Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 15
PETITIONER:
TRIPURA GOODS TRANSPORT ASSOCIATION & ANR.
Vs.
RESPONDENT:
COMMISSIONER OF TAXES & ORS.
DATE OF JUDGMENT: 18/12/1998
BENCH:
K.Venkataswami
JUDGMENT:
MISRA, J.
Leave granted.
The appellant-Association which is doing the business
of transporting goods within and outside the State of
Tripura, is aggrieved by the judgment of the Gauhati High
Court dismissing the writ Appeal challenging the
constitutional validity of the Tripura Sales Tax [11th
Amendment] Rules, 1994, (for short the Rules) and Sections
29, 32 and 36A of the Tripura Sales Tax Act, 1976, (for
short the Act) including notifications dated 23rd
September, 1994 and 15th October, 1994. By means of the
aforesaid 11th Amendment, sub-rule (3) has been inserted
after sub-rule (2) of Rule 46-A of the Tripura Sales Tax
Rules, 1976, (for short Principal Rules), sub-rule (1A)
has been inserted after sub-rule 63A (1), sub-rule (2) in
Rule 63A has been substituted in place of old sub-rule (2)
of the principal Rules and Rule 64A has been substituted for
the old sub-rule 64A. The resultant effect of such
amendment is that the appellants, who are working as
Transporters in Tripura, are required to obtain a
Certificate of Registration and to comply with various other
formalities as prescribed under the Act and the Rules, viz.,
to maintain accounts according to the prescription made by
the respondents under Section 36A of the Act for carrying on
transport business while entering into or going outside the
State of Tripura including making the declaration in Form
XXIV, which is challenged to be beyond the legislative
competence of the State Legislature and ultra vires the
Constitution offending Articles 14, 19 (1)(g), 246, 265,
286, 300A and 301 of the Constitution of India. The
challenge is based on the ground that the appellants are
Transporters and are not dealers within the meaning of
Section 2 (b) of the said Act, hence obligation cast on them
under the Act and Rules are beyond the legislative
competence of the State legislature.
By a reasoned order, the learned Single Judge was
pleased to dismiss the writ petition of the appellants,
except the challenge to the validity of Rule 63A (2) of the
principal Rules. However, the challenge made by the
appellants regarding constitutional validity of Section 36A,
which requires a carrier to maintain proper accounts of
goods transported to or outside Tripura in the manner
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 15
prescribed, was not entertained by the learned Single Judge.
In appeal before the Division Bench, though foundation was
laid but specific prayer for declaration of Section 36A as
ultra vires was not made due to inadvertence, hence the
appellants sought amendment to the prayer at the appellate
stage which was granted, accordingly it was incorporated at
the appellate stage. The Division Bench also dismissed the
appeal of the appellants. Aggrieved by the same, the
present appeal is filed.
Learned counsel for the appellants, Mr. M.L. Lahoty,
made two- fold submissions in support of the challenge.
First, the obligation cast under it on the Transporters
could only be on a dealer and since the Transporters are
neither trading in sale nor purchase of any goods hence not
a dealer as defined under Section 2(b) of the Act, hence the
impugned provisions lack legislative competence. Secondly,
when it further casts an obligation on such transporters to
obtain certificate of registration under the said Act, when
any good is brought within or sent outside the State of
Tripura and further to fill Form XXIV, it impedes free flow
of trade and business of the appellants, hence violative of
Article 301 of the Constitution of India.
In support of his first submission, he submitted that
Sec. 29 refers to offences and penalties not confined to
dealers as it begins with the word whoever, which includes
the transporters. As per sub-clause (4) whoever fails, when
required by or under the provisions of this Act to produce
any accounts, evidence or documents or to furnish any
information, are liable for conviction by a Judicial
Magistrate, punishable with imprisonment which may extend to
six months or with fine not exceeding one thousand rupees or
with both. Composition of offences is conferred under
Section 32. The Commissioner may, under it, either before
or after institution of criminal proceedings, accept from
the person who has committed or is reasonably suspected of
having committed an offence under the Act or the Rules made
thereunder, by way of composition of offence on such terms
and conditions as prescribed, and on payment of such sum as
determined by the Commissioner, no further proceeding is to
be taken against such person in respect of the such offence.
Reference was also made to Section 36A, which requires
maintenance of accounts by a carrier including Transporter,
the class to which the appellants belongs. This puts an
obligation on the Transporter to maintain proper account of
goods transported to or outside Tripura in the manner
prescribed and is liable to furnish in the prescribed manner
such information as the Commissioner may require relating to
the transportation of such goods. Reference is also made to
Section 38B, which requires the Transporter, Carrier or
Transporting Agent operating its transport business relating
to taxable goods in Tripura to obtain a Certificate of
Registration in the prescribed manner from the Commissioner
of Taxes on payment of such fees as may be prescribed.
