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1974 Supreme(Del) 22
High Court Of Delhi
MADHO RAM,LAL CHAND,CHARANJIT SINGH,HARBANS LAL KHOSLA,BHAGWAT SARUP AND B.R.CHAWLA - Appellant
Versus
H.G.SEKHRI, SALES-TAX OFFICER - Respondent
Civil 215D of 1965
Decided On : 01/22/1974
K.C.Nayar, S.S.Dalal
The withdrawal of exemption from sales tax on country liquor was valid, excise duty and license fee are part of the price, the assessing authority had jurisdiction to make the assessment, and the petitioners were given an opportunity to show cause against the assessment.
Headnote:
SALES TAX - Exemption - Country liquor - Withdrawal of exemption - Validity - Reasonable notice - Excise duty and licence fee - Whether part of price - Jurisdiction of assessing authority - Opportunity to show cause against assessment - Best judgment assessment.
Fact of the Case:
The petitioners, liquor vendors, challenged the withdrawal of exemption from sales tax on country liquor, the inclusion of excise duty and license fee in the price for calculating turnover, the jurisdiction of the assessing authority, and the lack of opportunity to show cause against the assessment.
Finding of the Court:
1. The withdrawal of exemption from sales tax on country liquor was valid as the government gave reasonable notice of its intention to do so. 2. Excise duty and license fee are part of the price. 3. The Commissioner of Sales Tax could delegate the power to assess tax and impose penalties to any Sales Tax Officer, including those outside the assessee's jurisdiction. 4. The petitioners were given an opportunity to show cause against the proposed assessments, and the assessments were not unreasonable.
Issues: 1. Whether the withdrawal of exemption from sales tax on country liquor was valid. 2. Whether excise duty and license fee are part of the price. 3. Whether the assessing authority had jurisdiction to make the assessment. 4. Whether the petitioners were given an opportunity to show cause against the assessment.
Ratio Decidendi: 1. The requirement of reasonable notice under section 6(2) of the Bengal Finance (Sales Tax) Act, 1941, as amended, was satisfied by the government's notification of its intention to withdraw the exemption, even though the amendment was not made within three months as originally required. 2. Excise duty and license fee are part of the price as they are charged to the customer along with the price and affect the price demanded by the seller. 3. The Commissioner of Sales Tax could delegate the power to assess tax and impose penalties to any Sales Tax Officer, including those outside the assessee's jurisdiction, under section 15 of the Act and the relevant rules. 4. The petitioners were given an opportunity to show cause against the proposed assessments through notices and personal hearings, and the assessments were not unreasonable.
Final Decision: The petitions were dismissed.
( 1 ) THIS judgment will dispose of three writ petitions, being CWs 156-D and 215-D of 1965 and 91-D of 1966. The petitioners in CWs 156-D and 215-D of 1965 are the firm named and styled as Messrs Madho Ram, Lal Chand, Charanjit Singh, Harbans Lal Khosla, Bhagwat swarup and B. R. Chawla, and its six partners, whose names form part of the said firm s name. The respondents in both these petitions are the Sales-tax Officer, Ward No. 2, Delhi, the Commissioner of Sales-tax, Delhi, and the Union of India, through the Secretary, Ministry of Home Affairs, Government of India, New Delhi. The petitioners in CW 91-D of 1966 are the firm, run under the name and style of Messrs Kidar Nath, Lal Chand, Madho Ram, Jagdev Singh, Sunder Lal and B. R. Chawla, and its six partners. The five respondents in this petition are the Sales-tax Officer, Ward No. 11, the Sales-tax Officer, now holding charge of Ward No. 14, Commissioner of Sales-tax, Collector of Delhi, and the Union of India. As the questions of law and fact, involved in these petitions are common, arguments were addressed in CW 215-D of 1965 only, which were said to be applicable to the other cases as well. Reference to facts wherever necessary, will be made in this judgment to the facts of CW 215-D of 1965; but the reasoning and conclusions are applicable to all the three petitions, which are being disposed of by this common judgment.
( 2 ) IN CW 156-D of 1965, the period for which the assessment of sales-tax is involved is June 4, 1964 to June II, 1964 and June 12, 1964 to December 31, 1964. In CW 215-D of 1965, the relevant period consists of the months of January and February, 1965. The relevant period in CW 91-D of 1966 is June 4, 1965 to August 25, 1965 and August 26, 1965 to September 21, 1965. The petitioners in the first two petitions carried on their business of purchase and sale of country liquor under a licence auctioned by the Excise Department, Delhi, for the excise year 1964-65 (1-4-1964 to 31-3-1965), while the petitioners in the third petition had the country liquor licence for the excise year 1965-66 (1-4-1965 to 31-3-1966 ).
( 3 ) THE sale of country liquor was exempt from payment of sale-tax levied under the Bengal Finance (Sales-tax) Act, 1941, as extended to the State of Delhi (now the Union Territory of Delhi), herein called the Act , in view of the provisions of section 6 (1) of the Act read with entry 40 of the Schedule of exempted goods which read as follows:
"all goods on which duty is or may be levied under the Punjab Excise Act 1914, as extended to the State of Delhi or the Opium Act, 1878. "the Central Government has the authority under sub-section (2) of section 6 of the Act to, inter alia, omit any item from the Schedule of exempted goods after giving notice in the official gazette of its intention to do so. Orginally, the said sub-section required this to be "not less than three months notice". These words in the inverted comas were substituted by the words "such previous notice as it considers reasonable" by an amending notification dated December 7, 1956. A notification accordingly was issued by the Government of India, Ministry of Finance, on October 20, 1956, the relevant portion whereof reads as follows:
"in exercise of the powers conferred by sub-section (2) of section 6 of the Bengal Finance (Sales-tax) Act, 1941, as extended to the State of Delhi, the Central Government hereby gives three months notice of its intention to make the following amendment in the Schedule to the said Act. 1 to 3. 4. Item 40 shall be deleted. 5. . . . . . . . . . "instead of amending the Schedule on the expiry of three months from the date of the said notification, the Central Government in partial modification of the said notification, issued another notification No. 372 dated 27th March, 1958), noticing its intention to omit item 40 from the Schedule with effect on and from 1st April, 1958. On April 1, 1958, the Central Government issued the follow
