Singh J. -
(1.) THE petitioner is a partnership firm and deals in Timber and Fuel and other forest products. By an order passed on 24th November, 1962 it was assessed to sales tax by the Assistant Sales Tax Officer, Tikamgarh Sub- Circle for the period from 8th October, 1959 to 22nd February, 1962. THE petitioner's turnover during this period was determined at Rs. 95,000. THE petitioner claimed that it had purchased the timber and other goods from the Forest Department of the Government and had resold the same and the sales tax was payable only by the Forest Department at the first point sale and the petitioner was not liable to pay any tax. This contention of the petitioner was accepted and no tax was levied on it. THEreafter, a notice purporting to be under section 18 (6) of the Madhya Pradesh Sales Tax Act was issued on 22nd February, 1966 against the petitioner for assessing again the sales tax payable for the same period by the Sales Tax Officer, Nowgong. THE notice called upon the petitioner to show cause why it did not register itself as a dealer under the Act and why it should not be assessed and penalised under section 18 (6) of the Act. THE petitioner appeared in reply to the notice and produced the books of accounts etc. THE Sales Tax Officer on 22nd September, 1966 passed the order of assessment. He held that the petitioner's turnover relating to sale of forest produce amounted to Rs. 1 lac which was earlier estimated by the Assistant Sales Tax Officer at Rs. 95,000. He also held that the dealer transported its own goods valued at Rs. 9,92,450 from Madhya Pradesh to its place of business Barwasagar in Uttar Pradesh and that this also amounted to sale by the dealer to itself. He further held that the Forest Department was not liable to pay any tax under a notification issued by the State Government and therefore, the petitioner was liable to pay sales tax on the goods sold by it which it had earlier purchased from the Forest Department. THE Sales Tax Officer assessed a sum of Rs. 42,468 as sales tax. He also imposed a penalty of Rs. 20,000 under section 18 (6) on the ground that the petitioner had failed to register itself as a dealer under the Act. THE petitioner by this petition under Article 226 of the Constitution seeks issuance of a writ in the nature of certiorari to quash the order of assessment of sales tax and penalty passed by the Sales Tax Officer.
(2.) IT may be mentioned at the outset that the order of assessment made by the Sales Tax Officer contains reference to section 19 (1) and it appears as if he was making a reassessment by that order under that section. However, the notice that was issued to the petitioner was under section 18 (6) and the last para of the order of assessment also refers to that section. The learned Government Advocate has contended that the first order of assessment made by the Assistant Sales Tax Officer was in excess of his jurisdiction (a point which has not been contested by the learned counsel for the petitioner), and that the assessment made by the Sales Tax Officer was the first assessment for the period and was made under section 18 (6). We will assume for the purpose of this petition that the assessment by the Sales Tax Officer was made under section 18 (6), and that the earlier assessment made by the Assistant Sales Tax Officer was without jurisdiction and a nullity.
The Sales Tax Officer on the face of his order committed an error of law in holding that the petitioner by sending its own goods worth Rs. 9,62,450 to its place of business in Uttar Pradesh made a sale of the goods to itself. The word "sale" connotes transfer of property in goods from one person to another and when the petitioner sent its own goods to itself, the transpiration of goods did not result in any transfer of property and did not amount to sale. The Sales Tax Officer exceeded his jurisdiction in taxing the transportation of goods which did not result in any sale. In the order of assessment reference has been made to a ruling of the Madras High Court in L. S. Chandramauli and Co. v. State of Madras((1966) 18 S T C323.) in support of the view that a person may be a seller as also a purchaser in the same transaction. In that case, an agent had transferred the goods belonging to his principal to himself and the transfer was held to be a sale. But that case is entirely distinguishable because in it there was a transfer of property as after the sale the goods of the principal became the goods of the agent. In the instant case, there is no second party. The petitioner transported its own goods to itself and this transportation could not result in any sale. In our opinion, therefore, the Sales Tax Officer exceeded his jurisdiction in, including Rs. 9,62,450 in the taxable turnover of the assessee, and in taxing the same.
