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Judgment
Sarjoo Prosad, C.J.—All these fourteen applications have been presented under Article 226 of the Constitution. The petitioners in these cases pray for writs of certiorari, mandamus or any other appropriate writ for quashing certain orders of the officers of the Sales Tax Department passed against the petitioners and for prohibiting the respondents from taking any action under the said orders.
The substantial questions which arise for determination in these cases are common and the petitioners in some of them are also common. The applications can be therefore conveniently disposed of together. Mr. Ranadeb Choudhury who addressed the leading argument before us appears in twelve of these cases, while the, petitioners in the remaining two are represented by Mr. P.K. Gupta.
The relevant facts omitting unnecessary details, (special features in certain cases apart, to which I shall refer later) are these. The petitioners are merchants carrying on business, inter alia, as dealers in jute. Their head office and principal place of business are both situated in Calcutta but they purchase jute at Dhubri in the district of Goalpara and are registered dealers within the meaning of the Assam Sales Tax Act (Assam Act 14 of 1947), hereinafter called "the Act".
The petitioners stated that at no material time they had transaction of sale of jute at Dhubri or anywhere in this State but that they merely purchased jute at Dhubri for the purpose of supplying to their Head Office at Calcutta. They admit having despatched bales of jute to diverse mills in Calcutta during the relevant periods but they allege that these despatches were against prior contracts entered into with them and sales effected in Calcutta.
They further alleged that in some instances, the bales of jute were consigned in the name of one Mill but actually sold and delivered to another according to the instructions of the Head Office and sometimes the bills of lading were endorsed in favour of a Mill called Sethia Baling Company as consignee merely for the purpose of obtaining priority in the matter of transport.
They contend that these despatches to their head office or to the mills in question do not constitute sale within the meaning of the Act, nor was there anything to show that at the time of the forward contracts of sale effected at the head office of the petitioners the goods were actually in existence in the State of Assam. They claim that in practice, at the time when the despatch was made it could not be ascertained against which particular contract the goods were despatched.
The Bills of Lading were not sent to the Mills direct but to the petitioners'' Head Office in Calcutta, and the petitioners throughout retained control over the goods until the delivery of the goods to the respective buyers and until the receipt of the price from them. In connection with the said business, the petitioners claim to maintain accounts on the basis of the Ramanavami year which commences from Chait, Sudi, 9, every year.
It is stated by the petitioners that on the above facts they rightly believed that they were not liable to the payment of any Sales Tax on the transactions aforesaid but to remove all doubts they approached the Commissioner of Taxes through their Association to clarify the position; but these officers did not give any definite lead on the point. On the contrary, the Superintendent of Taxes by his order, referred to in the various petitions purported to levy tax on the petitioners which was affirmed on appeal by the Assistant Commissioner of Taxes.
The petitioner then moved the Commissioner against the said orders, but this officer also, except for a small modification in some cases, substantially affirmed the order of assessment passed by his subordinates. The petitioners have therefore moved this Court for issue of appropriate writs on the ground that the orders of assessment are quite illegal and in abase of their powers under the Act and the respondents should therefore be restrained from enforcing these orders.
The material allegations have been controverted by the respondents. The assistant Commissioner of Taxes has filed a counter-affidavit in which it is stated that the petitioners had sale transactions at Dhubri. According to the trade practice, the jute mills and presses in Calcutta make contracts with the agents of the jute dealers of Assam residing in Calcutta and make a preliminary agreement to buy a certain quantity of jute at a certain rate whereupon these dealers, on intimation received, despatch the required quantity of jute to the Mill or Press concerned.
These supplies are made from procured jute stocked in the godowns of these dealers. The bills of lading are sent to their agents in Calcutta merely to enable them to realise the price from the buyers. According to the respondents, therefore, the sales took place in the State of Assam within the meaning of the Explanation to Section 2(12), Assam Sales Tax Act.
I have narrated above the cases of the parties which are common to all the applications. For obvious reasons, in these applications under Article 226 of the Constitution, we will avoid entering the arena of disputed facts but I have broadly summed up the relevant allegations in order to appreciate the points urged. The decision in these cases will have to proceed largely and in fact entirely upon the facts found by the officers of the Department unless the findings are discovered to be speculative or in direct opposition to the facts disclosed.
I shall therefore refer briefly to what transpired before the Department. The petitioners in these cases submitted returns with reference to transactions of sale during various periods ranging between March 1948 to March 1950. They were then asked u/s 17 of the Act to produce their evidence and account books in support of their returns but in spite of several adjournments, they failed to do so.
The Superintendent of Taxes therefore had no alternative but to assess them to the best of his judgment u/s 17(4) of the Act and directed assessment orders and demand notices to be drawn up accordingly. The petitioners appealed against these orders. On appeal, several contentions were raised and as it appears some books of account and documents were produced.
One of the main contentions raised was that the definition of ''sale'' with its explanation as contained in Section 2(12) of the Act was repugnant to the Government of India Act, 1935 and Article 286 of the Constitution. These contentions were repelled by the officer, who held that the Act was a valid piece of legislation and that the transactions assess-ed related to a period long prior to 26-1-1950. The officer also held that the jute was actually within the State of Assam at the time of making the contract and so by virtue of the explanation to Section 2(12) of the Act, the dealers were liable to pay tax even though the contracts were made out-side the State.
He found that the Mills and presses in Calcutta made contracts with the petitioners agents residing there for purchase of certain quantities of jute at certain rate, whereupon the petitioners in pursuance of these contracts of sale and on intimation from their agents despatched the bales of jute to the purchasing mill or press concerned during the relevant period. The bills of lading were sent directly to the agents for collecting the price from the buyers concerned by the time the goods were delivered.
The goods were duly appropriated to contracts of sale when despatched and thus within the meaning of the Explanation the sales were complete. It was also urged before the Assistant Commissioner that the Commissioner had power u/s 51 of the Act to determine whether any tax was payable in respect of any sale or contract. The Assistant Commissioner overruled the contention on the ground that there was no dispute referred to the Commissioner for his determination of any such point.
The petitioners then took the matter before the Commissioner who slightly modified the assessment, but on all substantial points confirmed the orders of his subordinate officers. He found in concurrence with them that admittedly, the despatches of jute were covered by prior contracts, that these contracts were definitely contracts of sale within the meaning of the Explanation to Section 2(12) of the Act and that the goods were actually in the State of Assam at the time when the contracts were entered into. He did not accept the case of the petitioners, except in one instance, that some of the consignees were mere Benamidars of the petitioners and not actual purchasers.
In eight of the cases, the Commissioner held that the applications in revision were barred u/s 31 or Section 32 of the Act. Those orders relate to Civil Rules Nos. 97, 175, 176, 177, 178 and 179 of 1953 and also Civil Rules Nos. 152 and 153 of 1953 in which Mr. Gupta appears. In the latter two cases, the petitioners had preferred appeals u/s 30 of the Act read with Rule 27, but the Commissioner treated them all on the same footing as revision and held them time-barred.
Mr. Ranadeb Choudhury with his usual ability has raised various points in support of his prayer for writs. He submits that admittedly the contract of sale in these cases did not take place in the State of Assam nor were the goods delivered in this State in pursuance of any such contract. Therefore, legally the goods could not be assessed to sales tax by the State Government. Here, the sales and deliveries both took place ''outside the State''.
