judgement:
: Civil Appeals Nos.
1393 1398 of 1975.
(Appeals by Special Leave Petitions from the Judgment and Order dated 31 1G, 1975, of the Andhra Pradesh High Court in Revision Case No. 3 to 8 of 1974).
V.P. Raman, Addl.
Solicitor General of India, G.L. Sanghi, and Girish Chandra, for the appellant.
A. K. Sen and P.P. Rao, for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
This batch of cases between a State Government (Andhra Pradesh) and the Union Government sug gests the need for litigative discipline for our governments and a periodical postauditing in that behalf.
And now we make good this inaugural observation by narrating briefly the necessary facts and examining closely the few points tersely presented by the Additional Solicitor General ap pearing for the common appellant in all these cases.
Our Constitution mandates on the State welfare activism and contemplates its undertaking distribution of commodities essential to the life of the community at large through trade and business directly organised or in other suit able ways.
Foodgrains and fertilisers are strategic items and the Union of India has, in fulfilment of high governmen tal functions, been procuring these vital goods and selling them lo the States or their nominees so as to ensure equita ble supplies and price discipline.
Pursuant to this com mendable programme the Central Government constructed an infra structure and, pertinent to our purpose, appointed, inter alia, a Joint Director of Food stationed in the port town of Visakapatnam.
This Officer sold, for the price fixed by his Government, food ' grains and fertilisers to the Andhra Pradesh State and other States.
These transactions, in the language of sales tax law, fell within the twin categories of intra State and inter State sales.
A vigilant State Sales Tax Officer directed the filing of returns by the appellant under the Andhra Pradesh General Sales Tax Act, 1957 (Act VI of 1957) (for short the State Act) and the (for short the Central Act).
This was complied with in six returns for the span of three years but was coupled with a plea of immunity from tax on grounds which will be presently discussed.
The adverse fate of those contentions at the hands of the Sales Tax Officer and the appellate officer eventuated in further appeals to the Tax Tribunal.
The three appeals covered by the Central Act were remanded for the narrow purpose of determining the presence of profit motive in the Central Government while undertaking these dealings as that element 61 is decisive of the appellant being a dealer doing business and therefore liable to tax under the Central Act.
The other three appeals were duly dismissed and these successive defeats notwithstanding, the Central Government 's Joint Director moved the High Court in all the.
six cases.
Un daunted by discomfiture there, the appellant has arrived here, discretion not being the better part of valour even where public money is involved.
The learned Additional Solicitor General has rightly discarded some of the rhetorical but lifeless contentions urged before the: High Courtbased on Part IV of the Consti tution.
The surviving points pressed before us may now be set out and discussed.
A hyper technical point half heartedly urged may be mentioned first, it being easy of rejection Argued counsel that since, in any view.
the sales were by the Central Government, the Joint Director could not be the assessee.
Obviously this official represented his Government in the sales and therefore could legitimately be dealt with for sales tax.
proceedings as representing the Union Govern ment.
The less said about such obstructive contention on behalf of a public functionary the better.
Devoid of presentability we decline to spend more space on this plea.
Next in order was the argument that the defination of 'dealer ' in section 2(b) of the Central Act read in implicit harmony with s.9 excludes the Central Government as an exigible entity.
The thrust of the argument, if we may say so, is that the Central Government being the taxing authori ty may not, without being guilty of grotesqueness, tax itself.
Counsel was cautious to concede that legally it was not impossible for the Central Government as a statutorily empowered agency to collect tax that falls due from it is as an assessee.
Indeed, if the statute deafly states that government is liable to pay tax qua dealer, it is not a legal plea to say that government is also the taxing author ity.
We have therefore to examine whether ' there is any necessary exclusion from exigibility or other provision of immunisation which can be spelt out of section 2 or section 9.
Section 2(b) Of the.
Central Act reads: "2.
(b) In this Act, unless the context otherwise requires, 'dealer ' means any person who carries on the business of buying or selling goods, and includes a Government which carries on such business".
Quite plain is the conclusion from a bare reading of this provision that a government (ergo any government) is by express inclusive definition made a dealer.
The Central Government being a govern ment is squarely covered by the definition.
Nor does section 9 rescue the appellant.
True it is that the tax shall be levied by the Government of India.
But it does so for the benefit of the other State Governments and indeed through the machinery of the State tax agency.
Section 9(3)reads: "The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government of India shall be assigned to that State and shall be re tained by it: and the proceeds attributable to Union territories shall form part of the Consoli dated Fund of India.
" 62 Again, article 269(g) of the Constitution speaks in the same strain, viz., that the real beneficiary of Central sales tax is the State designated in the above provisions, the Union Government being empowered to levy behalf of and thereafter to assign to the respective States eventually entitled to the tax.
We see no flaw in the reasoning of the High Court that the Central Government may tax itself, if it comes to that.
A subsidiary contention calculated to insulate the Central Government from liability was set up by the learned Additional Solicitor General to the effect that an undertak ing to distribute essential commodities by the State in implementation of its governmental obligations cannot be described as 'trading ' activity or carrying on of busi ness 'without doing violence to the concepts of governmental functions and business operations.
Indubitably the State has the power to carry on trade or business as is manifest from Art 19(6)(ii) and other provisions.
In dubitably the State, distributes essential commoditise in a fair and. equitable way for the survival of the community under its protection.
It does 'not follow that we cannot harmonize the tow functions.
It is well on the agenda of State activity that it carries on trade or business in essential commodi ties because it has the power to do carries on trade or business it it obligated to ensure even distribution of vital goods and because sections of the people We see no difficulty in inferring that the style martic activity of buying food grains and fetrilisers and selling them by the State although in fulfilment of a benificant national policy is never theless trade or business.
Necessarily Government becomes a 'dealer ' by definition and carries on 'busi ness, within the meaning of the central.
Act and the State Act (omitting for a moment the distiction in the two defi nitions based upon the motive to make gain or profit).
The conclusion therefore is inacvitable that the appellant, representing the Central Government is rightly held to be the assessee We may hasten to mention that the ordinary concept of business has the element: of gain or profit whose absence negatives the character of the activity as business in section 2(b) of the Central Act.
A person becomes a dealer only if he carries on business and the Central Government can be designated as 'dealer ' only if there.
is profit motive.
This question not having been investigated by the fact finding authorities has been directed to be gone into by the Tax Tribunal in the three.
case revolving round the Central Act.
So far as the State Act is concerned, this question does not arise for the straight forward reason that the definition in section 2(1)(bbb) of that Act expressly includes within the concept of 'business ' any trade or any adventure or concern in the nature of trade or commerce carried on or undertaken whether or not 'with a motive to make gain or profit whether or not profit accrues therefrom '.
Profit making in the State Act, it was conceded by counsel for the Union, was irrelevant in contrast to its pertinence in the Central Act.
If this be the correct position in law, it follows that the State Sales Tax Officer is entitled 10 collect sales tax from the appellant in regard to intra State sales even assuming that there is no profit motive or profit accrual.
The reverse is the case so far as Central sales tax is concerned.
In the result the orders passed by the Sales Tax Appel late Tribunal in all the six appeals, affirmed as it were by the High Court are correct and these appeals deserve to be dismissed.
63 We are conscious of the social implications of sales tax being leviable on essential commodities like food grains and fertilisers.
Both these items are vital to the common man and his fragile budget.
Any tax, especially on food, casts an extra burden on the poor who are the ultimate consumers of the article and victims of the impost.
But this socially desirable objective can .surely be achieved by appropriate notifications and, if need be, by necessary legislative direction.
The Court has to interpret the law and apply it.
The State, through its agencies.
makes the law for socially beneficial ends.
It is not for the former to salvage the latter from the legal coils which are its own.
handiwork.
We make these observations lest it should be felt that judicial constructions has contributed to extra food tax.
The blame, if any, must belong to the authors of the law.
The appeals are dismissed with costs one set.
P.H.P. Appeals dismissed.

summary:
The Joint Director of Food stationed in the Port of Visakapatnam sold food grains and fertilizers to the Andhra Pradesh State and other States at the price fixed by the Central Government.
The Sales Tax Officer of the Andhra Pradesh imposed the tax under the Andhra Pradesh General Sales Tax Act, 1957, on the intra State sales and imposed tax under on the inter State sales.
The Joint Director of Food claimed immunity from the tax on the ground that the element of profit motive was absent.
Under the Andhra Pradesh Act, the profit motive is irrelevant.
The High Court of Andhra Pradesh, therefore, dismissed the appeals filed by the Central Government as far as they related to the tax under the Andhra Pradesh Act.
The High Court, however, remanded the three appeals which per tained to the tax under the for deter mining the presence of profit motive in the Central Govern ment while undertaking the dealings in question.
In appeals by Special Leave the appellant contend ed: 1.
Since the sales were by the Central Govern ment, the Joint Director could not be the assessee.
Section 2(b) of the Central Act read with section 9 excludes the Central Government as an exigible entity.
An undertaking to distribute essential com modities by the State in implementation of its governmental obligations cannot be described as trading activity or carrying on of business without doing violence to the concepts of governmental functions and business operations.
Dismissing the appeal, HELD: (1) Since the Joint Director represented the Central Government in the sales he can legitimately be dealt with for sales tax proceedings as representing the Union Government.
[61 C] (2) Section 2(b).
of the Central Act in terms states that a dealer means any person who carries on the business of buying and selling goods and includes a Government which carries on such business.
[61 F] (3) Section 9(3) of the Central Act provides that the tax and penalty collected shall be assigned to the State which recovers the tax.
Therefore, the real beneficiary of the Central Act i.s the State concerned.
In any event there is no flaw in the reasoning of the High Court that the Central Government way tax itself.
[62 A B] (4) The State has the power to carry on the trade or business as is manifest from article 19(6)(ii) and other provi sions.
Systematic activity of buying foodgrains and ferti lizers and selling them by the State although in fulfilment of the beneficiant national policy is never the.
less trade or business.
