BENGAL IMMUNITY CO LTD Vs. STATE OF BIHAR
HIGH COURT OF PATNA
BENGAL IMMUNITY CO.LTD.
STATE OF BIHAR
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Ramaswami, J. -
(1.) In this case the petitioner has obtained a rule calling upon the State of Bihar and the other respondents to show cause why a writ in the nature of prohibition or certiorari should not be issued for quashing the proceedings instituted against the petitioner for assessment of sales tax. Cause was shown against the rule by the Government pleader on behalf of the State of Bihar and the other respondents to whom notice of the rule was directed to be given.
(2.) The petitioner, the Bengal Immunity Company, Limited, is a corporate body with its registered office at 153 Dharmatala Street, Calcutta, The petitioner carries on the business of manufacturing and selling vaccines, sera and biological products. The petitioner conducts an extensive sale of the manufactured goods not only in West Bengal but in other parts of the Union of India. The goods are despatched from Calcutta fey rail, steamer or air against orders which are sent to Calcutta by various customers. The petitioner has no agent or office in the State of Bihar. It is stated in the affidavit that the petitioner is not a resident of Bihar nor does the petitioner carry on business as dealer within the territorial limits of Bihar. The petitioner alleges that on 18-12-1951 the Superintendent of Commercial Taxes sent a notice under Section 13(5), Bihar Sales Tax Act "calling upon the petitioner to apply for registration and submit a return showing turn-over for the period 26-1-1950 to 30-9-1951." The petitioner remonstrated saying that there is no liability to pay tax under the provisions of the Bihar Sales Tax Act and the petitioner cannot be lawfully required to be registered as dealer. But the Superintendent of Sales Tax rejected the contention and required the petitioner to comply with the terms of the notice previously sent. On 28-5-1952, the petitioner was informed that in case of default assessment will be made by the sales tax officer to the best of his judgment in accordance with the provisions of Section 13(5) of the Act. It is submitted on behalf of the petitioner that the State of Bihar has no jurisdiction to impose sales tax on persons residing outside Bihar, that the provisions of the Bihar Sales Tax Act are inconsistent with the Constitution of India and that the order of the Superintendent of Commercial Taxes calling upon the petitioner to file a return and to get itself registered as dealer was illegal and without jurisdiction. The petitioner, therefore, asks for a writ in the nature of certiorari or prohibition to quash the proceedings instituted by the Superintendent of Commercial Taxes for assessment of sales tax.
(3.) The first question which arises is whether in the state of facts disclosed in the petitioner's affidavit a writ under Article 226 of the Constitution may be properly issued. It was pointed out by the Government pleader that only a notice under Section 13(5) has been issued, and that no order of assessment upon the petitioner has been made by the sales tax authorities. The Government pleader stated that the facts have not been investigated by the taxing authorities & the liability of the petitioner has not been determined. It was argued on behalf of the respondents that in issuing notices under Section 13(5) the Superintendent of Commercial Taxes was acting within the ambit of his jurisdiction and the High Court cannot control his proceedings by issue of a writ. Now Section 13(5) states
"if upon information which has come into his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless wilfully failed to apply for registration, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer ....." It was contended on behalf of the petitioner that he was not liable to pay tax under the Act, and that he cannot be asked to apply for registration or submit his return. It was argued that the Superintendent of Commercial Taxes committed an error of jurisdiction in holding that the petitioner was liable to pay tax. In my opinion this argument proceeds on a misconception. In the present case the test of jurisdiction is whether the Sales Tax officer had power to investigate and not whether his determination on a question of fact or law is right or wrong. It is not alleged on petitioner's behalf that there was no information which had come into the possession of the Sales Tax officer or that he acted mala fide without any such information. Section 13(5) not merely confers a power on the Sales Tax Officer to investigate but the section imposes a duty upon the Sales Tax officer to make assessment after giving reasonable notice. The section states that if the commissioner is satisfied that any dealer is liable to pay tax, he shall after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of tax, if any, due from the dealer. The section presupposes that the Sales Tax Officer has power to investigate into the matter which comes before him and to form a conclusion one way or the other. It is manifest that the section expressly confers on the Sales Tax officer jurisdiction to investigate for himself the facts before making the order of assessment. In my opinion the Sales Tax Officer was undoubtedly acting within his jurisdiction in issuing notice under Section 13(5) against the petitioner asking him to apply for registration and submit a return. It was contended for the petitioner that, the Sales Tax Officer was erroneous in law inj holding that the petitioner was liable to pay tax. But that decision was one within the ambit of the jurisdiction of the Sales Tax Officer and should he make any assessment under Section 13(5) against the petitioner the Act provides a right of appeal whereby any error of law may be corrected by the appellate authorities prescribed under the Act. It is manifest that Sections 24 and 25 of the Act furnish a complete and effective machinery for appeal and revision against assessment made under the Act. In a similar case -- 'Kodak, Ltd. v. Clark', (1903) 4 Tax Cas 549 Kodak Limited applied for a writ of prohibition against the General Commissioners of Taxes on the ground that the profits of the Eastman Kodak, Ltd. Rochester ought not to be assessed as the English Company's profits and that the assessment was not warranted by any jurisdiction conferred by any statute relating to income-tax. The application was rejected by the Court of appeal. At page 572 the Master of the Rolls states:
"ow what is that the General Commissioners of Taxes have to ascertain? Surely they had to ascertain what trade a tax payer who is assessable to income tax is carrying on, and to do this it is within the jurisdiction of the Commissioners to ascertain what is the connection between the Kodak Company in this country and the Rochester business in America. This is what the Commissioners are doing, and I agree with the King's Bench Division that the assertion that the Commissioners have gone, or are going, wrong in determining this question gives no ground for prohibition.";
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