It is true that under the Explanation to Section 2(12) of the Act, the State was authorised to levy tax on such sales, irrespective of the place where the contracts were made, provided that at the time when the contracts of sale were made the goods were actually in existence in the State of Assam; but after the present Constitution came into force, on 26-1-1950, this provision in the law became repugnant to Article 286 of the Constitution and stood impliedly repealed; and unless the tax had been already collected prior to the said date, it was no longer open to the taxing officers to assess or levy any tax on the authority of a provision in the law which had ceased to exist for all purposes. We have therefore to examine the validity of this provision and the assessments made thereunder.
Section 2(12), Assam Sales Tax Act, 1947 (Act 17/47) runs thus:
''Sale'' with all its grammatical variations and cognate expressions means any transfer of property in goods by any person for cash or deferred payment or other valuable consideration, and includes a transfer of property in goods involved in the execution of a contract, but does include a mortgage, hypothecation, charge or pledge. It also includes a transfer of goods on the hire-purchase or other instalment system of payment notwithstanding the fact that the vendor may retain the title in the goods as a security for payment of the price.
Explanation. Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in the Province at the time when the contract of sale (as defined in that Act) in respect thereof is made, shall, irrespective, of the place where the said contract is made, be deemed for the purposes of this Act to have taken place in the Province.
The important part of the section is the Explanation under which it is claimed that the tax could be levied.
This Explanation was amended by Act 4 of 1951, Assam Sales Tax (Amendment) Act but we are not concerned with the amendment at present. u/s 99 read with item 48 of List II of the Seventh Schedule to the Constitution Act (Government of India Act) of 1935, the Provincial Legislature was entitled to legislate with reference to taxes on the sale of goods.
The Assam Sales Tax Act was therefore a valid and competent legislation and it was open to the State to tax sales of goods which were actually in the Province of the State at the time when the contracts of sale were made in respect thereof, irrespective of the place of contract or delivery of the goods. The suits or location of the goods is an important factor in the element of sale and constitutes a valid nexus authorising the State where the goods lie to impose sales tax.
Therefore the Explanation to Section 2(12) of the Act could not be questioned and has not been questioned on any ground as being beyond the competence of the legislature functioning under the then Constitution Act. The transactions of sales in these cases relate to different periods ranging from March 1948 to March 1950. It is to be noticed that in Civil Rule No. 177 of 1953, alone the period of assessment travels beyond the relevant date 26-1-1950.
It has been further found and which finding must be assumed to be correct that at the time of the transactions the goods were actually in the State of Assam. The transactions therefore could be treated as ''sales'' within the meaning of the Explanation. Section 3 of the Act provides for the liability to the tax payable, which arose in respect of all ''sales'' effected after the notified date. That the transactions fulfilled the other requirement of the section and is no longer in dispute.
Thus the liability to pay the tax accrued immediately on the date of the sales. In one sense, the liability is inchoate and is not clearly determined until the stage of assessment, but the point to remember is that by virtue of Section 3, the liability accrues under the law as soon as each transaction of sale has been effected. Once the liability accrues, then the taxes can be determined and collected at any subsequent stage; the other procedures are merely consequential and do not affect the liability itself.
Section 16 requires the registered dealer to sabmit return of his total turnover and Section 17 enables the Commissioner to make the assessment. Some of the other sections provide the necessary machinery for the collection of the tax assessed and also for certain remedies to the assessee against wrong or illegal assessments. The sales tax officers therefore had ample authority under the law to assess and realise the taxes which accrued due in respect of the ''sales'' in these case.
But it is contended that this authority ceased as soon as the Constitution came into force, because; alter 26-1-1950, the relevant date, the Explanation to Section 2(12) ceased to be law being in apparent (sic) with Article 286 of the Constitution; the effect of the said provision in the Constitution was to repeal impliedly the Explanation to Section 2(12), Sales Tax Act and thereby to wipe it cut of that Legislation altogether, so that even for purpose of assessment and collection of the tax the liability ceased entirely.
An implied repeal has the same effect in law as an express repeal and the net result is that in either case the provision in the law is treated as ''non est'' unless there was some saving clause in the repealing Act itself to keep it alive for some purposes. To understand the implications of the argument, it would be well to reproduce Article 286 of the Constitution which runs as follows:
(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place
(a) outside the State; or
(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
Explanation: For the purposes of Sub-Clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce:
Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be (sic) until the thirty first day of March 1951.
(3) No law made by the Legislature of a State imposing or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
It is quite obvious from Clause (1) of the Article that no law of the State can impose or authorise the imposition of tax on the sale or purchase of goods which took place "outside the State." The Explanation to the clause makes an exception in cases where as a direct result of such sale or purchase the, goods have been actually delivered for the purpose of consumption in a particular State; the sale or urchase in such cases shall be deemed to have taken place in the State of delivery. In other words, it is the deliveree State which by virtue of the Explanation to Clause (1)(a) is authorised to levy or impose the tax, notwithstanding the fact that under the general law the property in the goods had by reason of such sale or purchase passed in another State. It is therefore clear that but for this exception, a State cannot impose tax on sale of goods outside the State. Clause (2) of Article 286 bans the imposition of tax by a State on sale or purchase of goods which takes place in course of inter-state trade or commerce.
The proviso to the clause enables the President to direct by his order that any tax on sale or purchase of goods which was being lawfully levied by the. Government of any State immediately before the commencement of the Constitution shall continue to be levied until 31-1-1951, notwithstanding that the imposition of such tax was contrary to the provisions of the clause.
This proviso only for a temporary period allows taxation by the States in contravention of the clause, i.e. up to 31-3-1951; and that also if there is an order of the President ratifying the levy of the tax. The scheme of this Article has come in for scrutiny by the Supreme Court and the High Courts in India on various occasions.
Mr. R.D. Choudhury has contended that the two clauses of Article 286 are mutually exclusive: Clause (1)(a) refers to sale or purchase of goods which takes place ''outside the State'' whereas Clause (2) refers to sale or purchase taking place in ''the course of inter-state trade or commerce'' and although the words "sale" or purchase outside the State may broadly speaking include in some instances sale or purchase taking place in the course of interstate trade or commerce, yet for the purpose of the Article, the two clauses have to be read as treating these transactions under two separate and distinct heads.
He submits that the transactions of sales in these cases fell under Clause (1) of the Sales Tax Act. The position therefore according to the learned Counsel is that on and after 26-1-1950, the State lost its authority to impose tax on sale or purchase of goods taking place outside the State, except on the authority of the Explanation of Article 286(1)(a), which has admittedly no application to these cases.
He points out that there is no other saving clause in Article 286(1) itself nor are the provisions of the General Clauses Act applicable to the construction of the Article and therefore the Explanation to Section 2(12) of the Sales Tax Act stood impliedly repealed and the provision cannot be looked at for any purpose now. It should be assumed in other words that the provision never existed in the Sales Tax Act at all.
I am inclined to agree with the contention of Mr. Choudhury that the effect of the Explanation attached to Clause (1)(a) of Article 286 is to invest what in truth is an inter-State transaction with an intra-State character in relation to the State of delivery and Clause (2) of the Article can therefore have no application to such cases.
It has been held in several cases that once it is determined with the aid of the fictional test (namely the test of delivery of the goods) that a particular sale or purchase has taken place with in the taxing "State, it follows, as a corollary that the transaction loses its inter-State character and falls outside the purview of Clause (2), not because the definition in the Explanation is used for the purpose of Clause (2) but because such sale or purchase becomes in the eye of law a purely local transaction. See for instance The State of Bombay and Another Vs. The United Motors (India) Ltd. and Others, and "Cement Marketing Co. of India Ltd. v. State of Assam (S) AIR 1955 Assam 113 (B).
The latter decision is a decision of this very Bench. I will, therefore, assume for the present that these transactions fall under Clause (1) of Article 280 i.e. sales "outside the State" and as such were not liable to be taxed by the State Government if the transactions had taken place after the commencement of the Constitution.
It is argued, however, that the right to impose tax having been taken away by this provision of Article 236, no tax could be any longer imposed by the State Government in regard to these sales or purchases at all. The Explanation to Section 2(12) of the Sales Tax Act which authorised the imposition of the tax has been definitely annulled by Article 286 of the Constitution, which has undoubtedly an overriding authority.
The omission to state in specific words as has been done in Article 13, that the provisions of law in conflict with the Constitution would be void, is immaterial because the same result would follow even if the Constitution had not said so.
If any provision of law is repugnant to the Constitution, the latter as the supreme law is bound to prevail. Therefore where the provisions of the first clause to Article 286 were in conflict with the scheme under which the sales taxes were collected under the impunged Act, there can be no doubt that to that exent the clause in the Constitution would prevail as and from the date of the Constitution.
In Himmatlal Harilal Mehta Vs. The State of Madhya Pradesh and Others, Mahajan, C.J. observed that "the Explanation II to Section 2(12) of the present Act, having been held to be ultra vires any imposition of the tax on the appellant in Madhya Pradesh was without the authority of law and that there being a threat by the State by using the coercive machinery of the impugned Act to realise it from the appellant, it was sufficient infringement of his fundamental right under Article 19(1)(g) which entitled him to relief under Article 226 of the Constitution."
There the period of assessment referred to quarter ending March 1851, that is after the commencement of the constitution. Here the point its whether Article 286 of the Constitution would operate to affect sales and purchases which had already taken place before the Constitution came into being and in regard to which the liability to impose or collect the taxes had already arisen.
Mr. Choudhury, of course, contends that it does affect even such sales or purchases. He says that the effect of the implied repeal is that the whole thing is wiped out of the Statute Book and inasmuch as the taxes were neither determined nor collected before the relevant date the right to impose them has since disappeared.
The cases on which the learned Counsel has relied do not have any direct bearing on the question whether the State is deprived of its right to impose tax under the law, the liability for the payment of which had already accrued long before the Constitution came into force. In this connection, he refers to a passage in Craies on Statute Law, page 322 where the learned author says:
The effect of a repeal without any express savings is thus stated by Tindal, C. J. in ''Kay v. Goodwin'' (1830) 6 Bing 570 (D) where he says: �I take the effect of repealing a statute to be to obliterate it as completely from the records of the Parliament as if it had never been passed; and it must be considered as a law that never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law.�
And in ''Surtees v. Ellison'', (1829) 9 B& C 750 (E), Lord Tenterden says: It has long been established (except as to transactions past and closed) as if it had never existed.'' So an offence committed against a Penal Act whilst it was in force could not be prosecuted after the repeal of the statute not could pending proceedings be further prosecuted after the repeal, even to the extent of applying for a certificate for costs.
He also relies upon a decision of the Supreme Court in The State of Uttar Pradesh Vs. Seth Jagamander Das and Others, where it was held that when a Statute is repealed or comes to an automatic end by efflux of time, no prosecution for acts done during the continuance of the repealed or expired Act can be commenced after the date of its repeal or expiry because that would amount to the enforcement of a repealed or a dead Act.
In the case in question an application was made to quash proceedings on the ground that the Defence of India Act and the Rules framed thereunder which were all temporary legislations, had expired and because the Constitution Act of 1935, which authorised these legislations, itself had been repealed by the present Constitution. The prosecution therefore which was started long after those measures had expired could not be continued. These principles have no application to the cases before us.
The Assam Sales Tax Act is undoubtedly a valid legislation. It continues to be good law even after the Constitution came into operation. All that has happened is that by virtue of Article 286 the Explanation to Section 2(12) which is in conflict with it ceases to be law and will cease to affect transactions which take place thereafter. But it cannot destroy the right of the State to determine and collect the taxes the liability for the payment of which accrued due under the law as it then stood.
The said Explanation to Section 2(12) of the Act, was not a temporary provision so as to expire with efflux of time nor can it be said to have, been void or incompetent when the Act was passed. That being so, there is a valid liability to pay the tax in respect of those transactions and this liability cannot be extinguished by the mere fact that as a result of Article 286(1) of the Constitution the right of the State to impose tax on such sales in future has been taken away.
If the sales took place after the enforcement of the Constitution, i.e., on or after 26-1-1950 the State of course loses the right to tax them except in so far as that Article of the Constitution permits such taxation. In regard to such sales, the sales tax officers can no longer invoke the protection of the Explanation to Section 2(12) of the Act. It is in view of this that the Explanation had to be amended and brought in line with the provisions of the Constitution.
It is urged that so long as the amount of tax has not been assessed and demand notices served the liability to pay the tax does not ripen into a legal liability. The decision of the Judicial Committee of the Privy Council in AIR 1945 62 (Privy Council) is an authority for the proposition that an Income Tax is not due in law until demand is made under Sections 29 and 45, Indian Income Tax Act. That may be so. Here also the taxes became due after the orders of assessment and demand notices.
There is a difference between the accrual of liability as such and the amount of tax being actually clue. These orders may be passed even after the commencement of the Constitution, if the liability to the tax under the law has not been extinguished; and there is nothing to induce us to assume that the liability has been so extinguished merely because with respect to future sales of that nature the Explanation to Section 2(12) has become a dead letter.
The other sections of the Act, authorising the officers of the Department to assess or levy the taxes have not been rendered inoperative. They are valid and operative; and on their authority the sales tax officers wore entitled to levy and collect the taxes, provided a liability to pay them had lawfully accrued earlier Article 265 of the Constitution would be no bar to the action of the authorities in that event.
The decision of Das, J. who delivered the majority judgment in Keshavan Madhava Menon Vs. The State of Bombay, throws a good deal of light on the point. It was pointed out there that existing laws which were inconsistent with the provisions of the Constitution were not ''ab initio'' void but void only to the extent of their inconsistency. It would be wrong to assume that those laws became void for all purposes.
All that can be said is that after the commencement of the Constitution, no existing law will be permitted to stand in the way of its provisions in other words the voidness pf the law due to its inconsistency will be limited only to future acts and transactions and it cannot be read as obliterating the: entire operation of the inconsistent laws, or to wipe them altogether from the Statute Book; for to do so would be to give them retrospective effect which they do not possess.
The inconsistent law therefore is not wiped out in regard to past acts or transactions. The discussion in that case was of course with reference to Article 13(1) of the Constitution which rendered void all laws inconsistent with the guaranteed fundamental rights to the extent of their inconsistency; but the observations apply with equal force to the present case where it relates to an inconsistency created by Article 286.
