IMPORTANT POINT
Sections 2(6), 11 and 14(4) of West Bengal Sales Tax Act, 1994 and Rules 172, 173, 174, 188 and 189 of West Bengal Sales Tax Rules, 1994 are constitutionally valid.

Headnote:(i) West Bengal Sales Tax Act, 1994-Section 2(6)-Definition of casual trader-Constitutional validity-Tribunal upholding it but directing suspension of the operation of section for want of machinery-Whether uncalled for and is illegal? (Yes) (see para 9).
       Held : It is, therefore, difficult to uphold the reasoning of the Tribunal to justify suspension of the said provision for want of machinery provisions. In this regard, the Tribunal referred to the Explanation to Section 2(1)(a)(i) of the 1941 Act, which had also been suspended by it in an earlier proceeding. In the appeal against the said order, in Civil Appeal No. 8180 of 1995, we have held that keeping that provision under suspension for want of a machinery was uncalled for and was illegal. We reiterate the same view in regard to Section 2(6) of the Act. We record the candid concession of Mr. Yashank Adhyaru, learned senior counsel for the respondents, that it will not be possible to support the reasoning and the conclusion of the Tribunal on this aspect. (Para 9)
       (ii) West Bengal Sales Tax Act, 1994-Section 11-Liability to pay tax on sales by casual trader-Aim to prevent evasion of tax payable under the Act-Tribunal holding it to be unconstitutional on ground of legislative incompetence-Whether correct? (No)-(Constitution of India-Entry 54 of List II of 7th Schedule).
       Held : On the issue of legislative competence, we shall refer to Entry 54 of List II of the Seventh Schedule to the Constitution which is the field of State legislation for imposing taxes on the sale or purchases of goods, other than newspaper. This Entry is subject to the provisions of Entry 92A of List I of the Seventh Schedule to the Constitution. It is well-settled that the State Legislature, while providing for levy of impost, has power to provide for incidental matters, including measures for prevention of evasion of tax. (Para 18)
       Held after discussing case law : From the above discussion it follows that the afore-mentioned impugned provisions which are intended to prevent the evasion of tax payable under the Act are within the legislative competence of the State and are intra vires Entry 54 of List II of the Seventh Schedule to the Constitution. (Para 24)
       (iii) West Bengal Sales Tax Act, 1994-Section 14(4)-Charging Section in respect of purchase made by a casual trader-Tribunal holding it illegal-Rules 172, 173, 174 and 188 and Form 28 were held in valid-Appeal against to Supreme Court-Whether Tribunal was right? (No)-Appeal allowed.
       Held : A perusal of sub-section (4) shows that every person who is transporting in a road vehicle goods, other than the excluded goods, purchased by him in West Bengal on his own account or on behalf of any other person is required, on interception by any person appointed under sub-section (1) of Section 3 and authorised by the Commissioner in that behalf, (referred to as the authorised officer in this section) to stop the vehicle and produce, on demand, before such authorised officer invoice, challan, transport receipt or consignment note or document of like nature in respect of such goods; further, he is also obliged to furnish the name, address and number of certificate of registration of the consignor or the consignee, if registered. But if the consignor or the consignee is not registered, the question of furnishing number of certificate of registration does not arise. In such an event, two courses are open to the authorised officer. The first is that if the authorised officer is satisfied that the person transporting the goods is not liable to pay tax under sub-section (1), he has to allow the movement of the vehicle immediately. And the second is that, if he is satisfied that the goods are being transported by a casual trader or a person on behalf of a casual trader he has the power to detain the vehicle for a period not exceeding twenty four hours for the purposes of sub-section (6) which provides for determination and collection of tax in the manner prescribed. It requires the casual trader to pay the tax in the prescribed form. Therefore, it follows that sub-section (4) is concerned with the detention of the vehicle for purposes of assessment and recovery of tax. This provision is also an anti-evasion of tax provision and over-rides Section 46. For the reasons above-mentioned, we do not find any illegality in sub-section (4) of Section 14 of the Act. We may add that the impugned provisions of sub-sections (5), (7), (8) of Section 11 and sub-section (4) of Section 14 are broadly akin to the provisions in the Bengal Finance (Sales Tax) Act, 1941, the validity of which was upheld by us in Civil Appeal No. 8180 of 1995 by order dated February 25, 2003. No separate arguments were addressed in regard to the invalidity of the Rules. In the view we have taken in upholding the provisions of the Act, the impugned Rules, namely Rules 172, 173, 174 and 188 and Forms 28 and 31 are also to be upheld and they are, accordingly, upheld. The orders under challenge in regard to the declaration of the Rules as invalid are, therefore, set aside. For all these reasons, we are unable to sustain the orders of the Tribunal under challenge and they are, accordingly, set aside. The Civil Appeals are, accordingly, allowed. (Paras 27 to 31)