To appreciate this controversy, Section 29(1) and (4),
Sections 30, 32, 36A and 38B are quoted hereunder: Section
29 :
29. Offences and penalties (1) Whoever - (1) Carries
on business as a dealer and acts in contravention of any of
the provisions of this Act; or (2) fails, without
reasonable cause, to submit in due time any return as
required by or under the provisions of this Act, or submits
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 15
a false return; or (3) fails, when required by or under the
provisions of this Act to keep accounts or records of sales;
or (4) fails, when required by or under the provisions of
this Act to produce any accounts, evidence or documents or
to furnish any information; or (5) fails or neglects to
comply with any requirement made of him under the provisions
of this Act; or (6) knowingly produces incorrect accounts,
registers or documents, or knowingly furnishes incorrect
information; or
xxx xxx xxx
shall, on conviction before a Judicial Magistrate and
in addition to any tax including interest if any, or penalty
or both that may be due from him, be punishable with
imprisonment which may extend to six months or with fine not
exceeding one thousand rupees or with both, and when the
offence is a continuing one, with a daily fine not exceeding
fifty rupees during the period of continuance of the
offence.
2. xxx xxx xxx
Section 30 :
30. False statement in declaration : Whoever makes
statement in verification or declaration in connection with
any proceedings under this Act which is false, and which he
either knows or believes to be false, or does not believe to
be true, shall on conviction before a Judicial Magistrate,
be punishable with simple imprisonment which may extend to
six months or with fine which may extend to one thousand
rupees, or with both.
Section 32.
32. Composition of offences : (1) Subject to such
conditions as may be prescribed, the Commissioner may,
either before or after institution of criminal proceedings
under this Act, accept from the person who has committed or
is reasonable suspected of having committed an offence under
this Act or the rules made thereunder, by way of composition
of such offence
(a) Where the offence consists of the failure to pay,
or the evasion of any tax recoverable under this Act, in
addition to the tax including interest if any or penalty or
both so recoverable, a sum of money not exceeding one
thousand rupees or double the amount of the tax recoverable,
whichever is greater, and (b) in any other case a sum of
money not exceeding one thousand rupees in addition to tax
recoverable. (2) On payment of such sum as may be
determined by the Commissioner under Sub section (1) no
further proceeding shall be taken against the person
concerned in respect of the same offence.
Section 36A.
36A. Maintenance of Accounts by Carriers : (1)
Notwithstanding anything contained in any other Act, any
transporter, carrier or transporting agent operating its
transport business in Tripura, shall maintain proper account
of goods transported to or outside Tripura through it in the
manner prescribed and shall on demand by the commissioner be
liable to furnish in the prescribed manner such information
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 15
as the Commissioner may require relating to the
transportation of such goods and shall also be bound to
produce books of accounts for inspection and examination by
the Commissioner.
Section 38B.
38B. For carrying out the purposes of section 38
every Transporter, carrier of Transporting Agent operating
its transport business relating to taxable goods in Tripura
shall be required to obtain a Certificate of Registration in
the prescribed manner from the commissioner of Taxes on
payment or such fees as may be prescribed.
The Transporter has to make a declaration in Form
XXIV, which is an obligation cast on such Transporter by
virtue of Section 38 (2) read with sub-rule (3) of Rule 46A,
which requires the Transporter to obtain Form XXIV from the
Superintendent of Taxes on payment of such fees as may be
specified by the Commissioner. Transporter is further
obliged to maintain a register of the accounts of such forms
serially. Rule 63A read with Section 38(3) confers power to
search at any place on the Officer-in-charge of a check
post, Superintendent of Taxes or any officer specially
empowered by the Commissioner to intercept, detain and
search any vehicle or place suspected of being used for
contravening provisions. Sub-rule (1A) of this Rule 63A
read with Section 38(4) gives power of seizure on the
aforesaid officer at the check post when goods are being
carried in contravention of any provision of the Act or the
Rules. Under sub-rule (2) the person, from whom such goods
are seized, has to make a declaration of the value of such
seized taxable goods. Such declaration is to be submitted
to the Superintendent of taxes with copies of the relevant
bills, invoice, and consignment note issued by the consignor
and other documents in support of the basis on which the
value is declared. Sub-rule (3) gives an option to the
person from whom such goods are seized to opt for
composition of such offence under Section 32 and then to pay
for the composition of the offence so determined within
seven days from the date of composition of the offence. In
case he does not opt, then such goods are liable to be
auctioned in terms of sub-rule (4). Next reference was to
Rule 64A which requires registration of Transporter. Rules
46-A, Rule 63A and Rule 64A are quoted hereunder: Rule
46-A: 46-A. (1) Every declaration to be given under sub-
section(2) of section 38 shall contain a correct and
complete accounts of the goods carried by the transporter
and shall be in Form XXIV in duplicate, and duly signed by
him: Provided that if the space provided in Form XXIV is
not sufficient for making the entries, separate annexure may
be attached to the form for the purpose which should be duly
signed by him.
(2) The Officer-in-charge of the check post or the
barrier on being satisfied about the correctness of the
statements made and particulars contained in the declaration
in Form XXIV, shall seal it with his official seal and give
a permit. One copy of the permit shall there upon be
returned to the transporter and the other shall be retained
by the Officer-in-charge: Provided that a transporter who
has obtained a permit at the first check post or barrier
under sub-rule (2) shall not be required to make any further
declaration at other checkposts or barrier in respect of
only so much of the consignments to which the permit
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 15
relates.
(3) The transporter shall obtain Form XXIV from the
Superintendent of Taxes concerned on payment of such price
as may be specified by the Commissioner. The Form shall be
serially numbered and account shall be maintained in
register. No other Form XXIV except those supplied from the
office of Superintendent of Taxes shall be entertained with
effect from such date as the Commissioner may notify by
publication in the local newspapers and Official Gazette.
Rule 63A:
63A. (Power to search at any place by Officer-in-
charge of a check post, Superintendent of Taxes or any
officer specially empowered by the Commissioner:
(1) Notwithstanding anything contained in any other
provision of these Rules, at every check post or barrier or
at any other place, when so required by the Officer-
in-charge of such check post or barrier, by any
Superintendent of Taxes or by any officer empowered by the
Commissioner of Taxes in this behalf for the purpose of
preventing the evasion of taxes payable under the Act, the
driver or any other persons in charge of goods vehicles
shall stop the vehicle and keep it stationary as long as may
be required by such officer to search the goods vehicle or
part thereof, examine the contents therein and inspect all
records relating to the goods carried which are in the
possession of such driver or other person in charge thereof,
who shall, if so required, give his name and address and the
name and address of the owner of the vehicle as well as
those of the consignor and consignee of the goods.
1A - On search, as aforesaid, if it is found that the
goods are being carried in contravention of any provision of
the Act or the Rules, such officer conducting search may
seize the goods found in the vehicle alongwith any container
or materials used for packing.
(2) When any taxable goods are seized, the person from
whom such goods are seized shall make a declaration in
respect of the value of the seized taxable goods and this
value shall be the retail prices or the aggregate of retail
prices of such goods at which these are likely to be sold in
Tripura at the relevant time. Such declaration shall be
submitted to the Superintendent of Taxes with copies of the
relevant bills, invoice, and consignment note issued by the
consignor and other documents in support of the basis of the
value declared. The copies so furnished may be returned to
the person after the Superintendent satisfies himself about
the value of the goods declared.
(3) When the person from whom the taxable goods are
seized opts for composition of such offence under Section 32
within a period of 15 days from the date of seizure of the
goods, the amount of composition money so determined shall
be payable within 7 days from the date of composition of the
offence by payment into Government treasury. Upon
production of the receipted copy of the challan in support
of payment to the Superintendent the seized goods be
released.
(4) If the person from whom the goods are seized does
not opt for composition of the offence within a period of 15
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 15
days from the date of seizure or having compounded the
offence, does not pay the amount in due time as provided in
sub-rule (3) the Superintendent with the previous sanction
of the Commissioner, shall issue a proclamation in form No.
XXI for auction for sale of such seized goods on a fixed
date, place and time. The description of the taxable goods
shall be mentioned in the proclamation. The proclamation
shall be published in at least one local newspaper. The
auction shall be conducted by the Superintendent or any
other official authorised by the Commissioner.
(5) The auction shall be governed by the conditions
laid down in the proclamation (Form No. XXI).
Rule 64A
64A. Registration of Transporter etc.
(1) No transporter, carrier, or transporting agent
shall operate its transport business in Tripura relating to
taxable goods without being registered with the Commissioner
of Taxes in such a manner as he may direct.
(2) A transporter, carrier, or transporting agent
already operating transport business in Tripura relating to
taxable goods shall, within a period of 30 (thirty) days
from the date of commencement of these rules (Eleventh
Amendment) apply to the Commissioner of Taxes for
registration.
(3) If a transporter, carrier or a transporting agent
carries or transports any taxable goods in contravention of
the provisions of the Act or the rules, his registration
shall be liable to be cancelled or suspended for such period
as may be determined by the Commissioner of Taxes after
giving him a reasonable opportunity of being heard.
(4) Every transporter, carrier or transporting agent
operating its transport business in Tripura shall maintain a
Register in Form No. XXII a true and correct account of
every consignment of goods transported into Tripura, and in
Form No. XXIII of goods transported outside Tripura,
through it.
(5) No taxable goods shall be delivered by the
transporters carriers or transporting agents unless the
requirements laid down in Rule 46 and 47 have been complied
with.
(6) No delivery of taxable goods shall be given by the
transporter without obtaining a copy of declaration in Form
XVIII signed by the superintendent of Taxes/Inspector of
Taxes.
Learned counsel for the appellants vehemently urged
that the appellants are mainly the Transporters carrying
goods of the consignor to the consignee and are neither a
dealer nor doing any business of sale or purchase of any
goods, hence the aforesaid obligations cast on the
transporters including punishment for the said offences are
beyond the legislative competence of the State Legislature
under List II of Entry 54 of the Seventh Schedule of the
Constitution of India.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 15
Learned senior counsel for the respondents, Mr.
Rakesh Dwivedi, submits that none of the said provisions
require the appellants (Transporter) to perform any of such
obligations so as to construe it to be that which could only
be on a dealer. The aforesaid provisions are only to
streamline assessment and to check the evasion of sales tax.
The said obligation casts on the Transporters to achieve
such purpose, is a necessary concomitant of any taxing
statute. He submits that the offence and penalties referred
to in Section 29 (4), which is strongly relied by learned
counsel for the appellants, when read with other sub-clauses
of that Section and further read with Section 30, reveal
that it is only a mechanism to make collection of tax more
effective and purposeful. Sub-section (4) of Section 29
constitutes offence only when one fails to produce such
account or form as he is required under the law when
required by the concerned authority. This is a necessary
corollary for which an obligation is cast on the
Transporters to do certain thing. This threat of offence is
only to keep him on guard so that he may not fail to produce
such documents as required, but for this the very objective
to trace a real dealer for tax and penalty would be
defeated. Thus this obligation cast on the Transporter is
really in aid to the taxing authorities. Section 30
constitutes offence when a false statement is declared.
This is followed by the composition of offences under
Section 32. Section 36A requires the maintenance of
accounts. Similar is the position with respect to the
aforesaid Rules. They are all in aid of the mechanism
evolved to check evasion of tax. Next requirement of
obtaining a Certificate of Registration under Section 38B
and making declaration on Form XXIV under sub-Rule 3 of Rule
46-A could not be construed as to constitute an inference
that it impedes any free flow of trade or business while
entering into and going out of the State of Tripura.
Thus, the question for consideration with respect to
the first submission is, whether such provisions could be
held to be beyond the legislative competence of the State
Legislature? The law in this regard is well-settled, if any
legislature makes any ancillary or subsidiary provision
which incidentally transgresses over its jurisdiction, for
achieving the object of such legislation then it would be a
valid peace of legislation.
In Express Hotels Private Ltd. Vs. State of Gujarat
& Anr., 1989 (3) SCC 677, this Court held:
We are dealing with an entry in a Legislative List.
The entries should not be read in a narrow or pedantic sense
but must be given their fullest meaning and the widest
amplitude and be held to extend to all ancillary and
subsidiary matters which can fairly and reasonably be said
to be comprehended in them.
In Elel Hotels and Investments Ltd. & Ors. Vs.
Union of India, 1989 (3) SCC 698, this Court held:
In interpreting expressions in the legislative lists
a very wide meaning should be given to the entries. In
understanding the scope and amplitude of the expression
income in Entry 82, List I, any meaning which fails to
accord with the plenitude or the concept of income in all
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 15
its width and comprehensiveness should be avoided. The
cardinal rule of interpretation is that the entries in the
legislative lists are not to be read in a narrow or
restricted sense and that each general word should be held
to extend to all ancillary or subsidiary matters which can
fairly and reasonably be said to be comprehended in it. The
widest possible construction, according to the ordinary
meaning of the words in entry, must be put upon them.
In P.N. Krishna Lal & Ors. Vs. Government of Kerala
& Anr, 1995 Suppl. (2) SCC 187, this Court held:
The legislature derives its power under Article 246
and other related articles in the Constitution. The
language of an entry should be given the widest meaning
fairly capable to meet the need of the Government envisaged
by the Constitution. Each general word should extend to all
ancillary or subsidiary matters which can fairly and
reasonably be comprehended within it. When the vires of an
enactment is impugned, there is an initial presumption of
its constitutionality. If there exists any difficulty in
ascertaining the limits of the legislative power, it must be
resolved, as far as possible in favour of the legislature,
putting the most liberal construction on the legislative
entry so that it is intra vires.
It is now necessary to scrutinise the impugned
provisions to see what are the obligations cast on the
transporters, what is the purpose of such obligation, is it
in any way taxing such transporters or impeding the
transport business to make it beyond the legislative
competence and ultra vires Article 301 of the Constitution
of India? Whenever any goods is sold or purchased inside or
outside the State, the incidence of tax and the quantum of
tax has to be ascertained under the provisions of the
relevant taxing statute. For this, it is necessary to fix a
dealer, the taxable goods, place of sale or purchase of such
goods and the quantum of tax. If a dealer in taxable goods
transaction of sale or purchase escapes attention of the
taxing authority, tax on such goods escapes with resultant
loss to the State revenue. To over reach this possible
escape a mechanism is invariably brought in a statute to
seal such loopholes of escape, of course casting obligations
on some to perform certain acts to reach this objective.
