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1966 Supreme(All) 99
Allahbad High Court
S.N.DWIVEDI,S.D.KHARE
The State of U.P. - Appellant
Versus
Duli Chand Kashi Prasad - Respondent
Decided On : 05/11/1966
Standing Counsel, for Appellants; R.R. Agarwal, for Respondent.
Headnote:
SALES TAX - Assessment - Jurisdiction of Assessing Authority - Validity of Notification Appointing Assessing Authority - Interpretation of Sales Tax Laws Validation Act, 1956 and Sales Tax Rules - Whether Respondents were Dealers - Writ in the Nature of Prohibition - When Issuable.
Fact of the Case:
The respondents, commission agents with their principal place of business in Calcutta, were issued notices by the Sales Tax Officer (Ex. U. P. Dealers), Allahabad, to produce their account-books for assessment of sales tax for the years 1953-54, 1954-55, and the period between April 1 and September 6, 1955. They challenged the competence of the Sales Tax Officer and the validity of the notices on several grounds, including the lack of jurisdiction of the assessing authority and their status as non-dealers.
Finding of the Court:
The Court held that the notification appointing the Sales Tax Officer was valid and did not contravene the Sales Tax Rules. It interpreted the Sales Tax Laws Validation Act, 1956, and the Sales Tax Rules to conclude that the State Government had the power to appoint an assessing authority over any part or the whole of the territory of the State. The Court also found that there was prima facie evidence to indicate that the respondents were dealers and that a writ in the nature of prohibition could not be issued at the threshold of the enquiry.
Issues: 1. Whether the notification appointing the Sales Tax Officer was valid and did not contravene the Sales Tax Rules? 2. Whether the respondents were dealers within the meaning of the Sales Tax Act?
Ratio Decidendi: 1. The Court interpreted the Sales Tax Laws Validation Act, 1956, and the Sales Tax Rules to conclude that the State Government had the power to appoint an assessing authority over any part or the whole of the territory of the State. The Court held that the notification appointing the Sales Tax Officer was valid and did not contravene the rules. 2. The Court found that the respondents had registered as dealers under Section 8-A of the U. P. Sales Tax Act and had submitted returns and paid taxes under protest. The Court held that there was prima facie evidence to indicate that the respondents were dealers and that a writ in the nature of prohibition could not be issued at the threshold of the enquiry.
Final Decision: The Court allowed the appeals, set aside the order of the learned Judge, and dismissed the writ petitions. Each of the respondents was ordered to pay costs to the appellant, assessed at Rs. 300.
DWIVEDI, J. :- These two appeals arise out of two writ petitions. The petitions were disposed of by a common judgment, and we propose to follow this pattern. The leading case is the special Appeal No. 113.
2. Broad facts of the case have been set out elaborately in the judgment of the learned single Judge. We would not repeat them in detail but would restate only such facts as are material for deciding the arguments before us.
3. The learned Judge allowed the petitions and quashed the notices issued by the Sales Tax Officer (Ex. U. P. Dealers), Allahabad. Two notices were issued to the respondents under the provisions of the Sales Tax Act. One was issued on December 26, 1956, and the other on March 2, 1957. They were issued by Sri Musharraf Husain, Sales Tax Officer (for Ex. U. P. Dealers) Allahabad. They called upon the respondents to produce their account-books including purchase invoices, cash memos, bills, receipt books, sales tax registers and other papers before him for enabling him to assess sales tax on them for 1953-54, 1954-55 and for the period between April 1 and September 6, 1955. They did not obey the notices and filed writ petitions in this Court. In the petitions they challenged the competence of the Sales Tax Officer to proceed to assess them to sales tax on several grounds. The learned Judge accepted their contention and accordingly quashed the notices.
4. Before us counsel for the respondents has sought to support the judgment of the learned Judge on two grounds. Firstly, it is said that Sri Musharraf Husain was not competent to issue notices to them. Secondly, it is contended that they were not dealers and could not therefore be assessed to sales tax.
5. The first argument is double barrelled. Firstly, it is contended that the notification appointing Sri Musharraf Husain as an assessing authority is ineffective. The notification is annexure E to the counter-affidavit of Sri Musharraf Husain. It was issued by the State Government on February 6, 1957. It states that Sri Musharraf Husain is appointed as an assessing authority.
"With co-extensive jurisdiction extending over all the Sales Tax Circles and sub-circles in Uttar Pradesh and with head quarters at Allahabad, - for purposes of levy and collection of U. P. sales tax in terms of the Sales Tax Laws Validation Ordinance, 1956 (No. 3 of 1956)".
It is pointed out that on the date of the issue of the notification the said Ordinance stood repealed by the Sales Tax Laws Validation Act, 1956. It is urged that accordingly the notification could not effectively confer power on Sri Musharraf Husain to assess sales tax in accordance with the Sales Tax Laws Validation Act, 1956. It is evident that the respondents are insisting on giving a literal effect to the notification. Having regard to the conditions which gave birth to the notification we should not, we think, confine the notification to its strict letter. After the decision of the Supreme Court in the Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661 no sales tax could be levied on inter-State sales. This decision largely affected the revenues of a State. To relieve their difficulty the President promulgated the Sales Tax Laws Validation Ordinance (No. 3), 1956. The Ordinance declared that all State laws levying sales tax on inter-State sales upto September 6, 1955, shall be deemed to be valid. It was promulgated on January 30, 1956. It was replaced by a Parliamentary Act called the Sales Tax Laws Validation Act, 1956. The Act came into force on March 21, 1956. Its scheme was the same as that of the Ordinance. On April, 12, 1956, the Commissioner, Sales Tax, U. P., appointed Sri Musharraf Husain as an assessing authority for Ex. U. P. Dealers of West Bengal and certain other regions. The letter of appointment is annexure F. to the counter-affidavit. It recites : "It has been decided to lake up assessment of Ex. U. P. dealers again in view of the Sales Tax Laws Validation Act, 1956". This letter wa