JUDGMENT

Syed Shah Mohammed Quadri, J.-Civil Appeal Nos. 5863-64/1997, 5865-66/1997 and 5534/1997 :

These appeals from various orders of the West Bengal Taxation Tribunal (for short, the Tribunal ) raise a common question as to the constitutional validity of provisions, mentioned hereunder, of the West Bengal Sales Tax Act, 1994 [West Bengal Act XVIX of 1994] (for short, the Act ) and the Rules made thereunder. The Act came into force on March 23, 1995. It repealed the Bengal Finance (Sales Tax) Act, 1941 which was then in force.

2. The respondents challenged the constitutional validity of the following provisions of the Act: (i) Section 2(6); (ii) Explanation to sub-section (1), sub-sections (5), (7), (8), (10), (11) and (12) of Section 11; (iii) sub-section (4) of Section 14; and (iv) Rules 172, 173, 174, 188 and 189 of the West Bengal Sales Tax Rules, 1994 (for short, the Rules ). The Tribunal held:

"that section 2(6) of the 1994 Act is valid and constitutional with a rider that until the manner of disclosure of name address of the consignor or consignee is prescribed in terms of this judgment, the provision as to disclosure of those particulars shall remain suspended. Observations have also been made in the body of the judgment regarding the extent of responsibility of a transporter in furnishing the required documents and disclosing the required particulars. The Explanation below sub-section (1) of Section 11 is declared to be unreasonable and ultra vires the Constitution. The said Explanation is, therefore, struck down. As per paragraphs 20 and 21 of this judgment, parts of sub-section (5) of Section 11 and sub-section (4) of Section 14 are declared as invalid and unconstitutional to the extent they apply to a transporter. Sub-sections (7) and (8) of Section 11 and the words `for the purpose of sub-section (7) and sub-section (8) in clause (ii) of section 11(5) are struck down as invalid and unconstitutional and beyond the competence of the State Legislature. Sub-sections (10), (11) and (12) of Section 11 are also declared unconstitutional insofar as they are applicable to transporters. Rules 172, 173 and 174 of the 1995 Rules are struck down for the reasons already stated. Forms 28 and 31 prescribed under the 1995 Rules are struck down in so far as they relate to advance tax or security in lieu thereof with reference to a transporter. Form 32 prescribed under those rules is valid. Rules 188 and 189 of the said Rules are valid subject to observations in this judgment in respect of transporters."

3. Mr. B. Sen, learned senior counsel appearing for the appellants-State, has contended that having upheld the constitutional validity of Section 2(6) which clearly provides the particulars to be declared by the transporter, there was no valid reason why the Tribunal should suspend the operation of the section so that portion of the order needs to be set aside. It is submitted that the Tribunal erred in striking down the impugned provisions of the Act on the ground of lack of legislature competence ignoring the fact that the legislature has ancillary power to enact provisions to prevent evasion of tax. The learned counsel has argued that the Tribunal is clearly wrong in declaring Explanation below Section 11(1) of the Act as arbitrary, unreasonable so unconstitutional.

4. In examining the constitutional validity of the impugned provisions of a statute, it will be useful to bear in mind the following well-settled propositions. If a legislation is found to lack in legislative competence or is found to be in contravention of any provision of Part III or any other provision of the Constitution, the impugned legislation cannot escape the vice of unconstitutionality [See : Keshavananda Bharti vs. State of Kerala (AIR 1973 SC 1643) and also State of Andhra Pradesh & Ors. vs. Macdowell & Co. (1996(3) SCC 709)]. A challenge to any statutory provision on the ground of the classification being discriminatory and violative of Article 14 of the

Click Here to Read the rest of this document

2003 Supreme(SC) 274

IMPORTANT POINTSections 2(6), 11 and 14(4) of West Bengal Sales Tax Act, 1994 and Rules 172, 173, 174, 188 and 189 of West Bengal Sales Tax Rules, 1994 are constitutionally valid.

Cases Referred (11)

IMPORTANT POINT
Sections 2(6), 11 and 14(4) of West Bengal Sales Tax Act, 1994 and Rules 172, 173, 174, 188 and 189 of West Bengal Sales Tax Rules, 1994 are constitutionally valid.