Thus, maintaining accounts of goods transported into or
outside Tripura in the prescribed manner and to furnish in
the prescribed manner such information as the Commissioner
requires including filling of Form XXIV is only for the said
objective to be achieved with the help and aid of such
transporter or carrier etc. Such obligation is cast only
for identifying the consignor or consignee to fix liability
on them in corelation with the goods carried by such
transporter further requiring the disclosure of such goods
with its quantity, value, weight, to help the taxing
authority to assess such goods on such escaping dealer.
This helps the taxing authorities in collecting taxes,
imposing penalties including punishing one for the offences
committed. If such an obligation is not cast on such
Transporters then any dealer under a false name, can
despatch his taxable goods to another person through a
Transporter escaping his sales tax liability on such goods.
It cannot be denied that some such dealers and transporters
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 15
do indulge in such illegal practices. This fact is brought
in through the counter-affidavit filed by the
respondents-State that some such consignments are booked
with consignee as self, without disclosing the name,
registration number and address of the consignee in the
appropriate column of Form XXIV. By incorrect, incomplete
declaration in such forms, if not made punishable, would
defeat the very purpose of enacting these provisions and
would help such clandenstile dealers to escape the liability
of tax. So each of these provisions are brought in to help
the authorities to check the evasion of tax.
The maintenance of accounts by the Transporter under
Section 36A is only to help the taxing authority to trace
the dealer, fix the goods transported corelating with such
dealers transporting such goods for fixing taxable liability
in this regard. There is no provision, which fixes any
liability on the transporters, carriers etc., which is on a
dealer. Liability, if at all, is only if such transporters,
carriers etc. do not disclose what is required and what is
within his knowledge to help the authorities to collect the
tax from escaping dealers which, but for this, would escape.
Section 29 speaks of offences covering both dealers and
non-dealers as is evident by the opening word whoever.
Sub-section (4), to which learned counsel referred to,
obligates a person to produce any accounts, evidence or
documents or to furnish any information as required by the
concerned authority. Of course, all this would be what one
is required to maintain and in the case of transporters,
carriers etc. what the relevant provisions require him to
do. If he is required to maintain or produce some document
which he has to maintain under a statute, and if he does not
produce it then of course he should be made liable for
offence. It is only on his failure to do this, it is
treated as an offence, punishment as it is one of the
legitimate weapons to enforce one to help the authorities.
Such information and documents sought are either with or
within the knowledge of Transporter. As aforesaid, this is
for the sole objective of ascertaining a consignor and
consignee of the taxable goods which the transporter is
carrying. Such requirement has no co-relation with the sale
and purchase of the goods or to treat a Transporter as
dealer and consequently, no obligation is cast on him to pay
any tax, interest or penalties which a dealer is required to
pay. Similarly Section 30 refers to offence only when a
false declaration is made in connection with any proceedings
under this Act, which he either knows or believes to be
false, or does not believe to be true. Again, the
conviction under it is only for making false declaration
which is within his knowledge. How can this constitute to
be a ground for legislative competence? This provision is
only to see that the correct statement of facts are brought
out. One is punished only if he knows or believes to be
false, yet does not disclose it or even does not believe to
be true, but still makes statement to the contrary. Under
Section 29 (4) and Section 30, the offences in case
committed by Transporter are relateable to checking of
evasion of tax, then composition of offence under Section 32
would also confine itself within this sphere. We do not
find any of these provisions in any way placing any
liability on the Transporter which is otherwise on a dealer
under this Act. Similarly, as aforesaid, the maintenance of
account by the transporters, carriers etc. under Section
36A is only to render help to the authorities in checking
the evasion of tax. This does not put any such obligation
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 15
on the Transporter to hold that these provisions transgress
the legislative competence of the State legislative.
Further Rule 46A read with Section 38 (2) requires
every person transporting taxable goods at any check post or
barrier referred to in sub-section (1), to file before the
Officer-in-charge of such check-post or barrier a correct
and complete declaration of the goods in such form and in
such manner as may be required. It is by virtue of this
Rule 46A a Transporter is required at the check post to
disclose complete accounts of the goods carried by him in
Form XXIV. The question is why such requirement? Form
XXIV, which is the main plank of attack by the learned
counsel for the appellants is really based on the offence
under Section 29 (4) or Section 30 in case declaration under
it is found to be false. Now, we proceed to examine what is
required to be filled by the transporters in Form No. XXIV.