Necessarily Government may become a dealer which carries on business within the meaning of the different definitions in one Central Act and the State Act.
[62 B E] (5) The question of profit motive is relevant for the purpose of Central Act.
Since the question has not been investigated by the fact finding authorities, the High court has rightly directed the authorities below to go into the said question.
So far as the Andhra Act is concerned since the profit motive is 60 irrelevant because of the special definition in the Act the State Sales Tax Officer is entitled to collect sales tax from appellant in regard to intra State sales even assuming that there is no profit motive.
[62 E H] (6) The Court observed that it is conscious of the social implications of the Sales Tax being leviable on the essential commodities like foodgrains and fertilizers.
Any tax on food and fertilizers is bound to cause an extra burden on the poor who are the ultimate consumers but the court has to interpret the law and apply it.
Necessary objective can be achieved by appropriate notifications or if need be, necessary legislative directions.
[63 A B]


judgement:
il Appeal No. 861 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 1 3 1975 of the Allahabad High Court (Lucknow Bench) in writ petition No. 405 of 1974.) A.K. Sen and S.K. Bisaria, for the appellant.
C.P. Lal for respondents 1 3.
Yogeshwar Prasad and R.N. Trivedi, for respondents.
No. 8.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This appeal by special leave is di rected against the judgment and order dated March 31, 1975, of Lucknow Bench of 65 the Allahabad High Court dismissing the writ petition No. 405 of 1974 filed by the appellant challenging the recommen dation made by a Selection Committee of the Lucknow Univer sity (hereinafter referred to as 'the University ') for appointment of respondent No. 8 as Professor of Anthropology in the Faculty of Arts of the University.
The facts giving rise to this appeal are: towards the end of the year 1973, the University put up an advertisement inviting applications from candidates possessing the follow ing qualifications to fill up a vacant post of Professor of Anthropology : "Essential: First or high second class Master 's degree and Doctorate in the subject con cerned with a good academic record, experience of teaching post graduate classes not less than 7 years and/or having conducted and successfully guided research work for 7 year 's in recognised institution and having published work of high standard in the subject concerned.
" Preferential: High academic distinctions.
" The appellant and( respondent No. 8 were the only two candidates who applied for the post in response to the advertisement.
Their respective qualifications are as set out hereunder : S.No.
Name Age Qualifications & Experience 1.
Dr. G. Sarana, 38 years H.S. (U. P. Bd) 1949 1 Div.
Head of Deptt.
Inter (B.H.U.) 1951 1 Div.
of Anthropology, B.A. (L.U.) 1953 I Div.
Karnatak University, M.A. (L. U.) 1965 I Div.
Dharwar.
Ph. D. (Harvard (U) 1966.
Published 28 research papers and 3 books.
Worked as : (1) Temp.
Lecturer in Anthro pology L.U. July, 1955 April, 1962.
(2) Lecturer in Anthropol ogy Punjab U April August, 1962.
(3) Visiting Lecturer Univ.
of California at Santa Barbara July 1965 June 1966.
(4) Karnatak Univer sity (September 1966 upto date as Reader and since 27 June 1970) as Profes sor.
66 S.No.
Name Age Qualifications & Experience 2.Dr.
K.S. Mathur, 44 years H.S. (U. P. Bd) 1944 1 Divn.
Reader and Head of the Inter (U. P. Bd) 1946 I Divn.
Deptt.
of Anthropology, B. Com (L. U.) 1950 I Divn.
Lucknow University.
Ph.D. (Australian National U) 1960.
Published several research papers, Worked as: (1) Lecturer in Anthropology L.U. 1951 64.
(2)Reader in Anthropology L.U. 1964 continuing (3) Sociologist National Council of Appl.
Economic Research, New Delhi March ' September 1960.
On February 27, 1974,, a Selection Committee consisting of Shri A.K.K. Mustafi, Vice Chancellor of the University, Dr. K.N. Shukla, Dean, Faculty of Arts and Professor & Head of the Department of Hindi of the University, and three experts viz., Dr. S.C. Dube, Dr. S.R.K. Chopra and Dr. T.B. Mayak, respondents 3, 4, 5, 6 and 7 respectively met to interview the candidates and to make their recommendation to the Executive Council of the University.
After interviewing the aforesaid two candidates, the Selection Committee re solved to recommend respondent No. 8 herein for appointment to the aforesaid post of Professor of Anthropology.
On coming to know of the recommendation, the appellant filed the aforesaid petition 'under Article 226 of the Constitution challenging the recommendation mainly on the ground that two out of the aforesaid three experts viz., Dr. S.C. Dube and Dr. S.R.K. Chopra were biased against him and in favour of respondent No. 8.
It was alleged by the appel lant that the respondent had close relations with the afore said two.
experts as he was instrumental in obtaining many remunerative assignments for them.
It was.
further averred by the appellant that whenever Dr. Dube visited Lucknow, he stayed with respondent No. 8.
It was also averred by the appellant that Dr. Chopra had strained relations with him on account of straight election contest between him and the latter for the office of the President of Anthropology Section of the Indian Science Congress for 19574.
The appellant further averred that in 1968 when he was serving in the Punjab University as a Lecturer in the Department of Anthropology headed by Dr. Chopra, the latter stubbornly opposed his application for leave to avail of the offer of fellowship from Harvard University and stopped forwarding his salary bills to the Executive, Council with the ulterior object of depriving him of the opportunity to attain higher academic qualification and thereby better his future pros pects with the result that he was compelled to resign his job and surrender three months ' salary in lieu of notice to avail of the offer.
67 The petition was vigorously contested by respondent No. 8.
On consideration of the material placed before it, the High Court, however, dismissed the application holding that though respondent No. 8 was the head of the department of Anthropology, he was not the only person responsible for bestowing various assignments either on Dr. Dube or on Dr. Chopra and that it was the Executive Council and the Academic Council which were responsible for giving those assignments to Dr. Dube and Dr. Chopra.
It was further held by the High Court that there was nothing unusual in Dr. Dube and Dr. Chopra 's knowing and enjoying the hospitality of respondent No. 8.
The fact that the appellant had an elec tion contest with Dr. Chopra was also, in the opinion of the High Court, of no significance, as such like contests were very common and ' it could not be said that Dr. Chopra had developed such a degree of ill will and hostility against the appellant for the latter 's standing as a candidate against him so as to render him incapable of acting impar tially when the task of selecting the best candidate was assigned to him and that it was not possible to.
presume that Dr. Dube and Dr. Chopra were in a position to influence the decision of the entire Selection Committee by injection bias in the minds of the other members.
The High Court finally held that from the facts relied upon by the appel lant, bias could not be spelt out.
In arriving at its decision, the High Court relied upon the following observa tions made by Frank, J. of the United States of America in re. Linahan.(1) "If, however, "bias" and "partiality" be defined to mean the total absence of preconceptions in the.
mind of the Judge, then no one has ever had a. fair triaL,, and no one ever will.
The human mind, even at infancy, is no blank piece of paper.
We are born with predispositions and the processes of education, formal and informal, create attitudes which precede: reasoning in particular instances and which, therefore, by definition, are preju dices.
" The High Court also held that the appellant having submitted to the jurisdiction of the Selection Committee, he could not be permitted to turn round and denounce the con stitution of the Committee.
Counsel for the parties have reiterated before us the contentions raised on behalf of their clients before the High Court.
In addition, it has been contended by counsel for respondent No. 8 that the impugned recommendation being in the nature of an interlocutory proceeding,, neither the writ petition nor the appeal arising therefrom could be maintained.
It is needless to emphasize that the principles of natural justice which are meant to .prevent miscarriage of justice are also applicable to domestic enquiries and admin istrative proceedings (See A.K. Karipak vs Union of India(2).
It cannot also be disputed that one of the funda mental principles of natural justice is that in case of quasi judicial proceedings, the authority empowered to decide the dispute (t) [1943], 138F. 2nd 650 at 652.
(2) :[1970] 1 S.C.R. 457 :A.I.R. 1970 S.C. 150.
68 between opposing parties must be one without bias by which is meant an operative prejudice, whether conscious or uncon scious towards one side or the other in the dispute.
(See Nageswara Rao vs
A.P. State Road Transport Corporation(1) and Gullapalli Nageshwar Rao v State of A.P.(2).
It would be advantageous at this stage to refer to the following observations made by this Court in Manak Lal vs Prem Chand(3).
"Every member of a tribunal that sits to try issues in judicial or quasi judical proceedings must be able to act.
judicially; and the essence of judicial decisions and judicial administration is that judges should be able to act impartially, objectively and without any bias.
In such cases the test is not whether in fact a bias has affected the judgment; the test always is and must be wheth er a litigant could reasonably apprehend that a bias attributable 'to a member of the tribunal might have operated against him in the final decision of the tribunal.
It is in this sensethat it is often said that justice must not only be done but must also appear to be done." Again as held by this Court in A. K. Karipak 's case (supra), reiterated in section Parthasarthi vs State of Andhra Pradesh(4) and followed by the High Court of Jarainu & Kashmir in Farooq Ahmed Pandey and Ors.
vs Principal Regional Engineering College & Anr.(5) the real question is not whether a member of an administrative Board while exercising quasi judicial powers or discharging quasi judicial functions was biased, for it is difficult to prove the mind of a person.
What has to be seen is whether there is a reasonable ground for believing that he was likely to have been biased.
In decid ing the question of bias, human probabilities and ordinary course of human conduct have to be taken into consideration.
In a group deliberation and decision like that of a Selection Board, the mem bers do not function as computers.
Each member of the group or board is bound to influence the oth ers, more so if the member concerned is a person with special knowledge.
His bias is likely to operate in a subtle manner.
At page 156 of "Principles of AdministratiVe Law" by J.A.G. Griffith and H. Street (Fourth Edition), the position with regard to bias is aptly and succinctly stated as follows : "The prohibition of bias strikes against factors which may improperly influence a judge in deciding in favour of one party.
