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PETITIONER: SODHI TRANSPORT CO. & ANR. ETC. ETC.

       Vs.

RESPONDENT: STATE OF U.P. & ANR. ETC. ETC.

DATE OF JUDGMENT20/03/1986

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) THAKKAR, M.P. (J)

CITATION:  1986 AIR 1099            1986 SCR  (1) 939  1986 SCC  (2) 486        1986 SCALE  (1)489  CITATOR INFO :  F          1989 SC1119  (5,19,23,24)

ACT:      Uttar Pradesh  Sales Tax Act, 1948/ Uttar Pradesh Sales Tax Rules, 1948: s. 28-B/r.87 - Constitutional Validity of - Goods -  Transit of through the State - Failure to surrender transit pass  at check-post  - Presumption  of sale of goods within the State - Whether arises.

HEADNOTE:      Indian Evidence Act, 1872: s.4 - Rebuttable presumption -  Provision   of  taxing   statute  creating  a  rebuttable presumption - Effect of.      Words and  Phrases: ’Shall presume’ - Meaning of - s.4, Indian Evidence  Act/s.28-B Uttar  Pradesh  Sales  Tax  Act, 1948.      Section 28  of the  Uttar Pradesh  Sales Tax  Act, 1948 authorises the  State Government to establish checkposts and barriers with  a view  to preventing evasion of tax or other dues payable  under the  Act in  respect of sale of goods in the State.  Section 28-B,  added by  the U.P. Act 1 of 1973, makes provision  for the procedure to be followed by persons who intend to transport goods from outside the State by road through the  State to  destinations outside  the  State.  It provides that  when a  vehicle coming from any place outside the State  and bound  for any  other place outside the State passes through the State, the driver or the other person in- charge of such vehicle shall obtain in the prescribed manner a transit  pass from  the officer  in-charge  of  the  first checkpost or  barrier after  his entry  into the  State  and deliver it  to the  officer in-charge  of the  checkpost  or barrier before  exit from the State. If he fails to do so it shall be  presumed that  the goods carried thereby have been sold within  the State  by the  owner or person in-charge of the vehicle.  Rule 87  of the  Uttar Pradesh Sales Tax Rules 1948, inserted  by the  U.P.  Sales  Tax  (First  Amendment) Rules, 1974  provides that  a person  who wishes to obtain a transit pass shall make an application in 940 the  prescribed   form  to  the  officer  in-charge  of  the checkpost concerned.  It also  provides  for  the  issue  of transit  pass  in  triplicate  and  for  inspection  of  the

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documents,  consignments   and  goods  to  ensure  that  the statements are true.      The appellants, who claim to be engaged in the business of transport  of goods  belonging to others for hire and who in the course of their business have to carry goods from one State to  another State  along roads  lying in  the State of Uttar Pradesh,  questioned the validity of s.28-B of the Act and r.87  of the  Rules by  filing writ petitions before the High Court.  Their contentions were (i) that s.28-B and r.87 were outside  the scope  of Entry 54 of the Seventh Schedule of the  Constitution, (ii)  that they  infringed freedom  of trade, commerce and intercourse guaranteed under Art. 301 of the Constitution,  and (iii)  that they imposed unreasonable restrictions  on  the  freedom  of  trade  guaranteed  under Art.19(1)(g) of  the Constitution.  The  High  Court  having upheld  the   constitutional  validity   of   the   impugned provisions appeals  were preferred  to this Court by special leave.      In the writ petitions under Art. 32 of the Constitution in addition  to the contentions raised in the High Court, it was submitted  that the  rule of presumption contained in s. 28-B of  the Act  virtually  made  a  person,  who  had  not actually sold the goods, liable to pay sales tax, and that a transporter being just a transporter could not be treated as a dealer  within the  meaning of  that expression  as it was defined in the Act at its commencement.      Disposing of the appeals and writ petitions, the Court, ^      HELD :  1. The decision of the High Court upholding the constitutionality of  s. 28-B of the Uttar Pradesh Sales Tax Act, 1948  and r.87  of the  Uttar Pradesh  Sales Tax Rules, 1948 does not call for any interference. [957 D]      The Act  is traceable  to Entry  54 in  List II  of the Seventh Schedule  to the  Constitution. Section  28-B of the Act and  r.87 of  the Rules  are enacted  to  make  the  law workable and to prevent evasion of tax. They fall within the ambit and  scope of  the power  to levy the tax itself. When the legislature  has the power to make a law with respect to any 941 subject it  has all  the ancillary  and incidental powers to make that law effective. [949 D; 950 E; 949 E]      Sardar Baldev Singh v. Commissioner of Income Tax Delhi JUDGMENT:      2. Taxation  laws usually  consist  of  three  parts  - charging provisions,  machinery  provisions  and  provisions providing for recovery of the tax. The provisions of s. 28-B of the  Act  and  r.87  of  the  Rules  are  just  machinery provisions. They  do not levy any charge by themselves. They ensure that  a person who has brought goods inside the State and who  has made  a declaration  that the goods are brought into the  State for the purpose of carrying them outside the State should  actually take  them outside  the State.  If he hands over  the transit  pass while taking the goods outside the State  then there  would be no liability at all. [949 F; 950 C; 949 D; 950 C-D]      Whitney v.  Commissioner of  Inland Revenue  (1925)  10 T.C. 88  and Gursahai  Saigal v. Commissioner of Income-tax, Punjab [1963] 3 S.C.R. 893 referred to.      3. The  words ’it  shall be  presumed  that  the  goods carried thereby  have been  sold within the State’ contained in s. 28-B of the Act only require the authorities concerned to raise  a rebuttable  presumption that the goods must have been sold  in the  State if  the transit  pass is not handed over to the officer at the checkpost or the barrier near the