This Form requires to disclose the name and address of the
consignor, whether a registered dealer or not, place of
despatch and destination of the goods, lorry number,
description of consignment, quantity, weight, value,
Consignors invoice number and date, railway receipt or bill
of lading and in case goods are sent outside the State, the
permit number and date authorising such export under Rule
47C. First, the question is why such information is
required, if necessary, what possibly is the difficulty of
the transporters, finally whether any objection by them is
sustainable in law? As we have said that these informations
are required solely for the purpose for checking the evasion
of tax. Next, we do not find any difficulty for any
transporter to disclose the names and addresses of the
consignor and the consignee, the place of destination, he
would also be knowing the description of consignment being
transported its quantity, weight and value also from the
description as disclosed by the consignor. The information,
which the Transporter has to give so far with reference to
the quantity, weight and value of the good, would be based
on the basis of the documents, paper etc. as disclosed by
the consignor. The fear expressed by the learned counsel
for the appellants that in case such description, specially
with reference to its weight or value, is found to be wrong
about which he would never be certain as he has to depend on
what is disclosed by the consignor, he would be liable for
punishment under Section 30. The fear expressed by learned
counsel is without substance and is mere imaginary. We have
already observed that the offence is only drawn when there
is false declaration, knowing the fact to be false, makes a
declaration, not believing to be true yet makes declaration
to the contrary. By making truthful declaration, believing
the statement to be true based on information of the
consignor, the offence is not drawn unless there is
connivance between the transporter and the consignor.
He also referred to sub-rule (1A) of Rule 63A under
which the good are being carried in contravention of the
provisions of the Act or the Rules, is liable for seizure
and under sub-rule (3) he is made liable to pay for the
composition of such offence in view of Section 32. The
aforesaid submissions for the appellants are without any
force. So far as the fear with reference to Form XXIV, as
we have said above, he is aware of the same and the same are
based on the information given by the consignor. The
purpose of this form rightly is to ascertain the consignor
and consignee and the details of the goods for the purpose
of taxing such goods under the Act. No Transporter can
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 15
escape this declaration as this is one of the essential
mechanisms evolved to help the taxing authorities to check
the evasion. Submission of the learned counsel, expressing
the fear, if ultimately statement in case found to be
incorrect as per his disclosure in Form XXIV, that he would
be held liable for offence is also unfounded. Apart from
what we have recorded above, Column 13 (i) of the said form
directs the declaration to be made in the following terms:
I/We hereby declare that the above statements are
true to the best of my/our knowledge and belief.
This itself clearly indicates when the liability of
the offence punishable under Section 29 or Section 30 would
be drawn. It only arises when such Transporter deliberately
makes false declaration and not when such declaration is
true to his knowledge and belief. Learned senior counsel
for the respondents fairly stated that the purpose mainly is
to get the disclosure of the name and address etc. of the
consignor and consignee. The rest of the columns from 7 to
13 are primarily to be filled in on the basis of the
information given by the consignor. Every taxing statute
has charging sections. It lays down the procedure to assess
tax and penalties etc. It also provides provisions to cover
pilferage of such revenue by providing such mechanism as it
deem fit, in other words, to check evasion of tax and in
doing so if any obligation is cast on any person having
connections with consignor or consignee in relation to such
goods, may be other than a dealer, to perform such
obligation in aid, to check evasion and in case he is made
liable for any offence, for his dereliction of duty or
deliberate false act contrary to what he is obligated to do.
In our opinion, it cannot be construed to be beyond the
competence of States Legislature. The impugned provisions
are not charging Sections, no tax liability is placed on the
transporters. We find neither Sections 29, 30, 32, and 36A
nor Rules 46A, 63A and 64A lack any legislative competence.
They are within the legislative competence of the State and
would fall under List II of Entry 54 of the Seventh Schedule
of the Constitution of India. In Sodhi Transport Co. &
Ors. Vs. State of U.P. & Ors., 1986 (2) SCC 486,
challenge was made to the provisions of Section 28-B of the
U.P. Sales Tax Act, which requires a Transporter while
entering the State of Uttar Pradesh to obtain transit pass
for its delivery at the exist barrier where the Transporter
leave the State of Uttar Pradesh and on its failure a
presumption is drawn the goods carried inside the State have
been sold within the State either by the owner or person
incharge of the vehicle. The Court held that such goods
carried have been sold within the State is a rebuttable
presumption. The persons concerned have the opportunity to
discharge the presumption by getting a finding recorded in
his favour. Thus, if the person proves the presumption to
the contrary, no liability is fasten on him. However, in
case he fails to avail this opportunity or fails to prove to
the contrary then he would be a dealer even according to the
definition of the word dealer subject to other conditions,
hence it was held that there is no unconstitutionality of
this provision. This Court held:
The words it shall be presumed in Section 28-B only
require the authorities concerned to raise a rebuttable
presumption, that the goods must have been sold in the State
if the transit pass is not handed over to the officer at the
check-post or the barrier near the place of exit from the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 15
State. A statutory provision which creates a rebuttable
presumption as regards the proof of a set of circumstances
which would make a transaction liable to tax with the object
of preventing evasion of the tax cannot be considered as
conferring on the authority concerned the power to levy a
tax which the legislature cannot otherwise levy. A
rebuttable presumption has the effect of shifting the burden
of proof. The authority concerned before levying sales tax
arrives at the conclusion by a judicial process that the
goods have been sold inside the State and in doing so relies
upon the statutory rule of presumption contained in Section
28B of the Act which may be rebutted by the person against
whom action is taken under Section 28B. The person
concerned having opportunity to displace the presumption by
leading evidence, there is no unconstitutionality in it.