The first of the three disabling types of bias is bias on the sub ject matter.
Only rarely will this bias invalidate proceedings.
"A mere general interest in the general object to be pursued would not disqualify," said Field J., holding that a magistrate who sub scribed to the Royal Society for the Prevention of Cruelty to Animals was not thereby disabed (1) [1959] Supp. 1 S.C.R. 319 :A.I.R. 1959 S.C. 308.
(2) ; (3) ; (4) (5) 69 from trying a charge brought by that body of cruel ty to a horse.
There must be some direct connec tion with the litigation.
If there is such preju dice, on the subject matter that ,the court has reached fixed and unalterable conclusions not founded on reason or understanding, so that there is not a fair hearing, that is bias of which the courts wilt take account, as where a justice an nounced his intention of convicting anyone coming before him on a charge of supplying liquor after the permitted hours . . .
Secondly, a pecuniary interest, however, slight will disqualify, even though it is not proved that the decision is in any way affected.
The third type of bias is personal bias.
A Judge may be a relative, friend or business associ ate of a party, or he may be personally hostile as a result of events happening either before or during the course of a trial.
The courts have not been consistent in laying down when bias of this type will.
invalidate a hearing.
The House of Lords in Frome United Brewering vs Bath Justices(1) approved an earlier test of whether "there is a real likelihood of bias.
" the House of Lords has since approved a dictum of Lord Hewart that "justice should not only be done,, but should manifestly and undoubtedly be seen to be done" al though it did not mention another test suggested by him in the same judgment: Nothing is to be done which creates even a suspicion that there has been an improper interference with the course of jus tice.
" At page 225 of his Treatise on "Judicial Review of Administrative Action" (Third Edition), Prof. S.A. De Smith, has stated as follows with regard to Reports and Preliminary decisions : "The case law on the point is thin, but on principle it would seem that where a report or determination lacking final effect may nevertheless have a seriously judicial effect on the legally protected interests of individuals (e.g. when it is a necessary prerequisite of a final order) the person making the report or preliminary decision must not be affected by interest or likelihood of bias.
" From the above discussion, it clearly follows that what has to be seen in a case where there is an allegation of bias, in respect of a member of an administrative Board or body is whether there is a reasonable ground for believing that he was likely to have been biased.
In other words whether there is substantial possibility of bias animating the mind of the member against the aggrieved party.
We do not, however, consider it necessary in the present case to go into the question of the.reasonableness of bias or real likelihood or bias as despite the fact that, the appellant knew all the relevant facts, he did not before appearing for the interview or at the time of the (1) 70 interview raise even his little finger against the consti tution.
of the Selection Committee.
He seems to have voluntarily appeared before the Committee and taken a chance of having a favourable recommendation from it.
Having done so, it is not.
now open to him to turn round and question the constitution of the Committee.
This view gains strength from a decision of this Court in Manak Lal 's case (Supra) where in more or less similar circumstances, it was held that the failure of the appellant to take the identical plea at the earlier stage of the proceedings created an effective bar of waiver against him.
The following observations made therein are worth quoting: "It seems dear that the appellant wanted to take a chance to secure a favourable report from the tribunal which was constituted and when he found that he was confronted with an unfavourable report, he adopted the device of raising the present technical point.
" It is also difficult to understand how the writ petition or for that matter the present appeal before us is maintain able when the recommenlation of the Selection Committee has still to be scrutinzed by the Excutive Council of the Uni versity and either accepted or rejected by t and other remedies by way of representation to.
the Executive Council and an application for reference of the matter under section 68 of the Uttar Pradesh Universities (Reenactment and Amendment) Act, 1974, 0 the Chancellor are still open to the appellant and have not been.
exmusted.
For the foregoing reasons, we find ourselves unable to allow the appeal.
In the result, the appeal fails and is hereby dismissed but in the circumstances of the case with out any order as to costs.
M.R. Appeal dismissed.

dataset_name: IN-Abs

summary:
The appellant and respondent No. 8 applied for the vacant post of Professor of Anthropology in the Faculty of Arts, in answer to an advertisement put up by the Lucknow University.
A selection committee of five persons including three experts, interviewed them and recommended respondent No. 8 for the post.
The appellant 's writ petition challeng ing the recommendation was dismissed by the High Court.
The appellant contended before this Court that two of the expert members of the selection committee were unduly biased against him and in favour of respondent No. 8.
The appeal was contested on two grounds.
Firstly, that by submitting to the jurisdiction of the selection committee, the appellant had waived his right to denounce its constitution and sec ondly, that the impugned recommendation being an interlocu tory proceeding against which remedies were available, the writ petition was not maintainable.
Dismissing the appeal, the Court, HELD: 1.
Despite the fact that the appellant knew all the relevant facts,he seems to have voluntarily appeared before the committee and taken a chance of having a favourable recommendation from it Having done so it is no now open to him to turn round and question the constitution of the committee.[70 A B] Manak Lal vs Prem Chand ; 1957 S.C. 425, applied.
Linahan 650; A. K. Karipak vs Union of India ; Nageshwar Rao vs State of A.P. ; 1959 SC 1376; section Partha rarathi vs State of Andhra Pradesh ; Farooq Ahmad Bandey and Ors.
vs Principal Regional Engineering College & Anr.
[1975] I&K L.R. 427; Principles of Adminis trative Law by I.A.G. Griffith and H. Street (4th edition) and Judicial Review of Administrative Action ' (3rd Edition) by Prof. S.A. De Smith, referred to. 2.
The recommendation of the selection committee has still to be scrutinised by the Executive Council of the University and either accepted or rejected by and other remedies by way of representation to the executive council and an application for reference of the matter under section 68 of the Uttar Pradesh Universities (Reenactment and Amendment) Act, 1974, to the Chance or are till open to the appellant and have not been exhausted The writ petition or he present appeal before us is not maintainable.
[70 C D]


judgement:
ivil Appeals Nos. 928 and 929 of 1975.
(From the Judgment and Order dated 8 10 1974 of the Allahabad High Court in Civil Writ Nos. 2169 and 2276 of 1974).
F.S. Nariman, D.N. Misra and O.C. Mathur, for the appellant.
S.C. Manchanda and O.P. Rana, for the respondents.
ARGUMENTS APPELLANTS 1.
Civil Appeal No. 928 of 1975.
In this Appeal three questions arise for determination: (i) Whether in the facts and circumstances of the case the proviso to section 9(1) of the was applicable so as to enable the State of Uttar Pradesh to levy and collect Central Sales Tax in respect of the subsequent sales of coal effected by the Appellants to consum ers in the State of U.P. ? (ii) Whether the Sales Tax Officer, Moradabad had no jurisdiction to rectify the assessment for the year 1966 67 as there was no error apparent on the face of the record of the original assess ment (section 22 of the U.P. Sales Tax Act, 1948)? (iii) Whether the order of rectification passed under section 22 of the U.P. Sales Tax Act on 26th March, 1974 (for the assessment year 1966 67) and communicated to the Appellants on 31st March, 1974 was barred by limitation as it could not be said to be "within.
three years from the date of" the original assessment order dated the 27th March, 1971 ? II.
Re: Whether in the facts and circumstances of the case the proviso to Section 9(1) of the was applicable so as to enable the State of Uttar Pradesh to levy and collect Central 28 Sales Tax in respect of the subsequent sates of coal ef fected by the Appellants to consumers in the State of U.P. ? (a) The proviso to section 9(1) of the does not apply either : (i) to subsequent sales (in the course of inter State trade or commerce) of declared goods i.e. goods declared in section 14 to be of spe cial importance in inter State trade or commerce; or (ii) to sale of goods to persons other than registered dealers; (b) The argument 'in support of the submission that the proviso to section 9(1 ) does not apply to declared goods is as follows : Section 8(1) and 8(2) of the deals separately with two types of goods, namely, (i) goods of the description referred to in sub section(3) [see section 8(1)(b) and (ii)] declared goods [see section 8(2)(a)].
The rates of tax for the two types of goods have been and are differently prescribed in sub section
(1) and sub section
(2) of section 8 especially since the Amending Act VIII of 1963.
The expression "goods of the description referred to in sub section (3)" in section 8(1) originally in cluded declared goods intended for re sale [see section 8(3)(a)] as originally enacted in the (reproduced in Chaturvedi 's , 4th .Edition, p. 548).
Sub section (3) of section 8 then read as follows: "(3) The goods referred to in sub section (1) (a) in the case of declared goods, are goods of the class or classes specified in the certifi cate of registration of the registered dealer purchasing the goods as being intended for resale by him; and (b) in any 'other case, are goods of the class or classes specified in the certificate of regis tration of the registered dealer purchasing the goods as being intended for re sale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any; contract; and in either case include the containers or other materials used for the packing of goods of the class or classes of goods so specified.
" By the Amending Act VIII of 1963 (which raised the rate of tax under section 8(1) to 2 per cent), clause (a) of section 8(3) stood deleted.
The effect of this deletion was 29 that since 1963.declared goods fell outside the purview of section 8(3) Section 8(4) only applies to sales of goods of the description referred to in sub section
(3), since the provisions of that sub section have express reference to the provisions of section 8( 1 ).
For the proviso to section 9( 1 ) being applicable it is necessary that the registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed in section 8(4)(a) i.e.
Form 'C ' prescribed under rr.
12 and 13 of the Central Sales Tax (Registration and Turn over) Rules, 1957 (see 'pages 25 and 27 of Chaturvedi 's , Fourth Edition).
In the present case, the appellants neither obtained nor could have obtained Form 'C ' from .their purchaser since section 8(4) [read with section 8(1) and (3)] did not (after 1963) apply to declared goods.
It is submitted that to accept the arguments urged on behalf of the Respondents that section 8(4)(a) [read with section 8(1) and (3)] dealt with declared goods as well, would be to give no meaning to the provisions contained in section 8(2).
