheless be a sale as sale can also often take place without volition of a party. So long as the parties trade under the control of the State at the tender price and accept these as any other law of the State because they must, the contract being for a fixed price and the payment being made through treasury and both sides having or deemed to have agreed to such a price, such a contract is just WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 26 of 33 another example of an implied contract with an implied offer and implied acceptance by the parties. If a sale, express or implied, is found to exist then the tax must follow. In other words, so long as mutual assent, express or implied, is not totally excluded, the transaction will amount to a sale. In the case at hand, the nature of the contract executed between the petitioner and the State-respondents plainly shows that the four elements to constitute a sale, namely, competency of parties, mutual assent of the parties even though the same may not be total, passing of property in the goods supplied by the petitioner to the licensed retail vendors via the Officer-in-Charge of the warehouse/Excise and Treasury, and lastly, payment of price, though statutorily controlled, were all present to render the transaction liable to sales tax. Though the parties, the cost price, the warehouse, the supply and acceptance of country spirit transported by the petitioner in accordance with the provisions of the Rules are all regulated/controlled, all the same, when the cost price of the country spirit paid by the licensed retail vendor was eventually paid every month to the petitioner in terms of Rule 97(2) of the Excise Rules, the contract executed by the petitioner is clearly indicative of sale albeit a statutorily controlled or regulated one. Once it is held that the transaction in question is sale, the impugned provision deeming the licensed contractor such as the petitioner as the first point seller liable to be taxed cannot be faulted with constitutionally or otherwise. In other words, the Legislature is not wide off the mark in deeming such a transaction to be a sale. Therefore, Explanation 3(ii) to Section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002 is intra vires the Constitution and the sales tax imposed thereby cannot be construed to be a tax on income beyond the legislative competence of the State WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 27 of 33 Legislature of Assam. As for the letter dated 23-7-2002 (Annexure-I) upon which heavy reliance is placed by the learned senior counsel to demonstrate that the Commissioner of Excise himself had held that as contractor did not directly supply the supplying country spirit to the lessees, it was not required to realize the sales tax, in the light of our finding that the supply of the country spirit by the petitioner in terms of the agreement dated 7-9-2000 is exigible to sales under the Excise Act, the view taken by the Excise Commissioner is contrary to law and is not binding upon the State-respondents: there can be no estoppel against statutory provisions. This letter is, therefore, non-est and cannot be of any assistance to the petitioner.
19. It is the next contention of the learned senior counsel that Section 4 of the Assam General Sales Act, 1993 barring any person from calling into question the jurisdiction of any authority after receipt of any notice under this Act from such authority, is violative of the basic structure of the Constitution as it takes away the power of judicial review vested in the High Court under Articles 226 and 227 of the Constitution. His argument runs along the following lines. Under our constitutional scheme, every High Court has, by virtue of Articles 226 and 227 of the Constitution, the power to issue prerogative writs or orders to all authorities and instrumentalities of the State which function within its territorial jurisdiction. In such situation, no authority or Tribunal located within the territorial jurisdiction of a High Court can disregard the law declared by it. The impugned provision, in so far as it seeks to divest the High Court of its power of superintendence over all revenue authorities, situated within its territorial jurisdiction, violate one of the basic features of the Constitution. He relies on the decision of the Apex Court in L. WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 28 of 33 Chandra Kumar v. Union of India, (1997) 3 SCC 261 to fortify his submissions. Section 4 of the Act reads thus:
"4. No person shall be entitled to call into question the jurisdiction of any authority under section 3 after the expiry of 90 days from the date of the receipt by him of any notice under this Act from such authority."
It will be interesting as well as instructive to compare Section 4 and Section 39 of the Act, which is in the following terms:
"39. Save as provided in this Chapter, no assessment made and no order passed under this Act or the Rules made thereunder shall be called in question before any court and no prosecution, suit or other proceeding shall lie against the State Government or any officer thereof for anything done or intended to be done under this Act."
20. Reading the two provisions in juxtaposition, it becomes, prima facie, clear that while Section 4 insulates any notice issued by any of the authorities envisaged by Section 3 after 90 days thereof from any challenge by a person before any court including a High Court or the Supreme Court, Section 39 only ousts the jurisdiction of a court to examine the legality of the assessment made and order passed under the Act or the Rules made thereunder and grants immunity to the State Government and its officers for anything done or intended to be done in good faith under the Act. As far as the first limb of Section 39 of the Act is concerned, the law is now well-settled and was reiterated by the Apex Court very recently, while construing Section 28 of Administration of Evacuee Property Act, 1950, which is virtually couched in similar language, that though the section bars the jurisdiction of the civil courts from entertaining suits relating to matters within the exclusive jurisdiction of the Custodian, that cannot bar the jurisdiction of the High Court under Article 226 of the Constitution (See Shakara Coop. WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 29 of 33 Housing Society Ltd. v. M. Prabharka, (2011) 5 SCC 607). As noticed above, Section 4 appears to have even barred a writ court from entertaining any complaint against the exercise of jurisdiction by the revenue authorities appointed under Section 3 after the expiry of 90 days from the date of the receipt by him of any notice from such authorities. In L.Chandra Kumar (supra), it has been re-affirmed by the Apex Court that the power vested in the High Courts to exercise judicial superintendence over the decisions of all courts and tribunals within their respective jurisdictions is also a part of the basic structure of the Constitution. In our opinion, revenue authorities appointed under Section 3 of the Act are also tribunals or, at any rate, have the trappings of a tribunal as they are exercising quasi-judicial functions. Ouster of jurisdiction by statutory provision may either be express or implied. When the exclusion of jurisdiction is also not expressly stated in the statute, it can be implied. In instant case, though the language of Section 4 does not say so in many words that even the jurisdiction of this Court under Article 226 of the Constitution to issue a writ of certiorari is barred, yet it is to be necessarily implied. When the Legislature intends to oust the jurisdiction of only civil courts and not the High Courts or the Supreme Court, it has been made apparent by them as indicated by Section 39 of the Act. We, therefore, hold that Section 4 violates the basic feature of the Constitution, and cannot be sustained in law. But then, this Court cannot be too trigger happy in striking down legislations as tersely observed by his Lordship, V.R. Krishna Iyer, J (Retd.) in Bhim Singhji v. Union of, (1981) 1 SCC 166:
"Reading down meaning of words with loose lexical amplitude is permissible as part of the judicial process. To sustain a law by interpretation is the rule. To be trigger-happy in shooting at sight WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 30 of 33 every suspect law is judicial legicide. Court can and must interpret words and read their meaning so that public good is promoted and power misuse is interdicted."
