STATE OF WEST BENGAL AND ANR.versusROAD TRANSPORT ASSOCIATION, SILGURI AND ANR.

                  ST ATE OF WEST BENGAL AND ANR.                                  A
                                      v.
        ROAD TRANSPORT ASSOCIATION, SILGURI AND ANR.

                           FEBRUARY 25, 2003

    [SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.]                               B


        Bengal Finance (Sales Tax) Act, 1941/West Bengal Sales Tax Rules,
1941:

       Ss.2(ia-1)-Explanation land ss.4C(6) and 4C(7)/rr.48L(4) and 48M-          C
Constitutional validity of-West Bengal Taxation Tribunal suspended operation
of Explanation I to s.2(/a-1) holding it valid but vague and held that there is
no machinery provision specifying the manner of disclosure-Tribunal also
held sub-sections (6) and (7) of s.4-C invalid and unconstitutional and sub-
rule(4) of r.48 as invalid observing that power to seize and sell the goods is    D
exercisable without purchase ofgoods by, and a proper assessment ofpurchase
tax in respect of, a transporter ofgoods-On appeal, Held, there is no ambiguity
in s.2(Ja-1) and Explanation I thereto-The requirements of Explanation I are
clear enough-Not providing any proforma for declaring particulars under
the Explanation would neither make it vague nor unworkable for want of any        E
machinery provision-Order of Tribunal in regard to Explanation/, set aside.

       Ss.4C(6) and 4C(7) of the Act and r.48L(4) of the Rules are not
unconstitutional-The course of action incorporated in these provisions is
meant to prevent evasion of tax due under the Act-It cannot be said that such
a course of action can be taken by the authorities even without any purchase      p
of goods by a casual trader-The sine qua non for levy of tax under the Act
is the purchase of the goods within the State-Jn the absence of any taxable
event the goods will not be liable to tax and consequently no transporter can
be made liable to pay tax at the entry point for his failure to disclose the
information which is required under Explanation to s.2(Ja-1) of the Act-
Order of Tribunal is set aside.                                                   G
      It is made clear that order of Tribunal is not challenged in so far as it
holds r-48M as unconstitutional.

        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8180 of H

                                     335
    336                    SUPREME COURT REPORTS                     [2003] 2 S.C.R.

A   1995.

         From the Judgment and Order dated 7.4.95 of the West Bengal Taxation
    Tribunal at Kolkata, in R.N. No. 148 of l 993.

        B. Sen, Rakesh Dwivedi, Dayan Krishnan and S. Mishra for M/s. Sinha
B   & Das for the Appellants.

         Yashank Adhyaru, Satyajit Saha and Mrs. V.D. Khnanna for the
    Respondents.

            The following Order of the Court was delivered
c
         This appeal, by the State of West Bengal and its Commissioner of
    Commercial Taxes, arises from the judgment of the West Bengal Taxation
    Tribunal in R.N. No. 148/1993, dated April 7, 1995.

          The first respondent is an association of road transporters and the second
D   respondent is its Member and Secretary. The respondents challenged before
    the West Bengal Taxation Tribunal (for short, 'the Tribunal') constitutional
    validity of the following provisions of the Bengal Finance (Sales Tax) Act,
    1941, as amended in 1993. (for short 'the Act'):

          (i) Explanation-I to sub-section (I a-1) of Section 2;
E
          (ii) Sub-sections (6) and (7) of Section 4-C of the Act and

         (iii) the legality of sub-Rule (4) of Rule 48-L of the West Bengal Sales
    Tax Rules, 1941 (for short, 'the Rules').

F         The Tribunal took the view that Explanation-I to Section 2(1a-I) of the
    Act is valid but vague and that there is no machinery provision specifying the
    manner of disclosure and, therefore, suspended the operation of the said
    Explanation till a machinery for that purpos'' is provided; it was held that
    sub-sections (6) and (7) of Section 4-C of the Act were invalid and
G   unconstitutional and consequently, sub-Rule (4) of Rule 48L was also invalid.
    The application of the respondents was thus allowed by the Tribunal by the
    order under cha:lenge ..

         Mr. Dayan Krishnan, the learned counsel appearing for the appellants,
    contends that the approach of the Tribunal in suspending operation of the
H   Explanation to Section '2(1a-l) and declaring sub-sections (6) and (7) of
         STATE v. ROAD TRANSPORT ASSOCIATION, SILGURI                      337

Section 4-C of the Act and sub-Rule (4) of Rule of 48L of the Rules as             A
 invalid and unconstitutional is erroneous and the decision untenable; the
Tribunal has erred in proceeding on the assumption that the power to seize
and sell the goods is exercisable without purchase of goods by, and a proper
assessment of purchase tax in respect of, a transporter of goods, Mr. Adhyaru,
the learned counsel for the respondents has expressed the apprehension and         B
real grievance of the respondents that due to fallacious interpretation of the
said impugned provisions, trucks are being stopped at the entry points and in
the event of failure of the transporters to furnish the details of the consignor
or the consignee, they are required to pay tax even though the goods have not
by then entered the limits of the State of West Bengal and no sale or purchase
of goods by the transporter takes place at that stage.                             c
      In our view, a true and proper interpretation of the impugned provisions
will put the controversy at rest. To understand the import of the definition,
'Casual trader' and Explanation- I thereto, it is necessary to read them here:

        "Sec.2 (la-I)                                                              D
           "Casual trader" means a person, other than a registered dealer,
       who whe(her as a principal or agent or in any other capacity, makes
       occasional purchases of goods in West Ben.gal for purposes other
       than his personal use or consumption of such goods in West Bengal
       or makes occasional sales of goods in West Bengal and who has no            E
       fixed place of business in West Bengal , and includes a consignor or
       a consignee of goods in West Bengal or a transporter as defined in
       clause (a) of the Explanation to section 14c and an owner or lessee
       of a godo·Nn or warehouse let out to any person for storage of goods.

            Explanation-I-A transporter who, while carrying goods in his           F
       goods vehicle within the meaning of section I 4c fails to disdose the
       name and address of the consignee or consignor in West Bengal or
       f~ils to furnish copy of invoice, challan, transporter receipt or
       consignment note or document of like nature in respect of any goods,
       shall be deemed to be a casual trader in respect of such goods carried
       in his goods vehicle.                                                       G
           Explanation-2-An owner or lessee of a godown or warehouse,
       who fails to disclose the name and address of the owner of any goods
       stored in such godown or warehouse, shall be deemed to be a casual
       trader in respect of such goods."
                                                                                   H
    338                    SUPREME COURT REPORTS                     [2003] 2 S.C.R.

A         It is seen that sub-section (I a-1) of Section 2 of the Act defines the
    expression "Casual trader" to mean: (1) a person, other than a registered
    dealer, who whether as a principal or agent in any other capacity, (a) makes
    occasional purchases of goods in West Bengal for purposes other than his
    personal use of consumption in West Bengal; or (b) makes occasional sales
    of goods in West Bengal and has no fixed place of business in West Bengal.
B   and (ii) includes (a) a consignor or a consignee of goods in West Bengal; or
    (b) a transporter as defined in clause (a) of the Explanation to section 14C
    and (c) an owner or lessee of a godown or warehouse let out to any person
    for storage of goods.


c meaning
       Explanation-I, referred to above, ropes in a transporter within the
          of the expression 'Casual Trader', who fails to fulfil the obligation        -·
    to disclose the name and address of the consignee or consignor in West
    Bengal or to furnish copy of invoice, challan, transporter receipt or
    consignment note or document of like nature in respect or any goods carried
    in his goods vehicle. Explanation-2 includes an owner or lessee of a godown
D   or warehouse also within the meaning of a 'Casual trader' in case of failure
    to furnish particular mentioned therein but this Explanation is not the subject-
    matter of the present discussion.

           A perusal of the definition clause and Explanation- I shows that there
    is no ambiguity in them. The requirements of the Explanation are clear enough.·
E   Not providing any proforma for declaring particulars under the Explanation
    would neither make it vague nor unworkable for want of any machinery
    provision. It cannot be disputed that a prescribed proforma would have 'oeen
    appropriate but absence of a proforma for making the required declaration
    would not warrant suspension of the said Explanation. We find )10 substance
p   in the reasoning of the Tribunal and, therefore, set aside the finding of the
    Tribunal in regard to Explanation- I.

           Section 4-C of the Act is a charging section in respect of a casual
    trader. Sub-section (I) thereof opens with a non-obstante clause and mandates
    that subject to the provisions of sub-section (3), a casual trader shall pay tax
G   on his every purchase of goods in West Bengal. Certain purchases are
    exempted thereunder but we are not concerned with them here. Sub-section
    (2) prescribes rates mentioned in various clauses of sub-section (1) of Section
    5 at which the tax is payable by a casual trader on purchase of any goods.
    Sub-section (3) speaks of refund of the tax paid by a casual trader when he
H    makes regular sales and gets himself registered in the circumstances specified
         STATE v. ROAD TRANSPORT ASSOCIATION, SI LG URI                          339
therein. Sub-section (4) is a machinery provision. It says that notwithstanding. A
anything contained in sub-se.ction (2) of Section J I, the tax payable under the
main section shall be determined and collected in such manner and by such
authority as may be prescribed and imposes an obligation on a casual trader
to pay the same at such time and at such interval as may be prescribed. Sub-
section (5) thereof deals with the procedure for production, inspection and B
seizure of accounts and document.

      Sub-sections (6) and (7) of s. 4-C of the Act and Rule 48L(4) of the
Rules, quoted hereunder, are at the center of the controversy. They have to
be read as part of the scheme of taxation of a 'Casual trader' under Section
4-C of the Act read with Rule 48L of the Rules and not in isolation.
                                                                                       c
        4C. Liability to pay purchase tax by a casual t~ader ........ :......... .

        (I) to (5) ........... .