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place of  exit from  the State. The transporter concerned is not shut  out from  showing by  producing reliable  evidence that the goods have not been actually sold inside the State. It  is  only  where  the  presumption  is  not  successfully rebutted the authorities concerned are required to rely upon the rule  of presumption  in s. 28-B of the Act. [951 E; 956 B, D]      A presumption  is not in itself evidence but only makes a prima  facie case for the party in whose favour it exists. It indicates  the person  on whom burden of proof lies. When presumption is  conclusive it obviates the production of any other evidence  to dislodge  the conclusion  to be  drawn on proof of  certain facts.  But when  it is rebuttable it only points out  the party on whom lies the duty of going forward with evidence  on the fact presumed, and when that party has produced 942 evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of presumption is over. Then the evidence will determine the true nature of the fact to be established. [954 F; 955 A]      Woodroffe &  Amir Ali’s  Law of  Evidence, Vol.  I 14th Edn. 299, W.S. Holdsworth’s ’ A History of English Law. Vol. IX, 140  and Izhar Ahmad Khan v. Union of India [1962] Supp. 3 S.C.R. 235, referred to.      4. The  words ’shall presume’ require the Court to draw a presumption  referred to  in a  law  unless  the  fact  is disproved. They  contain a rule of rebuttable presumption in respect of  matters with  reference to  which they are used, and do  not lay down a rule of conclusive proof. These words occur in  statutes wherever facts are to be ascertained by a judicial process. [953 E-G]      5. A  statutory provision  which creates  a  rebuttable presumption as  regards the  proof of a set of circumstances which would make a transaction liable to tax with the object of preventing  evasion cannot be considered as conferring on the authority  concerned the  power to  levy a tax which the legislature  cannot   otherwise  levy.   Such  a   rule   of presumption which  has the  effect of shifting the burden of proof cannot  be termed  unconstitutional  when  the  person concerned has the opportunity to displace the presumption by leading evidence. [955 G; 956 A]      6. It cannot be said that a transaction which is proved to be  not a  sale is  being subjected  to  sales  tax.  The authority concerned  before levying sales tax arrives at the conclusion by  a judicial  process that  the goods have been sold inside  the State  and in  doing  so  relies  upon  the statutory rule  of presumption  contained in  s. 28-B of the Act which  may be rebutted by the person against whom action is taken under that section. Once a finding is recorded that a person  has sold the goods which he had brought inside the State, then he would be a dealer according to the definition of the  word ’dealer’  in the  Act subject  to fulfilment of other conditions prescribed in this behalf. [956 D-F]      In the  instant case,  the assessing  authorities  made assessments ex-parte  in some  cases proceeding on the basis that s. 28-B contains a rule of conclusive presumption. The 943 assessees also failed to realise the meaning of that section and did  not attempt  to rebut the presumption. Even genuine transporters who  were not at all engaged in the business of purchase and  sale of goods and had not effected any sale of goods, were  found in many cases liable for large amounts of tax which they could have avoided if the authorities and the assessees had  realised the  true effect  of the provisions.

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[957 E-G]      [To meet  the ends  of justice  the Court  approved the scheme evolved by the State providing for withdrawal and re- examination by  the respondents of all the assessment orders ex-parte or  otherwise in  respect of  the period  prior  to 1.6.1979,    issuance    of    fresh    notices    to    the assessees/appellants/petitioners   and    finalisation    of assessment proceedings  by the  authorities keeping  in mind the rebuttable  presumption contained in s. 28-B, withdrawal of ex-parte  orders of  assessment passed after 1.6.1979 and issuance   of    fresh   notices   giving   opportunity   to transporters/assessees   to   present   their   cases,   and completion of assessment proceedings within five months from the date of the judgment.] [960 C; 959 C,D,F; 960 A]

