# ST A TE OF WEST BENGAL AND ANR v. E.l.T.A. INDIA LTD. AND ORS

- **Citation:** [2003] 2 S.C.R. 668
- **Court:** Supreme Court of India
- **Decided:** 2003-03-05
- **Bench:** Syed Shah Mohammed Quadri, Ashok Bhan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/st-a-te-of-west-bengal-and-anr-v-e-l-t-a-india-ltd-and-ors-18974
- **Pages:** 22

## Headnote

West Bengal Sales Tax Act, 1994/West Bengal Sales Tax Rules, 1995Sections 2(6), 11 (I) Explanation thereto, (5), (7), (8), (10), (11) and (I 2),
C 14(4)/ Rules 173, 174, 188 and 189-Casual traders-Liability to pay tax on
sale and purchase-Transporter and owner/lessee of warehouse deemed as
casual trader--Disposal of goods by them deemed to be sale as per the Act,
unless contra is proved-Constitutionality of the provisions challenged-Tax
Tribunal held Section 2(6) as valid, but in view of lack of machinary provision
suspended the same-All other provisions held unconstitutional-provisions
D held to be beyond legislative colnpetence of the State-Plea that no State
Legislature can create a fiction to treat any other transaction as sale except
to the extent as provided under Article 366(29A) of the Constitution-On
appeal held-Suspension of Section 6(2) not justified-Provisions of Section
11 are enacted to prevent evasion of tax payable under the Act-State
E Legislature has power to provide for measures for prevention of evasion of
tax-Hence the provisions intended to prevent the evasion of tax are within
the legislative competence of the State and are intra vires Entry 54 of List ll
of the Seventh Schedule-It will be misconceived to treat the statutory
presumption incorporated in the Explanation to sub-section (1) of Section I 1
as extending the definition of 'sale' in clause (29-A) of Article 366 of the
F Constitution-Constitution of India, 1950-Article 366(29A)-Seventh Schedule,
List ll, Entry 54-Evidence Act, I872-Section 4-Bengal Finance (Sales
Tax) Act, I94I.
Constitution of India, I950-Article 14-Challenge to taxation statute
on the ground of classification-Held: Legislature enjoys a greater latitude
G for classification in the field of taxation-No legislation can be declared to be
illegal on the ground of being unreasonable or on the anvil of Article 14,
except when it fails to clear the test of arbitrariness and discrimination.
Respondents challenged the constitutional validity of Section 2(6);
H explanation to sub-section (1), sub-sections (5), (7), (8), (10), (11) and (12) of
668
-(
,_
STATE v. E.l.T.A. INDIA LTD.
669
Section 11; Section 14(4) of West Bengal Sales Tax Act, 1994 and Rules 172, A
173, 174, 188 and 189 of West Bengal Sales Tax Rules, 1995. Taxation
Tribunal held Section 2(6) of the Act as valid and constitutional with a rider
that until the manner of disclosure of name and address of the consigner or
consignee was prescribed in terms of the judgment, the provision as to
disclosure of those particulars shall remain suspended; that explanation to B
sub-section (I) of Section 11 was declared to be ultra vires the Constitution;
that parts of sub-section (5) of Section 11 and sub-section (4) of Section 14
were declared as invalid and unconstitutional to the extent they applied to
transporters; that sub-sections (7) and (8) of Section 11 and the words 'for
the purpose of sub-section (7) and Sub-Section (8) in Clause (ii) of Section
11(5) were struck down as invalid and unconstitutional and beyond the C
legislative competence of the State; that sub-Sections (10), (11) and (12) of
Section 11 were declared unconstitutional in so far as they were applicable
to transporters; that Rules 172, 173 and 174 of the Rules were also struck
down; Forms 28 and 31 prescribed under Rules were struck down in so far
as they related to defence tax or security in lieu thereof with reference to a
transporter; Form 32 prescribed under the Rules was declared valid; that D
rules 188 and 189 were declared valid subject to observations in the judgment
in respect of transporters.
In appeal to this Court appellant-State contended that having upheld
the constitutional validity of Section 2(6) which clearly provided the E
particulars to be declared by the transporters, there was no valid reason for
the Tribunal to suspend the operation of the Section; that the Tribunal erred
in striking down the impugned provisions of the Act on the ground of

## Text

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A
B
ST A TE OF WEST BENGAL AND ANR.
V.
E.l.T.A. INDIA LTD. AND ORS.
MARCH 5, 2003
[SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.]
