Case: The State Of Bihar  Vs. Rat Bahadur Hurdut Roy-Mott Lall Jute Mills &amp; Another

proviso in the light of the explanation to S. 5 of the Act.The explanation in terms enumerates deductions which have to be made in determining the taxable turnover of the registered dealer and it is to these deductions which are allowable under the three sections specified in the explanation to which the latter part of the proviso to R. 19 refers.A claim for the exclusion of a part of the first respondents turnover on the strength of S. 33(1) (a) (i) cannot, therefore, be said to be an allowable deduction under the proviso.16. This question can be considered from another point of view. The provisions which allow deductions to be made or grant exemptions in respect of certain transactions obviously postulate that but for them the transactions in question would be liable to tax under the Act; and so when such transactions are included in the return the registered dealer is allowed to claim appropriate deductions in respect of them. But, the position with regard to S. 33 is entirely different; transactions which attract the provisions of the said section are in substance outside the scope of the Act and no tax can be imposed on them at all.If that be the true position the claim which can be made by the registered dealer in respect of such transactions cannot in law be regarded as a claim for allowable deductions or exemptions properly so-called; it is really a claim that the Act itself does not apply to the said transactions. Therefore, in our opinion it would be straining the language of the second part of the proviso to R. 19 to hold that the transactions in question fell within its purview.17. There is one more point to be considered in this connection. Form VI which has been prescribed for making the returns under S. 12 requires the gross turnover to be mentioned at the outset, and then it provides for the different deductions allowable under the Act. This form was prescribed in 1949 and has not been amended after the addition of S. 33 to the Act. On looking at this form it seems difficult to entertain the argument that the claim for the total exclusion of the transactions in question can be made under any of the headings prescribed in the form. The appellant, however, contends that the first item of gross turnover means the whole of the gross turnover which must include all sale transactions whether they took place within Bihar or outside it, and in support of this argument reliance is placed on the definition of "turnover" contained in S. 2(i). If the whole of the gross turnover has to be mentioned under item 1, it is urged, the claim for the exclusion of the transactions in question can well be adjusted under one or the other of the deduction items prescribed in the form. We are not inclined to accept this argument. The form as it has been prescribed construed in the light of the material provisions contained in Ss. 6, 7 and 8 does not support the case that in prescribing its several items it was intended that the transactions falling under S. 33 should be first shown under item I and then excluded under one or the other of the remaining items of deduction. Besides it may be relevant to point out that the heading of Chapter VII which deals with the submission of returns by dealers is "return of taxable turnover" and it is arguable that the gross turnover mentioned in Form VI may mean "gross taxable turnover" and not the gross turnover including the transactions which are outside the scope of the Act.18. Then as to the argument about the contravention of S. 14A itself it is difficult to appreciate how any provision of S. 14A can be said to have been contravened. S. 14A consists of two parts both of which are put in a negative form. The second part with which we are concerned in effect means nothing more than this, that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be prescribed.If the argument is that the first respondent was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside S. 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of S. 11A as such.In fact S. 14A itself refers to the restrictions and conditions which may be prescribed, and, as we have already seen, these conditions and restrictions are prescribed by the Rules in general and by R. 19 in particular. So the argument urged under S. 14A takes us back to the question as to whether the proviso to R. 19 has been contravened. In dealing with this question we cannot ignore the fact that the relevant provisions which fall to be construed in the present appeal impose a serious penalty on the registered dealer, and so, even if the view for which the appellant contends may perhaps be a possible view, we seen no reason why the other view for which the first respondent contends and which appears to us to be more reasonable should not be accepted.In the result we hold that the proviso to S. 14A cannot be invoked against the first respondent and so the order of forfeiture passed against him by the second respondent in unjustified and illegal.19. In view of this conclusion it is unnecessary to consider the objections raised by the first respondent against the validity of the proviso on the ground that it contravenes Arts. 20(1) and 31(2) of the Constitution. We may incidentally add that during the course of the arguments before us we have also heard all the learned counsel on the question as to whether the said proviso contravenes the provisions of Art. 19(1)(f) as well.