MONORANJAN GANGULI Vs. SECRETARY TO GOVERNMENT

JUDGEMENT

(1.) THIS is an appeal under S. 41 of the Pondicherry Generalst Act (Act 6 of 1967), against the order of the Secretary to Government, finance Department, Pondicherry, made under S. 37 of that Act. The appellant is a private limited company carrying on business as dealer in auto mobile and spare parts at Pondicherry. For the asst. yr. 1966-67 the appellant reported a total and taxable turnover of Rs. 7, 53, 199. 58 and Rs. 5, 50, 275. 17 respectively. Before the Joint commercial Tax officer, who was the assessing authority, the appellant claimed exemption in respect of a turnover of Rs. 33, 862, 82 representing two transactions of sale made on 2nd March, 1967 and 25th March, 1967. Though the assessing authority held that these transactions were not exempt and liable to sales-tax. The facts necessary for the claim of this exemption may now be noted.

(2.) THE validity of Pondicherry General ST Act (Act 10 of 1965), which came into force on 1st April, 1966, was questioned before the Supreme court and by its judgment in Sham Rao vs. Union Territory of Pondicherry dt. 20th February, 1967, the Supreme Court held that the Act was ultra vires of the powers of the Pondicherry Legislature. THEreafter the Legislature passed the pondicherry General ST Act (Act 6 of 1967), and this received the assent of the president of India on 2nd November, 1967 and it was published in the pondicherry Gazette on 21st November, 1967. Sec. 3 provided that the Act shall have retrospective effect from 1st April, 1966. As seen from these facts, from 20th February, 1967 to 20th November, 1967 there was no General ST Act in force. THE two transactions of sale of two fiat cars took place in between these two dates on 2nd March, 1967 and 25th March, 1967. In respect of the first transaction of sale, in the sale bill the appellant after totalling the price of the vehicle as Rs. 16, 896, 96 added under the head "sales tax deposit" Rs. 1, 689. 70. On the same date it obtained what is styled as a letter of indemnity from the purchaser under which he had agreed that in case the Pondicherry Government demands from the seller at a later date sales-tax on the said transaction the purchaser shall pay the amounts immediately on demand. Later on 24th May, 1968 the appellant in fact refunded the amount collected as sales-tax deposit to the purchaser. In the second transaction dt. 25th March, 1967, though the bill is similarly prepared and the amount was shown as sales-tax deposit, the purchaser had not paid that money and he had simply executed the letter of indemnity as in the other case agreeing to pay sales-tax in case the Pondicherry Government demanded at a later stage.

(3.) IN support of his order, the Secretary to Government, relied on Kassam & Co. vs. State of Madras IN that case, the assessee, who was not a dealer in cloth, claimed that he was not liable to be assessed in respect of certain transactions of sale by the levy of additional tax on the ground that the Government have waived the levy for the period from 1st january, 1957 to 17th December, 1957. At the relevant period, the sale of imported cloth was liable to sales-tax both under S. 3 (1) and an additional levy under S. 3 (2 ). Though the additional tax was brought into force even w. e. f 1st April, 1957, the imposition was announced long after that date. Probably with a view to meet the difficulties of the assessees who might not have collected the tax the Government appeared to have announced that they would waive the collection if the dealers had not collected it from the customers. The Government order itself was not produced before the Court but a communication by the Dy. Commr. of Commercial Taxes, Madurai, by the Madurai place Goods'Merchants Associates, was relied on by the assessee in support of the claim of waiver. Regarding the condition that he had not collected the additional tax from the customers the assessee contented that though he had collected the amount of additional tax from the customers, the assessee contended that though he had collected the amount of additional tax at the rate of 8 per cent as prescribed in S. 3 (2) he had noted it in his accounts as 'contingent liability'. How the amount collected was shown in the bill issued by the assessee was not in evidence. On those facts, this Court held that from the mere fact that he had accounted it as'contingent liability'will not detract from the fact that he has collected it as tax. But ultimately the decision was not based even on this reasoning. The assessee was held not liable to the benefit of the waiver on the ground that the waiver was not made in exercise of any statutory power and that the Government could not be forced to make a waiver. Only if it amounted to an exemption made under a valid provision of the Act, the assessee would be entitled to claim that exemption and since the waiver was not an exemption under the Act, the Court or the Tribunal could not enforce even if there was such a waiver. This decision, therefore, in our view, has no application.