West Bengal Sales Tax Act, 1994/West Bengal Sales Tax Rules, 1995Sections 2(6), 11 (I) Explanation thereto, (5), (7), (8), (10), (11) and (I 2),
C 14(4)/ Rules 173, 174, 188 and 189-Casual traders-Liability to pay tax on
sale and purchase-Transporter and owner/lessee of warehouse deemed as
casual trader--Disposal of goods by them deemed to be sale as per the Act,
unless contra is proved-Constitutionality of the provisions challenged-Tax
Tribunal held Section 2(6) as valid, but in view of lack of machinary provision
suspended the same-All other provisions held unconstitutional-provisions
D held to be beyond legislative colnpetence of the State-Plea that no State
Legislature can create a fiction to treat any other transaction as sale except
to the extent as provided under Article 366(29A) of the Constitution-On
appeal held-Suspension of Section 6(2) not justified-Provisions of Section
11 are enacted to prevent evasion of tax payable under the Act-State
E Legislature has power to provide for measures for prevention of evasion of
tax-Hence the provisions intended to prevent the evasion of tax are within
the legislative competence of the State and are intra vires Entry 54 of List ll
of the Seventh Schedule-It will be misconceived to treat the statutory
presumption incorporated in the Explanation to sub-section (1) of Section I 1
as extending the definition of 'sale' in clause (29-A) of Article 366 of the
F Constitution-Constitution of India, 1950-Article 366(29A)-Seventh Schedule,
List ll, Entry 54-Evidence Act, I872-Section 4-Bengal Finance (Sales
Tax) Act, I94I.
Constitution of India, I950-Article 14-Challenge to taxation statute
on the ground of classification-Held: Legislature enjoys a greater latitude
G for classification in the field of taxation-No legislation can be declared to be
illegal on the ground of being unreasonable or on the anvil of Article 14,
except when it fails to clear the test of arbitrariness and discrimination.
Respondents challenged the constitutional validity of Section 2(6);
H explanation to sub-section (1), sub-sections (5), (7), (8), (10), (11) and (12) of
668
-(
,_
STATE v. E.l.T.A. INDIA LTD.
669
Section 11; Section 14(4) of West Bengal Sales Tax Act, 1994 and Rules 172, A
173, 174, 188 and 189 of West Bengal Sales Tax Rules, 1995. Taxation
Tribunal held Section 2(6) of the Act as valid and constitutional with a rider
that until the manner of disclosure of name and address of the consigner or
consignee was prescribed in terms of the judgment, the provision as to
disclosure of those particulars shall remain suspended; that explanation to B
sub-section (I) of Section 11 was declared to be ultra vires the Constitution;
that parts of sub-section (5) of Section 11 and sub-section (4) of Section 14
were declared as invalid and unconstitutional to the extent they applied to
transporters; that sub-sections (7) and (8) of Section 11 and the words 'for
the purpose of sub-section (7) and Sub-Section (8) in Clause (ii) of Section
11(5) were struck down as invalid and unconstitutional and beyond the C
legislative competence of the State; that sub-Sections (10), (11) and (12) of
Section 11 were declared unconstitutional in so far as they were applicable
to transporters; that Rules 172, 173 and 174 of the Rules were also struck
down; Forms 28 and 31 prescribed under Rules were struck down in so far
as they related to defence tax or security in lieu thereof with reference to a
transporter; Form 32 prescribed under the Rules was declared valid; that D
rules 188 and 189 were declared valid subject to observations in the judgment
in respect of transporters.
In appeal to this Court appellant-State contended that having upheld
the constitutional validity of Section 2(6) which clearly provided the E
particulars to be declared by the transporters, there was no valid reason for
the Tribunal to suspend the operation of the Section; that the Tribunal erred
in striking down the impugned provisions of the Act on the ground of lack of
legislative competence ignoring the fact that the legislature had ancillary
power to enact provisions to prevent evasion of tax.
F
Respondents contended that except to the extent the provision of Article
366 (29A) of the Constitution of India provide for a deemed sale, no State
Legislature can create a fiction to treat any other transaction as sale and,
therefore, the disposal of the goods by a casual trader cannot per se be treated
as sale of the goods and he cannot be put to onerous task of proving a negative
fact that the disposal of the goods was not by way of sale.
G
Allowing the appeals, the Court
HELD: I.I A combined reading of the definitions of 'casual trader' and
'transporter' discloses that they are aimed at preventing any possible evasion
of tax payable under West Bengal Sales tax Act, 1994 by spreading a very H
670
SUPREME COURT REPORTS
[2003) 2 S.C.R.
A wide net. A comparison of the definition of 'casual trader' in the Act with
the definition of the said expression in the Bengal Finance (Sales Tax) Act,
1941 shows that there is no material difference between the two. Two
categories of persons are included within the meaning of 'casual trader'. Every
prudent bonajide transporter is expected to know the particulars of the
B consignor of the goods for transportation and of the consignee to whom the
goods have to be delivered in West Bengal. Similarly, every reasonable
transporter is expected to have a copy of the challan, transport receipt or
consignment note or document of like nature in respect of goods which are
being transported. The requirement to furnish these particulars cannot,
therefore, be treated as requiring the transporter to furnish information which
C is beyond his capacity or control. So also a prudent and reasonable owner or
lessee of a warehouse where such goods are stored is expected to know the
name and address of the owner of such goods and requiring him to furnish
those particulars cannot be said to be either oppressive, irrelevant or arbitrary.
