WP(C) 7807/2004 BEFORE HON’BLE THE CHIEF JUSTICE MR MADAN B. LOKUR THE HON’BLE MR. JUSTICE T. VAIPHEI JUDGMENT AND ORDER T Vaiphei, J. The constitutional validity of Explanation (ii) to Section 8(1)( a) of the Assam General Sales Tax (Amendment) Act, 2002 and the legality of (i) the assessment order dated 30-7-2004 of the Superintendent of Taxes, Unit-D, Ass am (respondent No. 3) assessing an amount of ‘ 1,25,46,326/- (ii) the assessment order bearing the same date assessing an amount of ‘ 7,25,034/- and (iii) the a ssessment order bearing the same date assessing an amount of ‘ 99,297/- for paym ent by the petitioner by way of sales taxes due and the accrued interests there on for the period between 1-4-2002 and 31-3-2003 issued by the Superintendent of Taxes, Unit-D, Guwahati (respondent 3) on the basis of best judgment assessment are called into question in this batch of three writ petitions filed by the sam e petitioner. 2. As there is virtually a common question of facts and of law in the three writ petitions, suffice it to refer to the controversy involved in WP(C) No. 78 07 of 2004 and our decision thereon will govern the remaining cases. The case of the petitioner in WP(C) No. 7807 of 2004 is that he is carrying on the business of contractual works under various Departments of the Government of Assam and t he Central Government through his proprietorial concern, namely, M/s. S.D. Enter prise having its office at Bharali Complex, G.S. Road, Guwahati. The Government of Assam, through the open tender process and in accordance with the provisions of the Assam Excise Rules, 1945, awarded the contract for wholesale supply of po table alcohol/rectified spirit (Grade) to the Excise Warehouse located at Jorhat for a period commencing from 13-9-2000 to 12-9-2003, for which the agreement da ted 7-9-2000 was executed by him with the Government of Assam. This was followed by the issuance of License at Annexure-B to him so as to enable him to carry ou t the terms of the said agreement. Immediately after execution of this agreement and the issuance of the license in this behalf, he started importing potable al cohol/rectified spirit from different distilleries to the Excise Warehouse, Jorh at at his own cost and against payment of the cost price of the country spirit. Thereafter, a Gazette Notification bearing dated 10-5-2002 (Annexure-H) was issu ed by the State-respondents notifying the Assam General Sales Tax (Amendment) Ac t, 2002, which came into force immediately, to the effect that in the case of co untry spirit mentioned in serial number 27A of Schedule-II, the licensed contrac tor who sells or supplies such item to a licensed retail vendor shall be deemed to be the first point seller who shall be liable to pay tax on the sale price of the item as defined in clause (34) of Section 2 including still head duty payab le thereon . It was further provided therein that the retail vendor while deposi ting the cost price and duty shall also deposit the tax payable under the Act in the designated Bank by challan and hand over one copy of the challan to the con tractor. It is another matter that another Notification was issued on 3-5-2003 n otifying the Assam General Sales Tax (Amendment) Act, 2003, which substituted th e impugned provision herein thereby making the Officer-in-Charge of the country spirit warehouse, instead of the licensed contractor, liable to pay the said ta x: this amendment came into force immediately. Following the impugned notificati on dated 10-5-2002, the respondent No. 5 vide his letter dated 19-3-2002 (Annexu re-G) informed the Superintendent of Excise, Jorhat, inter alia, that the Govern ment had imposed sales tax surcharge @ 20% on IMFL/country liquor with effect fr om 19-2-2002, and the sale tax surcharge was payable on any country spirit issue d from the Excise warehouse and the same is to be deposited in the Government Tr easury in the appropriate Head of Account with a request to instruct the retail licensees to deposit the sale tax, who had received stock on or after 19-2-2002. A copy of this letter was also forwarded to the Officer-in-Charge, Excise Wareh ouse, Jorhat. 