It was further pointed out there that the effect of; Article 13(1) was quite different from the effect of the expiry of a temporary statute or the repeal of a Statute by a subsequent; Statute. The idea of preservation of past inchoate rights or liabilities and pending proceedings to enforce the same is not foreign or abhorrent to the Constitution of India. Their Lordships therefore refused to entertain the plea that pending proceedings under a law which has become void cannot be proceeded with.
The legal position was further clarified in a very recent decision of the Supreme Court in Behram Khurshed Pesikaka Vs. The State of Bombay,
The meaning to be given to the expression ''Void'' in Article 13(1) is no longer ''res Integra''. It stands concluded by the majority decision in Keshavan Madhava Menon Vs. The State of Bombay, The minority view there was that the word ''void'' had the same meaning as ''repeal'' and therefore a statute which came into clash with fundamental rights stood obliterated from the statute book altogether, and that such a statute was void ''ab initio''.
The majority however held that the word ''void'' in Article 13(1) so far as existing laws were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion, Article 13 had not been given any retrospective effect. The majority however held that after the coming into force of the Constitution the effect of Article 13(1) on such repugnant Jaws was that it ''nullified'' them, of any legal force, or binding effect.
It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the. Constitution, the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, out that if any law was made after the 26th January 1950 which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America. The result therefore of this pronouncement is that the part of the section of an existing law which is unconstitutional is not law, and is null and void.
For determining the rights and obligations of citizens the part declared void should be notionally taken to be obliterated from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred Prior to 26th January 1950 and also for the determination of rights of persons who have not been given fundamental rights by the Constitution.
Thus, in this situation, there is no scope for introducing terms like ''relatively void'' coined by American Judges in construing a Constitution which is not drawn up in similar language and the implications of which are; not quite familiar in this country.
The result therefore is that for determination of rights and obligations incurred prior to 26-1-1950, the Explanation to Section 2(12) will be taken to stand on the statute book and treated as good law. The said Explanation was not void from its very inception. On account of its repugnance to Article 286 of the Constitution, it has become ineffectual and nugatory with effect from 26-1-1950. Therefore for determining prior rights and obligations, the Explanation will continue to have effect.
The argument of Mr. Choudhury founded as it is on the analogy of void, repealed or temporary legislations and encouraged by the American doctrine on those subjects cannot therefore prevail. If the liability to the tax has validly accrued as it did u/s 3 of the Act, the determination of the liability by an order of assessment and collection of the amount assessed would all be within the authority of the law. The liability in these cases validly accrued, because the Explanation to Section 2(12) would be deemed to subsist on the Statute Book regarding previous and in choate liabilities.
Mr. Choudhury has next urged that in the alternative, it should be held that the transactions of sale in these cases fell within Article 286(2) of the Constitution and that being so, the proviso to Clause (2) of the Article could not enable the State to tax them unless the whole process of assessment and collection was completed on or before 31-3-1951.
He again draws upon the analogy of a temporary legislation in construing the language of the above proviso. This contention runs counter to the first submission of Mr. Choudhury that the transactions in the present case fell under Clause (1) of the Article as being instances of sales "outside the Slate"; and that the two clauses of the Article are mutually exclusive.
I have already accepted this part of the submission of the learned Counsel and therefore it is unnecessary to answer his present contention. In view of what I have said above, these analogies are not an apposite guide to the interpretation of Article 286 of the Constitution. The main contentions of Mr. Choudhury are disposed of accordingly. There are, however, a few more points which appear to deserve notice.
Mr. Choudhury has urged that the finding of the learned Commissioner that the goods were actually in the State of Assam at the, time-when the contracts were made is merely speculative. I have earlier summarised the relevant findings. The petitioners did not place their books of account or evidence before the Superintendent of Taxes but they produced their books later before the superior officers.
There is nothing to show that they ever pointed out to these officers that the books did not support the conclusion that the goods were actually in existence in the State at the time of the contracts of sale. These taxing authorities-were conscious of the fact that this was an essential requirement of the law, which had to be determined on the evidence. This they have determined and it does not appear that the reason which the Commissioner has given in support of his finding are altogether unjustified.
It is to be remembered that the Commissioner had all that evidence before him and we cannot interfere with that finding as if we were a Court of appeal competent to go into the evidence ourselves. The same argument applies to the contention that the books of account were kept by the petitioners according to the Ramanavami year.
It appears that the point was never urged before any of the taxing officers and it is not open to the petitioners to urge this question of fact be-fore us in support of their prayer for writs. If the mistake is so obvious, u/s 31 of the Act, it would be always open to the Commissioner of Taxes to rectify the same in order to relieve the petitioners of any injustice caused to them on that account.
Another contention of the petitioners is that u/s 51 of the Act it was for the Commissioner to decide the question whether any tax was payable in respect of the transactions in these cases; and although they approached the Commissioner through their Association for a clarification of the point the Commissioner did not give any definite (sic) in the matter. It is alleged that in view of this uncertainty the petitioners were unable to realise sales tax in respect of the transactions aforesaid and it would be both unjust and inequitable now to throw this burden on them.
Unfortunately, we have no materials before us to substantiate these allegations. It appears that some letter was sent by the Goalpara District Merchants'' Association asking the opinion of the Commissioner regarding assessment of taxes on the sale of jute generally. The Commissioner''s reply is somewhat vague, prompted possibly by the vaguness of the enquiry; but if anything, it states that sales tax was payable under the Explanation to Section 2(12) of the Act on sales effected on and after 1-2-1948.
At any rate, the Assistant Commissioner is right in pointing out that the question was never raised by the parties in the form of a dispute as contemplated by Section 51 of the Act, at any stage earlier, so as to call for a proper determination by the Commissioner. I do not therefore see how the petitioners can have any advantage of Section 51 now. In a regular assessment proceeding the point that the transactions of sale are assessable under the law has since been decided against them. Section 51 therefore is of no avail to the petitioners now.
The only point which now remains for consideration is whether the Commissioner was justified in refusing to interfere in some of these cases on the ground that he was moved beyond the period of limitation or that in doing so, he erroneously refused to exercise jurisdiction which the law had vested in him. This point relates to eight of these applications. Before taking up these individual applications in different batches, I should like to discuss the powers of the Commissioner under the law as it stood at the time of the assessment orders, which, it is important to remember were made in all these cases prior to 26-8-1951.
Section 30 of the Act provides for appeals against assessment orders. It says that any dealer objecting to an order of assessment or penalty passed under this Act may, within ''thirty days'' from the ''date of the service of such order'', appeal to the prescribed authority'', against any such assessment or penalty. The period of limitation therefore u/s 30 of the Act is thirty days from the date of the service of the order appealed against.
We have to see the rules to find out the ''authority prescribed'' to whom an appeal lay u/s 30 of the Act. Rule 26 provides that an appeal against an order oft assessment or penalty passed by the Superintendent shall lie to the Assistant Commissioner. Rule 27 says that:
An appeal against any order whether original or appellate passed by the Assistant Commissioner shall lie to the Commissioner.
Rule 27 therefore contemplates that an appeal Jay to the Commissioner against any order of the Assistant Commissioner. Reading the rules together, it is obvious that the law prescribes for two appellate authorities. The Assistant Commissioner was the prescribed authority for appeals against: the orders of the Superintendent and the Commissioner against the orders of the Assistant Commissioner.
The learned Advocate-General contended that Rule 27 as it stood was ultra vires Section 30 of the Act itself which did not permit of two appellate-authorities as such. According to him Section 30 meant to provide only one right of appeal. I do not think that Section 30 is capable of this narrow interpretation.
All that it says is that an appeal shall lie to the "prescribed authority." It does not talk of one appeal or two appeals; and it was open to the framers of the rules u/s 52 of the Act to prescribe two such authorities for the purpose of hearing appeals thus constituting graded forums. The Rules therefore were validly framed and under Rule 27 an appeal lay to the Commissioner against the order of the Assistant Commissioner.
But Rule 27 was amended on 22-8-1951 and the right to appeal against the appellate orders of the Assistant Commissioner to the Commissioner was taken away. The Rule as amended provides now only for an appeal to the Commissioner against the original orders of his Assistant.
The question then is whether this change in the law would affect the remedies of the petitioners in the present cases it is well known that no one has a vested right in the rules of procedure and parties have to follow the rules prevailing at the time when they sock their remedies. A right of appeal, however, though a remedial right stands on a different footing, It is true that it relales to a rule of procedure but in one sense it creates a vested right.
I have pointed out here that the assessment orders in of the above cases were passed before the change in Rule 27 came into effect, i.e., before 26-8-1951. In two of the cases represented by Mr. Gupta, even the appellate order of the Assistant Commissioner was passed earlier than the date in question.
The petitioners were therefore entitled as of right to prefer an appeal to the Commissioner ac-cording to the law prevailing at the time of the assessment orders and the change in the law subsequently did not deprive them of this right. I need only refer to two important decisions on the point which establish the proposition that if the matter of procedure is one which touches a right in existence at the date of the passing of the Act, the right cannot be taken away unless the Statute in express words or by necessary intendment purports to do so.
It was observed in--''Colonial Sugar Refining Co. Ltd. v. Irving'' 1905 AC 369 (J).
to deprive a suitor in a pending action of an appeal to a superior tribunal which belonged to him a of right is a very different thing from regulating procedure. (sic) principle their Lordships see no difference between abolishing an appeal al-together and transferring the appeal to a new tribunal. In either case, there is an interference with existing rights quite contrary to the well-known general principle that statutes are not to be hold to act retrospectively unless a clear intention to that effect is manifested.
Again in-- AIR 1927 242 (Privy Council) at p. 244 (K), the same high authority, laid down the law thus:
The principle which their Lordships must apply in dealing with this matter has been authoritatively enunciated by the Board in the ''Colonial Sugar Refining Co. v. Irving (J)'' where it is in effect laid down that while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment.
The latter case was a converse case in which the Privy Council refused to reopen the finality of an order passed under the Income Tax Law, although by a subsequent amendment a right of appeal to the Privy Council had been provided. It is obvious therefore that in the above cases, the petitioner had a right of appeal to the Commissioner against the orders of the Assistant Commissioner as provided by Rule 27 read with Section 30 of the Act, before the rule in question came to be amended.
It appears, however, that in six of the above cases the petitioners did not prefer any appeal and avail themselves of that right. They were content merely to file applications in revision before the Commissioner u/s 31 of the Act; and also u/s 32 of the Act asking for a reference to this Court,--all of which were rejected by the Commissioner as time-barred.
No arguments have been advanced before us to show that the said applications, prima facie, labelled as applications for revision u/s 31 of the Act were as well competent as appeals and we have unfortunately no materials before us to assist us on the point. I find that the petitioners had a valid right of appeal in those cases and the Commissioner should have done well to examine the revision petitions filed before him as appeals under the law and proceeded to dispose of the, question pf limitation from that standpoint.
As materials are lacking before us we refrain from giving any definite direction, but would leave the matter there. If the appeals are otherwise competent the petitioners have a right to be heard by the Commissioner who should dispose of the appeals according to law; otherwise the appeals will have to be dismissed. If the appeals are competent they must be taken as pending for proper disposal. I have no doubt that the Commissioner will exercise a wise discretion in the matter and reconsider the position in the light of the remarks I have made above.
In a democratic state where the Government is of the people, by the people and for the people even in matters of taxation, and perhaps more so in these matters, the people should have the satisfaction that their view-point has been adequately considered by the authorities concerned before levying any imposition on them, for the good of the State.
In the other two cases, it appears that the petitioners actually filed appeals before the Commissioner and according to the contention of Mr. Gupta these appeals were in time. But the Commissioner treated these appeals as applications in revision and dismissed them as such. That these appeals as such were in time has not been seriously disputed before us. The Commissioner therefore had no jurisdiction to dismiss these appeals as time-barred on the erroneous assumption that the appeals were applications in revision u/s 31 of the Act.
The order of the Commissioner therefore in these cases will have to be set aside and a direction issued to him to dispose of these cases according to law. The applications in Civil Rules Nos. 152 and 153 of 1953 must therefore be allowed In view of my discussions above, it becomes in necessary to decide the question whether the period of limitation in an application in revision under, Section 31 of the Act, as it then stood, runs from the date of the order or the date of communication; thereof.
The result is that Civil Rule No. 177 of 1953 in which the assessment relates to a period ending on 31-3-1950 and travels beyond the prohibited date of 26-1-1950 must be allowed and. the order of assessment quashed. It will be open to the Commissioner to assess the petitioner in that case in respect of transactions of sale, with-in the meaning of the Explanation to Section 2(12) of the Act, which took place prior to 26-1-1950, i.e., before the Constitution came into force and not thereafter.
Civil Rules Nos. 152 and 153 of 1953 are also allowed and the Commissioner is directed to dispose of the appeals filed in those cases according to law. The other applications have substantially failed and the rule nisi issued in those cases must be discharged. In view of the peculiar circumstances disclosed in these cases we would not make any order for the payment of costs of these applications.
Deka, J.
These are 14 Writ petitions and are heard as analogous matters, because primarily the same set of points of law arises in all these cases. These are all sales-tax cases, where assessments have been made in thirteen cases on the basis of transactions that took place prior to 31-3-49 that is before the Constitution of India came into force on 26-1-1950. It is only in one case, namely, Civil Rule No. 177. of 1953, that the assessment has been made for the period extending up to 31-3-50.
One of the contentions of the petitioners in all these cases is common, and that is, that owing to Article 286 Clauses (1) and (2) of the Constitution, the sales-tax could neither be levied nor collected in all these cases, because the transactions on the basis of which the assessments were made, relate to sale of jute which was despatched to Calcutta for sale in pursuance of earlier contracts (except those which were found to be sold locally), where the articles are alleged to have been delivered for the purpose of consumption, and they were sales coming within the purview of Article 286(1), with its Explanation.
In these cases we are primarily bound by the decisions of the Sale-fax Officers on questions of fact, or, in other words, we must proceed on the basis of the findings as arrived at by the Commissioner of Taxes or the Assistant Commissioner of Taxes who heard the appeals or revisions, as the case may be.
The second point that was urged on behalf of the petitioners was that in six of the cases--they being Civil Rules Nos. 97, 175, 176, 177, 178 and 179--it was alleged that the revision cases were wrongly dismissed as time-burred by the Commissioner of Taxes, and in Rules Nos. 152 and 153 of 1953, it was further contended that under the rules then in force, appeals were competent before the Commissioner of Taxes, but they were treated as revisions and illegally rejected as time-barred.