In any event, after the Act came into force, such a person is expected to know
and collect necessary particulars and information so there can be no legitimate
D excuse for non-compliance of the statutory requirements. It is only in the event
of failure to furnish such information that the definition creates a fiction
deeming such a transporter of goods or owner or lessee of a warehouse as a
consignor or a consignee who, has brought the goods from any place outside
West Bengal for sale in West Bengal, or has procured the goods, otherwise
E than by way of purchase, from any person, other than the registered dealer,
for sale in West Bengal, or has purchased such goods in West Bengal from
any person, other than the registered dealer, for purposes other than his
personal use or consumption of such goods in West Bengal, as the case may
be. For the purpose of furnishing the particulars, neither any special proforma
is necessary nor any machinery is required to effectuate the section. Therefore,
F the reasoning of the Tribunal to justify suspension of Section 6(2) for want of
machinery provisions cannot be upheld. [677-B-F; H; 678-A-C)
1.2. It cannot be said that except to the extent the provision of clause
29-A of Article 366 of the Constitution of India provides for a deemed sale,
G no State Legislature can create a fiction to treat any other transaction as sale
and, therefore, the disposal of the goods by a casual trader cannot per se be
treated as sale of the goods and he cannot be put to onerous task of proving
a negative fact that the disposal of the goods was not by way of sale. In Section
4 of Evidence Act, 1872, the expression 'may presume' postulates whenever
it is provided by the Evidence Act that the court may presume a fact, it will
H regard such fact as proved, unless and until it is disproved, or may call for
-·
STATE v. E.l.T.A. INDIA LTD.
671
proof of it, but the expression 'shall presume' implies, whenever the Evidence A
Act says that the court 'shall presume' a fact, it shall regard such fact as
proved, unless and until it is disproyed. The statutory presumption
incorporated in Explanation to sub-section (1) of Section 11 is in the nature
of the second category of presumption. The deeming provisions embodied in
the Explanation does not extend the meaning of sale to every disposal of goods. B
It is attracted when a transporter or an owner or a lessee of a warehouse is
unable to account for the disposal of goods; the fact of disposal of the goods
in question having been established, the statutory presumption which is a
rebuttable presumption, would apply and the disposal of goods shall be
deemed to be by way of sale; it will be open to such a person to rebut the
presumption. Raising of such rebuttable presumption is normal legislative C
practice and no invalidity can be attributed to the same. It will be wholly
misconceived to treat the statutory presumption incorporated in the
Explanation as extending the definition of 'sale' in clause (29-A) of Article
366 of the Constitution. Indeed there can be no analogy between the definition
of deemed sale incorporated in clause (29-A) of Article 366 of the Constitution
and the statutory presumption incorporated in Explanation to sub-section (1) D
of Section 11. Explanation to Section 11(1) is valid in law and the challenge
to its invalidity is misconceived and unsound. !682-8-H; 683-AJ
Sodhi Transport Co. and Ors. v. State of Uttar Pradesh and Ors., [1986) 2
sec 486, relied on.
1.3. Sub-sections (3), (4), (5), (6), (7) and (8) of Section 11 are part of
the same scheme aimed at prevention of evasion of tax payable under the Act
Sub-sections (10) and (12) are consequential provisions. Imposition of penalty
E
is authorized under sub-section (11 ). These sub-sections stand or fall along
with sub-sections (5), (7) and (8). The impugned sub-sections of Section 11 F
are enacted to prevent evasion of tax payable under the Act. State Legislature,
while providing for levy of impost, has power to provide for incidental matters,
including measures for prevention of evasion of tax. Hence the impugned
provisions which are intended to prevent the evasion of tax payable under
the Act are within the legislative competence of the State.and are intra vires
Entry 54 of List II of the Seventh Schedule to the Constitution.
G
[684-G, H; 685-A; 687-FJ
Mis. Nand Lal Raj Kishan v. Commissioner of Sales Tax, Delhi and Anr.,
[1962) 1 SCR 283; Balaji v. Income-Tax Officer, Special Investigation Circle,
(196212 SCR 983; Khyerbari Tea Co. Ltd and Anr. v. The State of Assam, [1964) H
672
SUPREME COURT REPORTS
[2003) 2 S.C.R.
A 5 SCR 975; Tripura Goods Transport Association and Anr. v. Commissioner of
Taxes and Ors., (1999] 2 SCC 253 and State o(Rajasthan and Anr. v. DP Metals,
(2002] 1 sec 279, relied on.
1.4. Sub-section (4) of Section 14 is concerned with the detention of the
vehicle for purposes of assessment and recovery of tax. This provision is also
B an anti-evasion of tax provision and over-rides Section 46. There is no illegality
in sub-section (4) of Section 14 of the Act (689-B, CJ
1.5. The impugned provisions of sub-sections (5), (7), (8) of Section 11
and sub-section (4) of Section 14 are broadly akin to the provisions in the
C Bengal Finance (Sales Tax) Act, 1941, the validity of which was upheld by
this Court. ( 689-D]
State of West Bengal and Anr. v. Road Transport Association, Sitaguri and
Anr., (2003] 3 SCC 593 = JT (2003] 2 522 , relied on.
