# RATTAN J,AL & CO. & ANR v. THE ASSESSING AUTHORITY & ANR

- **Citation:** [1969] 2 S.C.R. 544
- **Court:** Supreme Court of India
- **Decided:** 1968-10-29
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rattan-j-al-co-anr-v-the-assessing-authority-anr-4563
- **Pages:** 14

## Headnote

RATTAN J,AL & CO. & ANR.
A
v.
THE ASSESSING AUTHORITY & ANR.
October 29, 1968
[M. HlDAYATULLAH, C.J., J. C. SHAH,
V. R.AMASWAMr.
B
K. S. HEGDE AND A. N. GROVER, JJ.]
Punjab General Sa/es Tax Act. 1948 as amended by Punjab Act 7
of 1967 and Haryaua Act 14 of 1967, ss. 5, llAA-Fixation of stage of
tax-A111end111ents if contravene s. 15 Central Sc;les Tax Act,
1955-[j
discrilninato1y-Constitution of India, Art. 304.
In Bhawani Cotton Mills v. State of Punj"/1,
11967] 3 S.C.R. 577
this Court struck down s. 5(1) second proviso and ss. 5(2) (a)(vi) of
the Punjab General Sales Tax Act, 1948 as contravening s. 15 of the
Central Sales Tax- Act, 1955, because, neither the Punjab Act nor the
rules made thereunder indicated, as required by the Central Act the stage
at which tax was to be levied.
After the formation of the new States of
Punjab and Haryana, the Act was amended by the legislatures of the
two States by Act 7 of 1967 and 14 of 1967 respectively.
The amendments fixed it at the stage of sale or purchase of goods by the last dealer
liable to pay tax.
In a writ petition before this Court the
petitioners
contended that (i) the position had not altered at all even after the
an1endn1ents and the liability to taxation at different stages still remained
and therefore the Act con.tinued to be in conflict with the Central Sales
Tax Act; (ii) the legislatures of the two States were not competent to
amend retrospectively an act passed by the composite State; (iii) by
leaving it free to the execlltivc to impose the tax within the maximun1
fixed there was excessive delegation of legislative functions; (iv) there
Yl'as discrimination in the new s. 1 lAA and the opportunity given to a
dealer to ask for reassessment or to submit to the old assessment and
(v) the Act discriminated between imported goods and local goods and
therefore contravened the equality clause and Art. 30. of the Constitution.
HELD : Disn1issing the petition.
(1) The Act by specifying the stage as the last purchase or sale by
a dealer liable to pay the tax makes the stage quite clear. The matter
is no\V in the hands of the dealer and he has to find out for himself
\vhether he is liable to pay the tax or not.
A dealer knows what he
has done \\'ith his goods or is going to do with them.
By providin_g
that he need not include in his turnover any transaction except when he
is the last dealer. the positfon is no\V made clear.
f553 F. G]
(2) The competency of the legislatures of Punjab and Haryana to
an1end an Act passed by the con1posite State cannot be questioned. After
the reorganisation the Act applied as an independent Act: to each of the
areas and is subject to the legislative competence of the legislature
i:n
that area. [556 BJ
c
D
E
F
G
( 3) There is no abdication of legislative functions in favour of the
administrative aulhority as the Central Act itself gives
poVl'er to
the
H
legislature to choose a rate of tax at not more than 3% of the taxable
tul·novcr.
~rhc tax levied is '.\'cl! \vi thin. that. lin1it
and
therefore
the
Legislature has
chO'scn
the
n1axin1un1
nnd has left it free
to
the
••
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•
RATTAN & CO. V. ASSESSING AUTHORITY
545
A
authorities to impose the tax within that maximun1 regard being had to
the requirements of revenue and the expenditure necessary for the State.
[555 GJ
B
c
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(4) The opportunity given to a dealer in s. llAA to ask for reassessment or to submit to the old assessment does not result in discrimination. 'fhis is open to every dealer an<l the intention is to give an opportunity to the dealer himself leaving it to his own will whether to ask
for a refund or not.
[555 E--F]
(5) When a taxing State is not imposing rates of tax on imported
goods different from rates. of tax on goods manufactured or produced.
Article 304 has no application.
So long as the rate is the same ·Art. 304
is satisfied.
In the instant case the tax is at the same rate and therefore
tax cannot be said to be higher in the case of imported goods.
When
the rate i

## Text

RATTAN J,AL & CO. & ANR.
A
v.
