Full Judgment Text
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PETITIONER:
THE STATE OF BIHAR
Vs.
RESPONDENT:
RAT BAHADUR HURDUT ROY-MOTT LALL JUTE MILLS & ANOTHER (and
DATE OF JUDGMENT:
26/11/1959
BENCH:
GAJENDRAGADKAR, P.B.
BENCH:
GAJENDRAGADKAR, P.B.
SINHA, BHUVNESHWAR P.(CJ)
SUBBARAO, K.
GUPTA, K.C. DAS
SHAH, J.C.
CITATION:
1960 AIR 378 1960 SCR (2) 331
CITATOR INFO :
C 1984 SC1194 (28)
ACT:
Sales Tax-Amount realised by registered dealer from
sales outside the State-Forfeiture of such amount-Validity-
Allowable deduction, meaning of-Bihar Sales Tax Act, 1947
(XIX of 1947), Ss. 5, 6, 7, 8, 14A Proviso, 33, r. 19
Proviso,
HEADNOTE:
The respondent mills, a registered dealer under the Bihar
Sales Tax Act, 1947 (Act 111 of 1947), was carrying on
business of manufacture and sale of gunny bags, hessian and
other jute products at Katihar. During the period April 1,
1950, to March 31, 1951, it sold and despatched its wares
worth about Rs. 92,24,386-1-6 to dealers outside the State
and realised a sum of Rs. 2,11,222-9-6 as sales-tax from
them. In assessing the sales-tax payable by the said
respondent for the relevant period the Superintendent of
Sales Tax, Purnea, held that the said amount of sales-tax
had been realised in contravention of s. 14A of the Act read
with r. 19 of the Bihar Sales Tax Rules, and directed its
forfeiture under the proviso to that section. The
respondent challenged the validity of the said order under
Arts. 226 and 227 of the Constitution. The High Court held
that the proviso to S. 14A of the Act was ultra vires the
State Legislature as it violated Arts. 20(1) and 31(2) of
the Constitution and set aside the order of forfeiture and
quashed the proceedings under s. 14A of the Act. The State
of Bihar appealed to this Court. It was urged by way of
preliminary objection on behalf of the respondent that since
the proviso to s. 14A of the Act had no application to the
facts of the case, there was no occasion to decide its
constitutional validity. The contention of the appellint
was that the proviso did apply to the respondent inasmuch
332
as he had contravened the conditions and restrictions
imposed by the proviso to r. 19. The question for
determination, therefore, was whether the said respondent
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could be said to have realised any amount by way of tax in
respect of such part of its turn-over as was allowed to be
deducted from his gross turn-over for the determination of
his taxable turn-over under the Act or the rules, as
contemplated by the later part of the said proviso.
Held, that the preliminary objection must prevail.
Held, further, that before the penalty of forfeiture could
be imposed upon a dealer under the proviso to s. 14A of the
Bihar Sales tax Act, 1947, it had to be shown that he had
acted contrary to the conditions and restrictions prescribed
by the Rules and it was not enough to show that the
collection of the sales tax made by him was otherwise
illegal or improper. The contravention of the statutory
provisions contained in s. 14A or of the Rules prescribing
conditions and restrictions in that behalf alone could form
the basis of the imposition of the penalty of forfeiture
prescribed by the said proviso.
With the insertion of S. 33 into the Act with retrospective
operation, prohibiting the imposition of the tax on sales
taking place outside the State and in view of the decision
of this Court in State of Bombaay v. The United Motors
(India) Ltd. [1953] S.C.R. 1069, the proviso to r. 19 must
be construed on the basis that the sales in question were
outside the scope of the Act and no tax could be imposed on
them. It could not, therefore, be said that that part of
the respondent’s turnover which was in question was an
allowable deduction within the meaning of the said proviso.
Such allowable deductions as are contemplated by the proviso
are clearly based on the provisions of ss. 6, 7 and 8 of the
Act as is quite clear from the Explanation to s. 5 of the
Act.