D
1.6. In the view taken in upholding the provisions of the Act, the
impugned Rules, namely Rules 172, 173, 174 'ind 188 of West Bengal Sales
Tax Rules, 1995 and Forms 28 and 31 are also upheld. (689-E]
2. If a legislation is found to lack in legislative competence or is found
to be in contravention of any provision of the Constitution, the impugned
E legislation cannot escape the vice of unconstitutionality. A challenge to any
statutory provision on the ground of the classification being discriminatory
and violative of Article 14 of the Constitution, can be successfully met on the
principle of reasonable classification having nexus to the object of the Act
sought to be achieved. However, the legislature enjoys a greater latitude for
classification in the field of taxation. No legislation can be declared to be illegal,
F much less unconstitutional on the ground of being unreasonable or harsh on
the anvil of Article 14 of the Constitution, except when it fails to clear the
test ·or arbitrariness and discrimination which would render it violative of
Article 14 of the Constitution. (674-F, G, H; 675-B]
Keshavananda Bharti v. State of Kera/a, AIR (1973( SC 1643; State of
G Andhra Pradesh and Ors. v. Macdowell and Co., (1996) 3 SCC 709; State of
Bombay v. F.N. Balsara, (1951) SCR 682; Budhan Choudhary and Ors. v. State
ofBihar, (1955] 1SCR1045; !Ws. Steelworth ltd v. State of Assam, (1962( Suppl.
2 SCR 589; Gopal Narain v. State of Uttar Pradesh and Anr., AIR (1964] SC
370 and Ganga Sugar Corporation Ltd v. State of Uttar Pradesh and Ors., AIR
H (19801SC286, referred to.
,_
ST \TE v. E.I.T.A. INDIA LTD. [SYED SHAH MOHAMMED QUADRI, J.]673
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8182 of A
1995.
From the Judgment and Order dated 7.4.1995 of the West Bengal
Taxation Tribunal in R. No. 152 of 1993.
WITH
C.A. Nos. I 1649-50/95, 5863-64, 5865-66 and 5534 of 1997.
B. Sen and Rakesh Dwivedi, Dayan Krishnan, S. Mishra for Mis. Sinha
and Das for the Appellants.
Yashank Adhyaru and Ms. V.D. Khanna, for the Respondents.
The Judgment of the Court was delivered by
SYED SHAH MOHAMMED QUADRI, J.
Civil Appeal Nos. 5863-64/1997, 5865-66/I997 and 5534/1997 :
These appeals from various orders of the West Bengal Taxation Tribunal
(for short, 'the Tribunal') raise a common question as to the constitutional
validity of provisions, mentioned hereunder, of the W.est Bengal Sales Tax
B
c
D
Act, 1994 [West Bengal Act XVIX of 1994] (for short, '<he Act') and the
Rules made thereunder. The Act came into force on March 23, 1995. It
repealed the Bengal Finance (Sales Tax) Act, 194 I which was then in force. E
The respondents challenged the constitutional validity of the following
provisions of the Act: (i) Section 2(6); (ii) Explanation to sub-section (I),
sub-section (5), (7), (8), (10), (I I) and (12) of Section 11; (iii) sub-section
(4) of Section 14; and (iv) Rules 172, 173, I74, 188 and 189 of the West
Bengal Sales Tax Rules, 1995 (for short, 'the Rules'). The Tribunal held:
F
"that section 2( 6) of the 1994 Act is valid and constitutional with a
rider that until the manner of disclosure of name and address of the
consignor or consignee is prescribed in terms of this judgment, the
provision as to disclosure of those particulars shall remain suspended.
Observations have also been made in the body of the judgment G
regarding the extent of responsibility of a transporter in furnishing
the required documents and disclosing the required particulars. The
Explanation below sub-section (I) of Section 11 is declared to be
unreasonable and .ultra vires the Constitution. The said Explanation
is, therefore, struck down. As per paragraphs 20 and 21 of this H
674
A
B
SUPREME COURT REPORTS
[2003] 2 S.C.R.
judgment, parts of sub-section (5) of Section 11 and sub-section (4)
of Section 14 are declared as invalid and unconstitutional to the extent
they apply to a transporter. Sub-sections (7) and (8) of section 11 and
the words 'for the purpase of sub-section (7) and sub-section (8)' in
clause (ii) of section 11 (5) are struck down as invalid and
unconstitutional and beyond the competence of the State Legislature.
Sub-sections (JO), (11) and (12) of Section 11 are also declared
unconstitutional insofar as they are applicable to transporters. Rules
172. 173 and 174 of the 1995 Rules are struck down-for the reasons
already stated. Forms 28 and 31 prescribed under the 1995 Rules are
struck down in so far as they relate to advance tax or security in lieu
C
thereof with reference to a transporter. Form 32 prescribed under
those rules is valid. Rules 188 and 189 of the said Rules are valid
subject to observations in this judgment in respect of transporters."
Mr. B. Sen, learned senior counsel appearing for the appellants-State,
has contended that having upheld the constitutional validity of Section 2(6)
D which clearly provides the particulars to be declared by the transporter, there
was no valid reason why the Tribunal should suspend the operation of the
section so that portion of the order needs to be set aside. It is submitted that
the Tribunal erred in striking down the impugned provisions of the Act on
the ground of lack of legislative competence ignoring the fact that the
legislature has ancillary power to enact provisions to prevent evasion of tax.
