DAWAR BROTHERS Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution, the petitioner challenges Rule 8(1 -A)(f) of the M.P. Sales Tax (Central) Rules, 1957, to be ultra vires the rule -making power conferred on the State Government by the Central Sales Tax Act, 1956 (hereinafter referred to as the 'Central Act').

(2.) WE may first briefly set out the facts giving rise to the present petition. The petitioner, M/s. Dawar Brothers, was a registered partnership firm. It carried on business in Madhya Pradesh as a motor dealer at Bhopal and Jabalpur. It also carried on business as dealers in spare parts, tractors, motor cycles and accessories and as suppliers of Indane gas for domestic consumption. In the course of its business as dealers, the petitioner made sales to the Government and other parties within the State of Madhya Pradesh. The sales tax was assessed on such sales in accordance with the provisions of the M.P. General Sales Tax Act, 1958 (hereinafter referred to as the 'State Act'). Orders for assessment for the assessment years 1969 -76 were made by the assessing authorities under the State Act during the period from 18th December, 1975, to 13th July, 1977, and a total sales tax liability of Rs. 16,70,425 together with penalty of Rs. 49,87,020 was determined against the petitioner under the said orders. According to the petitioner, as it found it difficult to prefer appeals against the abovesaid orders due to its incapacity to deposit the prescribed proportion of the tax assessed, it had to remain content with making applications to the Commissioner under Section 39 of the State Act for revision of the assessments in question and grant of necessary reliefs. The petitioner also, in the meantime, approached the State Government for grant of facility for payment of the amount in question in instalments on the basis of the estimated aggregated liability. The State Government made an order on 29th October, 1976 (annexure A), granting the facility of payment of the amount in question in instalments subject to certain conditions stated in the said order. However, as, according to the State Government, there were defaults committed by the petitioner of the abovesaid conditions, the State Government, vide its order dated 2nd August, 1977, addressed to the Commissioner, revoked the abovesaid order dated 29th October, 1976. The copy of the said revocation order was sent to the petitioner also.

(3.) THE subject -matter that survives for consideration in the present petition is only indirectly connected with the abovesaid facts. According to the petitioner, the abovesaid defaults in complying with the conditions of the order granting instalments had occurred mainly due to the failure of the sales tax authorities to issue declaration forms in form C, as provided for and prescribed under Section 8 of the Central Act read with Rule 8 of the Madhya Pradesh Sales Tax (Central) Rules, 1957, for being furnished to the selling dealers and thus earning concessional rate of tax. According to the petitioner, on account of the non -issuance of the said C forms by the sales tax authorities to it, its business suffered badly and its financial position got crippled. In the said connection, it was explained on behalf of the petitioner that, for carrying on its business, it had to indent goods from outside the State of Madhya Pradesh for which it was entitled to the issuance of declaration in C form under the provisions referred to above. It was pointed out that the petitioner was an Indane gas distributor appointed by the Indian Oil Corporation. In respect of supplies received from the corporation from Bombay, the petitioner, registered as 'purchasing dealer' in form B under the Central Act, was entitled to the issuance of C forms under the provisions in question so that it could reduce its sales tax liability to 4 per cent as against 12 per cent under the schedule. As since May, 1976, the C forms were withheld by the sales tax authorities, the Indian Oil Corporation made a debit against the petitioner at 12 per cent in lieu of the sales tax. The petitioner also carried on business as dealers of tractors, motor cycles and motor parts supplied by Escorts Ltd., Faridabad. In respect of the said goods also, the petitioner was entitled to the issuance of C forms so as to reduce its sales tax liability to 4 per cent as against 15 per cent under the schedule. On account of the C forms having been withheld by the sales tax authorities and consequential failure of the petitioner to furnish the same to Escorts Ltd., the said selling dealer issued debit note to the petitioner charging sales tax at 15 per cent. Similarly, the petitioner was doing business as a dealer of Hindustan Motors, Calcutta. Till November, 1976, Hindustan Motors had no local warehouse in Madhya Pradesh and the motor cars and parts received from them were chargeable to 4 per cent sales tax on the submission of the C forms. But the C forms, having been withheld by the sales tax authorities, Hindustan Motors debited the petitioner with 15 per cent as sales tax. The same position prevailed in respect of motor parts supplied to the petitioner by Hindustan Motors. According to the petitioner, it made repeated requests to the sales tax authorities to issue the C forms, but the said requests were in vain. One of such letters of request written by the petitioner to the Deputy Commissioner, Sales Tax, Bhopal, was dated 5th August, 1977 (annexure C -12), to which the Deputy Commissioner, Sales Tax, gave the reply dated 9th August, 1977 (annexure D -1). It is relevant to reproduce the contents of the said reply dated 9th August, 1977, which are as follows: