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PETITIONER: STATE OF UTTAR PRADESH & ORS.

       Vs.

RESPONDENT: KASTURI LAL HAR LAL

DATE OF JUDGMENT03/08/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) OZA, G.L. (J)

CITATION:  1987 SCR  (3) 756        1988 SCC  Supl.  302  JT 1987 (3)   237        1987 SCALE  (2)191

ACT:     Central  Sales Tax Act, 1956--Sub-ss. (1) and (2) of  s. 9---Read with s. 3(b)--’Appropriate State’ having  jurisdic- tion  to  impose and collect Central Sales Tax  on  sale  of goods  effected by transfer of documents of title  to  goods during their movement from one State to another.

HEADNOTE:     Section 3 of the Central Sales Tax Act, 1956  stipulates that  a  sale or purchase of goods shall be deemed  to  take place in the course of inter-State trade or commerce if  the sale or purchase(a) occasions the movement of goods from one State to another, or (b) is effected by a transfer of  docu- ments  of title to the goods during their movement from  one State  to another. Sub-s. (1) of s. 9 provides that the  tax payable  by  any  dealer under this Act on  sales  of  goods effected  by him in the course of inter-State trade or  com- merce,  whether such sales fall within clause (a) or  clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that  Government in accordance with the provisions of sub-section (2), in the State  I from which the movement of the goods commenced  and sub-s.  (2)  thereof provides that the authorities  for  the time  being  empowered  to assess,  re-assess,  collect  and enforce  payment of any tax under general sales tax  law  of the appropriate State shall, on behalf of the Government  of India,assess, re-assess, collect and enforce payment of tax, including any , etc.     The  respondent, a dealer in coal, had effected  certain transactions by endorsing Bilties (Railway Receipts made out in  its name to various parties in Uttar Pradesh  while  the goods  relating to the Bilties were in a state  of  movement from  Bihar to Uttar Pradesh. The bills connected with  such Bilties  had also been prepared by the respondent which  had realised  the money from the purchasing parties.  The  Sales Tax  Officer, Lucknow was of the view that the sale of  coal effected  in this manner came under inter-State sale and  as such was liable under section 3(b) of the Central Sales  Tax Act, 1956. Disagreeing with the contention of the respondent that  the goods having been sold to an unregistered  dealer, the respondent too being not a registered dealer during  the particular year. there was no question of imposition of  any

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sales tax, the Sales Tax 757 Officer imposed the liability under that provision which was challenged  by the respondent by a writ petition.  The  High Court, allowing the petition, set aside the order of assess- ment. Dismissing the appeal,     HELD: The Sales Tax Officer in Uttar Pradesh was not the appropriate  authority either to impose or collect the  duty on inter-State sale. [764G]     (i)  Sub-s.(1) of s. 9 confers jurisdiction to make  the levy and collect the tax on the State where the movement  of the  goods  commences,  and so the  determinative  test  for discovering  the jurisdiction of a particular State,  in  an inter-State  sale,  is the place where the movement  of  the goods commences. The words "appropriate Government" given in sub-s.  (2)  of that section must necessarily refer  to  the State  which by s. 9(1) has been conferred  jurisdiction  to levy and collect the tax. [763D-E]     (ii)  It is clear from an analysis of the scheme of  the Central  Sales Tax Act, 1956 that it is the Central  Govern- ment  which imposes tax on inter-State sale but it  is  col- lected  by the Government in accordance with the  provisions of  sub-s. (2) of s. 9 of the Act in the State. It is  clear from sub-s. (2) of s. 9 that the "appropriate State" imposes and  collects the tax on behalf of the Government of  India. In  order to be a sale or inter-State transaction  the  sale must  occasion the movement of goods. In the  instant  case, there were Railway receipts which were endorsed in favour of the parties in U.P. It is by that endorsement that title was transferred  to  the purchasers and that  transaction  occa- sioned  the  movement of the goods, in other  words,  caused inter-State  sales  to take place, namely,  the  sale  which occasions  the movement of goods from one State to  another, from the State of Bihar to the State of U.P. [762E-G]     (iii) The proviso to s. 9(1) can apply only if the  sale is  by  a registered dealer. Here the admitted  position  is that  the  dealer is not a registered one. It was  urged  on behalf  of the revenue that inasmuch as s. 7 required  every dealer  to obtain registration within the prescribed  period and in the event of not obtaining such a registration, penal consequences ensue under s. 10, the words "registered  deal- er" as used in the proviso to s. 9 do not refer  necessarily to a dealer who has obtained registration under s. 7, but to a  dealer who should have obtained such a  registration.  In other words, counsel tried to import the equitable maxim  by stating an argument in the manner that if registra- 758 tion  in the facts of a particular case was compulsory  then such  registration should be deemed to have been made as  by law  enjoined that it should have been made. Equity, it  was said,  "looks upon a thing as done which ought to have  been done". But that is not the position in a fiscal statute. The fiscal statute with which we are concerned recognises regis- tration  and  non-registration and  imposes  liabilities  on registration  and consequences for non-registration.  It  is not, therefore, possible to look upon a thing as done  which ought to have been done for which Legislature has separately featured differently in a fiscal statute of this nature. The Act  provides  machinery provisions for the  imposition  and realisation  of the Central Sales Tax. It must be read in  a commonsense point of view. [763E-H; 764A-B]     (iv)  Sub-s. (2) of s. 6 provides that where a  sale  of goods  in  the course of inter-State trade or  commerce  has either occasioned the movement of such goods from one  State