The main argument, however, has proceeded on the line as to whether the tax could have been levied and realised in all these matters after the Constitution of India had come into force, and on the assumption that the tax imposed relates to sales taking place outside the State.
It is conceded in a way by the learned Advocate-General appearing on behalf of the Sales Tax Department that the sales coming within the scope of the Explanation to Section 2(12), Assam Sales Tax Act, 1947, are repugnant to the provisions of Article 286 of the Constitution, and the Act has been accordingly amended by the Assam Sales Tax (Amendment) Act of 1951.
But his contention is that the Constitution--and particularly, Article 286 has no retrospective operation and it could not affect the sales that look place prior to 26-1-50, and, as regards the solitary case in which the assessment is made up to 31-3-50, the learned Advocate-General contends that that would come under the proviso to Clause (2) of Article. 286 of the Constitution and, as such, that tax up to that date was realisable by virtue of the order passed by the President on 26-1-1950, when the Constitution came into force. Leaving out the solitary case--Civil Rule No. 177 of 1953--we have first to decide--what would be the effect of the Constitution, or more strictly, of Article 286 on the sales that took place prior to the Constitution came into force.
The learned Advocate-General has based his contention on the authority of the Supreme Court decision in Keshavan Madhava Menon Vs. The State of Bombay, That decision has further been reinforced by a subsequent decision of the Sunreme Court in (S) AIR 1955 SO 123 (I). In ''Keshavan Madhava Motion''s case (H)'', the majority judgment was delivered by Das, J. with whom Kania, C.J., Sastri, J. and Aiyar, J. concurred. Mahajan, J. delivered a separate judgment, but mainly agreed with the majority decision, and a dissentient judgment was delivered by Fazl Ali, J. with whom Mukherjee, J. concurred.
The case related to a prosecution u/s 18(1), Indian Press (Emergency Powers) Act, 1981, the provisions of which came in conflict with the fundamental right conferred by Article 19(1)(a) of the Constitution, and, as such, became void under Article 13(1) of the Constitution after 26-1-1950. Article 13(1) of the Constitution lays down:
All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
Das, J. observed in ''Keshavan Madhava Menon''s case (H)'':
Every statute is prima facie prospective unless it is expressly or by necessary implications made to have retrospective operation. There is no reason why this rule of interpretation should not be applied for the purpose of interpreting our Constitution. We find nothing in the language of Article 13(1), which may be read as indicating an intention to give it retrospective operation. On the contrary, the language clearly points the other way.
Further down, Das, J. in same judgment observed:
Article 13(1) cannot be read as obliterating (ho entire operation of the inconsistent laws or to wipe them out altogether from the Statute Book for to do so will be to give them retrospective effect which, we have said, they do not possess. Such Laws exist for all past transactions and for. enforcing all rights and liabilities accrued before the date of the Constitution.
The learned Advocate-General relies upon the following passage occurring in the judgment:
As already explained, Article 13(1) only has the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or ''binding effect only with respect to the exercise of fundamental rights on and'' after the date of the commencement of the Constitution.
It has no retrospective effect, and if, therefore, an act was done before the commencement'' of the Constitution in contravention of the provisions of any law which, after the Constitution, becomes void with respect to the exercise of any of the fundamental rights, the inconsistent law is not wiped out, so far as the past act is concerned, for, to say that it is, will be to give the law retrospective effect.
Fazl Ali, J. with whom Mukherjee, J. concurred, observed:
The thoroughness and precision which the framers of the Constitution have observed in the matters to which reference has been made, disinclines me to read into Article 13(1) a saving provision of the kind which we are asked to read into it. Nor can I be persuaded to hold that treating an Act as void under Article 13(1) should have a milder effect upon transactions not past and closed than the repeal of an Act or its expiry in due course of time.
In my opinion, the strong sense in which the word "void" is normally used and the context in which it has been used, are not to be completely ignored. Evidently, the framers of the Constitution did not approve of the laws which are in conflict with the fundamental rights, and, in my judgment, it would not be giving full effect to their intention to hold that even after the Constitution has come into force, the laws which arc inconsistent with the fundamental rights, will continue to be treated as good and effectual laws in regard to certain matters, as if the Constitution'' had never been passed.
His Lordship further dispenses with the argument, that if Section 6, General Clauses Act does not in term apply, the principle underlying that section. should be applied.
Mahajan, J. in the course of the judgment in the said case observes:
It seems clear that an existing statute, in spite pf a declaration by Court that it is void, remains in force till 25-1-1950, and continues to remain on the statute book even after 26-1-1950, except; that no effect can be given to any of its provisions which are repugnant to the fundamental rights, guaranteed by the Constitution.
The effect of Article 13(1) is only prospective and it operates in respect to the freedoms which are infringed by the State subsequent to the coming into force of the Constitution, but the past acts of a person which came within the mischief of the law then in force are not affected by Part. III of the Constitution.
Mahajan, J. fully agreed with the majority decision on the point that Article 13(1) should have no retrospective operation. His Lordship expressed the opinion that
the rule contained in the General Clauses Act and in the English Interpretation Act is more in consonance with reason and justice and is also a rule of convenience and should be followed in this country, in preference to the rule evolved by the English Judges in the earlier part of the English legal history.
In the case in (S) AIR 1055 SG 123 (I), the judgment of the Constitution. Bench was delivered by Mahajan, C.J. on a reference by a Bench of the Supreme Court, and there also the effect of the word ''void'' occulting in Article 13(1) was considered. The learned Chief Justice discussed both the majority and the minority views as expressed in the case of ''Keshavan Madhava Menon (H)'' and fully endorsed his earlier view that agreed with the majority decision. His Lordship further concluded his decision on that point in the following words:
For determining the rights and obligations of citizens, the part declared void should be notion-ally taken to be obliterated from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26-1-1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution.
In effect, this decision fully endorses the (sic) of the Supreme Court in ''Keshavan Madhava Menon''s case (H)'', to the effect that Article 13(1) of the Constitution could have no retrospective effect, nor anything in the Constitution could materially affect the operation of any law repugnant to the Constitution, relating to rights and obligations arising therefrom till the Constitution came into force. In other words, the Constitution had no retrospective effect to obliterate those rights and liabilities completely, though the law becomes inoperative.
The learned Advocate-General further relied upon the decision of the Madras High Court in-- India Coffee and Tea Distributing Co. Ltd. Vs. The State of Madras, There the learned Judge has not given any reason for his decision, but has summarily come to the view that as Article 286 of the Constitution of India came into force on or after 26-1-50 this Article would not affect the assessment objected to relating to 1947 April to 1949,. There also the point involved was the legality of the assessment to sale-tax after the Constitution came into force, because of the bar created by Article 286 of the Constitution.
The learned advocate for the petitioners relies on the case in Himmatlal Harilal Mehta Vs. The State of Madhya Pradesh and Others, in support of the contention, and urges that a sale, by virtue of the Explanation to Section 2(12), Assam Sales Tax Act, being repugnant to the Constitution, the State is without authority of law in the matter of imposing any sales-tax, nor can it use a threat of using the coercive machinery of the impugned Act to realise sales-tax from the dealers,
What that case really decides is that once a tax is found to be illegally levied or levied without the authority of law, a relief can be obtained by the aggrieved person under Article 226 of the Constitution. This case does not decide the point as to whether any tax falling due on sales coming within Explanation II to Section 2(g) of the Sales Tax Act prior to the coming into force of the Constitution, would be realisable or not alter 26-1-50.