E The learned counsel has argued that the Tribunal is clearly wrong in declaring
Explanation below Section 11(1) of the Act as arbitrary, unreasonable so
unconstitutional.
In examining the constitutional validity of the impugned provisions of
a statute, it will be useful to bear in mind the following well-settled
F propositions. If a legislation is found to lack in legislative competence or is
found to be in contravention of any provision of Part III or any other provision
of the Constitution, the impugned legislation cannot escape the vice of
unconstitutionality [See: Keshavananda Bharti v. State of Kera/a, AIR ( 1973)
SC 1643 and also State of Andhra Pradesh and Ors. v. Macdowell & Co.,
G [1996] 3 sec 709]. A challenge to any statutory provision on the ground of
the classification being discriminatory and violative of Article 14 of the
Constitution, can be successfully met on the principle of reasonable
classification having nexus to the object of the Act sought to be achieved;
[See: State of Bombay v. F.N. Balsara, [1951] SCR 682 and Budhan
Choudhary and Ors. v. State of Bihar, [ 1955] I SCR I 045]. However, the
H legislature enjoys a greater latitude for
classification
in the field of
STATE v. E l.T,A. INDIA LTD. [SYED SHAH MOHAMMED QUADRI, J.]675
taxation (See: Mis. Steelworth Ltd. v. State of Assam, (1962] Suppl. 2 SCR A
589; Gopa/ Narain v. State of Uttar Pradesh and Anr., AIR (1964) SC 370;
and Ganga Sugar Corporation Ltd~ v. State of Uttar Pradesh and Ors., AIR
(1980) SC 286]. No legislation can be declared to be illegal, much less
unconstitutional on the ground of being unreasonable or harsh on the anvil
of Article 14 of the Constitution, except, of course, when it fails to clear the
test of arbitrariness and discrimination which would render it violative of B
Article 14 of the Constitution. [See : Mis. Steelworth Ltd. and Macdowell &
Co. (supra)].
Inasmuch as the expression 'casual trader', defined in sub-section (6) of
Section 2 of the Act is of great significance it will be apt to read it here : C
"2. Definitions-- In this Act, unless the context otherwise requires,-
6. 'casual trader' means a person, other than a registered dealer, who
has no fixed place of business fn West Bengal and who,--
(a) as a consignor or consignee, brings into West Bengal any goods,
other than those specified in Schedule I or Schedule IV or those
notified under sub-section (2) of section I 0, from any place outside
West Bengal for sale in West Bengal, or
(b) procures goods, other than those specified in Schedule I or
Schedule IV, otherwise than by way of purchase from a person
other than a registered dealer, for sale in West Bengal, or
(c) purchases any goods, other than those specified in Schedule I or
Schedule IV, in West Bengal from any person, other than a
registered dealer, for purposes other than his personal use or
consumption of such goods in West Bengal, any includes, whether
he has a fixed place of business in West Bengal or not,--
(i)
a transporter as defined in clause (a) of the Explanation of Section
72, and who while carrying such goods in his goods vehicle fails
to disclose the name and address on the consignor or consignee
in West Bengal or fails to furnish copy of invoice, challan,
transport receipt or consignment note or document of like nature
in respect of such goods, or
(ii) an owner or lessee of a warehouse where such goods are stored
and who fails to disclose the name and address of the owner of
such goods or fails to satisfy the Commissioner that such goods
are for his personal use nr consumption,
D
E
F
G
H
676
SUPREME COURT REPORTS
[2003] 2 S.C.R.
A
and who, for such failure, shall be deemed to have brought such
goods as specified in sub-clause (a) or procured such goods as specified
in sub-clause (b) or purchased such goods in sub-clause ( c ), as the
case may be on his own account."
A perusal of the definitfon of the expression "casual trader" shows that
B it has three parts. The first part defines the expression to mean a person, other
than a registered dealer, not having a fixed place of business in West Bengal
and who: (a) either as a consignor or as a consignee, brings into West Bengal
any goods other than those specified in Schedule I or Schedule IV or •those
notified under sub-section (2) of Section 10 (hereinafter referred to as "the
C excluded goods") from any place outside West Bengal for sale in West Bengal,
or (b) procures goods, other than the excluded goods, otherwise than by way
of purchase from a person other than a registered dealer for sale in West
Bengal, or (c) purchases any goods, other than the excluded goods, in West.
Bengal from any person, other than a registered dealer, for purposes other
than his personal use or consumption of such goods in West Bengal. The
D second part takes in its fold a person, whether he has a fixed place of business
in West Bengal or not, who is (i) a transporter, as defined in clause (a) of the
Explanation to Section 72, and while carrying such goods in his goods vehicle,
fails: (a) to disclose the name and address of the consignor or consignee in
West Bengal, or (b) to furnish a copy of invoice, challan, transport receipt or
consignment note or document of like nature in respect of such goods; or (ii)
E an owner or lessee of a warehouse where such goods are stored and fails (a)
to disclose the name and address of the owner of such goods, or (b) to satisfy
the Commissioner that such goods are for his personal use or consumption.
