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1990 DIGILAW 464 (KAR)

MANGALORE STEEL AGENCY v. GOVERNMENT OF KARNATAKA

1990-08-28

K.B.NAVADGI, M.P.CHANDRAKANTARAJ

body1990
JUDGMENT M. P. CHANDRAKANTARAJ URS, J. - The petitioner is M/s. Mangalore Steel Agency. It is a registered dealer under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the Act"). It is aggrieved by the assessment orders as at annexure-A concerning its taxable turnover for the period 1st October, 1979 to 31st August, 1980. The total turnover returned was Rs. 68,01,457.50. On identical amount exemption was also claimed inter-alia, on the ground that the goods in question, namely, mild steel rounds, flats, etc., sold to M/s. Canara Wire and Wire Products, Yeyyadi, Mangalore, were goods which had been re-rolled items by the principals of the assessee who claimed to be only an agent. It is clear from the assessment order as at annexure-A that in support of exemption claimed, from No. 32 was not produced, as an agent of the principal as per section 11(1) of the Act. Therefore, the assessing authority came to the conclusion that the sales made were re-rolled iron steel out of tax-paid ingots. The assessee being the first dealer in mild steel rounds was liable to pay tax in the various re-rolled items of iron and steel as the sales were made within the State only. Therefore the entire turnover, as admittedly the total turnover, became the taxable turnover and brought to tax. Aggrieved by that order as at annexure-A which is dated 18th November, 1981, he preferred writ petition on 11th March, 1982, questioning the constitutional validity of sub-section (4) of section 5 of the Act which brings to tax certain declared goods at the point of first sale in the State in accordance with the Fourth Schedule to the Act. 2. The argument advanced is that sub-section (4) of section 5 being arbitrary, not being clear as to what constitutes taxable turnover having regard to its language is violative of article 14 of the Constitution and therefore it be declared to be ultra virus the Constitution as violative of article 14. The assessment concluded thereunder should also be struck down by a writ of certiorari. 3. We have been taken through the definitions of "taxable turnover", "total turnover" and "turnover" as defined under section 2 of the Act. They do not pose any problem to understand as to what they mean. In fact Mr. The assessment concluded thereunder should also be struck down by a writ of certiorari. 3. We have been taken through the definitions of "taxable turnover", "total turnover" and "turnover" as defined under section 2 of the Act. They do not pose any problem to understand as to what they mean. In fact Mr. S. G. Shivaram, learned counsel for the petitioner, does not contend that there is any vagueness in those definitions. The thrust of his argument is vagueness or doubt arises in the language employed in sub-section (4) of section 5 which refers to tax under the Act shall be levied in respect of the sale or purchase of any of the declared goods mentioned in column (2) of the Fourth Schedule. The further thrust of the argument is that the expression "sale or purchase" is conferment of unguided arbitrary power on the assessing authority to bring to charge even the first purchase or the first sale which is the point at which the mild steel ingots are subjected to tax under the Fourth Schedule to the Act. 4. This argument is rather novel because all sales must necessarily include a purchase and vice versa, in that all purchases do constitute an element of sale, in that there is a seller who conducts the sale and there be a purchaser who purchases it. Therefore the so-called vagueness or arbitrariness in the language employed in sub-section (4) is more imaginary than real. 5. The case before the assessing authority put forward by the petitioner-assessee was not that there was any vagueness in determining the total and taxable turnover because he had himself returned a total turnover of Rs. 68,01,457.50. All that he claimed before the assessing authority was that they were exempted because they had suffered sales tax in the hands of manufacturer who had paid sales tax on the raw material. That was ruled out having regard to the law declared by the Supreme Court and the assessing authority brought the turnover to tax. There was no whisper of constitutional validity before the assessing authority as there could not be in that forum. 6. Two authorities were cited before us. They were (1) Nandi Steel Works Pvt. Ltd. v. Assistant Commercial Tax Officer (Recovery), Bangalore [1984] 57 STC 86 (Kar). There was no whisper of constitutional validity before the assessing authority as there could not be in that forum. 