State of Bombay & Another v. The United Motors (India) Ltd.
JUDGMENT:
An allowable deduction under the said proviso was not the
same thing as exclusion of a part of the turn-over on the
basis of s. 33(1)(a)(1) of the Act. It stands on an
entirely different footing. Transactions which fall within
the said section are in substance outside the Act and no tax
can be imposed on them. The transaction in question did
not, therefore, fall within the proviso to r.19 and the
proviso to S. 14A was not attracted and the order of
forfeiture passed against the respondent was unjustified and
illegal.
&
CIVIL APPELLATE JURISDICTION: Civil Appeal No.678 of 1957.
Appeal from the judgment and order dated August 1, 1956-of
the Patna High Court, in Misc. Judicial Case No. 188 of
1955.
WITH
Civil Appeals Nos. 546 of 1958 and 115 of 1959.
333
Appeals from the judgment and order dated March 8, 1957, of
the Patna High Court, in Misc. Judicial Cases Nos. 116 and
215 of 1956.
Lal Narayan Sinha and S. P. Varma, for the appellant.
C. K. Daphtary, Solicitor-General of India and R. C.
Prasad, for respondent No. 1 in C. A. No. 678 of 57.
B. C.. Ghose and P. K. Chatterjee, for the intervener.
H. N. Sanyal, Additional Solicitor-General of India and C.
P. Lal, for respondent No. 1 in C.A. No. 546 of 58.
H. N. Sanyal, Additional Solicitor-General of India and P.
K. Chatterjee, for respondent No. 1 in C.A. No. 115 of 1959.
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1959. November 26. The Judgment of the Court was delivered
by
GAJENDRAGADKAR J.-This is a group of three appeals which
have been filed in this Court by the State of Bihar
(hereinafter called the appellant) against three separate
registered dealers with a certificate issued by the Patna
High Court Under Art. 132(1) of of the Constitution that
they involve a substantial question of law as to the
interpretation of Art. 20(1) of the Constitution. The facts
in each one of the three appeals are similar, though not
exactly the same, but they raise a common question of law
under the proviso to s. 14A of the Bihar Sales Tax Act, 1947
(Act XIX of 1947) (hereinafter called the-Act). Orders of
forfeiture have been passed against the three registered
dealers in the three appeals respectively, and they raise a
common question of law in regard to the validity of the said
orders. By consent Civil Appeal No. 678 of 1957, has been
argued before us as the principal appeal and it has been
conceded that our decision in that appeal will govern the
two other appeals. We would,, therefore, set out the facts
in Civil Appeal No, 678 of 1957 and deal with the merits of
the points raised for our decision in that appeal.
Rai Bahadur Hurdut Roy Motilal Jute Mills, Katihar
(hereinafter called the first respondent) was at the,
43
334
material time registered as a dealer under the Act and was
carrying oil business of manufacture and sale of gunny bags,
Hessian and other jute products at Katihar in the district
of Purnea. During the period April 1, 1950, to March 31,
195 1, the said respondent sold and despatched its ware
worth about Rs. 92,24,386 to dealers outside the State
of Bihar and realised a sum of Rs. 2,11,222-9-6 as sales
tax from such dealers. The said respondent’s assessment to
sales tax for the relevant period was taken up by the
Superintendent of Sales Tax, Purnea (hereinafter called the
second respondent) on May 31, 1953; and in consequence of
these proceedings the impugned order of forfeiture came to
be passed.
Meanwhile Art. 286 of the Constitution along with other
articles was considered by this Court in the State of Bombay
& Anr. v. The United Motors (India) Ltd. & Ors. (1). The
question which this Court bad to consider in that case was
about the vires of the impugned provisions of the Bombay
Sales Tax Act, 1952 (Act XXIV of 1952), and for the decision
of the said question Art. 286 fell to be Considered.
According to the majority judgment in that case Art.