When once a finding is recorded that a person has sold the
goods which he had brought inside the State, he would be a
dealer even according to the definition of the word dealer
as it stood from the very commencement of the Act subject to
the other conditions prescribed in this behalf being
fulfilled. There is, therefore, no substance in the
contention that a transporter was being made liable for the
first time after 1979 with retrospective effect to pay sales
tax on a transaction which is not a sale.
This is also a case where obligation is cast on the
Transporter to fill up the transit form and, on his failure,
an inference was drawn holding such transporter liable to
pay the tax like that by a dealer. However, in the case in
hand, at no stage the transporter is held liable to pay the
tax as payable by a dealer. We have already referred to
sub-rule (1A) to Rule 63A as to when the goods could be
seized. Sub-rule (3) of Rule 63A gives an option to the
Transporter in case goods carried by him is in contravention
of any provisions of the Act and the Rules, if he so
desires, to opt for composition of offence. A Transporter
can always intimate within the time specified under sub-rule
(3) to a dealer or owner of the goods to come and pay the
amount fixed under Section 32. In case not, it is open to a
Transporter not to opt for composition of offence. No
liability is fastened on him, then the authorities may
proceed to take action under sub-rule (4). By following the
procedure therein, the seized goods are auctioned to recover
the liability of a dealer of tax, penalty etc. under the
Act. It is significant that sub-section (1) of Section 38A
records that in case any balance amount is left after the
said auction, the same to be returned to the person from
whom such goods are seized or to the owner of such goods.
It is coherent with the scheme of the Act, to collect the
tax and penalty by this mechanism, what otherwise would have
escaped assessment. Finally, the second submission is with
reference to the requirement of obtaining Certificate of
Registration under Section 38B which, according to the
learned counsel, impedes the free flow of trade and business
of a Transporter hence violative of Article 301 of the
Constitution. For ready reference Section 38B is quoted
hereunder: For carring out the purposes of section 38
every Transporter, or Trnasporting Agent operating its
transport business relating to taxable goods in Tripura
shall be required to obtain a Certificate of Registration in
the prescribed manner from the Commissioner of Taxes on
payment of such fees as may be prescribed.
This section, itself indicates, has been brought in
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 15
for carrying out the purposes of Section 38, which basically
is to check evasion of tax. Under it, the barriers,
check-post are set up, the officers are empowered to check
any vehicle, seized goods being carried in contravention of
any provision of the Act and the Rule. Thus, the
requirement of Certificate of Registration by a
transporter is also for the same purpose. It only applies
to such transporters doing transport business relating to
taxable goods in Tripura only. This certainly cannot be
construed to be violative of Article 301 of the Constitution
of India. Article 301 provides freedom of trade, commerce
and intercourse. This Article is subject to the other
provisions of this part, namely, part XIII which covers
Articles 301 to 307. Article 304 (b) empowers the State
Legislature to impose such reasonable restriction on the
freedom of trade, commerce or intercourse with or within the
State as may be required under the public interest. When a
provision is made for a Certificate of Registration which in
the present case is brought in by amendment as aforesaid is
really for checking the evasion of tax. By such
registration of transporters or carriers it becomes feasible
for the authorities to trace out such dealers escaping tax,
1989 such transporters.
In State of Bihar & Ors. Vs. Harihar Prasad Debuka &
Ors., 1989 (2) SCC 192, challenge is to the notification
issued under Section 31 (2- a) of the Bihar Finance Act,
1981, urging the requirement that a person transporting
goods exceeding the quantity notified under Section 35 on a
goods carrier to carry permits in prescribed Form {XXVIII-A
or XXVIII- B} in respect of the goods have brought into or
sent out of the State to be restrictive to free flow of
trade and hence violative of Articles 301 and 304. This
Court rejected the submission and upheld the notification by
holding that insistence on permits was intended to prevent
evasion and to facilitate assessment of sales tax. The
stoppage of transporting vehicle for checking the permit for
this purpose would not constitute to be violative of free
trade. Finally, learned counsel for the appellants strongly
relied on a decision of this Court in State of Haryana &
Ors. Vs. Sant Lal & Anr., 1993 (4) SCC 380. In this case,
this Court held that Section 38 of Haryana General Sales Tax
Act to be ultra vires. This section requires that every
clearing or forwarding agent, dalal or any other person
transporting goods (including manager, agent, driver and
employee of the owner) who handles documents of title to
goods for or on behalf of any dealer to furnish to the
assessing authority particulars and information in respect
of transaction of the goods and to obtain licence from the
assessing authority and on contravention provided high rate
of penalty. The section 38 is quoted hereunder:
38. Furnishing of information by clearing and
forwarding agents etc. - (1) Every clearing or forwarding
agent, Dalal or any other person transporting goods, within
the State, who, during the course of his business, handles
documents of title to goods for or on behalf of any dealer,
shall furnish to the assessing authority the particulars and
information in respect of the transactions of the goods in
such form and manner, as may be prescribed.