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to  another or has been effected by a transfer of  documents of title to such goods during their movement from one  State to another, any subsequent sale during such movement effect- ed by a transfer of documents of title to such goods to  the Government or to a registered dealer other than the  govern- ment,  if  the goods are of the description referred  to  in sub-section (3) of section 8, shall be exempt from tax under this  Act.  The proviso stipulates that no  such  subsequent sale shall be exempt from tax under this sub-section  unless the  dealer effecting the sale furnishes to  the  prescribed authority in the prescribed manner and within the prescribed time, a certificate as mentioned therein. In this case,  the subsequent sale if there be any in U.P. did not occasion the movement  of  the  goods. It is therefore,  not  subject  to inter-State sales tax. [764D-F]

JUDGMENT:      CIVIL  APPELLATE  JURISDICTION: Civil  Appeal  No. 5(NT) of 1975.     From  the  Judgment and Order dated 15.9.  1971  of  the Allahabad  High Court in Civil Misc. Writ Petition No.  5324 of 1970.     Prithvi  Raj, Mrs. Rekha Joshi and Ashok  K.  Srivastava for the Appellants.     Manoj  Swarup, ’Ms. Lalita Kohli and Pramod  Swarup  for the Respondent. The Judgment of the Court was delivered by 759     SABYASACHI  MUKHARJI, J. The question involved  in  this appeal is whether the respondent herein M/s. Kasturi Lal Hat Lal  is liable to the State of Uttar Pradesh for payment  of the Central Sales Tax in respect of the transactions of sale of coal. The Sales Tax Officer in this case passed an  order making  the  respondent  liable for the payment  of  tax  on certain  transactions  during the period from  1st  October, 1965 to 31st March, 1966 amounting to Rs.9,08,548.81 and tax liability was imposed at the rate of 2% thereof amounting to Rs. 18,170-98. The Sales Tax Officer found that the assessee carried  on  business in coal. The Sales Tax  Officer  noted that  the Bilties, concerning this kind of sale of coal  had been prepared in the name of the dealer. The dealer endorsed these Bilties (R.Rs) and gave these to the  diverse  parties in  U.P. The parties in U.P. on receiving these Bilties  got the  goods  released. The dealer admitted that  the  Bilties (R.Rs.)  having  been endorsed to the parties in  U.P.  were given to them at the time, while the goods were in the state of movement between Bihar and U.P. The bills connected  with Bilties  (R.Rs.) of this kind had also been prepared by  the dealer  and the money had been realised by the  dealer  from the  purchasing  parties. The Sales Tax Officer was  of  the view  that  the sale of coal effected in  that  manner  came under  interstate sale and as such was liable under  section 3(b)  of  the Central Sales Tax Act, 1956,  by  transfer  of document when the goods were in movement. It was the case of the  dealer that the goods had been sold to an  unregistered dealer  and he too was not a registered dealer for the  year 1965-66.  Therefore, there was no question of imposition  of any Sales Tax. The Sales Tax Officer did not agree with this view  and  imposed  liability for the said  Rs.  18  170-98. Challenging  the  said imposition an application  was  moved before the High Court under Article 226 of the  Constitution by the dealer. The application was allowed and the order  of assessment was set aside.