THE ASSESSING AUTHORITY & ANR.
October 29, 1968
[M. HlDAYATULLAH, C.J., J. C. SHAH,
V. R.AMASWAMr.
B
K. S. HEGDE AND A. N. GROVER, JJ.]
Punjab General Sa/es Tax Act. 1948 as amended by Punjab Act 7
of 1967 and Haryaua Act 14 of 1967, ss. 5, llAA-Fixation of stage of
tax-A111end111ents if contravene s. 15 Central Sc;les Tax Act,
1955-[j
discrilninato1y-Constitution of India, Art. 304.
In Bhawani Cotton Mills v. State of Punj"/1,
11967] 3 S.C.R. 577
this Court struck down s. 5(1) second proviso and ss. 5(2) (a)(vi) of
the Punjab General Sales Tax Act, 1948 as contravening s. 15 of the
Central Sales Tax- Act, 1955, because, neither the Punjab Act nor the
rules made thereunder indicated, as required by the Central Act the stage
at which tax was to be levied.
After the formation of the new States of
Punjab and Haryana, the Act was amended by the legislatures of the
two States by Act 7 of 1967 and 14 of 1967 respectively.
The amendments fixed it at the stage of sale or purchase of goods by the last dealer
liable to pay tax.
In a writ petition before this Court the
petitioners
contended that (i) the position had not altered at all even after the
an1endn1ents and the liability to taxation at different stages still remained
and therefore the Act con.tinued to be in conflict with the Central Sales
Tax Act; (ii) the legislatures of the two States were not competent to
amend retrospectively an act passed by the composite State; (iii) by
leaving it free to the execlltivc to impose the tax within the maximun1
fixed there was excessive delegation of legislative functions; (iv) there
Yl'as discrimination in the new s. 1 lAA and the opportunity given to a
dealer to ask for reassessment or to submit to the old assessment and
(v) the Act discriminated between imported goods and local goods and
therefore contravened the equality clause and Art. 30. of the Constitution.
HELD : Disn1issing the petition.
(1) The Act by specifying the stage as the last purchase or sale by
a dealer liable to pay the tax makes the stage quite clear. The matter
is no\V in the hands of the dealer and he has to find out for himself
\vhether he is liable to pay the tax or not.
A dealer knows what he
has done \\'ith his goods or is going to do with them.
By providin_g
that he need not include in his turnover any transaction except when he
is the last dealer. the positfon is no\V made clear.
f553 F. G]
(2) The competency of the legislatures of Punjab and Haryana to
an1end an Act passed by the con1posite State cannot be questioned. After
the reorganisation the Act applied as an independent Act: to each of the
areas and is subject to the legislative competence of the legislature
i:n
that area. [556 BJ
c
D
E
F
G
( 3) There is no abdication of legislative functions in favour of the
administrative aulhority as the Central Act itself gives
poVl'er to
the
H
legislature to choose a rate of tax at not more than 3% of the taxable
tul·novcr.
~rhc tax levied is '.\'cl! \vi thin. that. lin1it
and
therefore
the
Legislature has
chO'scn
the
n1axin1un1
nnd has left it free
to
the
••
-'
t
•
•
•
RATTAN & CO. V. ASSESSING AUTHORITY
545
A
authorities to impose the tax within that maximun1 regard being had to
the requirements of revenue and the expenditure necessary for the State.
[555 GJ
B
c
D
E
F
G
H
(4) The opportunity given to a dealer in s. llAA to ask for reassessment or to submit to the old assessment does not result in discrimination. 'fhis is open to every dealer an<l the intention is to give an opportunity to the dealer himself leaving it to his own will whether to ask
for a refund or not.
[555 E--F]
(5) When a taxing State is not imposing rates of tax on imported
goods different from rates. of tax on goods manufactured or produced.
Article 304 has no application.
So long as the rate is the same ·Art. 304
is satisfied.
In the instant case the tax is at the same rate and therefore
tax cannot be said to be higher in the case of imported goods.
When
the rate is applied the resulting tax may be somewhat higher but that
does not contravene the equality contemplated by Art. 304.
[557 B, CJ
State of Madras v. N. K. Natraja, Muda/iar, [1969] 1 S.C.R. referred
to.
ORIGINAL JURISDICTION: Writ Petitions Nos. 133, 165, 169172, 185, 218, 219, 227, 228, 230, 239, 252, 253, 248 and 249
of 1968.