And the third part contains a statutory presumption to the effect that such a
transporter or an owner or lessee of a warehouse, who fails to fulfil the
F obligations mentioned above, is deemed to have brought such goods as
specified in clauses (a) or (b) or (c), as the case may be, in the first part of
the definition, on his own account.
G
H
A 'transporter' is defined in Explanation (a) to Section 72, which reads
as follows:
" 'transporter' means the owner, or any person having possession or
control, of a goods vehicle who transports on account of any other
person for hire or on his own account any goods from one place to
another, and includes any person whose name is entered in the permit
granted under the Motor Vehicles Act, 1988 (59 of 1988), as the
holder thereof, the driver or any other person in charge of such
STATE v. E.l.T.A. INDIA LTD. [SYED SHAH MOHAMMED QUADRI, .J.]677
vehicle."
A
It is seen that the explanation defined the terms 'transporter' to mean
the owner or any person having possession or control of a goods vehicle who
transports on account of any other person for hire or on his own account any
goods from one place to another; it includes any person whose name is
entered in the permit granted under the Motor Vehicles Act, 1988 and the B
holder thereof, the driver or any other person in charge of such vehicle.
A combined reading of the definitions of 'casual trader' and 'transporter'
discloses that they are aimed at preventing any possible evasion of tax payable
under the Act by spreading a very wide net. A comparison of the definition
of 'casual trader' in the Act with the definition of the said expression in the C
Bengal Finance (Sales Tax) Act, 1941 (for short, 'the 1941 Act') shows that
there is no material difference between the two. Two categories of persons
are included within the meaning of 'casual trader'; the first is the transporter
who while carrying the goods fails to disclose the name and address of the
consignor or the cor:signee in West Bengal or having so declared the names, D
fails to furnish a copy of the invoice, challan, transport receipt or consignment
note or document of like nature in respect of such goods. Every prudent bona
fide transporter is expected to know the particulars of the consignor of the
goods for transportation and of the consignee to whom the goods have to be
delivered in West Bengal. Similarly, every reasonable transporter is expected
to have copy of the challan, transport receipt or consignment note or document E
of like nature in respect of goods which are being transported. The requirement
to furnish these particulars cannot, therefore, be treated as requiring the
transporter to furnish information which is beyond his capacity or control. So
also a prudent and reasonable owner or lessee of a warehouse where such
goods are stored is expected to know the name and address of the owner of
such goods and requiring him to furnish those particulars cannot be said to F
be either oppressive, irrelevant or arbitrary. As an alternative to non-disclosure
of the name and address of the owner of the goods stored in the warehouse,
such an owner or lessee is required to satisfy the Commissioner that such
goods are for his personal use or consumption. A person in possession af the
goods must have stored them for and on behalf of the owner thereof or as his G
own goods for his personal use or consumption. The information required to
be furnished by the owner or the lessee of a warehouse will normally be
within his knowledge and, at any rate, ought to be within the knowledge of
a reasonable owner or the lessee of a warehouse. In any event, after the Act
came into force, such a person is expected to know and collect necessary
particulars ~nd information so there can be no legitimate excu~e for non- H
678
SUPREME COURT REPORTS
[2003] 2 S.C.R.
A compliance of the statutory requirements. It is only in the event of failure to
furnish such information that the definition creates a fiction deeming such a
transporter of goods or owner or lessee of a warehouse as a consignor or a
consignee who, has brought the goods from any place outside West Bengal
for sale in West Bengal, or has procured the goods, otherwise than by way
B of purchase, from any person, other than the registered dealer, for sale in the
West Bengal, or has purchased such goods in West Bengal from any person,
other than the ·registered dealer, for purposes other than his personal use of
consumption of such goods in West Bengal, as the case may be. For the
purpose of furnishing the particulars under the afore-mentioned provision,
neither any special proforma is necessary nor any machinery is required to
C effectuate the section. It is, therefore, difficult to uphold the reasoning of the
Tribunal to justify suspension of the said provision for want of machinery ·
provisions. In this regard, the Tribunal referred to the Explanation to Section
2(l)(a)(i) of the 1941 Act, which had also been suspended by it in an earlier
proceeding. In the appeal against the said order, in Civil Appeal No. 8180 of
1995, we have held that keeping that provision under suspension for want of
D a machinery was uncalled for and was illegal. We reiterate the same view in
regard to Section 2(6) of the Act. We record the candid concession of Mr.
Yashank Adhyaru, learned senior counsel for the respondents, that it will not
be possible to support the reasoning and the conclusion of the Tribunal on
th is aspect.