(2) No clearing or forwarding agent, Dalal or any
other person transporting goods within the State shall carry
on his business unless he obtains from the assessing
authority, on payment of a fee not exceeding fifty rupees, a
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 15
license in the form and manner and subject to such
conditions as may be prescribed. (3) If any clearing or
forwarding agent or Dalal or person transporting goods
within the State contravenes the provisions of sub-section
(1) or sub-section (2) the Commissioner or any person
appointed to assist him under sub-section (1) of Section 3
may, after giving the person concerned a reasonable
opportunity of being heard, direct him to pay by way of
penalty, an amount equivalent to twenty per centum of the
value of goods in respect of which no particulars and
information has been furnished under sub-section (1).
Explanation - For the purpose of this section- (i) Dalal
shall include a person who renders his services for booking
of, or taking delivery of, consignments of goods at a
Railway Station, booking agency, goods transport company
office, or any place of loading or unloading of goods or
contrives, makes and concludes bargains and contracts for or
on behalf of any dealer for a fee, reward, commission
remuneration or other valuable consideration or otherwise;
(ii) person transporting goods shall, besides the owner,
include the manager, agent driver, employee of the owner or
person incharge of a place of loading or unloading of goods
or of a Railway out-agency, city booking office or city
booking agency, when run by a private person under a
contract with the Railways but excluding a rail head or a
post office, or of a goods carrier carrying such goods, for
despatch to other places or gives delivery of any
consignment of such goods to the consignee.
(Emphasis supplied)
Sub-section (1) of Section 38 of the Haryana Act
requires every clearing or forwarding agent etc.
transporting goods within the State who handles documents of
title to goods to be transported within the State for or on
behalf of any dealer to furnish to the assessing authority
such particulars and information as may be prescribed.
Sub-section (2) debars all clearing or forwarding agents
etc. from carrying on their business unless they are
licensed. It is held that a clearing, forwarding agent or
dalal etc. transporting goods within the State, even though
may not be handling documents of titles to goods, is obliged
to take a licence though he may not be liable to a penalty.
Hence, it was held to be beyond the competence of the State
legislature as it could not be in respect of any matter
ancillary or subsidiary to the legislative entry which
entitles the State Legislature to impose such tax. This
section further imposes a penalty equivalent to 20% of the
value of goods in respect of which no particulars and
information have been furnished. But this decision holds
that such clearing or forwarding agent has to be within a
reasonable and proximate connection between the transaction
of sale of such goods before the State Legislature would
have competence to levy tax. The Court held: If a
clearing or forwarding agent or dalal or person
transporting goods is indeed reasonably and proximately
connected with the sale occasioning the liability to the
sales tax, it is legitimate to require him to licence
himself under the Act and maintain and furnish such
information and particulars to the assessing authority
thereunder as he would in the course of his business come to
possess. It is legitimate then to make him liable for such
escapement of tax as has resulted from the breach by him of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 15
such obligation and to a reasonable penalty.
..However, inasmuch as the said Act does not define
what precisely it means by the expression documents of
title to goods, it is unclear which class of forwarding or
clearing agents or dalals or persons transporting goods it
intends to bring within the ambit thereof. To clearing and
forwarding agents, dalals and other persons transporting
goods who do not handle documents of title to goods for or
on behalf of any dealer, the provisions of the said Act can
have no application at all. In respect of such persons the
State Legislature has no power of legislation under the
legislative entry concerned. Qua them the legislation is
not in respect of any matter ancillary or subsidiary to the
legislative entry which entitles the State Legislature to
impose a tax on the sale of goods.
We find that this decision would render no help to the
appellants. The impugned provisions of the Haryana General
Sales Tax were different than the provisions we are
considering in this case, namely, the impugned Tripura Act
and the Rules. We further find that sub-para (ii) of the
Explanation to Section 38 of the impugned Haryana Act
specifically excluded, a goods carrier carrying such goods,
for despatch to other places or gives delivery of any
consignment of such goods to the consignee.
Hence, we hold that the requirement of Section 38B for
a transporter operating its transport business relating to
taxable goods in Tripura to obtain Certificate of
Registration from the Commissioner of Taxes, is not
violative of Article 301 of the Constitution.
In view of the aforesaid findings, we hold that the
impugned provisions of the Tripura Sales Tax Act and the
Rules of 1976 are valid pieces of legislation. The appeal
is, accordingly, dismissed. Costs on the parties.