&      CIVIL APPELLATE  JURISDICTION : Civil Appeal Nos. 3376- 80 and  3382 of  1982 etc.  and W.P.  Nos. 663, 9433 of 1981 etc.      From the Judgment and Order dated 25th May, 1982 of the Allahabad High  Court in Civil Misc. Writ Petition Nos. 363, 339, 546, 301, 362 and 544 of 1981 respectively.      G.L.   Sanghi,   S.N.   Kacker,   Harbans   Lal,   C.S. Vaidyanathan, B.P.  Singh, Ganga  Dev, L.P. Aggarwala & Co., R.B.   Mehrotra,   E.C.   Aggarwala,   S.K.   Sinha,   Gopal Subramanium, Mrs.  Shoba Dixit, C.V. Subba Rao, Madan Lokur, Sushil Kumar,  N.S. Das  Behl, P.H.  Parekh, S.C. Jain, O.P. Sharma, G.L.  Sanghi, Bishamber  Lal, Mehta  Dave & Co., Uma Dutta, S.N.  Mehta, Ashok  Grover, Rishi  Kesh, R.P.  Singh, H.M.  Singh,  D.P.  Mohanty,  Mrs.  Rani  Chabbra,  Miss  A. Subhashini, B.P.  Maheswari, Badridas  Sharma and R.A. Gupta for the appearing parties.      The Judgment of the Court was delivered by : 944      VENKATARAMIAH, J.  These appeals  by special  leave are filed against the judgment of the High Court of Allahabad in Civil  Miscellaneous   Writ  Petition  No.339  of  1981  and connected cases delivered on May 25, 1982 holding inter alia that section  28-B of  the Uttar Pradesh Sales Tax Act, 1948 (U.P. Act  No. XV  of 1948) (hereinafter referred to as ’the Act’) and rule 87 of the Uttar Pradesh Sales Tax Rules, 1948 (hereinafter referred  to as  ’the  Rules’)  framed  by  the Government of  Uttar  Pradesh  in  exercise  of  its  powers conferred under  the  Act,  as  constitutionally  valid  and dismissing the  Writ Petitions  with costs.  There are  also before us a number of writ petitions presented under Article 32 of  the Constitution  in which  similar  contentions  are raised.  We  are  disposing  of  all  the  appeals  and  the connected writ petitions by this common judgment. But we are setting out  the facts in one set of appeals for purposes of all these  cases as  the questions involved are mostly legal issues.      The appellants  who claim to be engaged in the business of transport  of goods belonging to others for hire from one place to  another and  who in  the course  of their business have to  carry goods  from one  State to another State along roads lying  in the  State of  Uttar Pradesh  filed the writ petitions out of which these appeals arise feeling aggrieved by the  restrictions imposed  on them by section 28-B of the Act and  rule 87  of the  Rules and the orders of assessment passed  under   the  Act  against  them  by  the  Sales  Tax authorities of the State of Uttar Pradesh.      The Legislature  of a  State is entitled to levy tax on

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sales under  Entry 54  of List II of the Seventh Schedule to the Constitution. The Act, however, came into force prior to the commencement  of the  Constitution. When  the  State  of Uttar Pradesh  found that  there was  large scale evasion of sales tax  by persons  engaged in  trade who  were  bringing goods from  outside the  State of  Uttar Pradesh  into  that State the  Legislature enacted  certain measures  by way  of amendment of  the Act  to prevent  as far  as possible  such evasion. First,  section 28  of the  Act was enacted in 1956 providing for  establishment of check-posts and barriers. It was substituted  by an  amended section 28 by U.P. Act 11 of 1972 which  inter alia  provided for  the  establishment  of check-posts and  barriers at the boundaries of the State and also for inspection of goods while in 945 transit. Even  this provision  was found  to be  inadequate. Therefore by  U.P. Act  1 of  1973,  the  State  Legislature substituted the  said amended section 28 by a new section 28 and also  added sections  28-A, 28-B,  28-C and 28-D to deal with the  problems of evasion arising out of transactions in which goods  imported  into  the  State  from  outside  were involved. Section 28-A deals with the provisions governing a person who  imports goods  by road  into the  State from any place  outside  the  State.  Section  28-C  deals  with  the regulation of  delivery and carrying away of the goods which are brought into the State by rail, river or air. We are not concerned with  sections  28-A  and  28-C  in  these  cases. Similarly section  28-D is  not material  for us as it deals with cases  governed  by  section  28-A  and  section  28-C. Section 28  and section  28-B which  are material  for these cases as they now stand read thus           "28. Establishment  of check-posts  and barriers -           The State  Government, if it is of opinion that it           is necessary  so to  do with  a view to preventing           evasion of  tax or  other dues  payable under this           Act in  respect of  the sale  of goods  within the           State after  their import  into the  State, may by           notification   in    the   Gazette    direct   the           establishment of  check-posts or  barriers at such           places within the State as may be specified in the           notification.           28-B. Transit  of goods  by road through the State           and issue  of transit pass - When a vehicle coming           from any place outside the State and bound for any           other place  outside the  State passes through the           State, the  driver or  other person  in charge  of           such vehicle shall obtain in the prescribed manner           a transit  pass from  the officer in charge of the           first check-post  or barrier  after his entry into           the State  and deliver it to the officer in charge           of the check-post or barrier before his exist from           the State, failing which it shall be presumed that           the goods  carried thereby  have been  sold within           the State  by the owner or person in charge of the           vehicle." Rule 87 of the Rules which was inserted into the Rules by 946 the U.P.  Sales Tax  (First Amendment)  Rules, 1974  for the purpose of section 28-B of the Act reads thus :           "87. Transit  of goods  by road  through the State           and issue  of transit  pass -  (1) The  driver  or           other person-in-charge  of  a  vehicle  shall,  in           order to  obtain a pass under section 28-B, submit           an application, in triplicate on Form XXXIV to the           office-in-charge of  the check-post or barrier, if

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         any, established  near the point of entry into the           State, hereinafter  referred to  as  Entry  Check-           Post.           (2) The  Officer-in-charge of the Entry Check Post           shall, after  examining the  documents  and  after           making such enquiries as he deems necessary, issue           a pass  on the  duplicate and triplicate copies of           the application,  retaining the  original himself.           The pass  shall  specify  the  check-post  or  the           barrier (hereinafter referred to as the Exit Check           Post) of the State to be crossed by the vehicle or           vessel and  the time and date upto which it should           be so crossed.           (3) The  driver or  other person-in-charge  of the           vehicle or  vessel shall  stop his vehicle at such           Exit Check  Post, surrender  the duplicate copy of           pass and  allow the officer-in-charge of the check           post to  inspect the  documents, consignments  and           goods in  order to  ensure that  the  consignments           being taken  out of  the State  are the  same  for           which pass  had  been  obtained.  The  Officer-in-           charge of  the  Exit  Check  Post  shall  issue  a           receipt on the triplicate copy of the pass for the           duplicate copies  surrendered  by  the  driver  or           other person- in-charge of the vehicle.           (4) The  Officer-in-charge of  the Exit Check Post           shall have powers to detain, unload and search the           contents of  the vehicle for the purpose mentioned           in sub-rule (3)."      The relevant  part of Form No. XXXIV which is issued in triplicate reads thus : 947         SODHI TRANSPORT v. STATE [VENKATARAMIAH, J.]                         "TRIPLICATE                          FORM XXXIV            Application for issue of Transit Pass               (To be submitted in triplicate)      (See rule 87(1) of the U.P. Sales Tax Rules, 1948) SIR I..................s/o Sri.............................r/o................(full address).............hereby   declare    that   I   am   the owner/driver  of  vehicle/truck  No................belonging to.............(Name and  address of the owner/ transporting agency.) 2.   I  hereby   declare  that   the  consignments  detailed overleaf being  carried by  the above  vehicle are meant for destination in  other States.  They will  not be unloaded or delivered any- where in Uttar Pradesh. 3.   My      vehicle/truck       will      cross       Uttar Pradesh................(name       of        the       other State).....................................Border at..............check post on or before (date) by  ...........hours(time)................... Date............ Time............                              Signature Place...........                                 status                         Transit Pass Serial No..........      Vehicle/truck  no.  .........................  carrying the consignments  mentioned overleaf  is permitted  to cross the Uttar  Pradesh ...........  (Name of  the  other  State) Border        at................Check         Post        by .....................hours ...................on  or  before ..............(date)

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Place .............. Date ............... Time ............... 948                                Signature of the Officer                                          I/c Check Post                             SEAL ____________________________________________________________ ________ *Strike out whichever is not applicable.      Certified that  I have  received the  duplicate copy of this pass. Place .............. Date ............... Time ...............                                Signature of the Officer                           (SEAL)"                                          I/c Check Post      Now section  28  authorises  the  State  Government  to establish check-posts and barriers, if it so desires, with a view to  preventing evasion  of tax  or other  dues  payable under the  Act in  respect of  sale of goods in the State of Uttar  Pradesh.   Section  28-B   makes  provision  for  the procedure to  be followed by persons who intend to transport goods by  roads into  the State of Uttar Pradesh from places out outside  the State  of Uttar  Pradesh for the purpose of transporting them  to places situated outside that State. It provides that  when a  vehicle coming from any place outside the State  of Uttar  Pradesh and  bound for  any other place outside the  State passes  through the  State, the driver or other person  in-charge of  such vehicle shall obtain in the prescribed manner  a transit pass from the officer in-charge of the  first check-post or barrier after his entry into the State and  deliver it to the officer in-charge of the check- post or  barrier before the exit from the State. If he fails to do  so, it  shall be  presumed  that  the  goods  carried thereby have  been sold  within the  State by  the owner  or person in-charge of the vehicle. Such presumption when drawn against the owner or the person in charge of the vehicle and he is  held to have sold the goods inside the State of Uttar Pradesh all the liabilities under the Act which arise in the case of  a person  who sells  goods inside  the State  would arise. Rule 87 provides that a person 949 who wishes  to get  a transit pass shall make an application in Form No. XXXIV to the officer in-charge of the check-post concerned. It  also provides  for the  issue of  the transit pass in  triplicate and  for inspection  of  the  documents, consignments and  goods to  ensure that  the statements made are true.      The validity  of sections  28, 28-B  and  rule  87  was questioned by  the petitioners  who filed the writ petitions in  the   High  Court   on  various   grounds.  Broadly  the contentions were  that (i)  the provisions  were outside the scope of  Entry 54 of List II of the Seventh Schedule to the Constitution; (ii) they infringed freedom of trade, commerce and  intercourse   guaranteed  under   Article  301  of  the Constitution;   and    (iii)   they   imposed   unreasonable restrictions  on  the  freedom  of  trade  guaranteed  under Article  19(1)(g)   of  the  Constitution.  The  High  Court rejected these contentions and dismissed the writ petitions. Hence these  appeals by  special leave have been filed. Some writ petitions have also been filed in this Court. All these were heard together by us.      Now  the   impugned  provisions   are  just   machinery