It is not disputed in the present case that there would be a bar to the realisation of similar tax'' after the Constitution came into force unless the transaction would come under the proviso to Article 286(2). Explanation II to Section 2(g), C.P. and Berar Sales Tax Act, 1947, is almost similar to the Explanation to Section 2(12), Assam Sales Tax Act.
So far as facts are concerned--under the C.P. & Berar Sales Tax Act, 1947, cotton was declared liable to sales tax on 11-4-49, and since that date, the appellant commenced paying the tax in respect of the purchases made by it, and continued to pay it till 31-12-1950.
For the quarter ending on 31-3-1951, the appellant declined to pay the tax in respect of the purchase made during that quarter, realizing that it could not be made legally liable for the payment of this tax in the State of Madhya Pradesh the transactions done or effected in Madhya Pradesh not being "sales" within that State, or, in other words, they found that the Explanation II to Section 2(g) of the said Act was no longer operative after the Constitution came into force.
This decision of the Supreme Court, therefore falls short of supporting the petitioner''s contention that the tax, even for the period earlier to 26-1-1950, was hit by the operation of Article 286 of the Constitution.
The learned Counsel for the petitioner relies on another decision of the Nagpur High Court Shriram Gulabdus v. Board of Revenue M.P. AIR 1952 Nag 378 (M), in support of his contention that the tax on sales coming within the Explanation to Section 2(12), Assam Sales Tax Act, could neither be levied nor realised after the Constitution came into force. That was a sales tax refer-once coming to the High Court u/s 23(3), M.P. Sales Tax Act.
There are only two points in the reference pertinent to the case before us--one is as to whether the sending of goods to persons outside the limits of the State would constitute a sale within the meaning of the Act, and the second point is--whether the Explanation II to Section 2(g) of the Act, which makes an agreement of sale taxable even though the sale may have taken place outside the Province, is ultra vires the Provincial Legislature?
In connection with the first point, I have just mentioned, when there is territorial nexus, where the goods have been sent to persons outside the limits of the State by a registered dealer in furtherance of the contract of sale outside the State, it was held to be a sale within the meaning of the Act, and secondly, that the Explanation II to Section 2 (g), which made an agreement of sale taxable even though the sale might have taken place outside the Province, was not ultra vires the Provincial Legislature.
The learned Judges, however, made it clear that this answer to the question in the affirmative was free from consideration arising under Article 286 and that after Article 286 of the Constitution came into force, the Explanation II could no longer be enforced, more particularly because of the Explanation to Clause (1) of Article 286, which lays down that sales-tax can only be collected at the market and where the goods arc delivered for consumption. This case, far from supporting the contention of the petitioners that Article 286 was retrospective in operation, is absolutely silent on the point; nor was the point considered as such, as it did not arise out of that reference.
The only thing that was found was that the definition of ''sale'' under Explanation II to Section 2(g), C.P. and Berar Sales Tax Act, 1947, was in conflict with Article 286 of the Constitution and could not (sic) as against the provisions of the Constitution, and to that extent, Clause (1) of Article 286 must prevail as, from the date of the Constitution, the collection of sales-tax must be within the State where the goods are delivered....
The learned Judges themselves said that they gave their answer to this question with considerable hesitation as it did not strictly arise from the reference, but arose only out of the point raised by the learned Advocate-General in his argument. The decision is confined only to the point under consideration, and it cannot be said to have decided whether any tax that accrued earlier to 26-1-50 might or might not be realised after the particular Explanation became inoperative.
The next case relied on by the learned Counsel for the petitioners was-- Kanpur Oil Mills Harriesganj Vs. Judge (Appeals) Sales Tax, Kanpur Range, Kanpur and Others, . There the point considered was the applicability of Article 286 of the Constitution to the transactions of sale of articles which were despatched for consumption outside the State--and the effect of the Constitution on the existing laws.
Though the learned Judge uses the word Void with regard to the laws repugnant to the Constitution, the judgment does not support the learned Counsel''s contention that they should be considered to be effaced from the Statute Book. Whether the Constitution had any retrospective effect, had not been considered in the judgment, and, therefore it is of little help to us that way.
Mr. Choudhuri for the petitioners tried to distinguish the case of ''Keshavan Madhava Menon (H)'' on the ground that what was decided in that case was only with reference to fundamental rights, and that Article 13(1) of the Constitution was not retrospective in operation, but it did not refer to the Constitution as a whole. I do not think tills contention to be correct, because Das, J. had already indicated in the said judgment that the Constitution as a whole should be treated as prospective unless there was something to show that any of the clauses in the Constitution had retrospective operation.
It was only by way of abundant caution that Article 13(1) has laid down that any law repugnant to the Constitution would be void. But even if that was not said, the fate of repugnant laws would be the same, Mr. Choudhuri strenuously contended that the effect of the repugnancy would be to completely efface the Act, as if it never existed in the Statute Book--and not simply bar its operation.
He referred to certain passages, in this connection, in Craies on Statute Law and Maxwell''s Interpretation of Statutes, which were relied on in the judgment of Fazl Ali, J. in ''Keshavan Madhava Menon''s case (H)''. I need not dilate on the point, and with great respect to the dissentient Judges, we are bound by the majority decision of the Supreme Court in ''Keshavan Madhava Menon''s case (H)'', subsequently followed in ''Belram Khurshid Pesikaka''s case (I), that the effect of the repugnancy in those cases is not completely to efface the effect of the legislation which stood or the rights and liabilities that arose, from the operation of the Act or clause till it came in conflict with the Constitution.
Accordingly, the liability of the dealers to pay sales-tax on the transactions coming within the Explanation to Section 2(12), Assam Sales Tax Act, or for consumption outside the State, prior to the Constitution coming into force, cannot be said to have eclipsed or to have been effected after the Constitution came into force.
I do not feel called upon to consider whether the spirit of Section 6 of the General Clauses Act applied to the clauses of the Statute that became inoperative after the Constitution came into force--since I have held, in the facts of this case, that the provisions of the Constitution had no retrospective operation except where specifically stated--and the tax accruing earlier to the coming in force of the Constitution remained unaffected.
There is no substance in the contention that there WHS any earlier determination of the question of liability or otherwise of the assessees u/s 51, Assam Sales Tax Act, 1947 (now deleted), or that the tax was not realisable by the Department, if the assessees themselves did not realise the same from the purchasers.
Another important branch of Mr. Choudhuri''s argument has been that the liability to pay tax did not accrue till it was finally determined and assessed and notice u/s 17, Assam Sales Tax Act was issued. Mr. Choudhuri drew our attention to Clauses (1), (2), (3), and (4) of Section 17, Assam Sales Tax Act, which compare with Section 23, Income Tax Act, and submitted that the tax becomes due only after the assessment is made, and the circle is complete only after having access to the highest Court of appeal or revision, that is, when the matter reachies the Commissioner of Taxes and the amount is finally fixed by such an authority.