Coming now to that part of the turnover which has been estimated at Rs. One Lac, it has to be noticed that the sales included in this turnover are second point sales. The sales at the first point were made by the Government to the petitioner. The second point sales of forest produce etc. were not liable to tax. The petitioner was, however, made liable on the view that the first point sales made by the Forest Department of the Government were exempted from tax by a notification. To understand the point involved, it is necessary to refer to certain statutory provisions. The tax is levied under section 6 of the Act which enacts that "the tax payable by a dealer under this Act shall be levied on his taxable turnover relating to goods specified in Schedule II, at the rate and at the point mentioned in the corresponding entry in columns 3 and 4 respectively of the said Schedule." The goods with which we are concerned are not specifically provided for in the Schedule and fall under the general entry contained in part 6 of Schedule II. That entry at the relevant time imposed four per cent. as the tax "on the point of first sale in the State by a dealer liable to tax." It will thus be seen that the goods were liable to tax on the point of first sale made by a dealer who was liable to tax. In the instant case, the goods that were sold by the petitioner were initially purchased by it in an auction from the Forest Department. Thus, the point of first sale was the sale made by the Forest Department to the petitioner. If the Forest Department was liable to tax, the subsequent sales made by the dealer could not be taxed because they would not be the first sales in the State by a dealer liable to tax. During the period for which the assessment relates, the Forest Department was not exempted from payment of tax and as a Government Department is included within the definition of dealer contained in the Act, the sales made by the Forest Department were the first sales in the State by a dealer liable to tax. Because of this the sales made by the petitioner were subsequent sales and were not liable to tax. However, the State Government issued a notification on 1st June, 1963 under section 12 of the Act exempting from tax for the period 1st April, 1959 to 2nd November, 1962 sales of forest produce effected by the Forest Department, except sales effected with the stipulation that sales tax payable in respect thereof shall be recoverable from the purchaser. There was no such condition which could bring the case within the exception contained in this notification. On the basis of the notification, the Forest Department got a retrospective exemption from payment of tax from 1st April, 1959 and it was argued by the respondent that because of this notification the sales made by the Forest Department to the petitioner ceased to be sales by a dealer liable to pay tax and therefore, the sales made by the petitioner became the first sales by a dealer liable to tax. In our opinion, this argument cannot be sustained. The taxing event under the sales Tax Act is the sale itself and we have to see the position at the time when the sales were made to and by the petitioner. The Forest Department was then not exempted and was liable to pay sales tax in respect of sales made to the petitioner. Even at the time when the sales were made by the petitioner, the Forest Department was not exempt and therefore, the sales made by the petitioner, were not taxable. By a subsequent notification issued under section 12, no liability for payment of tax can be retrospectively fastened on the petitioner. The object of section 12 under which the notification was issued is to grant exemption and not to create retrospective liability. Even if it is possible to exempt any person or any sale retrospectively, that cannot have the effect of fastening liability on a person who had no liability to pay sales tax at the time when the sales took place. In our opinion, the notification issued under section 12 exempting the Forest Department did not have the effect of creating a liability on the petitioner in respect of sales for the period when at the time they were made they were not liable to tax and the levy of tax on the turnover of Rs. One Lac was also erroneous.
(3.) ON our finding that no part of the petitioner's turnover was liable to tax during the relevant period, it logically follows that it could not be assessed to any penalty under section 18 (6) of the Act. Under that provision, jurisdiction to levy penalty only arises when the dealer has been assessed to tax. No penalty can be levied on the dealer under section 18 (6) when no tax is levied. ON this view, it has to be held that the levy of penalty of Rs. 20,000 was also erroneous.
The learned counsel for the Department strongly contended that the petitioner has filed an appeal and it should not be given any relief under Article 226 of the Constitution. It is true that the petitioner had filed an appeal; but to prosecute that appeal and for getting it admitted, it will have to deposit a substantial portion of tax and the penalty assessed on it. In such a situation the remedy of appeal is an onerous remedy. It is well settled that the provision for an appeal does not take away the jurisdiction of the Court to interfere under Article 226 of the Constitution. The order of the Sales Tax Officer is in excess of jurisdiction, for he has taxed transactions and sales which were not liable to be taxed at all. We, therefore, find that this is a fit case for interference should be made under Article 226 inspite of the fact that the petitioner has not exhausted the alternative remedy of appeal provided under the Act.;