E
F
G
We shall now advert to various provisions of Section 11 which are
brought under challenge. Inasmuch as almost entire Section 11 is under
challenge, it is quoted fiere :
"11. Liability to pay tax on sales by casual trader - (I) Notwithstanding
anything contained elsewhere in this Act, a casual trader shall be
liable to pay tax on all his sales in West B~ngal of goods, other than
those specified in Schedule I or Schedule IV or those notified under
·sub-section (2) of Section 10, brought by him into West Bengal from
any place outside West Bengal, or on all his sales in West Bengal of
goods, other than those specified in Schedule I or Schedule IV,
procured by him othervv ise than by way of purchase from a person
other than a registered dealer.
Provided that no tax shall be levied on sales of goods which are
effected on or after the date on which he becomes liable to pay tax
under Section 9 or sub-section (3) of Section 27 and is registered
H
under Section 26 or Section 27.
\ )-
ST ATE v. E.l.T.A. INDIA LTD. [SYED SHAH MOHAMMED QUAD RI, .I ]679
Explanation - Where a transporter, or an owner or a lessee of a A
warehouse, deemed to be a casual trader in respect of any goods
referred to in sub-section (I), is found to have disposed of such
goods the disposal of such goods shall be deemed to have been made
by way of sale by him in West Bengal, unless he proves it otherwise
with satisfactory evidence.
B
(2) The tax payable under this section by a casual trader shall be
levied at the rate referred to in clause (a), clause (b), clause (d),
clause (e), clause (f), clause (g) or clause (h), as the case may be, of
sub-section (!) of Section 17.
(3) The tax payable under this section shall, ,votwithstanding anything c
contained in section 46, be determined, collected and recovered in
•·
such manner and by such authority as may be prescribed and shall be
paid by such time as may be prescribed.
(4) No person shall, ex;~pt in accordance with the restrictions and
conditions provided in sub-section (5), bring into West Bengal any D
goods, other than those specified in Schedule I or Schedule IV or
those notified under sub-section (2) of Section I 0.
(5) Every person transporting in a road vehicle,--
(a) goods, other than those specified in Schedule I or Schedule IV or
those notified under sub-section (2) of Section I 0, brought by him E
I mto West Bengal, or
(b) goods, other than those specified in Schedule I or Schedule IV,
procured by him otherwise than by way of purchase from a person,
either than a registered dealer,
shall, on interception by any person appointed under sub-section (!) F
of Section 3 and authorised by the Commissioner in this behalf
(hereinafter referred to in this section as the authorised officer) stop
-
the vehicle and produce, on demand, before such authorised officer
invoice, challan, transport receipt, consignment note or document of
like nature in respect of such goods and shall also furnish the name, G
address and number of the certificate of registration of the consignor
or consignee, if registered, and thereafter,--
(i) if it appears to the authorised officer that such goods are being
transported by a person who is not a casual trader liable to pay tax
under this secticn, he shall immediately allow movement of such
H
vehicle, or
680
SUPREME COURT REPORTS
[2003) 2 S.C.R.
A
(ii) if it appears to the authorised officer that the goods are being
transported by a casual trader or by some person on his behalf, he
may detain such vehicle ordinarily for a period not exceeding twentyfour hours for the purposes of sub-section (7) and sub-section (8).
(6)
For the purposes of this section or section 14, the owner or
B
lessee of a warehouse where goods are stored, shall furnish, on
demand, before the Commissioner or the authorised officer.-
c
D
E
F
G
(a)
if he is the owner of such goods, the invoice, challan or other
documents in support of the manner of securing such goods, or
(b) if he declares that the goods are being stored by another person,
name and addres~ of the person who has stored the goods and evidence
in support of occupancy of the warehouse by that person.
and in the event of failure to furnish such particulars or evidence
within a reasonable time, the authorised officer may seal such
warehouse for a period ordinarily not exceeding twenty-four hours
from the time of enquiry or search for the purposes of sub-section (7)
and sub-section (8).
(7) if the Commissioner or any person appointed under sub-section
(I) of Section 3 to assist him is satisfied that a casual trader may
become liable to pay tax under sub-section (I) in respect of any
goods, he may, in order to secure payment of tax that may become
due upon determination of tax under sub-section (3) and for reasons
to be recorded in writing, demand from such casual trader an amount
in advance equivalent to the amount of tax that may become due
from him after detennination, or security for an equivalent amount,
after taking into consideration the saleable value of such goods.
(8) The amount in advance equivalent to the amount of tax that may
become due from a causal trader after determination after taking into
consideration the saleable value of the goods as aforesaid shall, on
demand under sub-section (4), be paid by him in advance and shall
be adjusted with the aM0unt of tax due from him; and the security,
if any, for the equivalent amount shall, on demand, be furnished by
him, and shall be refunded to him, in such manner and on such terms
and conditions as may be prescribed.
(9) For the purposes of this section, ifH
(a) production and inspection of accounts, registers and documents,
/-
•
STA TE v. E.I.T.A. INDIA LTD. [SYED SHAH MOHAMMED QUADRI, J.]681
and seizure thereof,
(b) entry, search and sealing of warehouse.
(c) interception, detention and search of any road vehicle, and
( d) seizure of any goods,
are required by the authorised officer, the provision of section 65,
section 66, section 67, section 69 and section 70 shall apply mutatis
mutandis.
