Important Points
1. 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.
2. 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.

Headnote:Tripura Sales Tax Act, 1976-Sections 29, 32, 36A & 38B-Tripura Sales Tax (11th Amendment) Rules, 1994-Tripura Sales Tax Rules, 1976-Rules 46A(2) and 63A(1A) and (2)-Transporters working in Tripura-Requirements to obtain certificate of registration, maintain accounts and to make declaration in Form XXIV-Constitutional validity - Challenge on ground that transporters are not dealers within meaning of Section 2(b) of Sales Tax Act and hence obligations cast on transporters are beyond legislative competence-Not sustainable - Obligations cast on transporters are only for the sole objective of ascertaining consignor and consignee of taxable goods and to check evasion to tax by dealers-No obligation on transporters to pay tax, interest or penalty which a dealer is required to pay unless declaration etc. made by transporter are false to the knowledge of transporter-Sections and Rules are within legislative competence and fall within List II, Entry 54 of Seventh Schedule of the Constitution of India.
       Held : 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. (Para 9)
       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 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. (Para 13)
       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 on the Transporter to hold that these provisions transgress the legislative competence of the State legislative. (Para 14)
       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 by 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, Consignor’s 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 difficult 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. (Para 15)
       The purpose of Form No. XXV 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 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. (Para 16)
       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. (Para 18)
       Section 38 itself indicates, has been brought in 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, through such transporters. 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. (Paras 19 & 22)
       Held consequently : the impugned provisions of the Tripura Sales Tax Act and the Rules of 1976 are valid pieces of legislation. (Para 23)

Judgment

Misra, J.-Leave granted.

2. 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.

3. 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 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.

4. 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.

5. In support of his first submission, he submitted that Section 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 time not excee

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1998 Supreme(SC) 1257

Cases Referred (6)