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   The  High Court having considered the facts and  circum- stances  of this case noted that the main contention  raised on behalf of the assessee was that inasmuch as the  movement of the goods had started from the State of Bihar, the tax if any, payable on such sales, was assessable in Bihar and  the Sales  Tax Officer, Lucknow had no jurisdiction to make  the order of assessment. The High Court in the light of  Section 9(1)  of the Central Sales Tax Act was of the view that  the "appropriate State" would be the Sales Tax Officer in  Bihar and as such the imposition was not possible in the manner it was  done. The assessee succeeded before the High  Court  on this ground. The question for determination is whether  that is so? 760     The High Court noted that in the previous case of  Karam Chand  Thapar and Bros. (Coal Sales) Ltd. v. The  Sales  Tax Officer, Moradabad and others, (Civil Miscellaneous Writ No. 4356 of 1969) the High Court had taken the same view on more or less identical facts on 24th of July, 1970. We were  told at  the Bar that in the said matter leave had  been  granted under  Article  136 of the Constitution by  this  Court.  We wanted  to know whether the matter had been disposed  of  by this  Court and if so what was the fate of the same and  had adjourned this appeal on this account. Neither the  assessee nor the revenue has been able to enlighten us on this point.     Under  the  Central  Sales Tax  Act,  1956  (hereinafter called ’the Act’), Section 2(a) stipulates that the  "appro- priate State" means (i) in relation to a dealer who has  one or  more places of business situate in the same State,  that State; (ii) in relation to a dealer who has places of  busi- ness  situate  in different States, every  such  State  with respect  to the place or places of business  situate  within its  territory.  On the other hand clause (b) of  section  2 defines "dealer" to mean any person who carries on  (whether regularly or otherwise) the business of buying and  selling, in  the manner indicated in sub-clause (b). It is  not  con- fined to a registered dealer only. Section 3 is the charging section and is in Chapter II dealing with the formulation of principles for determining when a sale or purchase of  goods takes place in the course of interState trade or commerce or outside  a State or in the course of import or export.  Sec- tion 3 stipulates that a sale or purchase of goods shall  be deemed  to take place in the course of inter-State trade  or commerce if the sale or purchase--(a) occasions the movement of goods from one State to another, or (b) is effected by  a transfer  of  documents of title to the goods  during  their movement  from one State to another. There are two  explana- tions to that section and explanation 1 provides that  where goods are delivered to a carrier or other bailee for  trans- mission,  the movement of the goods shall, for the  purposes of  clause  (b), be deemed to commence at the time  of  such delivery  and terminate at the time when delivery  is  taken from  such carrier or bailee. Explanation 2 enjoins that  if the  movement of goods commences and terminates in the  same State it shall not be deemed to be a movement of goods  from one  State to another by reason merely of the fact  that  in the  course  of  such movement the goods  pass  through  the territory  of  any  other State. Section 6  deals  with  the liability to tax on inter-State sales. Section 6(1) provides that  subject to the other provisions contained in the  Act, every dealer is liable to pay tax under the Act on all sales effected  by him in the course of inter-State trade or  com- merce  during  any year on and from the  date  so  notified. Sub-section (1A) of section 761