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]16. This question can be considered from another point of view. The provisions which allow deductions to be made or grant exemptions in respect of certain transactions obviously postulate that but for them the transactions in question would be liable to tax under the Act; and so when such transactions are included in the return the registered dealer is allowed to claim appropriate deductions in respect of them. But, the position with regard to S. 33 is entirely different; transactions which attract the provisions of the said section are in substance outside the scope of the Act and no tax can be imposed on them at all.If that be the true position the claim which can be made by the registered dealer in respect of such transactions cannot in law be regarded as a claim for allowable deductions or exemptions properly so-called; it is really a claim that the Act itself does not apply to the said transactions. Therefore, in our opinion it would be straining the language of the second part of the proviso to R. 19 to hold that the transactions in question fell within its purview.17. There is one more point to be considered in this connection. Form VI which has been prescribed for making the returns under S. 12 requires the gross turnover to be mentioned at the outset, and then it provides for the different deductions allowable under the Act. This form was prescribed in 1949 and has not been amended after the addition of S. 33 to the Act. On looking at this form it seems difficult to entertain the argument that the claim for the total exclusion of the transactions in question can be made under any of the headings prescribed in the form. The appellant, however, contends that the first item of gross turnover means the whole of the gross turnover which must include all sale transactions whether they took place within Bihar or outside it, and in support of this argument reliance is placed on the definition of "turnover" contained in S. 2(i). If the whole of the gross turnover has to be mentioned under item 1, it is urged, the claim for the exclusion of the transactions in question can well be adjusted under one or the other of the deduction items prescribed in the form. We are not inclined to accept this argument. The form as it has been prescribed construed in the light of the material provisions contained in Ss. 6, 7 and 8 does not support the case that in prescribing its several items it was intended that the transactions falling under S. 33 should be first shown under item I and then excluded under one or the other of the remaining items of deduction. Besides it may be relevant to point out that the heading of Chapter VII which deals with the submission of returns by dealers is "return of taxable turnover" and it is arguable that the gross turnover mentioned in Form VI may mean "gross taxable turnover" and not the gross turnover including the transactions which are outside the scope of the Act.18. Then as to the argument about the contravention of S. 14A itself it is difficult to appreciate how any provision of S. 14A can be said to have been contravened. S. 14A consists of two parts both of which are put in a negative form. The second part with which we are concerned in effect means nothing more than this, that a registered dealer can make collections of such tax only as is payable by him in accordance with the restrictions and conditions as may be prescribed.If the argument is that the first respondent was not liable to pay any tax and as such was not entitled to make any corresponding collection, then the collection made by him may fall outside S. 14A and be otherwise unjustified or improper; but it does not amount to the contravention of any provision of S. 11A as such.In fact S. 14A itself refers to the restrictions and conditions which may be prescribed, and, as we have already seen, these conditions and restrictions are prescribed by the Rules in general and by R. 19 in particular. So the argument urged under S. 14A takes us back to the question as to whether the proviso to R. 19 has been contravened. In dealing with this question we cannot ignore the fact that the relevant provisions which fall to be construed in the present appeal impose a serious penalty on the registered dealer, and so, even if the view for which the appellant contends may perhaps be a possible view, we seen no reason why the other view for which the first respondent contends and which appears to us to be more reasonable should not be accepted.In the result we hold that the proviso to S. 14A cannot be invoked against the first respondent and so the order of forfeiture passed against him by the second respondent in unjustified and illegal.19. In view of this conclusion it is unnecessary to consider the objections raised by the first respondent against the validity of the proviso on the ground that it contravenes Arts. 20(1) and 31(2) of the Constitution. We may incidentally add that during the course of the arguments before us we have also heard all the learned counsel on the question as to whether the said proviso contravenes the provisions of Art. 19(1)(f) as well.