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PUNJAB & HARYANA HIGH COURT
O.Chinnappa Reddy, S.C.Mital, Ajit Singh, Harbans Lal and Surinder Singh JJ.
Mool Chand Chuni Lal
Versus
Manmohan Singh
Civil Writ Petition No. 4154 of 1976,
Decided On : MAY 6, 1977
PUNJAB GENERAL SALES TAX ACT - SUB-SECTIONS (7) AND (8) OF SECTION 14B - VIRES - PREVENTION OF EVASION OF TAX - POWER INCIDENTAL TO LEVY OF SALES-TAX - CONSTITUTIONALITY - CONDITIONS PRECEDENT - SPECIFIED GOODS - NO REPUGNANCY WITH GENERAL SCHEME OF THE ACT.
Fact of the Case:
The petitioners challenged the vires of sub-sections (7) and (8) of Section 14B of the Punjab General Sales Tax Act, 1948, as amended by Punjab Act No. 9 of 1974, contending that they were beyond the competence of the State Legislature as they did not fall within the ambit of Entry 54 of List II of Schedule VII of the Constitution.
Finding of the Court:
The Court held that the amended sub-sections (7) and (8) of Section 14B were constitutional and within the powers of the State Legislature. It found that the provisions for detention of goods and levy of penalty were based on the attempt to evade tax and prescribed a condition precedent to the levy of penalty, which was the finding by the authorized officer that there had been an attempt to evade the tax due under the Act. The Court also held that the goods to be detained were specified as goods meant for trade and not covered by proper and genuine documents.
Issues: 1. Whether sub-sections (7) and (8) of Section 14B of the Punjab General Sales Tax Act, 1948, as amended by Punjab Act No. 9 of 1974, were beyond the competence of the State Legislature? 2. Whether the provisions for detention of goods and levy of penalty were based on the attempt to evade tax and prescribed a condition precedent to the levy of penalty? 3. Whether the goods to be detained were specified as goods meant for trade and not covered by proper and genuine documents?
Ratio Decidendi: 1. The Court held that the prevention of evasion of sales-tax was a power incidental or ancillary to the levy of sales-tax and fell within Entry 54 of List II of Schedule VII of the Constitution. 2. The Court found that Section 14B(7), which provided for detention of goods and levy of penalty if there had been an attempt to evade the tax due under the Act, was not repugnant to the general scheme of the Act. 3. The Court held that the goods to be detained were specified in Section 14B(6) as goods meant for trade and not covered by proper and genuine documents.
Final Decision: The Court dismissed the writ petitions with costs.
CHINNAPPA REDDY, J.
1. These three writ petitions (C. W. P. No. 4154 of 1976 and C. W. P. Nos. 506 and 507 of 1977) raise the question of the vires of sub-Ss. (7) and (8) of Sec. 14B of the Punjab General Sales Tax Act, 1948 as amended by Punjab Act No. 9 of 1974. It was contended by Shri Bhagirath Das Seth, learned counsel for the petitioners, that sub-ss. (7) and (8) of Sec. 14B were beyond the competence of the State Legislature as they did not fall within the ambit of Entry 54 of List II of Schedule VII of the Constitution.
2. Section 14-B (1) enables the State Government to establish check posts or erect barriers, with a view to prevent or check the evasion of tax under the Act. Sub-Ss. (2), (3), (4) and (5) of Sec. 14B provide for the documents which should accompany the goods carried in a goods Vehicle, for the examination by the officer incharge of the check post or barrier of the documents, packages etc., for declarations to be made by the owner or person incharge of the goods vehicle and for production for examination all transport and other documents at stations of transport of goods, bus stands etc. We are not particularly concerned with Sub-Ss. (2), (3), (4) and (5) of Sec. 14-B. Sub-Ss. (6) (7) and (8) are material. Sub-Ss. (6), (7) and (8) as they stand now were introduced by the amending Act No. 9 of 1974. Originally sub-ss. (6), (7) and (8) were as follows :-
"(6) Any officer not below the rank of an Assistant Excise and Taxation Officer while acting under this section shall have the power to seize any goods not covered by the documents mentioned in subsection (2) and sub-section (3).
(7) The dealer or any person, including a carrier of goods, acting on behalf of the dealer shall not take delivery of, or transport from any vessel, station, airport or any other place, whether of similar nature or otherwise, notified in this behalf by the State Government any consignment of goods, the sale or purchase of which is taxable under this Act except in accordance with such conditions as may be prescribed with a view to ensuring that there is no evasion of the tax imposed by or under this Act: Provided that no place which is a rail head or a post office shall be so notified by the State Government.
(8) Where the declaration made under sub-section (3) is false in respect of any particulars mentioned therein, the officer-in-charge of the check post or barrier or any other officer not below the rank of an Assistant Excise and Taxation Officer shall have the power to seize the goods in respect of which the declaration is false: Provided that an officer acting under sub-section (6) or sub-section (8) may, before or after such seizure, give to the person affected an option to pay, in lieu of seizure and in addition to the tax recoverable, a sum of money not exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater.
Explanation :-
In this section, the expression goods vehicle has the same meaning as is assigned to it in clause (8) of S. 2 of the Motor Vehicles Act, 1939, but does not include road transport plying in collaboration with rail transport."
These sub-sections underwent amendments in 1960, 1963, 1965 and 1974. Sub-sections (6), (7) and (8) as they now stand are as follows :-
"(6) If the officer in charge of the check post or barrier or other officer as mentioned in sub-section (2) has reason to suspect that the goods under transport are meant for trade and are not covered by proper and genuine documents as mentioned in sub-section (2) or sub-section (4), as the case may be or that the person transporting the goods is attempting to evade payment of tax due under this Act, he may, for reasons to be recorded in writing and after hearing the said person, order the unloading and detention of the goods, for such period as may reasonably be necessary and shall allow the same to be transported only on the owner of goods or his representative or the driver of other person in charge of
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