A
B
(10) Where the Commissioner or the authorise~ officer has reason to
believe that a person transporting goods has contravened the C
restrictions and conditions provided in sub-section (4) or section (5)
or an owner or a lessee of a warehouse fails to comply with the
conditions provided in sub-section (6), and if such person, owner or
lessee, as the case may be, fails to comply with the provisions of subsection (8), the Commissioner or the authorised officer, as the case
may be, shall seize the goods with containers or other packing D
materials, if any.
( 11) Where the goods are seized by the Commissioner or the authorised
officer under sub-section (I 0), he may, by an order in writing impose
upon the owner of such goods, where particulars of the owner of such
goods are available and the owner is a casual trader, or upon the E
person from whom goods are seized after giving such owner or person,
as the case may be, a reasonable opportunity of being heard, a penalty
of a sum not exceeding twenty-five per cent of the value of goods so
seized, and for the purposes of sub-section (I), sub-section (2) and
sub-section (3) of section 71 shall apply mutatis mutandis.
p
(12) If the penalty is not paid, the seized goods may be sold in open
auction and sale proceeds thereof shall be applied in the manner, and
subject to the conditions, provided in sub-section (4), sub-section (5),
sub-section (6), sub-section (7), and sub-section (8) of Section 71 as
may be applicable for the purpose of this section."
G
Section 11 is a charging section in respect of all sales of a 'casual
trader'. Sub-section (1) thereof opens with a non-obstante clause, gives it
over-riding effect over other provisions of the Act and mandates that a casual
trader shall be liable to pay tax on all his sales in West Bengal of goods,
other than the excluded goods, brought by him into West Bengal from any H
682
SUPREME COURT REPORTS
(2003] 2 S.C.R.
A place outside West Bengal or on all his sales in West Bengal of goods
procured by him otherwise than by way of purchase from a person other than
a registered dealer. The proviso is not relevant for our purpose.
The Explanation to sub-section (I) says that where a transporter or an
owner or a lessee of a warehouse, deemed to be a casual trader in respect of
B any goods referred to in sub-section (I), is found to have disposed of such
goods, the disposal of such goods shall be deemed to have been made by
way of sale by him in West Bengal, unless he proves to the contra with
satisfactory evidence. It is this Explanation which has been the subject-matter
of a lengthy debate. It is contended by Mr. Yashank Adhyaru that except to
C the extent the provision of clause 29-A of Article 366 of the Constitution of
India provides for a deemed sale, no State Legislature can create a fiction to
treat an:9 other transaction as sale and, therefore', the disposal of the goods
by a. casual trader cannot per se be treated as sale of the goods and he cannot
be put to onerous task of proving a negative fact that the disposal of the
goods was not by way of sale. This contention, though attractive, lacks
D substance. It will be apposite to notice here Section 4 of the Indian Evidence
Act, 1872, which defines, inter alia, the expres:;ions "may presume" and
"shall presume". The expression 'may presume' postulates whenever it is
provided by the Evidence Act that the court may presume a fact, it will
regard such fact as proved, unless and until it is disproved, or may call for
E proof of it; but the expression 'shall presume' implies, whenever the Evidence
Act says that the court 'shall presume' a fact, it shall regard such fact as
proved, unless and until it is disproved. The statutory presumption incorporated
in Explanation to sub-section (1) of Section 11 is in the nature of the second
category of presumption. The deeming provision embodied in the Explanation
does not extend the meaning of sale to every disposal of goods. It is attracted
p· when a transporter or an owner or a lessee of a warehouse is unable to
account for the disposal of goods; the fact of disposal Of the goods in question
having been established, the statutory presumption which is rebuttable
presumption, would apply and the disposal of goods shall be deemed to be
by way of sale;- it will be open to such a person to rebut the presumption.
Raising of such rebuttable presumption is a normal legislative practice and
G no invalidity can be attributed to the same. It will be wholly misconceived,
in our view, to treat the statutory presumption incorporated in the Explanation
as extending the definition of 'sale' in clause 29-A of Article 366 of the
Constitution. Indeed there can be no analogy between the definition of deemed
sale incorporated in clause 29-A of Article 366 of the Constitution and the
H statutory presumption incorporated in Explanation to sub-section (I) of Section
-
)
I
-(
\
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STA TE v. E.I.T.A. INDIA LTD. [SYED SHAH MOHAMMED QUADRI, J.]683
11. For these reasons, we cannot sustain the finding of the Tribunal. We hold A
that the said Explanation is valid in law and the challenge to its invalidity is
misconceived and unsound.
In Sodhi Transport Co. and Ors v. State of Uttar Pradesh and Ors.,
(1986] 2 SCC 486, Section 28-B of the Uttar Pradesh Sales Tax Act, 1948
was assailed as unconstitutional. It enacts a rebuttable presumption on the B
failure of a driver or other person in charge of vehicle carrying the goods to
deliver the pass to the officer in charge of the check post or barrier before
his exit from the State. It says, "it shall be presumed" that the goods were
sold within the State. Upholding the constitutional validity of the said
provision, it was observed that as a rebuttable presumption, it had the effect C
of shifting the burden of proof.