Petition under Art. 32 of the Constitution of India for the
enforcement of the fundamental rights.
S. V. Gupte, S. K. Mehta and K. L. Mehta, for the petitioners
(in W.P. No. 133 of 1968).
C. D. Garg, S. K. Mehta ~d K. L. Mehta, for the petitioners
(in W.P. No. 165 of 1968).
Hardev Singh, for the petitioners (in W.Ps. Nos. 169 and 170
of 1968).
V. C. Mahajan, S. K.' Mehta and K. L. Mehta, for the petitioners (in W.Ps. Nos. 171, 172, 218, 219, 227, 228, 230, 239,
248, 249, 252 and 253 of 1968).
M. C. Chagla, A. N. Sinha and B. P. Jha, for the petitioners
(in W.P. No. 185 of 1968).
Niren De, Solicitor-General, 0. P. Malhotra aind R. N. Sachthey, for the respondents (in W.P. Nos. 133 and 165 of 1968).
Anand Saroop, Advocate-General for the State of Haryana and
R. N. Sachthey, for the respondents (in W.P. Nos. 218, 219, 227
& 228 of 1968).
0. P. Malhotra and R. N. Sachthey, for the respond~ts (in
W.P. Nos. 169 to 172 of 1968).
R. N. Sachthe,v, for the respondents (in W.P. Nos. 185, 230,
239, 248, 249, 252 and 253 of 1968).
B. Datta and P. C. Bharatari, for the interveners (in W.P. No.
165 of 1968).
546
SUPREME COURT REPORTS
[1969] 2 s.c.R.
The Judgment of the Court was delivered by
Hidayatullah, C.J. These are 17 petitions challenging
the
validity of the Punjab General Sales Tax (Amendment and Validation) Act, 1967 (Act No. 7 of 1967) by the Punjab Legislature
and the Punjab Sales Tax (Haryana Amendment and Validation)
Act, 1967. Thirteen of these petitions challenge the Punjab
Amendment Act and four challenge the Haryana Amendment
Act.
The petitioners are firms or companies dealing in cotton or oil
seeds. Their business is to purchase ginned and unginned cotton
for manufacturi,ng yam and selling the said cotton also to registered and unregistered dealers both inside and outside the State.
The petitioners of the second category purchase oil seeds for use
in manufacture of edible oils. The surplus oil-seeds are sold to
other dealers, registered or unregistered, inside and outside the
State of Punjab.
Both these commodities are essential commodities to which the Central Sales Tax Act applies. Certain provisions of these Amending Acts are challenged on the ground that
they offend s. 15 of the Central Act and are also unconstitutional
being in violation of Articles 14 and 19.
The Punjab General Sales Tax Act was passed in 1948.
It
was amended from time to time.
The Act as it stood on April 1,
1960, was challenged in Bhawani Cotton Mills Ltd. v. State of
Punjab and anr.( 1 ). On April 10, 1967 this Court by majority
struck down certain portions of the Act on the ground that they
were in conflict with the provision of s. 15 of the Ceintral Act.
On November l, 1966 the former State.of Punjab bifurcated and
the States of Punjab and Haryana came into existence.
On
December 29, 1967, the Punjab Legislature enacted Act 7 of 1967
amending the original Act, and the following day the President's
Act intituled the Punjab General Sales Tax
(Haryana Amendment and Validation) Act, 1967 (Act No.
14 of 1967) was
passed for Haryana. Both the Acts were preceded by Ordinances
which they replaced. It is not necessary to refer to the Ordinances.
Section 15 of the Central Sales Tax Act, 1956 (54 of 1956)
provided as follows :
"15. Restrictions and conditions in regard to tax
on sale or purchase of declared goods within a
State. Every sales-tax law of a State shall, in so
far as it imposes or authorises the imposition of
a tax on the sale or purchase of declared goods,
be subject to the following restrictions and conditions, namely :-
(1). [1967] 3 S.C.R. 577.
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RATTAN & co. v. ASSESSING AUTHORITY (Hidayatullah, C.J.) 547
A
(a) the tax payable under that law in respect of any
sale or purchase of such goods inside the State
shall not exceed three per cent of the sale or
purchase price thereof, and such tax shali not
be leviable at more than one stage;
(b) where a tax has been levied under that law in
B
respect of the sale or purchase inside the State
of any declared goods and such goods are sold
in the course of inter-State trade or commerce,
the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in
r,
that State."