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6  provides that a dealer shall be liable to pay  tax  under the  Act on sale of any goods effected by him in the  course of inter-State trade or commerce notwithstanding that no tax would  have  been  leviable (whether on the  seller  or  the purchaser) under the sales tax law of the appropriate  State if  that sale had taken place inside that State.  Subsection (2)  of section 6 stipulates that  notwithstanding  anything contained  in sub-section (1) or sub-section (1A),  where  a sale  of  any goods in the course of  inter-State  trade  or commerce  has either occasioned the movement of  such  goods from one State to another or has been effected by a transfer of  documents of title to such goods during  their  movement from  one State to another, any subsequent sale during  such movement effected by transfer of documents of title to  such goods to the Government or to a registered dealer other than the Government, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax under the Act. Sub-section (2) of section 6 provides that no such  subsequent  sale shall be exempt from tax  under  that sub-section  unless the dealer effecting the sale  furnishes to  the  prescribed authority in the prescribed  manner  and within  the prescribed time or within such further  time  as that  authority  may, for sufficient cause,  permit,--(a)  a certificate duly filled and signed by the registered  dealer from whom the goods were purchased containing the prescribed particulars  in the prescribed form obtained from  the  pre- scribed  authority; and (b) if the subsequent sale  is  made (i)  to  a registered dealer, a declaration referred  to  in clause  (a) of sub-section (4) of section 8, or (ii) to  the Government,  not  being a registered dealer,  a  certificate referred  to in clause (b) of sub-section (4) of section  8. Sub-section (1) and sub-section (2) of section 9 of the  Act are material for our present purpose and read as follows:               "9(1) The tax payable by any dealer under this               Act  on sales of goods effected by him in  the               course  of  inter-State  trade  or   commerce,               whether  such sales fail within clause (a)  or               clause  (b) of section 3, shall be  levied  by               the Government of India and the tax so  levied               shall  be  collected  by  that  Government  in               accordance  with the provisions of  subsection               (2),  in the State from which the movement  of               the goods commenced;                         (2) Subject to the other  provisions               of this Act and the rules made thereunder, the               authorities  for the time being  empowered  to               assess, re-assess, collect and enforce payment               of any tax under general sales tax law of  the               appropriate  State  shall, on  behalf  of  the               Government of               762               India, assess, re-assess, collect and  enforce               payment of taX, including any penalty, payable               by  a dealer under this Act as if the  tax  or               penalty  payable by such a dealer  under  this               Act  is  a tax or penalty  payable  under  the               general  sales tax law of the State;  and  for               this  purpose they may exercise all or any  of               the  powers they have under the general  sales               tax  law of the State; and the  provisions  of               such  law,  including provisions  relating  to               returns,   provisional   assessment,   advance               payment of tax, registration of the transferee               of any business, imposition of the tax liabil-               ity  of a person carrying on business  on  the

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             transferee of, or successor to, such business,               transfer  of  liability of any firm  or  Hindu               undivided  family to pay tax in the  event  of               the  dissolution of such firm or partition  of               such  family, recovery of tax from third  par-               ties, appeals, reviews, revisions, references,               compounding  of  offences  and  treatment   of               documents  furnished by a dealer as  confiden-               tial, shall apply accordingly:                         Provided  that  if in any  State  or               part thereof there is no general sales tax law               in force, the Central Government may, by rules               made  in this behalf make necessary  provision               for  all  or any of the matters  specified  in               this sub-section."     It  is clear from the analysis of the scheme of the  Act that  the  Central Government imposes tax and it is  by  the Central  Government the tax is imposed for inter-State  sale but it is collected by the Government in accordance with the provisions of sub-section (2) of section 9 of the Act in the State.  It will be clear from sub-section (2) of  section  9 that the "appropriate State" imposes and collects the tax on behalf of the Government of India. The question is which  is the  "appropriate State" in a transaction of the  nature  or the  type  with which we are concerned Where tax  on  inter- State  sale was sought to be imposed. In order to be a  sale or inter-State transaction the sale must occasion the  move- ment  of  goods. Here in the instant case, it  appears  that there were Railway receipts which were endorsed in favour of the parties in U.P. It is by that endorsement that title was transferred to the purchases and that transaction occasioned the movement of the goods, in other words, caused inter-State sales to take place, namely, the  sale  which occasions the movement of  goods  from  one State  to  another from the State of Bihar to the  State  of U.P.     Counsel  for the revenue sought to urge at one point  of time  that as the railway receipts were endorsed in U.P.  in favour of different 763 parties  such a sale would not be an inter-State  sale  that would have occasioned the movement of goods. If that is  the position  here which counsel for the revenue sought to  urge then a tax on such sales as an internal sale might have been levied  under the U.P. Sales Tax Act. But that would not  be the case of sale on a transaction which occasions the  move- ment. For this purpose section 9 provides for the collection and  levy by the "appropriate Government". The  "appropriate Government"  means  in relation to a dealer who has  one  or more  places  of business situate in the  same  State,  that State or in relation to a dealer who has places of  business situate  in different States, every such State with  respect to the place or places of business situate within its  tern- tory.  It  is not the position in the instant case.  It  was contended  on  behalf of the revenue that in  the  State  of Uttar  Pradesh,  the concerned Sales Tax Officer  was  fully competent to make the assessment. The High Court was of  the view that this argument proceeded on an omission to consider the  opening  words  of section 2 which  is  the  definition clause,  and  which makes the definitions  given  thereunder subject to the context. Sub-section (1) of section 9 confers jurisdiction  to make the levy and collection of the tax  on the State where the movement of the goods commences, and  so the determinative test for discovering the jurisdiction of a particular State, in an inter-State sale, is the place where