            (6) Where there is no claimant of the ownership of any goods,
        whether in the custody of transporter, or such owner or lessee of the          D
        godown or the warehouse denies his liability to pay tax under this
        section, the Commissioner or any person appointed under sub-section
        (I) of section 3 to assist him may, with a view to checking evasion
        of tax.payable under this section, seize such goods from the custody
        of the transporter or from the godown, or warehouse of the owner or            E
        lessee of goods, if necessary, by breaking open the door of such
        godown or warehouse, and shall, before making seizure, prepare an
        inventory of such goods in the presence of the transporter or the
        owner or the lessee of the godown or warehouse, as the case may be,
        and get such inventory countersigned by him or any other witness.
                                                                                       F
            (7) If the goods seized under sub-section (6) are not claimed by
        the bonafide owner of such goods within fifteen days from the date
        of seizure the Commissioner may sell such goods in open action and
        auction adjust the amount of tax on purchases of goods that may be
        determined under sub-section (4) with the sale proceeds of the goods
        and deposit the balance, if any, with a Government Treasury for                G
        refund to the bonafide owner of goods upon claim preferred in the
        prescribed manner within one year.

        xxx             xxx            xxx              xxx            xxx

        Rule 48L (4):
                                                                                       H
    340                    SUPREME COURT REPORTS                    (2003] 2 S.C.R.

A                If a casual trader fails to pay the amount of tax as detennined
             under sub-rule (l} and directed to be paid under sub-rule (3), the
             goods liable to the purchase tax shall be seized for recovery of tax in
            .the manner referred to in sub-sections (6) and (7) of Section 4C."

           A plain reading of sub-section (6) shows that it is attracted where nc
B   one claims to be the owner of the goods in the custody of a transporter or
    owner or lessee of the godown of the warehouse and such a person denies
    his liability to pay tax under Section 4C; with a view to checking evasion of
    tax payable thereunder, it empowers the Commissioner or any person appointed
    under sub-section (I) of section 3 to assist him, to seize such goods from the
C   custody of such transporter or from the owner or lessee of the godown or
    warehouse, if necessary, by breaking open the door of such godown or
    warehouse. A duty is cast upon the Commissioner or the person authorised
    by him to prepare an inventory of the goods, before making seizure, in the
    presence of the transporter or the owner or lessee of the god own or warehouse,
    as the case may be, which should be countersigned by the concerned officer
D   as well as by the witnessees.

          It is evident from sub-section (7) that it authorises the Commissioner/
    the authorised person to sell in an open auction the goods which have been
    seized under sub-section (6) and not claimed by the bonajide owner thereof,
    within fifteen days from the date of seizure, and adjust the amount of tax on
E   purchases of goods that may be determined under sub-section (4) with the
    sale proceeds of such goods. The balance amount, if any, is required to be
    deposited with a Government Treasury for refund to the bonajide owner of
    goods upon claim preferred in the prescribed manner within one year.

          The procedure to levy the impost under Section 4-C of the Act is
F   mentioned in sub-rule (I) of Rule 48L of the Rules. It provides that if upon
    information or otherwise, the Commercial Tax Officer or Inspector, authorised
    by the Commissioner in that behalf, is satisfied that a casual trader is liable
    to pay tax under sub-section (I} of Section 4C of the Act on his purchases
    made in West Bengal of goods, he is required to determine by a precise order
G   in writing in Form VIB the amount of tax payable by such trader after taking
    into consideration the purchase bill memo, challan or consignment note which
    may be available relating to such goods. Sub-rule (4) of Rule 48L of the
    Rules, quoted above, says that if a casual trader fails to pay the amount of
    tax as determined under sub-rule (I) and demanded under sub-rule (3), the
H   goods liable to purchase tax shall be seized for recovery of tax in the manner
          STATE v. ROAD iRANSPORT ASSOCIATION, SILGURI                    341
referred in sub-sections (6) and (7) of Section 4C. It is thus abundantly clear   A
that under sub-rule (4), for the purpose of recovery of tax due, the power of
seizure and sale of the goods contained in sub-sections (6) and (7) of the Act
is made available to the concerned authority.

      From the above discussion, it is clear that the course of action
incorporated in these provisions is meant to prevent evasion of tax due under     B
the Act. We are, therefore, unable to accept that such a course of action could
be taken by the authorities even without any purchases of goods by a casual
trader. The sine qua non for levy of tax under the Act is the purchase of the
goods within the State of West Bengal. In the absence of any taxable event,
the goods will not be liable to tax and, consequently, no transporter can be      C
made liable to pay tax at the entry point for his failure to disclose the
information which is required under Explanation- I of Section 2(1 a- I) of the
Act. We find no valid reason to hold that the said provisions are illegal much
less unconstitutional, therefore, we are unable to sustain either the reasoning
or the conclusion of the Tribunal that sub-sections (6) and (7) of Section 4-
C of the Act and sub-Rule (4) of Rule 48-L of the Rules are unconstitutional.     D
In the result, we set aside the order of the Tribunal under challenge. However,
we make it clear that the impugned judgment insofar as it holds Rule 48M
of the Rules as unconstitutional is not challenged before us.

       The appeal is, accordingly, allowed.
                                                                                  E
       There shall be no order as to costs.

R.P.                                                         Appeal allowed.