The section provides that in respect of declared goods the tax
(sales or purchase) shall not exceed the prescribed limit and shall
not be levied at more than one stage and shal! be refunded to
persons from whom it is collected if the goods are sold in the
course of inter-state trade or commerce.
The original Punjab
D
General Sales Tax Act, 1948 was chal!enged before this Court
in Bhawani Cotton Mills Ltd.'s case('). The Act in defining the
tax-able turnover in s. 5(2) allowed certain deductions and one
such deduction in cl. (vi) was :
" ........ turnover during that period on the purchase of goods which are sold not later than six months
E
a.fter the close of the year, to a registered dealer, or in
the course of inter-State trade or commerce, or in the
course of export out of the territory of !ndia :
Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and
duly filled and signed by the registered dealer to whom
F
the goods are sold, is furnished by the dealer claiming
deduction."
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The original section, as it stood on April l, 1960, read as
follows:
"5. Rate of tax .
( 1) Subject to the provisions of this Act, there shall
be levied on the taxable turnover every year of
a dealer a tax at such rates not exceeding four
naye paise in a rupee as the State Government
may by notification direct :
•
Provided
(1) [1967] 3 S.C.R. 577.
548
SUPREME COURT REPORTS
[1969] 2 S.C.R.
Provided .further that the rate of tax shall not
exceed two naye paise in a rupee in respect of
any declared goods as defined in clause ( c) of
section 2 of the Central Sales Tax Act, 1956,
and such tax shall not be levied on the purchase .
or sale of such goods at more than one stage :
Provided
( 2) In this Act the expression "taxable turnover"
means that part of a dealer's
gross
turnover
during any period which remains after deducting
therefrom-
( a) his turnover during that period 011-
(i)
(ii) sales to a registered dealer of goods declared
by him in a prescribed form ....... .
,,
A
B
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(vi) the purchase of goods which are sold not
later than six months after the close of the
year, to a registered dealer, or in the course
of inter-State trade or commerce, or in the
course of export out of the territory of
India:
E
Provided that in the case of such a sale
to a registered dealer a decla~atian in the
prescribed form and duly filled and signed
by the registered dealer to whom the goods
are sold, is furnished by the dealer claiming
deduction.
"
It was contended in that case that s. 2 (ff), 5 ( 1) second proviso
and 5(2)(a)(vi) were in conflict \\~th section 15 of the Central
Act.
Bhawani Mills were dealers registered under the Punjab
General Sales Tax Act, 1948 and for the assessment years 1960-61
1961-62 and 1962-63 the Mills denied their liability to the Central Sales Tax on the purchase of cotton in the accounting year.
The scheme of the Act then :in force put the tax on purchase
of cotton {which was a declared commodity) at the rate of 2
naye paise in a rupee.
By the second proviso to s. 5 ( I ) it was
further provided that such tax shall not be levied on the purchase
or sale of such goods at more than one stage.
The word 'dealer'
at that time was defined as follows :
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RATTAN & co. v. ASSESSING AUTHORITY (Hidayatullah, C.J.) 549
"Dealer means any person including a Department
of Government who in the normal course of trade sells
or purchases any goods that are actually delivered for
the purpose of consumption in the State of Punjab.
irrespective of the fact that the main place of business
of such person is outside the said State rund where the
main place of business of any such person is not in the
said State, 'dealer' includes the local manager or agent
of such person in Punjab in respect of such business ...
The provisions for taxing purchases of cotton were challenged
on the ground that there was a possibility of the tax being levied
at more than one stage, the provisions of the second proviso
notwithstanding.
The argument was summarized by our brother
Vaidialingam thus :
"In this case, according to the appellant, it has to
send quarterly returns, even during the accounting year
and, as per s. 10 ( 4) of the Act, it has to pay also tax.
in accordance with the returns submitted by it for every
quarter. In the returns that are being sent, the dealer
will have to include all purchases of cotton, effected by
him during the quarter for which the return is sent.
There is no indication, either in the Act or in the rules
or the forms prescribed, as to whether the persons from
whom the appellant purchased cotton. have paid tax or
not.
Section 15 of the Central Act is not restricted
only to registered dealers.
There will also be nothing
to guide the appel!ant to know as to whether the goods.
purchased by it, have been sold to it by its vendor within
the period mentioned in cl. (vi) of s. 5(2) (a) of the
Act.
Under those circumstances. there 1s always a
possibility, or even a certainty, of more persons than one
having paid tax or being made liable to pay tax in respect o~ the same goods at different stages.
