Case: State of Kerala and Others Vs. Travancore Chemicals and Manufacturing Company and Another

entry under which sale of particular goods are to be taxed can be raised and determined before various quasi-judicial and judicial authorities. There is a right of appeal and revision which is given to a person who is aggrieved by any order. 11. A plain reading of Section 59-A shows that if any question relating to the rate of tax leviable under the Act on any goods is referred to the Government then its decision thereon, "notwithstanding any other provision in this Act is final". This section does not indicate as to who can make a reference to the Government. There is no obligation on the Government to hear any dealer before it decides as to the rate of tax leviable on the sales or purchase of any type of goods. In fact, as we have noticed earlier, by an omnibus order dated 23-4-1984, the Government decided rates of tax payable in respect of various items without any opportunity of being heard having been granted to any of the dealers. Lastly, Section 59-A clearly states that the decision so given by the Government shall be final and would have an overriding effect. 12. There is no warrant in our opinion in trying to read down the provisions of Section 59-A. The words of the said provision are clear and unambiguous. The said section gives absolute power to the Government to decide any question regarding the rate of tax leviable on the sale or purchase of goods in any manner it deems proper and finality is given to such a decision. 13. Section 59-A enables the Government to pass an administrative order which has the effect of negating the statutory provisions of appeal, revision etc. contained in Chapter VII of the Act which would have enabled the appellate or revisional authority to decide upon questions in relation to which an order under Section 59-A is passed. Quasi-judicial or judicial determination stands replaced by the power to take an administrative decision. There is nothing in Section 59-A which debars the Government from exercising the power even after a dealer has succeeded on a question relating to the rate of tax before an appellate authority. The power under Section 59-A is so wide and unbridled that it can be exercised at any time and the decision so rendered shall be final. It may well be that the effect of this would be that such a decision may even attempt to override the appellate or the revisional power exercised by the High Court under Section 40 of the Act as the case may be. The section enables passing of an executive order which has the effect of subverting the scheme of a quasi-judicial and judicial resolution of the lis between the State and the dealer. 14. We are unable to agree with the submission of Mr. Bhat that the section furnishes a limitation subject to which the power can be exercised. The section does not contain and guidelines as to at what stage the power can be exercised and nor does the exercise of such a power make it amenable to the appellate or revisional provisions provided by the Act. It is no doubt true that in certain enactments of other States, the Government has the power but such power is not unbridled. For example, under Section 49 of the Delhi Sales Tax Act, 1975, power has been given to the Commissioner of Sales Tax to determine certain disputed questions. The said section reads as under. "49. Determination of disputed questions. - (1) If any question arises, otherwise than an proceedings before a court, or before the Commissioner has commenced assessment or reassessment of a dealer under Section 23 or Section 24 whether for the purposes of this Act, -(a) any person, society, club or association or any firm or any branch or department of any firm is a dealer; or(b) any particular thing done to any goods amounts to or results in the manufacture of goods within the meaning of that term as given in clause (h) of Section 2; or(c) any transaction is a sale, and if so, the sale price therefor; or(d) any particular dealer is required to be registered; or(e) any tax is payable in respect of any particular sale, or if the tax is payable, the rate thereofthe Commissioner shall, within such period as may be prescribed, make an order determining such questionExplanation. - For the purposes of this sub-section, the Commissioner shall be deemed to have commenced assessment or reassessment of a dealer under Section 23 or Section 24, when the dealer is served with any notice by the Commissioner under Section 23 or Section 24, as the case may be(2) The Commissioner may direct that the determination shall not affect the liability of any person under this Act as respects any sale effected prior to the determination(3) If any such question arises from any order already passed under this Act or under the Bengal Finance (Sales Tax) Act, 1941, Bengal Act VI of 1941, as then in force in Delhi, no such question shall be entertained for determination under this section; but such question may be raised in appeal against, or by way of revision of such order." The aforesaid section itself provides that a question for determination must arise otherwise than in proceedings before a court or before the Commissioner has commenced assessment or reassessment. Furthermore, sub-section (2) enables the Commissioner to direct that the determination of the question shall not affect the liability of any person under that Act in respect of any sale effected prior to the determination. No such safeguard or guideline as provided in the said Section 49 of the Delhi Sales Tax Act is present in the main provision. 15. We are in complete agreement with the view of the Kerala High Court that Section 59-A of the Act is violative of Article 14 of the Constitution and the High Court was, therefore, right in striking down the said provision. 16.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]11. A plain reading of Section 59-A shows that if any question relating to the rate of tax leviable under the Act on any goods is referred to the Government then its decision thereon, "notwithstanding any other provision in this Act is final". This section does not indicate as to who can make a reference to the Government. There is no obligation on the Government to hear any dealer before it decides as to the rate of tax leviable on the sales or purchase of any type of goods. In fact, as we have noticed earlier, by an omnibus order dated 23-4-1984, the Government decided rates of tax payable in respect of various items without any opportunity of being heard having been granted to any of the dealers. Lastly, Section 59-A clearly states that the decision so given by the Government shall be final and would have an overridingSection 59-A enables the Government to pass an administrative order which has the effect of negating the statutory provisions of appeal, revision etc. contained in Chapter VII of the Act which would have enabled the appellate or revisional authority to decide upon questions in relation to which an order under Section 59-A is passed. Quasi-judicial or judicial determination stands replaced by the power to take an administrative decision. There is nothing in Section 59-A which debars the Government from exercising the power even after a dealer has succeeded on a question relating to the rate of tax before an appellate authority. The power under Section 59-A is so wide and unbridled that it can be exercised at any time and the decision so rendered shall be final. It may well be that the effect of this would be that such a decision may even attempt to override the appellate or the revisional power exercised by the High Court under Section 40 of the Act as the case may be. The section enables passing of an executive order which has the effect of subverting the scheme of a quasi-judicial and judicial resolution of the lis between the State and theWe are unable to agree with the submission of Mr. Bhat that the section furnishes a limitation subject to which the power can be exercised. The section does not contain and guidelines as to at what stage the power can be exercised and nor does the exercise of such a power make it amenable to the appellate or revisional provisions provided by the Act. It is no doubt true that in certain enactments of other States, the Government has the power but such power is notaforesaid section itself provides that a question for determination must arise otherwise than in proceedings before a court or before the Commissioner has commenced assessment or reassessment. Furthermore, sub-section (2) enables the Commissioner to direct that the determination of the question shall not affect the liability of any person under that Act in respect of any sale effected prior to the determination. No such safeguard or guideline as provided in the said Section 49 of the Delhi Sales Tax Act is present in the mainWe are in complete agreement with the view of the Kerala High Court that Section 59-A of the Act is violative of Article 14 of the Constitution and the High Court was, therefore, right in striking down the said provision.