6. Two authorities were cited before us. They were (1) Nandi Steel Works Pvt. Ltd. v. Assistant Commercial Tax Officer (Recovery), Bangalore [1984] 57 STC 86 (Kar). One of us dismissed the writ petition filed by the petitioner therein, inter alia, on the ground that the statute provided a further appeal and the assessee not having pursued that remedy it was not open to him to question the recovery proceedings. On an appeal filed to a Division Bench, the Division Bench took the view that existence of an alternative remedy would not preclude the High Court from going into the correctness or otherwise of the assessment order resulting in recovery proceedings and on merits of the case remanded the matter to assessing authority in the light of the observation made by their Lordships. With utmost respect it may be stated in view of the decisions of the Supreme Court that in taxing statute where special remedy is provided under the relevant statute unless that remedy is exhausted it will not be open to the High Court to interfere except where there is total want of jurisdiction to conclude an assessment under the taxing statute. In that view of the matter this stand is not of any assistance to the petitioner. 7. The second decision relied upon by the learned counsel is that of the Supreme Court in Govind Saran Ganga Saran v. Commissioner of Sales Tax [1985] 60 STC 1; AIR 1985 SC 1041 . Our attention was drawn to page 4 of STC (paragraph 6 of AIR) where it is observed by the Supreme Court that the components which enter into the concept of a tax were well-known. The first was the character of the imposition known by its nature which prescribed the taxable event attracting the levy; the second was a clear indication of the person on whom the levy was imposed and who was obliged to pay the tax, the third was the rate at which the tax was imposed; and the fourth was the measure or value to which the rate would be applied for computation of the tax liability. (See [1985] 60 STC 1 (SC) at page 4; AIR 1985 SC 1041 at page 1043). (See [1985] 60 STC 1 (SC) at page 4; AIR 1985 SC 1041 at page 1043). If those components were not clearly and definitely ascertainable; it was difficult to say that the levy existed in point of law. 8. The principles enunciated by the learned Judge speaking for the Bench may never be disputed. In all taxing statutes the quantification of the tax, the incidence of tax, the rate applicable and the nature of liability must be indicated, failing which not assessment against any particular person exigible to tax will be possible. But that is not the case with which we are dealing here. 9. In this case the point at which the tax is levied is determined by sub-section (4) of section 5. It states that sale or purchase of any of the declared goods in column (2) of the Fourth Schedule at the rate and only at the point specified in the corresponding entries of columns (4) and (3) of the Fourth Schedule on the dealer shall be liable to tax. Therefore, sub-section (4) of section 5 of the Act cannot be said to lack any one of the components which the Supreme Court stated a taxing provision must contain. 10. In that view of the matter there is neither vagueness not uncertainty about levy attracted. Instead of assisting the petitioner, the decisions relied upon, is against the assessee. In that view of the matter it is difficult for us to hold that there is conferment of any arbitrary power on the assessing authority to pick and choose the seller or the purchaser to bring to tax in respect of declared goods at the point of first sale in the State in accordance with sub-section (4) of section 5 of the Act. 11. A feeble attempt was made by Mr. Shivaram, counsel appearing for Mr. K. Srinivasan, learned counsel for the petitioner, that rule 6 did not provide any guidelines to the assessing authority to arrive at the taxable turnover, total turnover or turnover itself. We do not think there is any substance in that assertion because rule 6 has been operative since the framing of the same, and assessing authorities have not found any difficulty in understanding and working that rule. 12. We do not think there is any substance in that assertion because rule 6 has been operative since the framing of the same, and assessing authorities have not found any difficulty in understanding and working that rule. 12. We, therefore, reject the argument advanced and the petition in which only a feeble attempt was made challenging the constitutional validity of section 5(4) of the Act to escape liability. 13. Accordingly we dismiss this writ petition. Writ petition dismissed.