That is quite
opposed to the provisions of s. 15 (a) of the Central Act.
Even otherwise, it is pointed out that if a person has
purchased cotton and sells it after the period provided
for ins. 5(2) (a) (vi), that party is liable to pay sales
tax and would have also paid the same.
Another purchaser from the said party will also be liable to pay tax.
on .the same. commodity, if he sells the goods, after the
penod _mentioned in cl. (vi). That is, two persons are
made liable for payment of tax in respect of the same
commodity. In other words the purchases of the same
item of declared goods, by the persons indicated above,
are made liable for tax, whereas under the Central Act,
there can be only one levy and collection of tax at one
stage, either on sale or on purchase."
550
SUPREME COURT REPORTS
(1969] 2 S.C.R.
Learned counsel in that case showed by way of contrast how
the Madras, Mysore, Andhra Pradesh and U.P. had avoided such
a consequence. In answer, it was pointed out by the State that
since the tax. was levied, whether on sale or purchase, at the very
first transaction, the stage was fixed and that the dealer could
always claim exemption under s. 5(2)(a)(vi) or a refund under
s. 12 of the Act.
This Court in its majority judgment did not
consider that the second proviso to s. 5 ( 1) by its mere declaration
prevented the levy of tax at more than one stage. The difficulty
. however, rem;ained that the Act itself did not indicate the stage
at which the tax was to be levied and because under s. 15(1) of
the Central Act there could be no liability for payment of tax
unless this stage was so stated in the Act or the rules thereunder.
It was pointed out that a dealer would have to show in his return
all purchases of cotton and pay the tax with his return.
There
was nothing which would have enabled the dealer to know whether
the tax had already been paid by another dealer and to exclude
from his return those transactions.
The dealer could not take a
chance as heavy penalties were provided.
This was particularly
so where the goods passed through an unregistered dealer's hands
at an intermediate stage.
In dealing with the latter part of the
reasons this Court gave an example which may be quoted here :
" .... i.f a dealer, 'A' sells the declared foods to 'B',
six months after the close of the year ( B being a registered dealer) , A becomes liable to purchase tax. But,
if B sells the identical declared goods, again, after the
period mentioned in sub-cl. (vi), he will also be liable
to pay purchase tax.
That means, in respect of the
same item of declared goods, more than one person is
made liable to pay tax and the tax is also levied at more
than one stage. That is not permissible under s. 15 (a)
of the Central Act. If goods are resold to a nonregistered dealer, within the period, sub-cl. (vi), will not
help the original purchaser. We may also point out, at
this stage, that sub-cl. (vi) of s. 5(2)(a), negatives the
assumption that the normal rule, under the Act, ill respect of declared goods, is to levy the tax on the first
purchaser."
This Court then referred to s. 12 where there is a provision for
refund which taken with rules 48-58 allowed for r()fund to be
claimed, and found the provisions insufficient to get over the
difficulty.
This Court observed :
"Even in the matter of obtaining refunds, there can
be no controversy, that the appellant will have to place,
before the officer concerned, particulars of transactions
connected with the commodity, in question and also the
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RATTAN & co. v. ASSESSING AUTHORITY (Hidayatullah, C.J.) 551
basis on which it claims the relief. It will be absolutely
difficult, if not impossible, for persons like the appellant,
to collect materials in this behalf, because, there is no
provision, contained either in the Act or the rules, on
the basis of which it will be entitled to be supplied with
all the material information, relevant, for sustaining a
request for refund. If the Central Act makes it mandatory that the tax can be collected only at one stage,
in our opinion, it is not enough for the State to say that
a person, who is not liable to pay tax, must nevertheless,
pay it in the first instance, aud then claim refund, at a
later stage. We may state that the question as to how
far a party can ask for refund, without the order of
assessment being set aside, by appropriate proceedings,
is highly doubtful; because at the time when the actual
order of assessment is passed, in certain cases, it may
not be possible for a party to say whether he is entitled
to exemption, or not, under sub-cl. (vi) of s. 5 ( 2) of
the Act. If a person is not liable for payment of tax
at all, at auy time, the collection o.f a tax from him,
with a possible contingency, of refund at a later stage,
will not make the original levy valid; because, if particular sales or purchase are exempt from taxation altogether, they can never be taken into account,
at any
stage, for the purpose of calculating or arriving at the
taxable turnover and for levying tax."