3. Pursuant to the said Notifications dated 10-5-2002 and 10-5-2002, the Sa les Tax Department, Government of Assam started demanding payment of sales tax f rom the petitioner on account of the sale of the country spirit transported by h im as indicated earlier. Contending that the contractual assignments undertaken by him in transporting the country spirit did not constitute a sale exigible to sales tax but is only a transportation contract, he approached the Commissioner of Excise, Assam (respondent 5) for appropriate action. The respondent No. 5 acc ordingly by his letter dated 23-7-2002 (Annexure-I) informed the Commissioner an d Secretary, Government of Assam in the Excise Department that the spirit supply contractors were not supplying country spirit directly to the licensed retail v endors and, as such, they were not required to realise sales tax and the sales t ax is to be paid by such vendors and deposited with the Treasury with the furth er information that the Officer-in-Charge of the Warehouse would issue the spiri t from bottling plant after verification of Treasury Challan for sales tax and f orwarded a copy of the same to the respondent No. 2 for information and necessar y action. Subsequently, the respondent No. 5 by his letter dated 12-9-2002 (Anne xure-J), inter alia, informed the respondent No. 2 that sales tax was to be real ized from the lessees of country spirit, but the practice of issuing Road Permit s to contractors was still in vogue thereby implying the liability of contractor s to pay sales tax and, therefore, to remove possible confusion, had requested h im to issue necessary orders for allowing the contractors to bring spirit from o utside on the strength of export and import permits issued by the Excise Authori ty only and to exempt the practice of issuing Road Permits to these contractors. Thereafter, the Joint Commissioner of Taxes, Assam by his letter dated 13-9-200 2 directed the respondent 3 to allow the vehicles of the contractors carrying th e consignment of spirit on behalf of the State of Assam to cross the Check Gates subject to verification of documents and ensuring that the goods belonged to th e Excise Department of Assam. The net effect of the said letters dated 12-9-2002 and 13-9-2002 is that the authorities had stopped demanding payment of sales ta x by the petitioner in connection with the said sales and that the petitioner ac cordingly submitted monthly supply statements/returns of country spirit without enclosing any sales tax deposit challans to the respondent No. 3. 4. In the year 2003, the State Government issued the Gazette Notification d ated 3-5-2003 notifying the Assam General Sales Tax (Amendment) Act, 2003 amendi ng Section 8 of the Assam General Sales Tax Act, 1993 by inserting Explanation 3(ii) after Explanation 3(i) to Section 8(1) of the Assam General Sales Tax Act, 1993 declaring that in the case of country spirit mentioned in serial number 27 A of Schedule-II, the Officer-in-Charge of the country spirit excise warehouse w ho sells or supplies such items to a licensed retail vendor shall be deemed to b e the first point seller who shall be liable to pay tax on the sale price of th e items as defined in clause (34) of Section 2 including excise duty, vend fee, bottling charges and other duty or fee by whatever name called, payable thereon. The retail vendor while depositing cost price and excise duty shall also deposi t the tax payable under this Act into the Government account in the manner presc ribed by a separate challan and hand over one copy of the challan to the Officer -in-Charge of such warehouse. According to the petitioner, the aforesaid Notific ation has clarified the settled position of law that a transport contractor like him is not a first point seller of country spirit and is not, therefore, liable to pay sales tax against the supply of country liquor made by him and that it i s rather the Officer-in-Charge of the Country Spirit Excise Warehouse, who is th e first point seller of the spirit and is thus liable to pay the sales tax on su ch sale price. However, contrary to this settled law, contends the petitioner, t he respondent No. 3 issued notice to him to show cause as to why the submitted r eturns should not be rejected and assessment should not be completed under Secti on 17(5) including taking action as per the provisions of the Assam General Sale s Tax Act, 1993. The application of the petitioner for extending the time to sub mit his show cause reply was not granted by the respondent No. 3, who, instead, proceeded to issue the impugned assessment order on the basis of the best judgme nt assessment. It is contended by the petitioner that the impugned assessment or der is unconstitutional, illegal arbitrary, unfair and unreasonable and is liabl e to be quashed. It is also the contention of the petitioner that Section 4 of t he Assam General Sales Tax Act, 1993, in so far as it seeks to bar a person from calling into question the jurisdiction of the revenue authorities before the Hi gh Court under Article 226 of the Constitution, has encroached upon the field of judicial review, which is the basic structure of the Constitution and is, there fore, ultra vires the Constitution and is liable to be struck down. The petition er also alleges that there are a number of excise warehouses in the State of Ass am, which were also leased out on similar terms and conditions to other contract ors for the same period, but they were not assessed for payment of sales tax lik e him, and he has been singled out for hostile discrimination thereby denying hi m equality before the law or of equal protection of law: his fundamental right t o equality guaranteed under Article 14 of the Constitution has thus been infring ed. This is how these writ petitions have been filed by the petitioner. 