The legal position is explained in detail by the Apex Court in M. Rathinaswami v. State of T.N., (2009) 5 SCC 625 at paras 28, 29 and 30 of the judgment. This is what it said:
"28. It is well settled that to save a statutory provision from the vice of unconstitutionality, sometimes a restricted or extended interpretation of the statute has to be given. This is because it is a well-settled principle interpretation of the statute that the Courts should make every effort to save a statute from becoming unconstitutional. If on giving one interpretation the statute becomes unconstitutional, then the Court should prefer the latter on the ground that the legislature is presumed not have intended to have exceeded its jurisdiction.
29. Sometimes to uphold the constitutional validity the statutory provision has to be read down. Thus, in Umayal Achi v. Lakshmi Achi (AIR 1945 FC 25), the Federal Court was considering the validity of the Hindu Women‟s Property Act, 1937. In order to uphold the constitutional validity of the Act, the Federal Court held the Act intra vires by construing the word "property" as meaning "property other than agricultural land". This restricted interpretation of the word "property" had to be given otherwise the Act would have become unconstitutional.
30. Similarly, in Kedar Nath Singh v. State of Bihar (AIR 1962 SC 955) this Court had to construe Section 124-A of the Penal Code which relates to the offence of sedition which makes a person punishable who "by words, either spoken or written, or by signs, or by visible representation, or otherwise, brings or attempts to bring into hatred or contempt, excites or attempts to excite disaffection towards, the Government established by law". This Court gave a restrictive interpretation to the aforesaid words so that they apply only to acts involving intention or tendency to create disorder or disturbance of law and order or incitement to violence. This was done to avoid the provisions becoming violative of Article 19(1)(a) of the Constitution which provides for freedom of speech and expression."
21. The underlying principle which can be culled out from the paragraphs extracted above is that where the language of the statute leads to manifest contradiction or ambiguity or defect or omission, the Court can adopt a construction which saves the statutory provision from WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 31 of 33 the vice of constitutional infirmity. In other words, every effort must be made by a Court to save a statutory provision from becoming unconstitutional and "not to be trigger-happy shooting at sight every suspect law". Of course, the easy course of action to be taken by us is simply to declare Section 4 of the Act as ultra vires the Constitution and then quash the same. If, however, on giving one interpretation, the impugned statutory provision becomes unconstitutional and on another interpretation, it will be constitutional, then the Court should prefer the latter on the ground that the legislature is presumed not to have intended to have exceeded its jurisdiction. Here is a statutory provision of substantial defect ousting judicial review of a Constitutional Court and has the potential of destroying one of the basic features of the Constitution. On the other hand, this Court is not oblivious of the burdensome and cumbersome process of new legislation for rectification of the defect, which will be the inevitable consequence of our striking down the impugned provision. Under the circumstances, the via media we have in mind is not to strike down the impugned provision but to read down the provision suitably so as to save it from unconstitutionality. This necessarily warrants giving restrictive interpretation to Section 4 of the Act by reading the words "except in the High Court under Articles 226 and 227 of the Constitution" between the words "call in question"
and "the jurisdiction of any authority under Section 3". No other contention of substantial nature survives for consideration.
22. The result of the foregoing discussion is that the writ petitions are disposed of with the following orders:WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 32 of 33
(a) The impugned assessment orders dated 20-7-2004 in the three writ petitions are valid and enforceable.
Section 4 of the Act, in so far as it ousts the jurisdiction of the High Court under Articles 226 and 227 of the Constitution to question the legality of the exercise of jurisdiction by the revenue authorities under Section 3, is violative of the basic structure of the Constitution and is, therefore, declared as unconstitutional.
(b) However, instead of striking down Section 4 lock stock and barrel, the words "except in the High Court under Articles 226 and 227 of the Constitution" shall be read into between the words "call in question" and "the jurisdiction of any authority under Section 3" of Section 4 of the Act.
(c) The parties are directed to bear their respective costs.
JUDGE CHIEF JUSTICE dev WP(C) No. 7807 of 2004 WP(C) No. 7808 of 2004 WP(C) No. 7810 of 2004 Page 33 of 33