286(1)(a) read with the explanation thereto and construed in
the light of Art. 301 and Art. 304 prohibits the taxation of
sales or purchases involving inter-State elements by all
States except the State in which the goods are delivered for
the purpose of consumption therein. The latter State is
left free to tax such sales or purchases and it derives this
power not by virtue of the explanation to Art. 286(1) but
under Art. 243(3) read with Entry 54 of List 11. The view
that the explanation does not deprive the State in which the
property in the goods passed of its taxing power and that
consequently both the State in which the property in -the
goods passes and the State in which the goods are delivered
for consumption have the power to tax is not correct.
When the first respondent’s assessment was taken up by the
second respondent his attention was invited to this Court’s
decision in the case of the United Motors (1); he followed
the said decision and held that
(1) [1953] S.C.R. 1069.
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the turn over of Rs. 92,24,386-1-6 on account of despatch of
manufactured jute products to out-of-Stat buyers was
exempted from the levy of tax; this meant, a deduction of
the said amount from the amount of Rai Bahadur the total
turnover shown by the first respondent in the return
submitted by him according to the provisions of the Act.
Subsequently the second respondent proceeded against the
first respondent under s. 14A of the Act" and issued a
notice in that behalf on June 18, 1954. By this notice the
first respondent was called upon to show cause why the
entire amount of Rs. 2,11,222-9-6 which had been recovered
by him as sales tax from the dealers should not be forfeited
to Government. The first respondent showed cause but the
second respondent was not satisfied with the explanation
given by the first respondent, and so he directed the first
respondent to deposit the said amount into the Government
treasury and produce the proof of payment before him within
a month of the receipt of his order. This order was passed
on February 10, 1955. It shows that the second respondent
thought that the matter raised for his decision was simple;
the first respondent had collected the amount in question as
tax under the Act from his customers for and on behalf of
the appellant, and so he could not retain the said amount ;
it must go to the State coffers. He also held that the
first respondent had represented to the, purchasers that the
amount was chargeable as sales tax under the Act and as such
the first respondent had clearly contravened the explicit
provisions of s. 14A of the Act read with r. 19 of the Bihar
Sales Tax Rules (hereinafter called the Rules). It is on
these findings that the second respondent passed the
impugned order of forfeiture.
The first respondent then applied to the Patna High Court,
tinder Arts. 226 and 227 of the Constitution challenging the
validity of the said order. It was urged on his behalf that
the proviso to s. 14A under which the impugned order was
purported to have been passed did not apply to the case of
the first respondent, and as such the order was Dot
justified
336
by the said proviso. It was also contended that if it is
held that the said proviso justified the impugned order it
was ultra vires the State Legislature inasmuch as it
violates Art. 20(1) and Art. 31(2) of the Constitution. The
High Court did not consider the first contention raised
before it; it dealt with the two constitutional points urged
by the first respondent and found in his favour on both of
them.
On these findings the petition filed by the first
respondent was allowed, the impugned order of forfeiture was
set aside and the proceedings taken against the first
respondent under s. 14A were quashed. The appellant then
applied for and obtained a certificate from the said High
Court under Art. 132(1) of the Constitution.
On behalf of the appellant Mr. Lal Narain Sinha has
contended that the High Court was in error in holding that
the proviso to s. 14A violates either Art. 20(1) or Art.
31(2) of the Constitution. He has addressed us at length in
support of his case that neither of the two articles is
violated by the impuged proviso. On the other hand, the
learned SolicitorGeneral has sought to support the findings
of the High Court on the said two constitutional points; and
he has pressed before us as a preliminary point his argument
that on a fair and reasonable construction, the proviso
cannot be applied to the case of the first respondent. We
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would, therefore, first deal with this preliminary point.
In cases where the vires of statutory provisions are
challenged on constitutional grounds, it is essential that
the material facts should first be clarified and ascertained
with a view to determine whether the impugned statutory
provisions are attracted; if they are, the constitutional
challenge to their validity must be examined and decided.
If, however, the facts admitted or proved do not attract the
impugned provisions there is no occasion to decide the issue
about the vires of the said provisions. Any decision on the
said question would in such a case be purely academic.