5. The State-respondents resisted the writ petitions and filed their affida vit-in-opposition through the Joint Commissioner of Taxes in the Office of the C ommissioner of Taxes, Assam. According to the answering respondent, Annexure-A a nd Annexure-B, which are the copies of the agreement executed between the petiti oner and the Excise Department and the Deed of License granted by the latter in pursuance of the said agreement unambiguously shows that the petitioner is the s eller of the country spirit lifted by the retail vendors from the concerned ware houses. It is the contention of the answering respondent that the submissions of the petitioner in paragraphs 6 and 7 of the writ petition clearly establish bey ond any doubt that he has been supplying country spirit to various retail vendor s though the modus operandi of the supply is being controlled and regulated by t he Excise Department keeping in mind public interest. It is denied that the peti tioner is a mere transporter of the country spirit. He procures or purchases the country spirit to be eventually supplied to the retail vendors in his own name, for which he obtained registration certificates under both the Assam General Sa les Tax Act, 1993 and the Central Sales Tax Act, 1956 from the jurisdictional as sessing officer, on the strength whereof, he proceeded to obtain C.S.T. declarat ion forms C as well as delivery notes from the same assessing officer from tim e to time. It is explained by the answering respondent that C forms are issued by a registered dealer of one State to a selling dealer of another State only w hen the former undertakes to utilize goods so purchased for the purpose of re-sa le or use in the manufacture for sale of the result and finished goods. Similarl y, delivery notes in Form 24 of the Act are utilized for importing goods into As sam for the purpose of sale by the concerned importing dealer. Consequently, the conclusion is inevitable that he has been supplying the country spirit to the r etail vendors within the meaning of the charging provisions of the extant sales tax legislation thereby making him liable to pay sales tax irrespective of wheth er he realizes such taxes from his buyers or not. 6. The answering respondent further asserts that the Sales Tax Department r ightly proceeded to levy and recover exigible sales tax on the country spirit su pplied by the petitioner. The letter dated 23-7-2002 of the Commissioner of Exci se is in the form of an individual opinion expressed by him, which cannot be hel d out against the Revenue as some kind of promissory estoppel as accepting such contention would amount to nullifying the mandatory requirements of the law apar t from providing a license to Government or other body to ignore binding provisi ons of law: that would render mandatory provisions of law superfluous and meanin gless. The answering respondent flatly denies that the tax authority stopped ins isting payment of the tax by the petitioner as the proceeding for the assessment and recovery thereof were never suspended: the date of assessment was, however, extended to comply with the principles of natural justice before finalization o f the proceedings. By the Notification dated 3-5-2003, the Officer-in-Charge of the Country Spirit Excise Warehouse has been made liable as the first point sell er only with effect from 3-5-2003 and as for the period from 19-5-2002 to 2-5-20 03, the liability to pay the sales tax remains squarely with the petitioner. Acc ording to the answering respondent, the petitioner seems to have misconception a bout the intent and scope of Section 4 of the Act, which can at best be regarded as a machinery provision facilitating easy and smooth administering of the Act without affecting in any way the substantial rights of the subjects. Since the a mount of tax assessed against him is a statutory liability, any question of suff erance of loss or injury would not entitle him to any claim of exemption. Of