Habibunnissa vs State of Madras and Others

Veeraswami, J.—The petitioner, who was a licensed dealer and tanner, was assessed to sales tax for the year 1953-54 to a tax of Rs.

10,937-80 np. The turnover consisted of purchases of untanned hides and skins from licensed dealers which attracted tax at the point of purchase

u/s 3(1) read with Section 5(vi) of the Madras General Sales Tax Act, 1939. The Tribunal''s order, on appeal, was made on 9th September,

1957. It does not appear that the petitioner agitated the matter further by filing a revision petition to this Court. This petition is to forbid the revenue

from collecting the tax.

The Rule is asked for on two grounds. The first of them is with reference to Section 24(2)(b) of the Madras General Sales Tax Act, 1959. The

contention is that the particular Magistrate to whom application has been made by the department is competent to impose a fine not exceeding Rs.

2,000, and that, as, in the instant case, the tax far exceeds that amount, the Magistrate will have no jurisdiction to proceed in the matter. That

statutory provision enables the department to apply to any Magistrate to recover the tax as if it were a fine imposed by him. The fiction is

introduced merely for the purpose of recovery and its object is not to make the tax a fine in reality. The provision is merely another device of

collecting the revenue. The jurisdiction of the Magistrate to fine for a penal offence is no doubt limited under the provisions of the Code of Criminal

Procedure. The jurisdiction of the Magistrate to collect tax, as if it were a fine, is not under that Code, but under the provisions of the enabling

fiscal Act. The foundation of the Magistrate''s jurisdiction being the fiscal Act itself, I do not think that the pecuniary limit of fine prescribed by the

Code of Criminal Procedure can be applied to the Magistrate when he acts u/s 24(2)(b). This provision, as a matter of fact, makes any Magistrate

competent to entertain an application and direct recovery of tax as if it were a fine imposed by him. In my opinion, there is no substance in this

point.

The second ground on which the petitioner relies is based on Article 14 of the Constitution. He does not question the validity or propriety of the

tax levied at the purchase point of the turnover consisting of purchases of untanned hides and skins by the licensed dealer from a licensed dealer in

hides and skins. What is contended is that when the tanner, like the petitioner who pays tax on such point, tans the goods and sells them to

unlicensed dealers, tax is leviable at the sale point, since they will not be entitled to the concessional single point scheme of tax. In that way, it is

said discrimination occurs in relation to the burden of tax imposed on transactions entirely covered by licence as contrasted With transactions not

so covered. It seems to Me that this contention overlooks that if there is any differential burden brought about, it is not because the provisions of

the Act themselves are discriminatory, but because of the failure of one or the other dealers in hides and skins in the series of transactions in hides

and skins to take out a licence. The general scheme of the Act is to impose tax at every point of sale or purchase, subject to special provisions as

to concessions and exemptions. The concessions are given again subject to restrictions and conditions. So long as these restrictions and conditions

are observed, it is obvious that the single point scheme of taxation is completely effectuated. But, if one dealer in the series fails to take out a

licence, in the nature of things, the scheme of single point taxation breaks down, with the result that the transactions fall outside the scope of

Section 5(vi) and become taxable u/s 3(1) read with Section 6-A. The inhibition under Article 14 of the Constitution is only that the State shall not

discriminate. Mr. Thyagarajan has not been able to satisfy me by what act of the State or by what provision of the Act any discrimination in

taxation resulted. Further, the requirements of equal protection is only that like should be treated alike. It is not the case of the petitioner that,

among licensed dealers, some have been picked out for a differential treatment. What is more, so far as the assessment order for the year 1953-54

is concerned, the petitioner has no cause to complain on the ground of discrimination. It is only if and when he is called upon to pay tax on further

transactions in the same goods after tanning that the question may arise at all. In my opinion, there is hardly any room, having regard to the Scheme

of the Act, for the contention based on discrimination. That was the view I took in H.H. Naeems & Co. v. State of Madras [1964] 15 S.T.C.

269.

The petition is dismissed with costs. Counsel''s fee Rs. 100.