Relying upon the observations in A. V. Fernandez v. State of
Kera/a(') this Court concluded:
" ...... the provisions contained in a statute with
respect to exemptions of tax or refund or rebate, on the
one hand, must be distinguished from the total nonliability or non-imposition of tax, on the other. These
observations, also, in our opinion, effectively provide an
answer to the stand taken by the State, in this case that
s. 12 of the Act provides an adequate relief, by way
o.f refund, even if tax is collected at an earlier stage."
The Amending ~cts which are now challenged set about removmg these ~1fficulttes.. These a.mendments are again challenged
on the same Imes .. It 1s convement to take the two Amending
Acts. separately. Frrst we shall take up for
consideration the
Punpb amendments.
Here, we are concerned only with a few
of the amendments made by the Amending Act 7 of 1967. Sec--
tion 5 was amended retrospectively from different dates.
In subsection (1), in the sec?nd proviso, the words "as defined in cl. ( c)
(!) [1957] S.C.R. 837.
552
SUPREME COURT REPORTS
(1969] 2 S.C.R.
·of s. 2 of the Central Sales Tax Act, 1956, and such tax shall not
A
be levied on the purchase of sale of such goods at more than one
stage" are now omitted.
After the second proviso another proviso is introduced : In sub-s. IA, the words "in respect of such
.goods other than declared goods" are substituted retrospectively
from 16th December, 1965 for the words "in respect of such
goods."
After sub-s. (2) a new sub-section (3) is introduced
B
from October l, 1958.
We may now set out the 5th sub-section
as it emerges from the amendment before we deal with the
·objections :
"Section 5-Rate of tax ( 1) Subject to the provisions of this Act. there shall be levied on the taxable
turnover of a dealer a tax at such rates not exceeding
C
six naye paise in a rupee as the State Government may
by notification direct."
( 2) In this Act the expression
'taxable turnover'
means that part of a dealer's gross turnover during any
period which remains after deducting therefrom-
( a) his turnover during that period onD
(i)
(vi) the purchase of goods which are sold not later
than six months after the close of the year, to a
registered dealer, or in the course of inter-State
J!!
trade or commerce, or in the course of export
out of the territory of India;
Provided that in the case of such sale to a registered dealer, a declaration, in the prescribed form and
duly filled and signed by the registered dealer to whom
the go?<ls ·are sold, is furnished by the dealer claiming
F
deducuon.
(3) Notwithstanding anything contained in this
Act,-
( a) in respect of declared goods tax sha!J be levied
at one stage and that stage shall be -
(i) in the case of goods liable to sales tax, the
stage of sale of such goods by the last dealer
liable to pay tax under this Act;
(ii) in the case of goods liable to purchase tax,
the stage of purchase of such goods by the
last dealer liable to pay tax under this
Act;
(b) the taxable turnover of any dealer for any period
shall not include his turnover during that period
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RATTAN & co. r. ASSESSING AUTHORITY (Hidayatllllah, C.J.) 553
on any sale or purchase of declared goods at any
stage other than the stage referred to in subclause (i), or as the case may be, sub-clause
(ii) of clause (a)."
In addition, a new section, s. ! !AA was added to the following
effect :
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"1 lAA. Review of certain assessments, etc. of tax
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on declared goods :-
(1) Notwithstanding anything contained in this Act,
the Assessing Authority shall (whether or not an
application is made to him in this behalf), review
all assessments and re-assessments made before
the commencement of the Punjab General Sales
Tax Amendment and Validation Act, 1967, in
respect of declared goods and make such order
varying or revising the order previously made as
may be
necessary for bringing the order previously made into conformity with the provisions.
of this Act as amended by the Punjab General
Sales Tax (Amendment and Validation) Act.
1967:
Provided that no procecuing for review
shall
be·
initiated without giving the dealer concerned a notice
in writing of not less than thirty days.
(2) Any dealer on whom a notice is served under
sub-section ( l) may within thirty days from the
date of receipt of such notice intimate in writing the assessing authority ot his intention to•
abide by the assessment or reassessment sought
to be reviewed and if he does so, the assessing
authority shall not review such assessment or reassessment under this section.
(3) No order shall be made under this
section
against any dealer without giving such dealer
a reasonable opportunity of being heard .
( 4) Notwithstanding anything contained in any
judgment, decree or order of any court or other
authority to the contrary but subject to the provisions of the foregoing sub-sections any assessment. re-assessment. levy or collection of any
tax in respect of declared goods made or purporting to have been made, and any action or
thing taken or done or purporting to have done
in relation to such assessment.
re-assessment.
levy or collection under the provision of this Act
before the commencement of the Punjab General:
554
SUPREME COURT REPORTS
(1969] 2 S.C.R.