Besides, as held by Their Lordships in State of Tamil Nadu vs Sitalakshmi Mills & Others C ; at 412 para 6), section 8 deals with three different classes of cases declared goods do not fall within the class mentioned in section 8 ( 1 ).
The argument that the charging section 6 does not make any differentiation between declared and undeclared goods is of no avail.
Section 6(1) itself commences with the words "Subject to the other provisions contained in this Act . . ".
If the effect of any other provision is to take away liability to pay sales tax, effect would have to be given to that other provision notwithstanding the charging section [see State of Mysore vs L. Setty 16 S.T.C. 231,239 (S.C.)].
Declared ' goods are clearly intended by the framers of Central Tax Act, 1956 to receive preferential treatment not only in respect of local sales tax on local sales (see section 15), but also Central Sales Tax in sales effected during the course of inter State trade or commerce [see section 8(2)].
(c) Even assuming that section 8(4)(a) [read with section 8(1) and (3) include within its purview "declared goods", the proviso to section 9(1) is still inapplicable for the following reason : For the proviso to section 9(1) to be applicable and.
for the State of U.P. to have jurisdiction to levy and collect the Central Sales Tax on subsequent sales, it is necessary that the registered dealer effecting the subsequent sales (by endorsement of documents of title like Railway Receipt during the course of the movement of the goods from one State to another) either "obtained or as the case may be 30 could have obtained" the Form prescribed.
in section 8(4)(a) in connection with the purchase of such goods involved in the subsequent sale.
Such a form could only be obtained under section 8(4)(a) from the appellants ' purchasers if the appellants ' sales were to be "a registered dealer" [see section 8(1) (b)].
Admittedly in the present case the appellants though registered dealer for the rele vant year in question did not sell coal to any registered dealer [see the averments in para 11 of the Writ Petition, page 62 Vol. 2 which have not been denied in the Affidavit in Reply (para 8 page 109 Vol. 2].
Therefore, even assuming that the provisions of section 8(4)(a) [read with section 8(1) and (3)] were applicable to declared goods (even after the Amending Act VIII of 1963), the sales result ing in the turnover of Rs. 5,59,172.38 not being to registered dealers, the provisions of section 8(1)(b) were not attracted.
Consequently the form pre scribed under section 8(4)(a) Form 'C ' could not have been obtained by the appellants ' purchaser from the prescribed authority.
Consequently the appel lants could not obtain from their purchaser such form under section 2(4)(a).
Accordingly the last part of the proviso to section 9(1) not being satisfied, the State of U.P. had not jurisdiction to levy and collect Central Sales Tax from the Appellants.
Re: Whether the Sales Tax Officer, Moradabad had no jurisdiction to rectify the assessment for the year 1966 67 as there was no error apparent on the face of the record of the original assessment (Section 22 )of the U.P. Sales Tax Act, 1948) ? It has been stated in the order of rectification dated the 26th March, 1974 passed under section 22 of the U.P. Sales Tax Act, 1948 that (page 96, Vol. 2): "In the present case of the assessee tiffs error is apparent because if this fact that it was registered under the had been placed before the Hon 'ble Allahabad High Court in the case of Karam Chand Thapar & Bros. (Coal Sales) Ltd., Moradabad for the year 1965 66 the decision would have been against them as have been happened in the above mentioned two cases.) The error apparent on the face of the record, which is a condition precedent to invoking the rectification provision (section 22) is that the appellants were treated as unregistered dealers by the High Court in the decision for the earlier assessment year 1965 66 (the judgment of the Hi h Court has been extracted at pages 71 78 of Vol. 2.
But in section 22 the error has to be an "error apparent on the face of the re cord" of the assessment i.e.
for the assessment year 1966 67.
This assessment order is dated 27th March, 1971 and a copy of it is at pages 31 79 83 of VoL 2.
In that order it is specifically mentioned (page 79 viz).
: "10.
Whether registered or not: Yes".
Thus it was known to the Sales Tax Officer passing the original assessment order that the appellants were in fact registered dealers.
An error apparent on the face of the record must be an error which is "glaring and obvious" [see ; , 150 (S.C.)].
Besides, there is a distinction between a mere erroneous decision and a decision which could be characte rised as vitiated by "error apparent".
A rectification is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected.
It lies only for patent error (see Thungabhudra Industries Ltd. vs Government of Andhra Pradesh ; , 186) where the expression "error apparent on the face of the record" in 0.47, r i, C.P.C. was interpreted by the Supreme Court).
In that case was also said that an error apparent on the face of the record was one where "without any elaborate argument one could point to the error" (page 186).
This is also the.
view expressed in a Sales Tax Case Master Construction Co. 17 S.T.C. 360, 365 366 (Subba Rao, J.).
In the present case, it is submitted that the view of the Sales Tax Officer, Moradabad who passed the original assessment order dated 27th March, 1971 following the deci sion of the Allahabad High Court dated the 24th July, 1970 in Civil Miscellaneous Writ No. 4356 of 1969 (pages 71 to 78) was not patently erroneous.
As a matter of fact the correctness of the subsequent decisions of the Allahabad High Court is being doubted in the present Appeal and there is no pronouncement of your Lordships on the question viz., interpretation of the proviso to section 9( 1 ).
Besides, it cannot be said that at the time when the original assessment order was passed there was a manifest error.
Moreover, even as a result of the subsequent decisions of the Allahabad High Court it cannot be said that what was not an error on 27th March, 1971 became an error on 26th March 1974 (the date of the rectification order under section 22).
In any event, even assuming that there was an error, that error is not apparent on the face of the record of the original assess ment it is a matter in which the arguments, to say the least, are evenly balanced and a decision of the Highest Court is now awaited.
In the circumstances there was no jurisdiction in the Sales Tax Officer, Moradabad to rectify and set aside the original order of assessment IV.
Re: Whether the order of rectification passed under Section 22 of the U.P. Sales Tax Act on 26th March, 1974 (for the assessment year 1966 67) and communicated to the Appellants on 31st March, 1974 was barred by limitation as it could not be said to be "within three years from the date.
of" the original assessment order dated the 27th March, 1971 ? It is submitted that the period of limitation under section 22 of the U.P. Sales Tax Act, 1948, runs from the date on which the order of rectification is communicated to the assessee which would enable the assessee to file an appeal under section 9 of the U.P. Sales Tax Act, 1948.
The period of limitation for filing an appeal is 30 days from the date of service of the copy of the order appealed against.
It is submitted that an order of rectifi cation is not complete as against the assessee unless it is duly communicated to him.
The order of rectification af fects the rights and liability of an assessee and it is essentially fair and just that it should be communicated to the party as stated by Your Lordships in a case under the Land Acquisition Act where the phrase "date of the Collec tor 's award" was being considered.
Your Lordships observed : " .
If the award is treated as an admin istrative decision taken by the Collector in the matter of the valuation of the property sought to be acquired it is clear that the said decision ultimately affects the rights of the owner of the property and in that sense, like all decisions which affect persons, it is essentially fair and just that the said decision should be communi cated to the said party.
The knowledge of the party affected by such a decision, either actual or constructive, is an essential element which must be satisfied before the decision can be brought into force.
Thus considered the making of the award cannot consist merely in the physical act of writ ing the award or signing it or even filing it in the office of the Collector; it must involve the communication of the said award to the party con cerned either actually or constructively.
If the award is.
pronounced in the presence of the party whose rights are affected by it it can be said to be made when pronounced.
If the date for the pro nouncement of the award is communicated to the party and it is accordingly pronounced on the date previously announced the award is said to be commu nicated to the said party even if the said party is not actually present on the date of its pronounce ment.
Similarly if without notice of the date of its pronouncement an award is pronounced and a party is not present the award can be said to be made when it is communicated to the party later.
The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fair play and natural justice the expression 'the date of award ' used in the proviso must mean the date when the award is either commu nicated to the party or is known by him either actually or constructively.
In our opinion, there fore, it would be unreasonable to construe the words from the date of the Collector 's award used in the proviso to section 18 in a literal or mechanical way." (A.I.R. 1961 S.C. 1500, 1503 [1962] 1 S.C.R. 676, 683684).
It is submitted that on an analogy of reasoning the words "the date of any order passed by him" in section 22(1) of the U.P. Sates Tax Act, 1948 must be construed to mean the effective date of an order of rectification viz. the date when it is communicated.
In the instant case the order was communicated after three years from the date of the assess ment order and, therefore, the order of rectification is vitiated as being barred by time.
33 V. 1n Civil Appeal No. 929 of 1975 the only question that arises is: Whether in the facts and circumstances of the case the proviso to section 9(1) of the , was applicable so as to enable the State of Uttar Pradesh to levy and collect central sales tax in respect of the subsequent sales of coal effected by the appellants to consumers in the State of U.P. ? The assessment year in question is 1969 70 and the Appellant adopts the arguments urged in Civil Appeal No. 928 of 1975.
With regard to whether the sales by the appellants (in 1969 1970) during the course of the movement of the goods from State to State were to registered dealers or to consum ers, there is no indication in the record as to wheth er the sales effected to registered dealers or to con sumers or unregistered dealers.
In the event of Your Lord ships holding that declared goods are not covered by the proviso to section 9(1) this would make no difference because it is admitted that the subsequent sales effected by the appel lants were of declared goods namely coal.
But in the event of Your Lordships coming to the conclusion that the proviso to section 9 (1 ) may include also subsequent sales of declared goods, then the submission urged is (as in Civil Appeal No. 928 of 1975) that in any view of the matter it is only subsequent sales to registered dealers which would attract jurisdiction of the State authorities under the proviso to section 9( 1 ) and not subsequent sales by the appellants to unregistered dealers or consumers.
The fact would be easy of ascertainment by the Sales Tax Officer and it is submit ted that in that event a direction ought to be given that the State of U.P. could levy and collect central sales tax under proviso to section 9 (1 ) in respect of subsequent sales of coal effected by the appellants only to registered dealers and not to unregistered dealers or consumers.
short one.
It is as to which State has jurisdiction to tax subsequent sales made by a registered dealer.