cou rse, it would be open to him to proceed against his buyers for realizing the cha rgeable tax if not already factored by him in his bills of cost submitted to the controlling Department. It is further contended by the answering respondent tha t all similarly situated dealers are equally amenable to the charging provisions of the Act and there can simply be no question of any discrimination on the par t of the Revenue while discharging its function. The petitioner could have avail ed of the appellate and revisional fora provided for in the Act itself for redre ssal of his grievance against the assessing officers before approaching this Cou rt. These are the sum and substance of the contentions of the answering responde nt. 7. Having heard the learned counsel appearing for the rival parties, it is obvious that the question which, therefore, falls for consideration is whether t he supply of the country spirit in the circumstances set forth above can constit ute a sale or not. In other words, what is the nature of the transaction which w as actually undertaken by the petitioner in supplying the country spirit to the specified warehouses of Assam during the relevant period? It is contended by Mr. N. Dutta, the learned senior counsel for the petitioner, that after procurement of the country spirit in the aforesaid manner from different distilleries/bonde d warehouses against payment of cost and other duties payable thereon and transp ortation of the same to the Excise Warehouse, the petitioner did not have any ac cess to the same and it was the Officer-in-Charge, Excise Warehouse, who took ov er the control of the country spirit transported by him till issue of the same t o the retail vendors and although he transported the country spirit to the Excis e Warehouse at his own cost, the same was ultimately issued to the retail vendor by the Officer-in-Charge, Excise Warehouse. Thus, according to the learned seni or counsel, the petitioner cannot be regarded as the seller of the country spiri t, but is merely a transporter of the country spirit. It is the contention of th e learned senior counsel that as the petitioner never sold country spirit to the retail vendors but merely transported the same to the warehouse, the impugned E xplanation 3(ii) to Section 8(i)(a) of the Act under the guise of levying sales tax is in fact imposing a tax on the income earned by the petitioner in carrying out his transport business and is, therefore, without any legislative competenc e: tax on income can be levied only with the authority of Parliament and not by the State Legislature. Drawing our attention to the letter dated 13-9-2002 of th e Joint Commissioner of Taxes, Assam (Annexure-K), the learned senior counsel al so submits that this letter informing the Superintendent of Taxes, inter alia, t hat the Excise Department had been importing spirit from outside the State on be half of the State Government through the petitioner and the vehicles carrying th e above consignment should be allowed to cross the check gate subject to verific ation of documents, would go show that the goods belonged to the Excise Departme nt of Assam: because of this letter, the authority concerned stopped demanding p ayment of sales tax by the petitioner. The learned senior counsel also points ou t that the Assam General Sales Tax (Amendment) Act, 2003 enacted and enforced su bsequently has further amended Explanation 3(ii) to Section 8 of the Assam Gener al Sales Tax Act, 1993 (as amended in 2002) to the effect that in case of countr y spirit mentioned in serial number 27A, in Schedule II, the Officer-in-Charge o f the country spirit warehouse selling or supplying such items to a licensed ret ail vendor should be deemed to be the first point seller who should be made liab le to pay tax on the sale price of the item as defined in clause (34) of section 2 including excise duty, vend fee, bottling charges and other duty or fee by wh atever named called, payable thereon and submits that this amendment has clarifi ed the settled position that a contractor is not a first point seller of country spirit and is not liable to realise the sales tax against supply of country spi rit. It is thus contended by the learned senior counsel that impugned amendment and the assessment order dated 30-7-2004 made thereunder are unconstitutional, a rbitrary, illegal, unfair, unreasonable and bad in law and should be struck down and quashed accordingly. Lastly, he submits that Section 4 of the Act debarring any person from invoking the jurisdiction of this Court under Article 226/227 o f the Constitution to call into question the jurisdiction of