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provisions. They  do not levy any charge by themselves. They are enacted  to ensure  that there  is no evasion of tax. As already observed,  the Act  is traceable to Entry 54 in List II of  the Seventh  Schedule to the Constitution which reads thus :  ’54. Taxes  on the  sale or  purchase of goods other than newspapers  subject to  the provisions  of entry 92A of List I’. It is wellsettled that when the Legislature has the power to  make a  law with respect to any subject it has all the  ancillary   and  incidental  powers  to  make  the  law effective. Taxation  laws usually  consist of  three parts - charging provisions,  machinery provisions,  and  provisions providing for  recovery of the tax. We may refer here to the observations of  Lord Dunedin  in Whitney v. Commissioner of Inland Revenue  [1925] 10  T.C. 88  (110). The  learned Lord said :           "My Lords,  I shall  now permit  myself a  general           observation. Once  that it  is fixed that there is           liability, it  is antecedently  highly  improbable           that the  statute should  not go  on to  make that           liability effective.  A statute  is designed to be           workable and the interpretation thereof by a Court           should be to secure that object, unless crucial 950           omission  or   clear  direction   makes  that  end           unattainable. Now  there are  three stages  in the           imposition of  a tax : there is the declaration of           liability, that  what persons  in respect  of what           property  are   liable.   Next,   there   is   the           assessment.   Liability   does   not   depend   on           assessment. That,  exhypothesi, has  already  been           fixed. But assessment particularises the exact sum           which a person liable has to pay. Lastly, come the           methods of  recovery, if the person taxed does not           voluntarily pay."      These observations  are quoted  with  approval  by  our Court in  Gursahai Saigal  v.  Commissioner  of  Income-tax, Punjab [1963] 3 S.C.R. 893 at 900. The provisions of section 28-B of  the Act and rule 87 of the Rules which are impugned in  these  cases  as  mentioned  above  are  just  machinery provisions. They  impose no  charge on the subject. They are enacted to  ensure that  a person  who has brought the goods inside the  State and  who has  made a  declaration that the goods are brought into the State for the purpose of carrying them outside the State should actually take them outside the State. If  he hands  over the  transit pass while taking the goods outside  the State then there would be no liability at all. It is only when he does not deliver the transit pass at the exit  check post  as undertaken  by him, the question of raising a  presumption against  him would  arise.  We  shall revert to  the question  of presumption  again  at  a  later stage,  but   it  is  sufficient  to  say  here  that  these provisions are  enacted to  make the  law  workable  and  to prevent evasion.  Such provisions  fall within the ambit and scope of  the power to levy the tax itself. Dealing with the question of  validity of  section 23-A  of the Indian Income Tax Act,  1922 this Court observed in Sardar Baldev Singh v. Commissioner of  Income Tax,  Delhi &  Ajmer [1961] 1 S.C.R. 482 at page 493 thus :           "In spite  of all  this it  seems to  us that  the           legislation was  not incompetent. Under Entry 54 a           law could  of course be passed imposing a tax on a           person on  his own income. It is not disputed that           under that  entry a  law could  also be  passed to           prevent a  person from  evading the tax payable on           his own  income. As  is well-known the legislative

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         entries have to be read in a very wide manner and 951           so as  to include  all  subsidiary  and  ancillary           matters. So  Entry 54  should be  read not only as           authorising the  imposition of  a tax  but also as           authorising an  enactment which  prevents the  tax           imposed being  evaded. If  it were  not to  be  so           read, then  the admitted  power to tax a person on           his own  income might often be made infructuous by           ingenious contrivances.  Experience has shown that           attempts to evade the tax are often made."      We shall  now deal  with the  question relating  to the presumption contained in section 28-B of the Act. It is seen that if  the transit  pass is not handed over to the officer in-charge of  the check-post or barrier before his exit from the State  it shall  be  presumed  that  the  goods  carried thereby have  been sold  inside the  State by  the person in charge of the said goods. It is contended that the said rule virtually makes a person who has not actually sold the goods liable to  pay sales  tax and  it is  further argued  that a transporter being  just a transporter cannot be treated as a dealer within  the meaning  of that  expression  as  it  was defined in  the Act  at  the  time  when  section  28-B  was introduced into  the Act.  The appellants  contend that  the words ’it  shall be  presumed that the goods carried thereby have been  sold within the State’ in section 28-B of the Act as meaning that it shall be conclusively held that the goods carried thereby  have been sold within the State to buttress their argument  that a  tax is being levied on a transaction which is  not a sale at all under Entry 54 of List II of the Seventh  Schedule  by  introducing  a  legal  fiction.  This argument overlooks  the essential difference between the two sets of  words set  out above.  The meaning  of these  words would become  clear if  we read the definitions of the words ’may presume’, ’shall presume’, and ’conclusive proof’ given in section  4 of the Indian Evidence Act, 1872, although the said Act is not directly attracted to this case. These words mean as follows :           "4. ’May presume’. Whenever it is provided by this           Act that  the Court  may presume  a fact,  it  may           either regard  such fact  as  proved,  unless  and           until it  is disproved;  or may  call for proof of           it;           ’Shall presume’.  Whenever it  is directed by this           Act that Court shall presume a fact, it shall 952           regard such fact as proved, unless and until it is           disproved;           ’Conclusive proof’.  When one  fact is declared by           the Act  to be  conclusive proof  of another,  the           Court shall,  on proof of the one fact, regard the           other as  proved, and  shall not allow evidence to           be given for the purpose of disproving it."      In the  Indian Evidence Act, 1872 there are three cases where conclusive presumption may be drawn. They are sections 41, 112  and section  113. These are cases where law regards any amount  of other  evidence will not alter the conclusion to be  reached when  the basic facts are admitted or proved. In Woodroffe  & Amir  Ali’s Law  of Evidence  (Vol. I)  14th Edition at page 299 it is stated thus :           "Conclusive presumptions of law are :           ’rules  determining   the  quantity   of  evidence           requisite  for   the  support  of  any  particular           averment, which is not permitted to be overcome by           any proof that the fact is otherwise. They consist