Courts are and should be reluctant to decide constitutional
points merely as matters of academic importance.
337
Before considering the preliminary point raised by the first
respondent it is necessary to refer briefly the relevant
scheme of the Act. The Act was originally passed in 1947
because the Legislature thought it necessary to make an
addition to the revenue of Bihar, and for that purpose to
impose a tax on the sale of goods in Bihar. The provisions
of the Act as well as the statutory Rules framed under it
have been subsequently modified from time to time. In our
present discussions we would refer to the provisions and the
Rules which were in operation at the material time. The
goods the sale of which is taxed under the Act are defined
by s. 2(d) as meaning all kinds of moveable property other
than those specifically excepted. Section 2(g) defines "
sale " inter alia as meaning any transfer of property in
goods for cash or other considerations and the second
proviso to it prescribes that the sale of any goods-(1)
which are actually in Bihar at the time when, in respect
thereof the contract of sale as defined in s. 4 of that Act
is made, or (2) which are produced or manufactured in Bihar
by the producer or manufacturer thereof,-shall wherever the
delivery or contract of sale is made, be deemed for the
purposes of this Act to have taken place in Bihar. The tax
leviable Linder the Act is defined by s. 2(hh) as including
a fee fixed in lieu of the tax under ’the’ first proviso to
s. 5, whereas under s. 2(i) " turnover " means the aggregate
of the amounts of sale prices received and receivable by a
dealer in respect of sale or supply of goods or carrying out
of any contract, effected or made during the given period,
or, where the amount of turnover is determined in the
prescribed manner, the amount so determined. Section 4 which
is the charging section provides that every dealer whose
gross turnover during the specified period on sales which
have taken place both in and outside Bihar exceeds Rs.
10,000 shall be liable to pay tax on sales which have taken
place in Bihar oil and from the date of the commencement of
the Act. This section shows that the incidence of taxation
can be attracted only where the gross turnover of the dealer
exceeds Rs. 10,000 and in
338
determining this prescribed minimum. sales which take place
both in Bihar and outside are taken into account. Section
5, prescribes the rate of tax at six pies in a rupee on the
taxable turnover. The provisos to this section confer
specific powers on the State Government; the first
proviso which is relevant for our purpose empowers the State
Government by notification to fix a higher rate of tax not
exceeding one anna in a rupee or any lower rate of tax in
respect of sale of any goods or class of goods specified in
such notification subject to such conditions as it may
impose. The explanation to this section indicates what the
taxable turnover for the purpose of the section means. "
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Taxable turnover " according to this explanation means that
part of a dealer’s gross turnover on sales which have taken
place in Bihar during any period which remains after
deducting therefrom the items specified in cls. (a) and (b)
of the explanation. The sale of any goods declared
from time to time as tax-free goods under s. 6 is one of
those items. Section 6 empowers the State Government to
exempt sale of any goods or class of goods from the levy of
tax under this Act subject to the conditions specified in
the section, whereas s. 7 empowers the Government to exempt
dealers from tax, and s. 8 authorises the Government to
prescribe points at which goods may be taxed or exempted.
Section 9 deals with the question of registration of dealers
and provides that no dealer who is liable to pay tax under
s. 4 shall carry on business unless he has been registered
under the Act and possesses a registration certificate.
Under s. 11 a list of registered dealers is published, and
by s. 12 such registered dealers are required to furnish
such returns by such dates and to such authorities as may be
prescribed. Section 13 prescribes the procedure for
assessment, and s. 14 requires that the tax payable under
the Act shall be paid in the manner hereinafter provided at
such intervals as may be prescribed. Section 14(2) requires
the registered dealer to pay into a Government treasury the
full amount of tax due from him according to the returns
which he has to file and has to
339
furnish along with the said return a receipt from the
treasury showing the payment of such amount.
