- (1.) IN Cr.R.C. Nos. 88 and 89 of 1953, the accused have been convicted under Section 15(b) of the Madras General Sales Tax Act and each of them has been sentenced to pay a fine of Rs. 25, in default to undergo simple imprisonment for fifteen days. The sales tax amounts of Rs. 3,125-4-0 and Rs. 4,000-6-6 respectively have been directed to be recovered from them as if they were fines. IN Cr.R.C. Nos. 90 and 91 of 1953, the accused have been convicted under the same section and each of them sentenced to pay a fine of Rs. 75, in default to undergo simple imprisonment for fifteen days. IN addition, the sales tax amounts due, viz., Rs. 3,577-6-0 and Rs. 1,522-7-3 respectively, have been directed to be recovered from them as if they were fines. The facts in each of these cases are the same and accordingly the order of the learned Magistrate in each of these cases is also, in substance, the same. The witnesses examined for the prosecution are also the same and the defence raised before the learned Magistrate in each of the cases was also the same. These revision cases against the said orders of the learned Magistrate have been posted together before this Bench for being dealt with in a batch for the reason that they raise common grounds on which the accused seek to set aside the orders of the learned Magistrate.
(2.) THE accused are merchants dealing in hides and skins in Salem. THEir business consists in the purchase of skins and hides and exporting the same to foreign countries. In Cr.R.C. No. 88 of 1953, the accused were called upon to pay sales tax in the sum of Rs. 3,126-4-0 which represented the balance payable out of the sum of Rs. 5,519-13-0 to which the accused were assessed for the year 1950-51. This assessment is said to have been made on the purchases of skins made by the accused in pursuance of orders placed with them by the foreign companies for the supply of the same. In Cr.R.C. No. 89 of 1953, the same accused as in Cr.R.C. No. 88 of 1953, were assessed to sales tax for the months of April to September, 1951, by the Assistant Commercial Tax Officer, Salem, in the total sum of Rs. 4,000-6-6 said to be due from the company on the skins purchased by them. In Cr.R.C. No. 90 of 1953, there has been a provisional assessment against the accused for the months of May to September, 1951, in respect of sales tax due for the skins purchased by them. Similarly in Cr.R.C. No. 91 of 1953, the accused was assessed by the Assistant Commercial Tax Officer, Salem Town, to an aggregate sum of Rs. 2,652-5-9 for the year 1950-51. THE prosecution in this case is in respect of the sum of Rs. 1,522-7-3 representing the balance of the assessment due and payable by the accused. The charge against all these accused is that they, having been legally assessed to sales tax, failed to pay either the whole or part of the said tax, in spite of an order of assessment having been served on them, as also a notice of demand calling upon them to make payment of the tax due within the stipulated period of time, and that such failure on the part of the accused brings them within the scope of Section 15(b) of the Madras General Sales Tax Act. Section 15(b) is to the effect that any person who fails to pay within the time allowed any tax assessed on him or any fee due from him under the Act shall, on conviction by a Presidency Magistrate or a Magistrate of the First Class, be liable to a fine which may extend to Rs. 1,000 and, in the case of conviction under clause 15(b), (d), (f) or (g) the Magistrate shall specify in the order the tax, fee or other amount which the person convicted has failed or evaded to pay or has wrongfully collected and the tax, fee or amount as specified shall be recoverable as if it were a fine. It is not disputed in these cases that there was a tax assessed on the accused in each of the cases, that a time has been prescribed within which the tax was to be paid and that the accused failed to pay the tax so assessed and demanded. In the lower Court, all the accused raised a single legal defence, viz., that the skins or hides were purchased by them in the course of their export out of the territory of India, and, that under the provisions of Article 286(1)(b) of the Constitution of India, the State is not empowered to impose a tax on goods so purchased in the course of export out of the territory of India, that the sales and purchases in question were not liable to any tax, that the assessment levied by the Commercial Tax Authorities was invalid and therefore the accused were not liable to pay the sales tax so assessed. The prosecution, however, contended that it was not open to the accused to raise any question as to the validity of the assessment levied by the Commercial Tax Authorities under the Act in a prosecution laid against them for non-payment of the tax assessed and that Section 16A of the Madras General Sales Tax Act was a bar against the raising of any such question. The learned Magistrate, relying upon the decision of Panchapakesa Ayyar, J., in In re Gigina Pasha Sahib ([1950] 1 S.T.C. 240; 1950 M.W.N. (Crl.) 57; (1950) 1 M.L.J. 231) and also of Ramaswami, J., in Hajee Meeran v. The Public Prosecutor (Crl. R.P. No. 11 of 1952) to the effect that Section 16A is not ultra vires of the Constitution, decided against the accused, holding that it