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         chiefly  of   those  cases   in  which   the  long           experienced connection,  just alluded  to has been           found so  general and  uniform  as  to  render  it           expedient for the common good that this connection           should be  taken to  be inseparable and universal.           They have  been adopted  by common  consent,  from           motives of  public policy, for the sake of greater           certainty, and the promotion of peace and quiet in           the community;  and  therefore,  it  is  that  all           corroborating evidence  is dispensed with, and all           opposing evidence  is forbidden (Taylor, Ev., s.71           : Best, Ev., p. 317, s.304’).           .............................................           Rebuttable presumptions of law are, as well as the           former,           ’the  result   of  the  general  experience  of  a           connection between  certain facts  or things,  the           one 953           being usually  found to  be the  companion or  the           effect of  the other.  The connection, however, in           this class  is not so intimate or so uniform as to           be conclusively  presumed to  exist in every case;           yet, it is so general that the law itself, without           the aid  of a  jury, infers  the one fact from the           proved existence  of the  other in  the absence of           all opposing  evidence.  In  this  mode,  the  law           defines the  nature and the amount of the evidence           which is  sufficient to  establish a  prima  facie           case, and  to throw  the burden  of proof upon the           other  party;  and  if  no  opposing  evidence  is           offered, the  jury are  bound to find in favour of           the presumption.  A contrary  verdict might be set           aside as being against evidence. The rules in this           class of  presumptions as in the former, have been           adopted by  common consent  from motives of public           policy and  for the promotion of the general good;           yet not  as in  the former  class  forbidding  all           further evidence, but only dispensing with it till           some proof is given on the other side to rebut the           presumption raised."      Having regard  to the  definition  of  the  words  ’may presume’, it  is open  to a court where they are used in its discretion either to draw a presumption referred to in a law or may  not. The  words ’shall presume’ require the court to draw  a   presumption  accordingly,   unless  the   fact  is disproved. They  contain a  rule of  rebuttable presumption. These words  i.e., ’shall  presume’ are being used in Indian judicial lore  for over  a century  to convey  that they lay down a  rebuttable presumption  in respect  of matters  with reference to  which they  are used and we should expect that the U.P. Legislature also has used them in the same sense in which Indian  courts have understood them over a long period and not  as laying  down a rule of conclusive proof. In fact these presumptions  are not  peculiar to the Indian Evidence Act. They  are generally  used  wherever  facts  are  to  be ascertained by a judicial process.      The history  of the  rules  regarding  presumptions  is succintly given  in W.S.  Holdsworth’s ’A History of English Law’ (Vol.IX) at page 140 thus : 954           "From  time   to  time  the  ordinary  process  of           reasoning have suggested various inferences, which           have been treated by the courts in different ways.           Sometimes  they   are  treated  as  more  or  less

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         probable inferences  of fact;  and it is possible,           though by  no means  certain, that  in the  remote           past  most   presumptions   originated   as   mere           presumptions of  fact. Just  as  in  the  case  of           judicial notice, the courts, as a matter of common           sense, assume  the existence  of matters of common           knowledge without  further proof;  so they  easily           drew an  obvious in  ference from  facts proved or           admitted,  and  thus  created  a  presumption,  as           common sense  dictated. And  just as  the  truisms           which elementary  experience teaches  came  to  be           embodied in maxims which illustrate the origins of           the doctrine  of judicial  notice, so other maxims           arose which  illustrate the  origins, in that same           elementary experience, of some of the commonest of           the presumptions  known to  the law.  But  it  was           inevitable that  as the  law  developed,  some  of           these presumptions  should be  so frequently drawn           that they  took upon  themselves the  character of           rules of  laws and we shall see that, owing to the           exigencies of  primitive  methods  of  trial,  the           Legislature and the courts were active in creating           them. Some  of them were made or became only prima           facie  rules   -  rules,   that  is,   which  were           rebuttable by  further evidence.  Others were made           or became  irrebuttable, and  therefore, in effect           rules of  law. Others  hovered uncertainly  on the           border  line   of  rebuttable   and   irrebuttable           presumptions......"      A presumption  is not in itself evidence but only makes a prima  facie case  for party in whose favour it exists. It is a  rule concerning  evidence. It  indicates the person on whom  the   burden  of   proof  lies.  When  presumption  is conclusive, it obviates the production of any other evidence to dislodge  the conclusion  to be drawn on proof of certain facts. But  when it  is rebuttable  it only  points out  the party on  whom lies  the duty of going forward with evidence on the  fact presumed,  and when  that  party  has  produced evidence fairly  and reassonably  tending to  show that  the real fact is not as presumed the 955 purpose of  presumption is  over.  Then  the  evidence  will determine the true nature of the fact to be established. The rules of  presumption are  deduced  from  enlightened  human knowledge and  experience and are drawn from the connection, relation and coincidence of facts, and circumstances.      In Izhar  Ahmad khan v. Union of India, [1962] Suppl. 3 S.C.R. 235  @ 257  Gajnendragadkar,  J.  (as  he  then  was) explains the meaning of a rebuttable presumption thus :           "It is  conceded, and  we think,  rightly, that  a           rule prescribing  a rebuttable  presumption  is  a           rule of  evidence. It is necessary to analyse what           the rule  about the  rebuttable presumption really           means. A  fact A  which has relevance in the proof           of  fact   and  inherently   has  some  degree  of           probative or  persuasive value  in that behalf may           be weighed  by a  judicial mind after it is proved           and before  a conclusion  is reached as to whether           fact is  proved or  not. When  the law of evidence           makes  a   rule   providing   for   a   rebuttable           presumption that on proof of fact A, fact shall be           deemed  to   be  proved  unless  the  contrary  is           established, what  the rule  purports to  do is to           regulate  the  judicial  process  of  appreciating           evidence and to provide that the said appreciation