Having thus provided for the recovery of the tax charged
under s. 4, s. 14A in effect authorises registered dealers
to reimburse their dues by making collections of the tax
payable by them in accordance with the restrictions and
conditions as may be prescribed. It provides that no dealer
who is not a registered dealer shall realise any amount by
way of tax on sale of goods from purchasers nor shall any
registered dealer make any collection of tax except in
accordance with such restrictions and conditions as may be
prescribed. That takes us to the proviso to s. 14A with
which we are directly concerned in the present appeal. It
reads thus:
" Provided that if any dealer collects any amount by way of
tax, in contravention of the provision of this section or
the conditions and restrictions prescribed thereunder, the
amount so collected shall, without prejudice to any
punishment to which the dealer may be liable for an offence
under this Act, be forfeited to the State Government and
such dealer shall pay such amount into the Government
treasury in accordance with a direction issued to him by the
Commissioner or any officer appointed under section 3 to
assist him and in default of such payment, the amount shall
be recovered as an arrear of land revenue."
The effect of this proviso is clear. A dealer is authorised
to collect amounts by way of tax from the purchasers only in
accordance with the provision of s. 14A and the conditions
and restrictions prescribed thereunder. The conditions and
restrictions referred to in the proviso are to be found in
the material Rules framed under the Act. If it is shown
that a dealer has collected an amount by way of tax in
violation of the conditions and restrictions prescribed by
the Rules he incurs the penalty of forfeiture as specified
in the proviso. There can be no doubt that before the
penalty of forfeiture can be imposed upon the dealer under
the proviso it must be shown that he has acted contrary to
the conditions and restrictions prescribed
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340
by the Rules. It would not be enough to show that the
collection of the amounts in question by the dealer is
otherwise illegal or improper. The contravention of the
statutory provision contained in s. 14A or of the Rules
prescribing conditions and restrictions in that behalf alone
can form the basis of the imposition of the penalty under
the proviso. This position is not disputed before us.
The appellant contends that the proviso is attracted to the
present case because the first respondent has contravened
the conditions and restrictions imposed by the proviso to r.
19, whereas the first respondent argues that a proper
construction of this latter proviso does not justify the
appellant’s plea. It would thus- be seen that the decision
of the preliminary point raised by the first respondent
involves the narrow question of the construction of the
proviso to r. 19.
Before construing the said proviso it is, however, necessary
to refer to s. 33 of the Act. This section was enacted on
April 4,1951, but it has been expressly made retrospective
as from January 26, 1950. Therefore at the material time
this section must be deemed to have been in operation.
Section33(1)(a)(i)provides that notwithstanding anything
contained in the Act a tax on the sale or purchase of goods
shall not be imposed under the Act where such a sale or
purchase takes place outside the State of Bihar. Section
33(2) makes the explanation to cl. (1) of Art. 286 of the
Constitution applicable for the interpretation of subcl. (i)
of cl. (a) of sub-s. (1). It is common ground that if the
relevant provision just cited is construed in the light of
the decision of this Court in the case of the United Motors
(1) there can be no doubt that the sales which are the
subject-matter of the present proceedings consist of
transactions on which a tax cannot be imposed under the Act.
That is why the appellant strongly relies on this provision
and contends that in construing the proviso to r. 19 the
true legal position in respect of the transactions in
question must be borne in mind.
Let us now read the proviso to r. 19. Rule 19 itself
prescribes the procedure which has to be followed by
(1) [1953] S.C.R. 1069.
341
a registered dealer in realising any amount by way of tax on
sale of goods from purchasers. This procedure refers to the
issue of a cash memo or a bill as prescribed by it. The
proviso to this Rule lays down that no such registered
dealer shall realise any amount by way of tax at a rate
higher than the rate, at which he is liable to pay tax under
the Act, or realise any amount by way of tax in respect of
such part of his turnover as is allowed to be deducted from
his gross turnover for the determination of his taxable
turnover under the Act or these Rules. The appellant relies
on the latter part of the proviso and argues that the part
of the turnover of the first respondent which is in question
fell within s. 33(1)(a)(1) and as such was not liable to be
taxed. That being so there was no justification for the
first respondent to collect any amount by way of tax from
his purchasers under s. 14A. The scheme of S. 14A is to
permit the registered dealer to collect such amounts of tax
from his purchasers as he in his turn is liable to pay to
the appellant. Authority to collect such tax amounts given
to the registered dealer inevitably postulates his liability
to pay a similar amount to the appellant. Therefore the
conduct of the first respondent in collecting amounts by way
of tax from his purchasers amounts to a breach of s. 14A
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itself.