In the instant case, admittedly the appellant is a dealer regis tered in U.P. both under the Central and the U.P. Act.
Therefore, the short question which arises for consideration is as to whether in the instant case the State of U.P. would have the jurisdiction to tax such subsequent sales effected by the enforcement of documents t0 parties in U.P. ? There is a specific provision in the Act, which is proviso to section 9 (1 ), to cover cases such as the present case.
Section 9(1) reads: "The tax payable by any dealer under this Act on sales of goods effected by him in the course of interstate trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that gov ernment in accordance with the provisions of sub section (2) in the State from which the movement of goods commence: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subse quent to the first sale in respect of the same goods, the tax 34 shall, where such sale does not fall within sub section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form pre scribed for the purposes of clause (a) of sub sec tion (4) of section 8 in connection with the pur chase of such goods." Sub section
(2) of section 9 merely provides that the appropriate State on behalf of the Government of India shall assess, 'reassess, collect and enforce payment of tax under the Act as if the ' tax under the Act was a tax payable under the general sales tax law of the State.
Therefore, it is that the tax to be collected under the Act is by the appro priate State for and on behalf of the Government of India.
In the case of at first sales, the substantive provisions of section 9 (1 ) are clear and unequivocal.
Section 9 (1 ) selects out of several States one.
particular State and empowers it to levy and collect C.S.T. That State alone has the power to levy the tax and all other States by implica tion are debarred.
This was a simple device adopted in order to fix the forum and jurisdiction of the particular State to make the assessment in respect of first sales.
A simple test was evolved to avoid multiplicity of imposition of tax by more than one State in respect of the same goods and that was to link the tax with the commencement of the physical movement of the goods on their Journey from one State to another.
This was simple to comprehend and exe cute.
Therefore, the appropriate State was the one from where the.
movement of goods started on their interstate journey.
That problem does not concern us here as the States of Bihar and Bengal from where the movement of coal commenced have duly assessed the tax u/s 9 (1) of the Act.
The question, however, is which is the State which can tax the subsequent sale in the instant case.
For this purpose the proviso had to be enacted as admittedly CST is multipoint in nature and there is no provision for a single point tax.
The only exemption is to be found in section 6(2) which is the charging section and if the transaction does not satisfy all the three conditions of section 6(2), viz., (a) the purchaser is a registered dealer, (b) who by a certificate of registration is authorised to purchase his goods, and (c) the selling dealer furnishes to his assessing authority : (i) a certificate duly filled and signed by the registered dealer from whom the goods were pur chased containing the prescribed particulars in a prescribed form obtained from the prescribed au thority, and (ii) a declaration in C Form duly filled and signed by the registered dealer to whom the goods were sold.
(see Chaturvedi 's 3rd edition, page 383).
No attempt has been made by the appellant assessee in the instant case even to allege, what to say of proof, that the aforesaid three conditions were satisfied.
Therefore, section 6(2) which provides for exemption in respect of subsequent sales, albeit of declared or undeclared goods, will have no application.
The position therefore would be that the 35 subsequent sales in the instant case would not be exempt u/s 6(2).
Therefore, the subsequent shies have to be taxed and the only question is which State would have jurisdiction to assess the subsequent sales.
It was fairly conceded that the subsequent sales would be assessable u/s 9 ( 1 ), except sales of declared goods.
The argument was built up merely On the omission of el.
(a) from section 8(3) of the Act with effect from 1 4 1963.
Prior to that date section 8(3) ran as follows: "The goods referred to in clause (b) of sub section (1) (a) in the case of declared goods or goods of the class or classes specified in the certifi cate or registration of the registered dealer purchasing the goods as being intended for resale by him. " The above was omitted by section 2(iii) (a) of the C.S.T. Amendment Act (No. 8 of 1963) with effect from 1st April, 1963.
From this omission it was assumed that it was no longer necessary for de clared goods to be specified in the declaration prescribed under rule 12 and the Form C.
This assumption is wholly unwarranted and is contrary to the provisions of the Amending Act (No. 8 of 1963), The omission of cl.
(a) and certain words in cl.
(b) of section 8(3) was necessitated as the legislature probably wanted to do away with the distinction between declared goods and undeclared goods for purposes of section 8(3).
Hence it deleted clause (a) in its entirety and the words "in the case of goods other than declared goods" from cl.
(b) of section 8(3).
Thus with effect from 1 4 63 so far as mentioning of goods in the certificate of registration of purchasing dealer for purpose of re sale etc.
are concerned they made only one category and specified the same rate of tax as was applicable u/s 8 ( 1 ) both for declared and undeclared goods, provided Form C was duly submit ted.
The above interpretation also finds support from Chaturvedi 's Central Sales Tax Law, 3rd edi tion, 1973 at page 325, paras 7 and 8, which read as : "Clause (a) of section 8(3) was omitted by section 2(iii) (a) of the Amendment Act, 1963 with effect from 1 4 63.
Before that the rate of tax for sales covered in sub section (1 ) was 1 p.c. and all the sales or purchases of declared goods under the said Act could be subjected to tax at the rate upto 2% by virtue to section 15 of the principal Act.
"Sales covered under sub.
section
(1) could enjoy a concessional rate of 1 p.c. instead of the state rate of 2 p.o.
But when by the CST Amendment Act (No. 8 of 1963) the rate of tax for sales covered by sub section
(1 ) was enhanced also to 2 p.o.
there was no use of cl.
(a) of sub section
(3) and it was omitted. "In el.
(b) of sub section
(3), the opening words 'in the case of goods other than declared goods ' were omitted by section 2(iii) (b) of the C.S.T. Amend ment Act, 1963 with effect from 1 4 63.
" 36 Thus it is manifest that the argument laboriously built up had no foundation and the omission of sub cl.
(a) from section 8(3), if anything, goes against the contention of the assessee and fully supports the contention of the Department as that Vividly demonstrates that if .there was ever any intention of the legislature to make any distinction between declared and undeclared goods insofar as the sale of such goods was made to government or to a regd dealer that was done away with after 1 4 63.
The contention for the Department was that there was never any distinction made between declared and undeclared goods even in the Act and the Rules prior to 1963 64 in the matter of specification of the class or classes of goods in the application under Form A, the certificate under From B and the requisite declaration under Forn C under rr. 5 and 12 of the CST Rules.
The only place where the words "declared goods" occur is in section 8(2) (a) which merely provides the rate of tax applicable for sales without furnishing Form C ' and not for any other reason.
Thus the Act, the Rules and the Forms make no distinction between declared and undeclared goods whatsoever.
The main argument, therefore, has no force and in the absence of the condition u/s 6(2) having been satis fied, declared goods are taxable and the assessee being a regd.
dealer registered in U.P. both under the Central Act and the U.P. Act and the subsequent sale having been effect ed by such registered dealer in the State of U.P. the provi so to section 9 (1 ) is clearly attracted.
To sum up, in the instant case the State of U.P. would have the jurisdiction to assess, levy and collect C.S.T. on subsequent sales effected, by the assessee under the provi so to section 9 (1 ), provided the following conditions are satisfied: (1) The sale is a subsequent sale made during the movement of goods from the States of W. Bengal and ' Bihar to the State of U.P .This condition was fairly conceded by the learned counsel for the assessee to be satisfied.
(2) The subsequent sale is in respect of the same goods.
Tiffs was also conceded.
(3) That the goods do not fail within section 6(2), that is, the sale was to a registered dealer other than Government, if the goods are of the description referred to in Sub section (3) of section 8.
Such subsequent sale would be exempt provided the necessary certificate in Form C is produced.
(4) The registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed for purposes of el.
(a) of sub.
section
(4) or section 8, that is, Form C.
The last two conditions according to the learned couusel do not require to be satisfied in case of declared goods.
As already stated there is no express warrant nor does the scheme of the Act support any distinction for C.S.T. be tween declared and undeclared goods except in the conces sional rate applicable.
37 Section 15 only places restrictions and conditions in regard to intra state sales of declared goods. ' This has no application to intexstate sales and, therefore, the single point tax provided in section 15 cannot be imported into the other provisions of the Act.
Therefore, C.S.T. is multi point in the absence of any specific provision to make it single point.
The relevant sections are section 3 which artificially determines when sale of goods can be said to take place in the course of interstate trade or commerce.
Section 6 is the charging section.
It is significant that it charges tax on all sales.
Therefore unless there is a specific exemption, sales of both declared and undeclared goods would be taxable.
It is well settled that the burden of proof lies heavily on the person ,who claims such exemp tion.
Section 6(2) deals with the charge to be levied in respect of a subsequent sale effected by transfer of docu ments to a regd.
dealer which would be exempt provided the conditions specified in the proviso thereto are satisfied.
These conditions undoubtedly have not been satisfied.
The case .of the assessee is that they do not require to be satisfied in the case of declared goods.
section 7(3) requires in the certificate of registration under r. 5 and for the purposes of section 8 (1 ) the class or classes of goods to be specified and it is only in respect of those goods so specified that to be exemption or conces sional rate is available and not otherwise.
section 8 merely provides the rates of tax on inter state sales.
There is a concessional rate of 3% for sales to regd.
dealers provided the goods are of the description referred to in section 8(3) which refers to section 7(3) and the application in Form A and the certificate in Form B issued under rr. 3 and 5 of the Rules.
Section 8(2) refers specif ically to the concessional rate for declared goods vis a vis undeclared goods.
For declared goods it is 3 % being the rate in the appropriate State, and 10% for undeclared goods.
Beyond this concessional rate there is no other distinction made between declared and undeclared goods.
section 8(3) refers back to section 7(3), rr. 3 and 5 and Forms A and B and only those goods, declared and undeclared, which find a place the certificate are entitled to the conces sional rate and none others.
The proviso to section 9(1) specifically covers the instant case.
The assessee is a regd.
dealer, and the sales do not fall within the exemption u/s 6(2) and being a regd.
dealer in U.P. he could have obtained the Form C from the Sales Tax Officer of his Circle.
