Case: Mcdowell and Company Limited Vs. Sales Tax Officer, Sherthallay

the condition that the seller should produce before the assessing authority within three months from the end of the assessment year, a declaration duly signed by the purchaser in the form appended to the notification. A similar notification was issued on February 23, 1963, in respect of the sales to dealers in Pondicherry.The appellant produced declarations before the respondent in respect of the sales to dealers in Goa but they were not produced within the time prescribed in the notification. It did not produce any declaration in respect of its sales to dealers in Pondicherry. Hence it did not comply with the conditions laid down in the notifications. The provisions of sub-sections (3) and (4) of section 8 could not be satisfied in the case of sales to dealers in Pondicherry as the Act had not been extended to that territory during that assessment year and in the case of sales to dealers in Goa as the relevant statutory machinery had not been established. Hence the respondent assessed the appellant at 40 per cent. on the turnover relating to sales mentioned earlier.5. Aggrieved by the assessment orders made against it by the respondent, the appellant moved the High Court of Kerala under article 226 of the Constitution to quash the assessment order. A learned single Judge of the Kerala High Court quashed the assessment order on the sole ground that Goa and Pondicherry were not States. In coming to that conclusion, the learned Judge clearly overlooked the provisions of article 367 of the Constitution read with section 3(58) of the Kerala General Clauses Act. The learned single Judge did not decide any of the other contentions raised in the writ petition.6. Aggrieved by the order of the single Judge, the respondent took up the matter in appeal to a Division Bench of the Kerala High Court. The Division Bench reversed the decision of the learned single Judge. It repelled the contention of the appellant that Goa and Pondicherry were not States as contemplated by the Act. That contention was not pressed before us.7. Before the Division Bench, it was contended on behalf of the appellant that the notifications issued under section 8(5) were invalid as the State Government was not competent to fix a time-limit for the production of the prescribed declarations. The High Court rejected that contention. The same contention was repeated before us. In support of that contention reliance was placed on the decision of this court in Sales Tax Officer, Ponkunnam v. K. I. Abraham ([1967] 20 S.T.C. 367 (S.C.).), wherein this court held that the third proviso to rule 6(1) of the Central Sales Tax (Kerala) Rules, 1957, which provided that all declaration forms pending submission by dealers on May 2, 1960, shall be submitted not later than February 16, 1961, is ultra vires section 8(4) read with section 13(3) and (4) of the Act. This court held that it was the duty of the dealers to furnish the declarations in form C within reasonable time. In our judgment the High Court rightly held that the said decision has no application to the facts of this case. Therein this court was considering the declaration required to be produced under section 8(4). In that case the impugned rule was found to have gone beyond the provisions in section 8(4). The declarations that the appellant was required to produce were declarations prescribed by the notifications issued under section 8(5). Under that section the State Government was empowered to provide for hard cases which may not come within the scope of section 8(4). The notifications issued afforded certain concessions to the assessees. They did not restrict the rights of the assessees. But for those notifications dealers in Kerala who had sold goods to dealers in Goa and Pondicherry would have had to pay sales tax as provided in the State laws as it was not possible for them to take the benefit of section 8(4) for the reasons already mentioned. Section 8(5) specifically empowered the State Governments to grant any concession "subject to such conditions as it may think fit to impose". The appellant does not challenge the vires of section 8(5). If the notifications in question are struck down, the appellant will get no benefit. He will have still to pay tax under the State law.The contention that in view of the fact that the Act had not been extended to Pondicherry at the relevant time, compliance with the provisions of the Act in the case of sales to dealers in that place was impossible and consequently the dealers in Kerala cannot be penalised for sales admittedly in the course of inter-State trade has no basis in law. The rate of tax fixed under sub-section (1) of section 8 applied only to sale of goods of the description referred to in sub-section (3) to a registered dealer. In the case of sales which did not fall under sub-section (1), tax was payable at the rates prescribed in sub-section (2). Quite clearly sales to dealers in Pondicherry did not fall under sub-section (1). Therefore they are taxable under sub-section (2). It is true that difficulty had been created because of the fact that the Act was not extended to Pondicherry but such a difficulty confers no rights on the dealers. But then, the State of Kerala tried to get over that difficulty by issuing notifications under section 8(5). The appellant did not take the benefit afforded by those notifications. Hence he has only to blame himself.8. In the case of the sales to dealers in Goa, no doubt the appellant did produce the declarations in the prescribed form but those declarations were not produced within the time prescribed. The notifications issued prescribed that the declarations in question should be produced within the time prescribed therein. We have already held that those notifications were valid notifications. The appellant has suffered because of its own laches.9. We see no merit in any of the contentions advanced on behalf of the appellant.10.

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

Explanation:
0[ds]In our judgment the High Court rightly held that the said decision has no application to the facts of this case. Therein this court was considering the declaration required to be produced under section 8(4). In that case the impugned rule was found to have gone beyond the provisions in section 8(4). The declarations that the appellant was required to produce were declarations prescribed by the notifications issued under section 8(5). Under that section the State Government was empowered to provide for hard cases which may not come within the scope of section 8(4). The notifications issued afforded certain concessions to the assessees. They did not restrict the rights of the assessees. But for those notifications dealers in Kerala who had sold goods to dealers in Goa and Pondicherry would have had to pay sales tax as provided in the State laws as it was not possible for them to take the benefit of section 8(4) for the reasons already mentioned. Section 8(5) specifically empowered the State Governments to grant any concession "subject to such conditions as it may think fit to impose". The appellant does not challenge the vires of section 8(5). If the notifications in question are struck down, the appellant will get no benefit. He will have still to pay tax under the State law.The contention that in view of the fact that the Act had not been extended to Pondicherry at the relevant time, compliance with the provisions of the Act in the case of sales to dealers in that place was impossible and consequently the dealers in Kerala cannot be penalised for sales admittedly in the course oftrade has no basis in law. The rate of tax fixed under(1) of section 8 applied only to sale of goods of the description referred to in(3) to a registered dealer. In the case of sales which did not fall under(1), tax was payable at the rates prescribed in(2). Quite clearly sales to dealers in Pondicherry did not fall under(1). Therefore they are taxable under(2). It is true that difficulty had been created because of the fact that the Act was not extended to Pondicherry but such a difficulty confers no rights on the dealers. But then, the State of Kerala tried to get over that difficulty by issuing notifications under section 8(5). The appellant did not take the benefit afforded by those notifications. Hence he has only to blamethe case of the sales to dealers in Goa, no doubt the appellant did produce the declarations in the prescribed form but those declarations were not produced within the time prescribed. The notifications issued prescribed that the declarations in question should be produced within the time prescribed therein. We have already held that those notifications were valid notifications. The appellant has suffered because of its ownsee no merit in any of the contentions advanced on behalf of the appellant.