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         will draw  the inference  from the proof of fact A           that fact has also been proved unless the contrary           is established.  In other  words, the  rule  takes           away judicial  discretion either to attach the due           probative value  to fact  A or  not  and  requires           prima facie the due probative value to be attached           in the matter of the inference as to the existence           of  fact   B,  subject  of  course,  to  the  said           presumption  being   rebutted  by   Proof  to  the           contrary..."      In our  opinion a  statutory provision  which creates a rebuttable presumption  as regards  the proof  of a  set  of circumstances which  would make  a transaction liable to tax with the  object of  preventing evasion of the tax cannot be considered as  conferring on  the  authority  concerned  the power to  levy a  tax which the Legislature cannot otherwise levy. A  rebuttable presumption  which is  clearly a rule of evidence has 956 the effect of shifting the burden of proof and it is hard to see how it is unconstitutional when the person concerned has the opportunity  to  displace  the  presumption  by  leading evidence.      We are  of the view that the words contained in-section 28-B of  the Act  only require  the authorities concerned to raise a rebuttable presumption that the goods must have been sold in  the State if the transit pass is not handed over to the officer  at the check-post or the barrier near the place of exist  from the  State. The  transporter concerned is not shut out  from showing  by producing  reliable evidence that the goods  have not  been actually sold inside the State. It is still  open to  him to  establish that the goods had been disposed of  in a  different way.  He may establish that the goods have  been delivered  to some  other  person  under  a transaction which  is not  a sale,  they have  been consumed inside the State or have been redespatched outside the State without effecting  a sale  within the  State etc. It is only where the  presumption  is  not  successfully  rebutted  the authorities concerned  are required to rely upon the rule of presumption in  section 28-B  of the  Act. It is, therefore, not correct  to say that a transaction which is proved to be not a  sale is  being subjected  to sales  tax. me authority concerned before levying sales tax arrives at the conclusion by a  judicial process  that the goods have been sold inside the State  and in doing so relies upon the statutory rule of presumption contained  in section  28-B of the Act which may be rebutted by the person against whom action is taken under section 28-B  of the  Act. When  once a  finding is recorded that a person has sold the goods which he had brought inside the State,  then he  would be a dealer even according to the definition of  the word  ’dealer’ as  it stood from the very commencement of  the Act  subject to  the  other  conditions prescribed in  this behalf  being fulfilled.  A  person  who sells goods  inside the  State of Uttar Pradesh and fulfills the other  conditions prescribed  in that behalf is a dealer even as  per amendments  made in  1959, 1961, 1964, 1973 and 1978  to  the  said  definition.  There  is,  therefore,  no substance in  the contention  that a  transporter was  being made liable for the first time after 1979 with retrospective effect to  pay sales  tax on  a transaction  which is  not a sale. Tax  becomes payable  by him  only after  a finding is recorded that  he has sold the goods inside the State though with the help of the presumption which is a rebuttable one. 957      The levy  of sates  tax on goods which are held to have

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been  sold   inside  the   State  cannot  be  considered  as contravening  Article   301   of   the   Constitution.   The restrictions imposed  are not also shown to be unreasonable. They do  not unduly hamper trade. On the other hand they are imposed in  the public  interest. The  contentions based  on article 301  and Article  19(1)(g) of  the Constitution are, therefore, without substance.      The foregoing  discussion disposes  of the  contentions regarding legislative  competence or  unreasonable character of tile  provisions contained in section 28-8 of the Act and rule 87  of  the  Rules.  They  are  introduced,  as  stated earlier, to  check evasion  and to  provide a  machinery for levying tax  from persons  who dispose  of goods  inside the State and  avoid tax which they are otherwise liable to pay. The  law  provides  enough  protection  to  them  and  makes provision to  enable them  to show that they are in fact not liable to  pay any  tax. The  decision  of  the  High  Court upholding the  constitutionality of  section 28-B of the Act and rule 87 of the Rules does not call for any interference. We uphold the validity of the said provisions.      This, however,  does not  solve all  the problems posed before us  by some  of the parties who are involved in these cases. We  have found  that  in  some  cases  the  assessing authorities  have   made  assessments   ex   parte   without appreciating the  true meaning  of the  rule of  presumption contained in  section 28-B  of the  Act. They have proceeded virtually on  the basis  that the section contains a rule of conclusive presumption.  Even the  assessees have  failed to realise the  meaning of  that section  and do  not appear to have made  any attempt  to  rebut  the  presumption.  It  is noticed that in many cases even genuine transporters who are not at  all engaged  in the business of purchase and sale of goods and  have not  effected any  sale of  goods have  been found liable for large amounts of tax, which they could have avoided, if  the authorities  and the assessees had realised the true  effect of the provisions contained in section 28-B of the Act. This has led to serious prejudice in many cases. When this  fact was  brought to  the notice  of the  learned counsel for  the State  of  Uttar  Pradesh  he  very  fairly submitted on behalf of the Commissioner of Sales Tax thus: 958           ’Whereas it  was observed  by the Hon’ble Court in           the course  of the discussion that the presumption           under section 28-B is a rebuttable presumption.           Whereas  it   was  pointed   out  that  while  the           Commissioner of Sales Tax had issued a circular in           1985 to  the effect  that ways  and means  will be           found to  ensure that inter-State transporters who           are not  engaged in  buying or selling of goods in           the Uttar  Pradesh are  not unduly  inconvenienced           but  the   said  circular   was  not  extant  when           assessments were made in numerous pre-1985 cases.           Whereas it  was mentioned  by the  appellants  and           petitioners that  it would be virtually impossible           to  produce   the   exit   permits   of   pre-1979           assessments and that it would not be reasonable to           treat them  as dealers  who  had  sold  assessable           goods  in   Uttar  Pradesh.  Now,  therefore,  the           Commissioner of Sales Tax states as under :-           1. A  large number  of  Civil  Appeals  have  been           preferred by  way of  Special  Leave  against  the           Judgment and Order of Allahabad High Court dated e           25.5.82 by  which the  Allahabad  High  Court  was           pleased to  uphold the  constitutional validity of           sec. 28-B of the U.P. Sales Tax Act and rule 87 of