It, therefore, follows that in the instant case there can be no doubt whatsoever that the admitted subsequent sales are taxable in the State of U.P. for and on behalf of the Government of India u/s 9(1) of C.S.T. B. Contentions 2 and 3.
These .may be dealt with togeth er.
The argument of the learned counsel for the assessee in short was that there was no error apparent on the face of the record and, therefore, 38 section 22 of the U.P. Act read with section 9(2) of the Central Act could not be invoked.
It must be remembered that this point is taken in a writ under article 226 when there was no possi bility of the appeal or revisional courts going into the facts of the case.
In these circumstances the facts as found by the Sales Tax Officer in his order u/s 22 and by the High Court in its judgment dismissing the writ petition will have to be taken as sacrosanct.
At page 92 of volume II is the order u/s 22.
At page 94, line 4, it is stated "The assessee is registered in this office under C.S.T. Act and their Central regn.
No. is 2931 which had been in existence since 4 12 65.
In the case of M/s Karam Chand Thapar & Bros. for the year 1965 66.the High Court had held that sales made by them were exempt from C.S.T. or U.P. Sales Tax and the authorities of Bihar or West Bengal only could assess the tax.
Thereafter the Hon 'ble High Court of Allahabad in many cases held that if the assessee was registered under the CST the authority of that State had jurisdiction to make assessments.
Therefore, the S.T.O. Morada bad has jurisdiction to assess the assessee.
In the meanwhile the High Court of Allahabad held in several cases that only dealers who are registered under the C.S.T. are liable to be assessed under the Act as for example . . " At page 96, line 2 "In the present case of the assessee this error is apparent because if this fact that it was registered under the C.S.T. had been placed before the High Court . . for the year 1965 66, the decision would have been against them as hap pened in the above mentioned two cases.
" At page 97, line 4 "In the above mentioned case the error of law is clear because u/s 9(1) the jurisdiction of assessment of tax lies only with that State where from the dealer has received their Central Regn.
No. and wherefrom the dealer receives C Form.
" Similarly, the judgment of the High Court is at page 1, of volume I and at page 2, last paragraph, the finding is: The petitioner claimed that the turnover of Rs. 30.07 lakhs was exempt from tax and that of Rs. 5.59 lakhs could not be taxed in the State of U.P.
The S.T.O. relying upon the observations made by the High Court in petitioner 's own assessment case for the year 1965 66 accepted his case that his turnover amounting to Rs. 5.59 lakhs could not be taxed in U.P. Subsequently in a number of cases this Court ruled that in a case where a dealer effecting a second sale in the course of inter state trade is a registered dealer, sales tax on the turnover of such goods is to be realised in the State where the dealer effecting the sale, is registered." , para 2: "In the instant case we find that while making the assessment order of 27 3 71 and holding that petitioner 's turnover amounting to Rs. 5.59 lakhs was not liable to tax in U.P., the S.T.O. relied upon a decision of this Court which, as subsequently clarified in the case of Shinghal Bros. & Co. vs State did . . . . not lay down that even in the case of a registered dealer effecting a subsequent sale in the course of inter state trade or commerce would not be liable to be taxed in the State where he is registered.
Accordingly, the S.T.O. applied the law laid down in this Court 's earlier judgment to the facts of the present case under some misapprehension and it is not disputed that in subsequent cases this Court has very clearly laid down that in the case of a subsequent sale effected during the course of interstate trade and commerce by a regd.
dealer the turnover of such sale.
is to be assessed in the State where the dealer is registered.
It is thus clear that there Was a mistake in the assessment order dr. 27 3 71.
The mistake was apparent on the face of the record inasmuch as the S.T.O. applied the observations made by this Court in a case which had been decided on the footing that the concerned dealer was an unregistered dealer to a case where the dealer was admittedly a registered dealer.
This mistake did not require any elaborate argu ment or prolonged debate on the merits or on the questions of law involved in the case.
" In view of these categorical findings by.
two courts that there was a clear and obvious mistake resulting from a mistake which had crept into the judgment of the High Court in the assessee 's own case for the A/year 1965 66 which the S.T.O. was bound to follow and could not ignore, the mistake in the subsequent assessments could be rectified u/s 22 within the period of limitation of 3 years.
Action could also have been taken u/s 21 under the U.P. Act for a reassessment .where the period of limitation is 4 years.
It is well settled that sections 21 and 22 are not mutually exclusive and the same action may be taken under either of the sections provided the conditions specified therein are satisfied.
The notice u/s 22 was issued within the period of three years and there was yet another year to run for action u/s 21, and in these circumstances a technical point of this nature raised in a writ petition should not be countenanced.
The main point that the sum of Rs. 5.59 lakhs was taxable not being in dispute as stated by the High Court, no assessee has a vested right to the forum or to succeed on mere technicalities.
The contention that the notice u/s 22.
and the order passed thereunder should have been communicated to the assessee within three years is wholly unsupported by any authority.
Section 22 merely requires the order to be made within three years.
No rights of the assessee are af fected by the passing of the order and it is only when the additional demand is served upon him under the provisions of 40 section 22(2) of the Act that the period of limitation for any appeal, revision, etc. would begin to run.
Authorities Rectification Glaring and obvious mistake of law ; SC 53 Cal Weekly Notes 869 Cal A .P.
Date of order meaning of 34 S.T.C. 257 SC 46 ITR 529 All.
SC Pb All.
The Judgment of the Court was delivered by GUPTA, J.
The appellant in Civil Appeal No. 928 of 1975.
M/s. Karam Chand Thapar and Brothers, is a limited company incorporated under the Companies Act, (referred to hereinafter as the Company), and the six branches of the Company at Allahabad, Moradabad, Kanpur, Varanasi, Gorakhpur and Lucknow are the appellants in Civil Appeal No. 929 of 1975.
The Company carries on business as coal agents and is registered under the Uttar Pradesh Sales Tax Act, 1948 and the with the Sales Tax Officer at Moradabad in Uttar Pradesh.
We shall refer to these two statutes as the U.P. Act and the Central Act for the sake of brevity.
The Company used to arrange supply of coal from collieries situate in West Bengal and Bihar to consumers in Uttar Pradesh.
The collieries used to send the coal by rail and the railway receipts were pre pared either in the name of the Company or in the name of the consumer in Uttar Pradesh on whose behalf the order for supply of.
coal was placed.
The collieries sent the bills and invoices in respect of the coal despatched to Uttar Pradesh to the Company 's head office in Calcutta; the Compa ny forwarded the railway receipts to the consumers in cases where the receipts were in the names of the consumers and endorsed the receipts that were in the Company 's name in favour of the consumers for whom the coal had been des patched.
These two appeals, brought on certificates of fitness granted by the Allahabad High Court, arise out of two writ petitions filed in the High Court respectively by the Company and its aforesaid branches.
The petition filed by the Company leading to Civil Appeal 928, is directed against an order made under section 22 of the U.P. Act giving rise to the question whether section 9 (1 ) of the Central Act was applicable to the case enabling the State of Uttar Pradesh to levy and collect Central sales tax in respect of subsequent sales of coal effected by the Company to consumers in Uttar Pradesh by endorsement of the documents of title; in the other writ petition, filed by the Company 's six branches, the applicability of section 9(1) of the Central Act was 41 one of the points raised in the High Court, but this was the only point urged before us in Civil Appeal No. 929.
The assessment year in question in Civil Appeal 928 is 1966 67, and that in Civil Appeal 929 is 1969 70.
As the Company 's appeal covers the question involved in the other case and raises two additional questions, we shall state only the facts of Civil Appeal 928 to indicate how these questions arise.
In the assessment year 1966 67, the Company filed quarterly returns showing its turnover of coal in two cate gories: (a) turnover in cases where the railway receipts had been prepared in the names of the consumers amounting to Rs. 30,07,439/02p.
; and (b) turnover in cases where the railway receipts had been prepared in the name of the Company but subsequently endorsed in favour of the consumers in Uttar Pradesh amounting to Rs. 5,59,172/32p.
The dispute in this case relates to the amount of Rs. 5,59,172/32p.
which according to the Company could not be taxed in the State of Uttar Pradesh.
Before We proceed further, it would.
be convenient to set out the relevant provisions of the two Acts.
Taking the Central Act first, section 2(c) de fines "declared goods" as the goods declared under section 14 to be of special importance in inter State trade or commerce.
SectiOn 14 which declares certain goods to be of special importance in inter State trade or commerce mentions coal as one of them.
Under section 3 a sale or.purchase of goods is deemed to take place in the course of inter State trade or commerce if the sale or pur chase, (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods .during their movement from one State to another.
The sales we are concerned with in this case were of this second type.
Sub section (1) of section 6 provides that subject to the other provisions of the Act, every dealer shall be liable to pay tax under this Act on sales of goods effected by him in the course of inter State trade or commerce.
Sub section (2) of section 6 states that notwithstanding what is provided in sub section (1), any subsequent sale of goods effected by a transfer of documents of title to the goods, (A) to the Government, or (B) to a registered dealer other than the Government, if the goods are of the description referred to in sub section (3) of section 8, shall be exempt from tax under this Act.
There are two provisos to this sub section, but it is not necessary to refer to them.
Section 7(1) requires every dealer liable to pay tax under this Act to apply for registration.
Sub section (3) of section 7 provides that if the application is in order, the prescribed authority shall register the applicant and grant to him a certificate of registration in the prescribed form which shall specify the class or classes of goods for the purpose of sub section (1) of section 8.
Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957, states that an application for registration under section 7 shall be made in Form A, and Form A requires the purpose or purposes for which the goods or 5 1003 SCI/76 42 casses of goods are purchased by the dealer in the course of interState trade or commerce to be speci fied; as would appear from the Form, 'resale ' is one such purpose.
Rule 5 (1 ) of the Rules pro vides that the certificate of registration must be in Form B. Section 8(1) provides that every dealer who in the course of inter State trade or commerce, (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to.
in sub sec tion (3) of this section, shall be liable to pay tax under this Act at the rate of three per cent of his turnover.
Subsection (2) of section 8 states that the tax payable by any dealer on his turnover relating to the sales of goods in the course of inter State trade or commerce which does not fall within sub section (1) shall be (a) in the case of declared goods, at the rate applicable to the sale or purchase of such goods inside the appropri ate State, and (b) in the case of goods other than declared goods, at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher.
The goods referred to in clause (b) of sub section (1) are specified in sub section (3) of this section as goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him.
Sub section (4) of section 8 says that the "provisions of sub section (1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner (a) a declara tion duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority;" rule 12(1) of the Rules states inter alia that the declaration referred to in sub section (4) of section 8 shall be in Form C. Clause (b) of sub section (4) is not relevant to the present purpose.
Section 9 (1) reads: "9.
(1) Levy and collection of tax and penal ties.
The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub section (2), in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed the purposes of clause (a) of sub section (4) of section 8 in connection with the purchase of such good 43 The dispute in this case turns on whether the proviso to section 9 (1 ) is applicable to the case.
Reference may also be made to section 15 which provides the restrictions and conditions in regard to the tax on sale or purchase of declared goods within a State.
The tax on sale or purchase of such goods inside the State.
is not to exceed three per cent of the price thereof, and such tax is not to be levied at more than one stage.
The only provision of the U.P. Act which is relevant is section 22 which is in these terms: "22.
Rectification of mistakes.
(1) The assessing, appellate, revising or additional revis ing authority may, at any time within three years from the date of any order passed by it, rectify any mistake apparent on the record; Provided that no such rectification, which has the effect of enhancing the assessment shall be made unless the authority concerned has given notice to the dealer of his intention to do so and has allowed him a reasonable opportunity of being heard.
(2) Where such rectification has the effect of enhancing the assessment, the authority con cerned shall serve on the dealer a revised notice of demand in the prescribed form and therefrom all the provisions of the Act and the rules framed thereunder shall apply as if such notice had been served in the first instance." The Sales Tax Officer had accepted the contention that the turnover amounting to Rs. 5,59,172/32p.
was not taxable in Uttar Pradesh.
In taking this view the Sales Tax Officer appears to have proceeded upon the observations in a Judg ment of the Allahabad High Court in the Company 's own as sessment case for the year 2965 66.
However, in several subsequent decisions, the High Court held that m a case where a registered dealer effected a second sale in the course of interState trade and commerce, sales tax on the turnover was to be realised in the State where the dealer effecting the sale was registered.
In one of these cases, M/s. Singhal & Co. vs State & Ors(1) it was pointed out that the earlier decision of the High Court had completely overlooked the proviso to section 9(2) of the Central Act.
The Company being admittedly a registered dealer under the Central Act and liable to pay tax under that Act, the Sales Tax Officer thought that there was an apparent error in the order of assessment made on March 27, 1972 exempting the turnover amounting to Rs. 5,59,172/32 p. which in view of the proviso to section 9(1) of the Central Act was taxable in Uttar Pradesh.
Accordingly, he proposed to rectify the error under section 22 of the U.P. Act, and on March 21, 1974 he issued a notice to the Company requiring it to appear before him on March 25, 1974.
In response to the notice a representative (1) (1973) U.P. Tax Cases 466. 44 of the Company appeared.
contended against the proposed rectification, and also filed a written objection.
The Sales Tax Officer recorded an order on March 26, 197.4 overruling the objections and rectified the order of assess ment dated March 27, 1.971.
A copy of the order passed on March 26, 1974 rectifying the mistake in the earlier assess ment order was served on the Company on March 31, 1974.
The Company challenged the order dated March 26, 1974 by a writ petition in the Allahabad High Court which, was dismissed giving rise to this appeal.
Mr. Nariman appearing for the appellants in these ap peals pressed the following grounds: (1) the proviso to section 9 (1 ) of the Cen tral Act has no application to goods declared to be of special importance in inter State sales or commerce under section 14 of the Central Act; (2) section 22 of the U.P. Act was not applica ble as there was no mistake apparent on the face of the record; and (3) in any event, the order made under section 22 of the.
U.P. Act was barred by limitation.
The argument.
that the proviso to sub section (1) of section 9 does not apply to declared goods proceeds as follows: Sub section (1) (b) and sub section 2(a) of sec tion 8 of the Central Act deal with two different types of goods.
Sub section (1)(b) speaks of goods of the descrip tion referred to in sub section (3), and subsection (2) relates to declared goods.
Sub section (3) of section 8 only mentions the goods referred to in sub section (1)(b) which are goods of the class or classes specified in the certificate of registration of the dealer purchasing the goods as being intended for resale.
Subsection (4) requires a declaration for the purposes of sub section (1) (b), and as sub section (1)(b) does not speak of declared goods, the declaration referred to in sub section (4) would not be necessary in the case of sale ' or purchase of declared goods.
We fail to see any valid distinction between declared goods and other goods for the purpose of the applicability of sub section (1 ) of section 8.
The .distinction was made by Mr. Nariman inferentially from the Central Sales Tax (Amendment) Act (8 of 1963) which omitted with effect from April 1, 1963, clause (a) from sub section (3) of section 8 as it stood prior to that date.
Sub section (3), it may be recalled, specifies the goods referred to in section 8(1)(b).
Prior to April 1, 1963, section 8(3)listing such goods, stated in clause (a) "(a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration 45 of the registered dealer purchasing the goods as being intended for resale by him." Clause (b) of section 8(3) then began with the words: "in the case of goods other than declared goods, are . . ".
By the same Amendment Act (8 of 1963) the opening words of clause (b), "in the case of goods other than declared goods", were consequentially omitted, also with effect from April 1, 1963.
The omission of clause (a) is the basis of the argument that declared goods are altogether outside the purview of sub section (3) and, therefore, of sub section (1) of section 8, and, as the declaration referred to in sub section (4) of section 8 was required where sub section (1) of the section was applicable, it was not possible for the Company to obtain such a declaration.
The contention seems to us untenable.
Section 9(1) of the Central Act contains a general rule that tax payable by any dealer under this Act shall be levied and collected in the State from which the movement of the goods commenced.
The proviso to section 9(1 ) qualifies this rule in the case of a subsequent sale which is not exempt from tax under section 6(2), and states that the tax on such subsequent sale would be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or could have obtained the form prescribed for the pur poses of section 8 (4) (a).
No exemption under section 6(2) is claimed in this case.
The declaration referred to in section 8 (4) (a) is necessary for the dealer to avail of the benefit of the rate of tax mentioned in section 8(1 ).
Under section 7(3) the certificate of registration granted to a dealer has to specify the class or classes of goods for the purposes of section 8 (1 ).
Rule 3 of the Central Sales Tax (Registration and Turnover) Rules, 1957 requires an application for registration under section 7 to be made in Form A, and Form A requires the purpose for which the goods or class of goods are purchased by the dealer to be specified; resale is one of the purposes mentioned in Form A. Thus, section 7(3) makes no distinction between declared goods and other goods; it is impossible to argue therefore that declared goods purchased by a dealer for resale need not be specified in his certificate of registration.
Reading sub section (1) and sub section (3) of section 8 together, it is clear that all sales to a registered dealer other than the Government, whether of declared goods or other goods, are covered by subsection (1) of section 8.
Clause (a) was omitted from sub section (3) of section 8 by the Amendment Act (8 of 1963) presumably because it was considered unnec essary to retain clause (a) to deal with declared goods when clause (b) apparently covered all goods, both declared and other than declared.
The Act and the rules and the prescribed forms make No. distinction between declared goods and other goods except for the purpose of the rate of tax.
There is no valid reason why the Company could not have obtained a declaration in Form C as required by the proviso to section 9(1).
It follows therefore that the order of assessment dated March 27, 1971 was wrong as it held, contrary to the proviso to section 9(1), that the sales in question were not taxable in the State of Uttar Pradesh where the Company was registered as a dealer under this Act.
46 Another point sought to be made against the applicabili ty of the proviso to section 9(1) was tiffs.
The proviso refers to the Form prescribed for the purpose of section 8(4)(a) which should contain a declaration duly filled and signed by the registered dealer to.
whom the goods were sold.
It was argued that as the declaration was required only where the sale was to a registered dealer, and as there was no finding in this case that the sales were to regis tered dealers, the proviso was not attracted.
It appears, however, that the Company never claimed before the Sales Tax Officer that the sales were not to registered dealers; in the written objection filed before the Sales Tax Officer pursuant to the notice under section 22 of the U.P. Act, the only ground taken was that no declaration was required to be filed in the case of declared goods.
The point was taken for the first time in the writ petitions.
We do not think we should allow this question, which is one of fact, to be raised at this stage.
The next question is whether this error in the original order of assessment can be called an apparent error within the meaning of section 22 of the U.P. Act.
There is no dispute that an apparent error means a patent mistake, an error which one could point out without any elaborate argument.
The order of assessment relating to the assess ment year in question, 1966 67, was made on March 27, 1971 by the Sales Tax Officer relying on a Judgment of the Alla habad High Court on a writ petition made by the Company questioning the validity of the assessment in respect of the assessment year 1965 66.
In that Judgment the High Court held, referring to the provisions of section 9(1 ) of the Act, that "the Sales tax authorities in the State of U.P. had No. jurisdiction to make any assessment even if there was any inter State sale which could be liable to tax in the hands of the petitioner Company.
The only State which could levy tax could be either Bihar or West Bengal.
The impugned assessment order passed by the Sales Tax Officer, Moradabad, is therefore clearly without jurisdiction and is liable to be quashed".
In this Judgment there is no reference to the proviso to section 9(1 ).
It appears from the Judgment under appeal that the High Court in a number of latter decisions held that in view of the proviso, tax on a subsequent sale by a registered dealer in the course of inter State trade or commerce was to be levied and collected in the State where the dealer effecting the subsequent sale was registered.