It is also contended that having regard to the -provisions
of s. 33(1)(a)(i) the first respondent was entitled to claim
a deduction of the transations in question from his gross
turnover under the latter part of the proviso, and that
clearly means the first part of the said proviso applies to
his case and it prohibited him from realising the said
amounts. His conduct in collecting the amounts, therefore,
constitutes a breach of the conditions specified in the
proviso to r. 19.
In appreciating the validity of these arguments it would be
relevant to remember that at the material time there was
considerable confusion in the minds of the public as well as
the State authorities about the true scope and effect of the
provisions of Art. 286(1) of the Constitution. It is not
disputed that during the material period and in the years
preceding it registered
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342
dealers used to pay tax in respect of transactions which
were really not liable to be taxed under s. 33(1)(a)(i)
and such tax was being received by the appellant. In fact,
as we have already pointed out s. 14 of the Act imposes a
liability on the registered dealer to furnish along with his
return a receipt for the payment of the tax which is payable
under the return. Such payments were made by registered
dealers in respect of similar transactions and were
accepted. It is an accident that the assessment proceedings
of the first respondent were actually taken up for decision
by the second respondent after the decision of this Court in
the case of the United Motors (1). If the question about
the first respondent’s liability to pay the tax under the
Act had been decided before the date of the said decision
there is no doubt that he would have been required to pay
the tax for the transactions in question. Indeed it is
common ground that the notification issued for the material
period levied a tax at three pies on the goods in question "
if the sales tax authority is satisfied that the goods have
been despatched by or on behalf of the dealer to any person
outside the Province of Bihar." This notification is
consistent with the definition of the word " sale " as it
then stood. It is thus clear that at the material time the
appellant thought that transactions like those in question
in the present appeal were liable to pay the tax at the rate
of three pies as prescribed by the relevant notification;
the registered dealers also had no doubt on the point; and
so taxes were collected in respect of such transactions by
the appellant from the registered dealers and by the
registered dealers in their turn from their purchasers.
Nevertheless, after the enactment of s. 33 the legal fiction
about the retrospective operation of the said section must
be given effect to and in construing the proviso to r. 19 it
must be assumed that the transactions in question were
outside the scope of the Act and no tax could have been
imposed in respect of them. Construing the proviso on this
assumption, can it be said that in respect of the part of
the first respondent’s
(1) [1953] S.C.R. 1069.
343
turnover which is in question a deduction was allowable
within the meaning of the proviso? In our opinion this
question cannot be answered in favour of the appellant.
Rule 19 itself was framed in 1949 and has not been amended
subsequent to the enactment of s. 33. As it was framed its
reference to the allowable deductions was clearly based on
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the provisions of ss. 6, 7 and 8 of the Act. This position
would be clear beyond all doubt if we read the material
words in the proviso in the light of the explanation to s. 5
of the Act. The explanation in terms enumerates deductions
which have to be made in determining the taxable turnover of
the ’registered dealer and it is to these deductions which
are allowable under the three sections specified in the
explanation to which the latter part of the proviso to r. 19
refers. A claim for the exclusion of a part of the first
respondent’s turnover on the strength of s. 33(1)(a)(i)
cannot, therefore, be said to be an allowable deduction
under the proviso.
This question can be considered from another point of view.