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         the U.P.  Sales Tax  Rules. A large number of writ           petitions have  been filed under Article 32 of the           Constitution    of     India    challenging    the           constitutional validity  of sec.  28-B of the U.P.           Sales Tax Act.           2. In  the Civil  Appeals, this  Hon’ble Court was           pleased to  pass  an  interim  order  staying  the           recovery of  sales tax  for the  period  prior  to           1.6.79. mis  Hon’ble Court  was pleased to clarify           that there  would be  no stay  of payment  of  tax           after 1.6.1979.           3. During  the hearing  of these  appeals, learned           counsel for  the appellants  pointed out that some           difficulties and hardships were being faced by the 959           genuine  transporters.   Keeping   in   view   the           submissions made  by the  learned counsel  for the           appellants, this  Hon’ble  Court  was  pleased  to           suggest to  the counsel appearing for the State to           evolve a  suitable method  to ensure  that the Act           and the  provisions would  not operate unjustly or           harshly against bona fide transporters.           4. Counsel  appearing for  the State  of U.P.  has           agreed on  behalf of the Respondents to re-examine           all the assessments in respect of the period prior           to 1.6.1979  (the date  mentioned by  this Hon’ble           Court in  the interim  order). Counsel states that           all assessment orders ex parte or otherwise, shall           be withdrawn.           5. A  fresh notice  containing as  far as possible           relevant  particulars,  would  be  issued  to  the           assessees/appellants/petitioners. The  authorities           will  finalise   the  assessment   proceedings  in           accordance with  law. The  authorities  will  also           bear in  mind that  the presumption  contained  in           section 28-B  that if  the  transporter  fails  to           produce the  transit pass  at the exit check-post,           then it  would be  presumed that the goods carried           have been  sold within  the State  by the owner or           person in  charge of  the vehicle, is a rebuttable           presumption  and   it  would   be  open   to   the           transporter,   assessee,    to    displace    this           presumption  by  producing  adequate  material  or           evidence.           6. In respect of the assessments after 1.6.79, the           department will  withdraw any  ex parte  orders of           assessment which  may have  been passed.  A  fresh           notice giving an opportunity shall be given to the           transporter /  assessee to  present his  case. The           assessments made  after 1.6.79  after affording an           opportunity to  the transporter  / assessee  shall           not be  disturbed except  in accordance  with  law           (i.e.  by  way  of  appeal  or  any  other  remedy           provided under the Act).           7. The revised assessment proceedings pursuant to 960           this order  may be  completed within a period of 5           months from today.           8.  The  assessing  authorities  will  pass  fresh           orders  of   assessment  in  accordance  with  law           uninfluenced by the previous orders which may have           been made.           9. It  may be  clarified that  Sec. 21 of the U.P.           Sales Tax Act will not be a bar to the instant re-           assessments."

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    On going  through the  above proposal  we feel  that it would  meet  the  ends  of  justice  if  the  cases  of  the appellants and  petitioners are  permitted to  be dealt with accordingly. We  give our approval to the said proposals and make an  order accordingly.  Any assessment made pursuant to the above orders shall not be open to question on the ground that it  does not satisfy the period of limitation contained in section  21 of  the Act.  We also  make it clear that any person who  is aggrieved  by the  order  of  assessment  may question it  in appeal or revision as provided by the Act on all grounds  except on  the ground  that it  had been passed beyond time. We also direct that if any of the appellants or petitioners  has,  depending  upon  the  pendency  of  these appeals or  petitions, not  filed  any  appeal  or  revision against any  order passed  under the  Act, such appellant or petitioner may  prefer such  appeal or  revision as the case may be on or before April 30. 1986 and if any such appeal or revision is  filed it  shall be disposed of by the concerned authority without  raising any objection as to the period of limitation.      These  appeals  and  writ  petitions  are  disposed  of accordingly. There shall be no order as to costs. P.S.S. 961