was not open to the accused to question before a Criminal Court the validity of the assessment made by the Commercial Tax Authorities and overruling the objection of the accused that Section 16A of the Madras General Sales Tax Act was invalid as it was opposed to Article 286(1)(b) of the Constitution of India, the same having been enacted before the Constitution. The learned Magistrate, therefore, declined to go into the question of the validity or otherwise of the assessments in respect of which the accused were prosecuted in the light of Article 286(1)(b) or other Articles of the Constitution. In view of the arguments advanced before us by Mr. K. S. Jayarama Ayyar appearing on behalf of the petitioners and by the learned Advocate General appearing for the State, it seems to be necessary that we should bear in mind the scheme of the Act, before we could consider the various points raised by the learned counsel for the petitioners on the question of the validity of the convictions. Section 3 of the Madras General Sales Tax Act (Act IX of 1939) is the section that seems to levy sales tax in sale of goods. It enacts that subject to the provisions of the Act, (a) every dealer shall pay for each year a tax on his total turnover for each year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover. There is a proviso to sub-clause (b) which it is not necessary to extract here, as it is not strictly relevant to the case before us. Sub-clause (2) of the same section provides that subject as aforesaid, the sale of any of the goods mentioned in the various items given under this sub-clause shall be subject to a tax at the rate specified in respect thereof, at such single point in the series of sales by successive dealers as may be prescribed; and the tax shall be paid by the dealer concerned on his turnover in each year relating to such goods, and shall be in addition to the tax to which he is liable under sub-section (1) on his total turnover for the year. Sub-section (3) of Section 3 provides :- "A dealer whose total turnover in any year is less than ten thousand rupees shall not be liable to pay any tax for that year under sub-section (1) or sub-section (2)." Sub-section (4) says that the turnover shall be determined in accordance with such rues as may be prescribed, and sub-section (5) provides that the taxes under sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed. There are two provisos to this sub-section (5) which set out that either the buyer or the seller in respect of the same transaction of sale shall be taxed and not both. Proviso (ii) is in the following terms :- "Where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him".
(3.) SUB-section (6) says that subject to such rules as may be prescribed; the assessing authority may assess a dealer for any year as if his transactions in such year had been the same as in the previous year. That this section is the charging section is common ground between the parties. The 'turnover' on which the sales tax is to be levied has been defined in Section 2(i) of the Act. It is in the following terms :- "'Turnover' means the aggregated amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest. Whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover." The word "dealer" has also been defined in Section 2, sub-clause (b), as meaning any person who carries on the business of buying or selling goods. The important point to noticed in regard to the definition of the term "turnover" is that it comprises the aggregate amount for which the goods are either bought by or sold by a dealer. That is to say, the emphasis is on the words "either bought by or sold by." It is not necessary to refer to the other sections of the Madras General Sales Tax Act which prescribe the exemptions and reductions in taxes and also the rules which prescribe the method of calculation and the ascertainment of the taxes due from dealers like the petitioners dealing in hides and skins. It is common ground in the cases before us that the petitioners have sent the returns in Form A-4 and also the cheques along with the returns as required by the sections of the Madras General Sales Tax Act and the rules prescribed thereunder. There is no question of their having contravened any of these provisions in the present revision cases. For a complete understanding of the scheme of the Act, it is further necessary that reference should be made to the other sections of the Act which are relevant also for the consideration of the points raised in these petitions and they are Sections 9, 10, 11, 12, 12A, 12B and 12C. Section 9 deals with the procedure to be followed by the assessing authority in the case of dealers whose turnover is ten thousand rupees or more in a year and the obligation on the dealer to submit his return relating to his turnover in the manner prescribed by the rules made under the Act. Section 10 provides for the payment and recovery of tax assessed, for prescribing the time for payment and how the tax could be recovered. Section 12, 12A, 12B and 12C provide for appeals and revisions being preferred by the assessee objecting to the assessment made on him under the sections of the Act and for revision of the orders of the authorities suo motu where no appeals are allowed under the conditions set out in the said sections. ;