Sales Tax (Amendment and Validation) Act,
1967, shall be as valid and effective as if such
assessment, re-assessment, levy or collection or
actiOJ:! or tiring had been made, taken or done
under this Act as
amended by the Punjab
General Sales Tax (Amendment and Validation)
·Act, 1967."
The argument is that the position has not altered at all even
after the amendments
and the liability to taxation at different
stages remains still and the Act continues to be in conflict with
the Central Act on the same reasons on which Bhawani Mills
case(') proceeded. It is argued that the amendments have been
made retrospective but no machinery is provided to enable the
dealer to discover that the goods had been taxed before and the
single stage at which the tax is to be levied is still not clearly
<liscernible.
This is the main argument but there are many
supplementary arguments which we shall notice later.
For the
present we confine our attention to the main point.
The stage of tax is now stated ins. 5 (3) (i) and (ii). In the
case of sales-tax, the stage of tax is the sale of such goods by the
last dealer liable to pay the tax and in the case of purchase tax
1he stage is purchase by the last dealer liable to pay the tax.
It is also provided that the turnover of any dealer for any period
shall not include his turnover during that period of any sale or
purchase of declared goods at any other stage ihan the stage so
mentioned.
It will be seen that the m·atter is now in the hands of the
dealer. . He has to find out for himseLf whether he is liable to pay
the tax or not.
A dealer knows what he has done with his goods
or is going to do with them. If he knows that he is not the last
dealer having parted with the goods to another dealer or he knows
tliat he is going to use the goods or sell ihem to consumers, he
knows when he is not liable to tax and when he is.
Therefore,
he will not include the transaction in his taxable turnover in the
iirst case but include it in the second. Goods in the hands of a
dealer are not taxed.
They are only taxed on the last purchase
or sales.
This information is always possessed by a dealer and
by providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now clear.
Tt is contended that even so the dealer may not know that he
is the last dealer and may make some mistake.
The Jaw does
not take into account the actions of persons who are negligent or
mistaken but only of persons who act° correctly, according to Jaw.
If the dealer is clear about his own position he is now quite able
to see whether he is the last purchaser liable to pay the tax or the
last seller liable to pay the tax.
The Act by specifying the stage
(1) ]19671 3 S.C.R. 577.
A
B
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D
E
F
G
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A
B
c
D
E
F
G
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RATTAN & co. v. ASSESSING AUTHORITY (Hidayatul/ah, C.I.) 555
as the last purchase or sale by a dealer liable to pay the tax makes
the stage quite clear and by giving an option to nim not to include
such transactions in his return saves him from the liability to pay
the tax till he is the <lealer liable to pay the tax.
In our opinion,
therefore, the present provisions of the Act are quite clear and
are quite sufficient to make the amended Act accord with the
Central Act.
The arguments noted in the earlier case of this
Court do not therefore arise.
It will thus be seen that the present Act does not suffer from
any of the defects from which the unamended Act had suffered.
It is, however, contended that the Act has been made retrospective
but no machinery is provided to discover if the declared goods
were assessed to tax more than once. As we have already pointed
out, the matter is within th'-' ken of the dealer himself and it is
for him to decide whether he would not claim the
benefit of
s. I !AA and ask for a refund or in future transactions delete the
sales from his taxable turnover when he is not the last dealer
liable to pay the tax.
Therefore the retrospectivity of the Act
does not make any difference. It is not contended before us that
it was not within the competence of the Punjab Legislature to
pass such an Act retrospectively.
The defect pointed out i~ the
self same defect which was noticed in
Bhawani Mills case(').
But that defect no longer exists.
It is argued further that there is a discrimination between the
two kinds of manufacturers. In the definition
of 'dealer' in
s. (2)( d) and in th'-' proviso to s. l!AA it is submitted discrimination arises because of the opportunity given to a dealer to ask
for reassessment or to submit to the old assessment. This is
open to every dealer and the intention is to give an opportunity
to the dealer himself leaving it to his own will whether to ask for
a refund or not. This hardly can be said to create a discrimination.
Lastly it is contended that there is a delegated legislation in
that the maximum has been provided without indication of the
circumstances under which the tax is to be levied. This, it is said,
creates unguided delegation to administrative authority, the function of the legislature.