He further referred to Section 34, Clause (2) of the said Act to show that tax is payable only after the assessment is finalised. He placed before us for consideration the case in AIR 1945 62 (Privy Council) The learned Advocate-General on the other hand submits that Section 3, Assam Sales Tax Act is the charging section, and it clearly indicates that the dealer is liable to pay tax under this Act on all sales effected after the notified date, as indicated therein.
It is urged, therefore, that it follows that tax becomes due as soon as a sale takes place, and does not wait to accrue till assessed by the Department. Section 16(1) of the Act provides for voluntary submission of a return by a registered dealer in respect of his total turnover by such date and to such authority as may be prescribed, and Section 34, Clause (2) requires that before any registered dealer furnishes the returns required by Sub-section (1) of Section 16, he shall, in the prescribed manner, pay into a Government Treasury the full amount of tax due from him under this Act on the basis of such returns, and shall furnish, along with the returns, a receipt from such Treasury in token of payment of such tax.
These two sections, read together, clearly indicate that the tax does not wait to be due till assessed, but the dealer can, and should, deposit the tax in Treasury according to the return he himself files. This strongly supports the learned Advocate-General''s argument that the tax accrues, as indicated in Section 3 of the Act, as soon as a certain transaction coming under the Act takes place.
The learned Advocate-General has further placed before us the case reported in--''Whitney v. Commissioner of Inland Revenue'' 1926 AC 37 (O), reading from p. 52 (extract from Lord Dune-din''s judgment) which indicates that there are three stages in the imposition of a tax, namely,--(i) the accrual stage or the declaration of liability, (ii) the assessment stage, and (iii) the realisation stage. The following passage from his Lordship''s judgment is important:
Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, came the methods of recovery, if the person taxed does not voluntarily pay.
He has further relied upon the authority of the decision in the case--''Chatturam v. Commr. of Income Tax, Bihar'' AIR 1947 FC 32 (P), which was a case relating to Income Tax. Their Lordships followed the case in 1926 AC 37 (O), and held that the liability to pay the tax is founded on Sections 3 and 4, Income Tax Act, which are the charging sections, and Section 22 etc., are the machinery sections to determine the amount of tax.
In the case-- Bihar Mica Concern Ltd. Vs. Commr. of Income Tax, presided over by Ramaswami and Sarjoo Prosad (as he then was), JJ.--a similar view was held, namely, that the liability to pay the tax is founded on Sections 3 and 4, Income Tax Act, which are the charging sections, and that Section 22 and others are the machinery sections to determine the amount of tax, and it was futile to contend that the Income Tax Officer was not entitled to assess the party, or that the party is not liable to pay any tax because notice of demand under the Income Tax Act had not been issued to him, and there, the Federal Court decision in the case AIR 1947 FC 32 (P), was followed. Mr. Lahiri further argued that the Privy Council case of--Doorga Prosad Chamari (G), does not really lay down any law on the point, except to say that after the assessment is completed and demand is made, it becomes a debt due to the Crown. The point involved in that case was--whether the period for which the tax is assessed should be, specifically mentioned in the certificate in col. 4 thereof.
Their Lordships held that although Income Tax may be popularly described as due for a certain year, it is not in law so due, but it is calculated and assessed by reference to the income of the assessee for a given year, and it is due when demand is made u/s 29 and Section 45, when it becomes a debt due to the Crown, but not for any particular period. This case obviously does not support the petitioner''s contention that the liability to pay the tax arises only after the assessment is completed.
In this view, I must hold that the tax that arose on the basis of returns submitted for a period earlier than 26-1-50, was due, and it could not only be levied but could be collected as well.
In view, however, of the operation of Article 286 (1) of the Constitution, the sale-tax based on transactions covered by the Explanation to Section 2(12) or for consumption outside the State became non-realisable after the Constitution came into force. In Civil Rule 177 of 1953, assessment has been made up to 31-3-50, and I consider that that has been improper, since the Explanation to Section 2(12) was inoperative after 25-1-1950, and the tax became realisable only in that State where the article was delivered for consumption.
In the case-- The State of Bombay and Another Vs. The United Motors (India) Ltd. and Others, it was held by the Supreme Court that the assessment of sales-tax is permissible only in the State of consumption, and not in the State of issue. It has further been held therein that the operation of Clause (2) of Article 286 stands excluded as a result of the legal fiction enacted in the Explanation to Clause (1) and the State in which the goods are actually delivered for consumption can impose tax on inter-State sales or purchases.
The effect of the Explanation in regard to inter-State dealings is to invest what, in truth, is an inter-State transaction with an intra-State, character in relation to the State of delivery, and Clause (2) can, therefore, have no application to such sales or purchases.
The sales in this case on or after 26-1-1950, coming under the Explanation to Clause (1), cannot'' come under Clause (2) of Article 286 of the Constitution, and, therefore, the Sales Tax Department cannot have the advantage provided under the proviso to Article 286(2), as contended by the learned Advocate-General. The result is that, in this matter, the tax will have to be re-assessed and levied up to 25-1-1950 only.
Mr. Chaudhury further contended that the revision petitions connected with Rules Nos. 97, 175, 176, 177, 173 and 179 should be re-heard by the Commissioner, and we should hold that they were illegally rejected by him as time-barred. The assessees concerned in these cases, as a matter of fact, came in a reference to this Court, but the references were all turned down, on the interpretation of the law as it then stood.
Even if it be contended that the revisions were rejected illegally--I must still abide by the earlier decision of this Court, to which I was a party--''Rahman Stores v. Commr. of Taxes Assam'' AIR 1953 Assam 144 (S), wherein it was held that limitation for revision of appellate orders ran from the date of the order itself, and not from the date of knowledge of the order.
The law has since been amended. Further details are not given in the petitions to give a clear impression as to why those matters can be said to be rejected illegally. In a Patna decision, to which my Lord the Chief Justice was a party, as a Judge of that Court,-- Diamond Coal Co. Ltd. Vs. The State of Bihar and Another, it was held that no writ should be issued under Article 226 of the Constitution where a point is wrongly decided by the Department concerned.
In my opinion, the point was not wrongly decided, but, even if it was, I see no sufficient reason to interfere after the lapse of such a long period--and there is no power left with the Department to revise those cases except in Civil Rule No. 177, which we are sending down for reconsideration and re-assessment of tax on sales that took place up to the period before the Constitution came into force.
In Civil Rules 152 and 153 of 1953, it has. been argued by Mr. P.K. Gupta, the learned advocate for the petitioners, M/s Gowardhandas Banthia, that appeals were competent against the order of assessment passed by the Assistant Commissioner in each of these cases, but the learned Commissioner of Taxes treated them as revision petitions and rejected them as time-barred.
No specific ground was taken in the petitions before us, but that point was allowed to be argued as no objection was raised from the Taxing Department, and it appears to us that the assessees had the right to file an appeal and that right could not be retrospectively taken away by subsequent modification in the rules whereby a Second Appeal is eliminated. The Collector will, therefore, in all fairness, rehear these appeals, if not other-wise barred, and dispose of them according to law.
The result is that I agree with the orders proposed by my Lord the Chief Justice that the petitions in Rules Nos. 152, 153 and 177 be allowed to the extent indicated above, and the other Rules discharged. There will be no order as to costs.
Sarjoo Prosad, C.J. and Deka, J.
Leave to appeal to the Supreme Court, as prayed for, is granted.