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the movement of the goods commences. The words  "appropriate Government"  given in sub-section (3) of that  section  must necessarily  refer  to the State which by section  9(1)  has been conferred jurisdiction to levy and collect the tax. The provisions  must be harmonised. It was next  contended  that the  case  of the respondent fell within the  ambit  of  the proviso  to Section 9(1). We have.noted that the  provisions of the proviso can apply only if the sale is by a registered dealer. Here the admitted position is that the dealer is not a registered one. It was urged on behalf of the revenue that inasmuch  as section 7 of the Act required every  dealer  to obtain registration within the prescribed period and in  the event  of  not obtaining such a registration,  penal  conse- quences ensue under section 10 of the Act, the words "regis- tered  dealer"  as used in the proviso to section 9  do  not refer necessarily to a dealer who has obtained  registration under  section 7, but to a dealer who should  have  obtained such a registration. In other words, counsel tried to import the  equitable  maxim by stating an argument in  the  manner that  if registration in the facts of a particular case  was compulsory  then such registration should be deemed to  have been made as by law enjoined that it should have been  made. Equity,  it was said the maxim long time ago "looks  upon  a thing  as done which ought to have been done." But  that  is not  the  position in a fiscal statute. The  fiscal  statute with which we are concerned recognised registration and 764 non-registration and imposes liabilities on registration and consequences  for  non-registration. It is  not,  therefore, possible  to look upon a thing as done which ought  to  have been  done  for which Legislature  has  separately  featured differently  in  a fiscal statute of this  nature.  The  Act provides machinery provisions for the imposition and  reali- sation  of the Central Sales Tax. It must be read in a  com- monsense point of view.     It  is clear here that registration of dealer is  impor- tant because the proviso states that in the case of sale  of goods  during their movement from one State to another,  the sale  subsequent to first sale in respect of the same  goods being  also a sale which fell under sub-section (2) of  sec- tion  6, the tax shall be levied and collected on  a  subse- quent  sale which had been effected by a transfer  of  docu- ments  of title to such goods by a registered dealer in  the State  from which the registered dealer obtained or  as  the case  may  be  could have obtained the  form  prescribed  in clause  (a)  of sub-section (4) of section 8 of the  Act  in connection  with purchase of such goods. Sub-section (2)  of section 6 provides that where a sale of goods in the  course of  inter-State trade or commerce has either occasioned  the movement of such goods from one State to another or has been effected  by a transfer of documents of title to such  goods during their movement from one State to another, any  subse- quent  sale during such movement effected by a  transfer  of documents  of title to such goods to the Government or to  a registered  dealer other than the government, if  the  goods are  of  the description referred to in sub-section  (3)  of section  8,  shall be exempt from tax under  this  Act.  The proviso  stipulates  that no such subsequent sale  shall  be exempt  from  tax under this sub-section unless  the  dealer effecting the sale furnishes to the prescribed authority  in the  prescribed  manner and within the  prescribed  time,  a certificate  as mentioned therein. In this case, the  subse- quent  sale  if there be any in U.P. did  not  occasion  the movement  of  the  goods. It is therefore,  not  subject  to inter-State sales tax.

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   In  that view of the matter we are of the  opinion  that the  Sales Tax Officer in U.P. was not the  appropriate  au- thority either to impose or collect the duty on  inter-State sale.  The  High Court was right in the view it  took.  This appeal must therefore, be dismissed with costs. H.L.C.                                          Appeal  dis- missed. 765