It is to be noticed that the Central Act
itself gives power to the legislature to choose a rate of tax at not
more than 3 per cent of the taxable turnover.
The tax levied
is well within that limit and therefore the legislature has chosen
the maximum and has left it free to the authorities to impose the
tax within that maximum regard being had to the requirements of
revenue and the expenditure necessary for the State.
We may now deal with some arguments which are common
to both sets of cases before considering the case of the Haryana
amendment.
It is argued that the organisation of the State
(1) {19671 3 S.C.R. 577.
556
SUPREME COURT REPORTS
[ 1969] 2 S.C.R.
took place on November 1, 1966 and the amendment in some of
its parts seeks to amend the original Act from a date anterior to
this date.
In other words, the legislature of one of the States
seeks to amend a law passed by the composite State. This araument entirely misunderstands the position of the original Act after
the reorganisation. That Act applied now as an independent Act
to each of the areas and is subject to the legislative competence
of the legislature in that area. The Act has been amended in the
new States in relation to the area of that State and it is inconceivable that this could not be within the competence.
If the argument were accepted then the Act would remain unamendable
unless the composite State came into existence once more.
The
scheme of the States Reorganization Acts makes the Jaws applicable to the new areas until superseded, amended or altered by
the appropriate legislature in the new States.
This is what the
legislature has done and there is nothing that can be said against
such amendment.
A
B
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In regard to Haryana cases also the
same arguments are
urged. It is contended that the amended Act there also offends · D
s. 15 for the reasons which we have given. Neither the amendment of s. 55. in this area nor the introduction of s. l lAA for
refund offends against s. 15 of the Central Act or the equality
clause of the Constitution. lt is said that pending cases will always
be reconsidered whether or not an application in that behalf is
made but in the case of disposed of cases it depends upon the
party to intimate in writing that he has no objection to the assessE
ment or reassessment already made. If any objection can be taken
it will be by those whose cases are pending and not by those
whose cases have been closed. The option to submit to the assessment is open to every one alike and there is no discrimination if a
party wants that his case need not be reconsidered. He has only
to state that in writing and that would be the end of the matter.
F
If he wants his case to be reconsidered then he can go before the
Tribunal and get his case reconsidered.
It is also urged in this connection that there is a discrimination between the imported goods and local goods. 1t is said that
the discrimination is also between the first purchase in the case of
imported goods and last sale in the case of local goods.
Since
G
the imported goods might be more expensive by reason of freight
etc. or intermediary sales having taken place, it is said, that the
burden of tax will be heavier and therefore this will offend against
the equality clause and Art. 304 of the Constitution.
In our
opinion this argument is without any Sllbstance.
The rate of tax
is same in every case.
In State of Madras v. N. K. Nataraja
Mudaliar('), this Court stated that the essence of Arts. 301 and
B
303 is to enable the State by a law "to impose on goods imported
(1) [1969] 1 S.C.R.
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D
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RATTAN & co. v. ASSESSING AUTHORITY (Hidayatul/ah, C.J.) 557
from other States or the Union territories any tax to which similar
goods manufactured or produced in the State are subject, so, however as not to discriminate between goods so imported and goods
so manufactured or produced." It was pointed out by this Court
that "imposition of differential rates of tax by the same State on
goods manufactured or produced in the State and similar goods
imported in the State is prohibited by that clause. But where the
taxing State is not imposing rates of tax on imported goods
different from rates of tax on goods manufactured or produced,
Art. 304 has no application".
Here also the tax is at the same rate and therefore the tax
cannot be said to be higher in the case of imported goods.
It
may be that when the rate is applied the resulting tax is somewhat
higher but that does not offend against the equality contemplated
by Art. 304. That is the consequence of ad valorem tax being
levied at a particular rate.
So long as the rate is the same Art.
304 is satisfied. Even in the case of local rnanufactures if their
cost of production varies, the net tax collected will be more or less
in some cases but that does not create any inequality because
inequality is not the result of the tax but results from the cost of
production of the goods or the cost of their importation.
This
ground, therefore, has also no substance.
We do not think it
necessary to set down here the provisions of the Haryana Amendment Act because they follow the scheme of the Punjab Amendment Act in substance and what we have said in regard to the
Punjab Amending Act applies
mutatis mutandis to
Haryana
Amendment Act also.
In the result these petitions have no substance. They are dismissed with costs.
One set of hearing fee .
Y.P.
Petitions dismissed .
4Sup.C.l./69--J