The provisions which allow deductions to be made or grant
exemptions in respect of certain transactions obviously
postulate that but for them the transactions in question
would be liable to. tax under the Act; and so when such
transactions are included in the return the registered
dealer is allowed to claim appropriate deductions in respect
of them. But, the position with regard to s. 33 is entirely
different ; transactions which attract the provisions of the
said section are in substance outside the scope of the Act
and no tax can be imposed on them at all. If that be the
true position the claim which can be made by the registered
dealer in respect of such transactions cannot in law be
regarded as a claim for allowable deductions or exemptions
properly so-called; it is really a claim that the Act itself
does not apply to the said transactions. Therefore, in our
opinion it would be straining the language of the second
part of the proviso to r. 19 to hold that the transactions
in question fell within its purview.
There is one more point to be considered in this connection.
Form VI which has been prescribed for
344
making the returns under s. 12 requires the gross turnover
to be mentioned at the outset, and then it provides for
the different deductions allowable under the Act. This
form was prescribed in 1949 and has not been amended after
the addition of s. 33 to the Act. On looking at this form
it seems difficult to entertain the argument that the
claim for the total exclusion of the transactions in
question can be made under any of the headings prescribed in
the form. The appellant, however, contends that the first
item of gross turnover means the whole of the gross turnover
which must include all sale transactions whether they took
place within Bihar or outside it, and in support of this
argument reliance is placed on the definition of " turnover
" contained in s. 2(1). If the whole of the gross turnover
has to be mentioned under item 1, it is urged, the claim for
the exclusion of the transactions in question can well be
adjusted under one or the other of the deduction items
prescribed in the form. We are not inclined to accept this
argument. The form as it has been prescribed construed in
the light of the material provisions contained in ss. 6, 7
and 8 does not support the case that in prescribing its
several items it was intended that the transactions failing
under s. 33 should be first shown under item 1 and then
excluded under one or the other of the remaining items of
deduction. Besides it may be relevant to point out that the
heading of Chapter VII which deals with the submission of
returns by dealers is " return of taxable turnover " and it
is arguable that the gross turnover mentioned in Form VI may
mean "gross taxable turnover " and not the gross turnover
including the transactions which are outside the scope of
the Act.
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Then as to the argument about the contravention of s. 14A
itself it is difficult to appreciate how any provision of s.
14A can be said to have been contravened. Section 14A
consists of two parts both of which are put in a negative
form. The second part with which we are concerned in effect
means nothing more than this, that a registered dealer can
make collections of such tax only as is payable by him in
accordance with the restrictions and conditions as may be
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prescribed. If the argument is that the first respondent
was not liable to pay any tax and as such was not entitled
to make any corresponding collection, then the collection
made by him may fall outside s. 14A and be otherwise
unjustified or improper; but it does not amount to the
contravention of any provision of s. 14A as such. In fact
s. 14A itself refers to the restrictions and conditions
which may be prescribed and, as we have already seen, these
conditions and restrictions are prescribed by the Rules in
general and by r. 19 in particular. So the argument urged
under s. 14A takes us back to the question as to whether the
proviso to r. 19 has been contravened. In dealing with this
question we cannot ignore the fact that the relevant
provisions which fall to be construed in the present appeal
impose a serious penalty on the registered dealer, and so,
even if the view for which the appellant contends may
perhaps be a possible view, we see no reason why the other
view for which the first respondent contends and which
appears to us to be more reasonable should not be accepted.
In the result we hold that the proviso to s. 14A cannot be
invoked against the first respondent and so the order of
forfeiture passed against him by the second respondent is
unjustified and illegal.
In view of this conclusion it is unnecessary to consider the
objections raised by the first respondent against the
validity of the proviso on the ground that it contravenes
Arts. 20(1) and 31(2) of the Constitution. We may
incidentally add that during the course of the arguments
before us we have also heard all the learned counsel on the
question as to whether the said proviso contravenes the
provisions of Art. 19(1)(f) as well.
The result is the appeal fails and is dismissed with costs.
The decision of this appeal governs Civil Appeals Nos. 546
of 1958 and 115 of 1959. They also fail and are dismissed
with costs.
Appeal dismissed.
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