We are of the view that the order of as sessment dated March 27, 1971 was apparently erroneous in that it failed to take into consideration the proviso to.
section 9(1).
It is not that the order dated March 27, 1971 was in accordance with law when it was made but the subse quent decision of the High Court took a different view of the law.
For the reasons we have given above, it was pat ently erroneous when it was made, but in view of the obser vations of the High Court in the case relating to the as sessment of an earlier year, the Sales Tax Officer felt that he had to dispose of the assessment case for the year 1966 67 in the manner he did.
The Judgment of the High Court which the Sales Tax Officer followed in making the assess ment for the year in question did not concern itself with the proviso to section 9(1).
47 The next, and the last, question is whether the order dated March 22, 1974 rectifying the assessment order made on March 27, 1971 was barred by limitation.
Under section 22( 1 ) of the U.P. Act any mistake apparent on the record may be rectified at any time within three years from the date of the order.
It is not disputed that the other requirements of section 22 have been complied with.
The Company 's representative appeared before the Sales Tax Officer pursuant to the notice served on them on March 25, 1974, and the objections to the proposed rectification were heard.
There is no dispute that the order rectifying the mistake was recorded by the Sales Tax Officer on March 26, 1974, and this order was communicated to the appellant on March 31, 1974 According to Mr. Nariman, the order of rectification must be held to have been made on March 31, 1974 when it was communicated to the assessee which was beyond three years from the date of the order of assessment.
Mr. Nariman relied on the well known rule of fairplay that the rights of a party cannot be affected by an order until he has notice of it.
In Raja Harish Chandra Rai Singh vs The Deputy Land Acquisition Officer and another,(1) this Court considering the meaning of the words "the date of the award" occurring in section 18 of the Land Acquisition Act, 1894 observed.
"The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fairplay and natural justice the expression "the date of the award" used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively.
In our opinion, therefore, it would be unreasonable to construe the words "from the date of the Collector 's award" used in the proviso to section 18 in a literal or me chanical way.
. where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the order must mean either actual or constructive communication of the said order to the party concerned.
" Following this decision, this Court held in a subsequent ease under the , Madan Lal vs State of U.P. and others,(1) that the right of appeal given by section 17 of the Forest Act should be deemed to be the date when the party aggrieved by an order came to know of that order from which an appeal was sought to be preferred.
But how have the Company 's rights been affected in this case ? (1) [1962] 1 S.C.R. 676.
(2) [1975] 3 S.C.C. 779. 48 Section 9 of the U.P. Act gives a right of appeal to "any dealer objecting to any order made by the assessing authority, other than an order mentioned in section 10 A", within thirty days from the date of service of the copy of the order.
In this case the Company was not affected by the order under section 22 being communicated to it after the expiry of three years from the date of the order because the limi tation for an appeal from that order did not begin to run before the communication of the order.
The provisions of section 9 of the U.P. Act make that clear.
The appeals therefore fail and are dismissed.
Considering the circumstances, we direct the par ties to bear their own costs here and in the High Court.
V.P.S. Appeals dismissed.

summary:
Under section 3(b), , a sale or purchase of goods is deemed to take place in the course of inter State trade or commerce if the sale or purchase is effected by a transfer of documents of rifle to the goods during their movement from one State to another.
Section 7(3 ) provides that on the application of the dealer the prescribed authority shall register the applicant and grant him a registration certificate which shall specify the class or classes of goods for the purpose of section 8(1); and the Form prescribed by r. 3, Central Sales Tax (Registration and Turnover) Rules, 1957, for application for registration, requires the purposes for which the goods were purchased by the dealer to be specified, resale being one such purpose.
Section 8(1)(b) provides that every dealer who, in the course of inter State trade or commerce sells to a regis tered dealer other than the Government, goods of the de scription referred to in sub section
(3) shall be liable to pay 3.%_ of his turnover as.tax under the Act; whereas, under section 8(2), the tax payable with respect to goods which do not fall within sub section (1) shall be, in the case of declared goods, at the rate applicable to to the sale or purchase of such goods inside the appropriate State and in the case of other goods 10%, or the rate applicable in the State, which ever is higher.
Prior to April 1, 1963, section 8(3) stated, that the goods referred to in section 8(1)(b), "(a) in the case of declared goods, are goods Of the class or classes speci fied in the certificate of the registered dealer purchasing the goods as being intended for resale by him; and (b) in the case of goods other than declared goods are goods of the class or classes specified in the certificate of registra tion of the registered dealer purchasing the goods, as being intended for resale by him.
" By the Amendment Act (8 of 1963), cl.
(a) was omitted and the opening words in cl.
(b), "in the case of goods other than declared goods" were also omitted; so that, after April 1, 1963, the goods referred to in section 8(1)(b) are specified in sub section
(3) as goods of the, class or classes specified in the certificate of registra tion of the registered dealer purchasing the goods as being intended for resale by him.
Section 8(4)(a) says that the provisions of section 8(1) shall not apply to any sale in the course of inter State.
trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner, a declaration in the prescribed.
Form, duly filled and.signed by the registered dealer to whom the goods are sold containing the prescribed particu lars.
Section 9(1) contains a general rule that the tax payable by any dealer on sales effected in the course of inter State trade or commerce would be levied by the Govern ment of India and collected in the State from which the movement of the goods commenced.
The proviso to the sub section qualifies this rule in the case of a subsequent sale which is not exempted from tax under section 6(2).
and states, .that the tax on such subsequent sale would be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained, or could have Obtained, the Form prescribed for the purpose of section 8(4)(a).
Coal is one of the declared goods having been declared under section 14 to be of special importance in inter State trade or commerce.
The appellant was a Company carrying on business as coal agents and was registered in U.P. under the U.P. Sales Tax Act, 1948, and the .
The appellant arranged for the supply of coal from collieries in W. Bengal and Bihar to consumers in U.P.
The collieries sent the coal by 4 1003 SCI/76 26 rail, the railway receipts either in the name of the.appel lant or in the name of the consumer in U.P., and sent the bills and invoices to the appellant 's head office in Calcut ta.
The appellant forwarded the railway receipts to the consumers in cases where the receipts were in the names of the consumers, and in cases where the receipts were in the appellant 's name also endorsed them in favour of the consum ers.
There was thus, in the latter cases, a subsequent sale of goods in the course of inter State trade or commerce by the transfer of documents of title by the appellant to the consumers in U.P.
For the assessment year 1966 67 the appellant claimed that the turnover in cases where the railway receipts had been subsequently endorsed in favour of the consumers in U.P. was not taxable in U.P.
The Sales tax Officer by order dated March 27, 1971, accepted the conten tion, relying on a decision of the High Court.
But, in subsequent decisions, the High Court held that in cases where a regisetred dealer effected a second sale in the course of inter State trade and commerce, sales tax on the turnover was to be realised in the State where the dealer effecting the sale was registered; and in one of the deci sions it was observed that the decision on which the Sales tax Officer relied had overlooked the proviso to section 9(1 ) of the Central Act.
The Sales tax Officer accordingly proposed to rectify the error committed by him and after following the procedure prescribed for rectification of errors appar ent on the face of the record in section 22 of the U.P. Act, passed an order on March 26, 1974, rectifying the mistake and served it on the appellant on March 31, 1974.
The appellant challenged the order unsuccessfully in the High Court.
In appeal to this Court it was contended: (1) That the declaration prescribed under section 8(4)(a) is necessary when section 8(1) was applicable, but that, after the omission in section 8(3), reference to 'declared goods ' is omitted in that section, so that when section 8 (1)(b) refers to the sale of goods mentioned in section 8(3) the reference is only to goods other than declared goods and hence, when a dealer sells declared goods, he could not have obtained the prescribed declaration and so the proviso to section 9(1) did not apply; (2) Section 22 'of the U.P. Act was not ap plicable as there was no mistake apparent on the face of the record; and (3) The order under section 22 was barred by limi tation, because it was effective only when it was served on the appellant.
Dismissing the appeal to this Court, HELD: (1) The 1971 assessment order was wrong.
[46 G] The Act and the rules and the prescribed Forms make no distinction between declared goods and other goods, except for the purpose of the rate of tax.
Under section 7(3) the regis tration certificate granted to a dealer has to specify the class or classes of goods for the purposes of section 8(1) and it makes no distinction between declared goods and other goods.
Sub sections 8(1) and (3) also show that all sales to a registered dealer other than the Government, whether of declared goods or other goods, are covered by section 8(1).
Clause (a) was omitted from section 8(3) presumably because it was considered unnecessary to retain it when cl.
(b) apparently covered all goods both declared and other than declared.
The declaration referred to in section 8(4)(a) is necessary for the dealer to avail himself of the benefit of the rate of tax mentioned in section 8(1).
There is no valid reason why the appellant could not have obtained the decla ration in the prescribed Form as required by the proviso to section 9(1 ).
Since no .claim for exemption under section 6(2) is made by the appellant, the first order of assessment was contrary to the proviso of section 9(1) and the sales in question were taxable within the respondent State, where the appel lant was registered as a dealer.
[45 D H] (2) The 1971 order of assessment was patently errone ous in that it failed to take into consideration the proviso to section 9(1).
Therefore, it could be rectified under section 22, U.P. Act.
[46 G] 27 (3) The order rectifying the mistake was recorded with in 3 years of the date of the original order as required by section 22 of the U.P. Act.
The fact that the order was communi cated, to the appellant on March 31, 1974 could not make any difference.
The order of rectification is deemed to be made on the date of communication only for the purpose of count ing the period of limitation for filing the appeal, under section 9 of the U.P. Act.
Therefore, in the instant case, the appellant was not affected by the order under section 22 being communicated to it after the expiry not of 3 years from the date of the original order.
[47 B; 48 B] Raja Harish Chandra Raj Singh vs The Deputy Land Acquisition Officer [1962].
3 S.C.R. 676 and Madan Lal vs State of U.P. explained & distinguished.