the taxing authorit y thereby ousting judicial review is against the basic feature of the Constituti on of India and is, therefore, liable to be declared unconstitutional. In suppor t of his contentions, heavy reliance is placed by him upon the following decisio ns:- (a) Navnit Lal C. Javeri v. IT App. Asst. Commr., AIR 1965 SC 1375; (b) Go vt. of A.P. v. Guntur Tobacco, AIR 1965 SC 1396; (c) Salar Jung Sugar Mills Ltd. v. State of Mysore, (1972) 1 SCC 23; (d) Vishnu Agencies (P) Ltd. v. Commercial Tax Officer, (1978) 1 SCC 520; (e) State of Punjab and others v. Dewan’s Modern Breweries Ltd., (1979) 2 SCC 210; (f) Assessing Authority-cum-Excise and Taxati on Officer v. East India Cotton Mfg. Co. Ltd., (1981) 3 SCC 531; (g) Tripura Goo ds Transport Association and another v. Commissioner of Taxes and others, (1999) 2 SCC 253 and (h) Southern Petrochemical Industries Co. Ltd. v. Electricity Ins pector & Etio and others, (2007) 5 SCC 447. 8. On the other hand, Mr. R. Dubey, the learned counsel appearing for the T axation Department, Government of Assam, supports the impugned amendment as well as the assessment order and submits that it is none but the petitioner who sold the country spirit lifted from the concerned warehouses by the retail vendors, and he alone has the duty to pay the sales tax for the spirit so lifted. Accordi ng to the learned State counsel, the petitioner purchased or procured the countr y spirit, which were eventually supplied to the retail vendors in his name, obta ined registration certificates both under the Assam General Sales Tax Act, 1993 and the Central Sales Tax Act, 1956 from the jurisdictional assessing officers a nd on the strength of such certificates, he also obtained Central Sales Tax (CST ) declaration forms C as well as delivery notes from the assessing officer fro m time to time, which clearly indicates that he was supplying the country spirit to the retail vendors within the meaning of the charging section of the Act: th e activities so carried on by him cannot be treated as purely job work of some type of intermediary. Or else, how could one view his act of obtaining C form as a registered dealer from respondent 3 (Superintendent of Taxes, Unit-D, Guwah ati) and thence making over these items to sellers all in his own name, he quest ions. These are the sum and substance of the contentions of the learned standing counsel. 9. A perusal of the agreement dated 7-9-2000, executed by the petitioner wi th the State-respondents, which is at Annexure-A and the License issued by the S tate-respondents to the petitioner, which is at Annexure-B may provide a key to understanding the whole controversy. The agreement granted the petitioner the co ntract for wholesale supply of potable alcohol/rectified spirit (Grade-I) to the districts of Jorhat, Golaghat and Karbi Anglong in accordance with the terms of the license issued by the Commissioner of Excise. The said agreement and the Li cense visualized, among others, (i) the payment by the petitioner of monthly ren t of the excise warehouse from time to time, (ii) the fixation of the price per London Proof Litre of potable alcohol/rectified spirit by the Government from ti me to time, (iii) the responsibility of the petitioner to procure, supply and tr ansport, at his own cost, the potable alcohol/rectified spirit from the place of manufacture, which may be anywhere in India under Import permits to be issued b y the Commissioner of Excise, Assam to the warehouse, (iv) the sale of the spiri t only to licensed vendors producing passes in the prescribed form and (v) the o bligation of the petitioner to supply to the licensed vendors by way of sale at any warehouse at which the sale of the spirit under the license was permitted. T he aforesaid terms and conditions have been made strictly in accordance with the provisions of the Assam Excise Rules, 1945 and the Instructions relating to Liq uor. Therefore, the agreement can be said to statutory in nature or, at any rate , have a statutory flavour. Admittedly, the supply of the spirit contemplated by the Rules and the said agreement is restrictive in nature. In other words, the freedom of contract exercised by the petitioner is not exactly free. 10. The leading authority on this issue is the decision of a seven-Judge Ben ch of the Apex Court in Salar Jung Sugar Mills Ltd (supra). The question raised therein was as to whether transactions subjected to statutory controls can still be deemed to be a contract came up for consideration before the Apex Court. In that case, the appellants challenged the demand and collection made against them for large sums of money as and for