G.K.Mitter, J. - (1.) This is an appeal from an order under Article 226 of the Constitution making absolute a rule issued at the instance of the first respondent for a writ in the nature of certiorari quashing a notice under Section 11(2) of the Bengal Finance (Sales Tax) Act, 1941, and all proceedings thereunder together with a writ in the nature of mandamus directing the State of West Bengal and its Commercial Tax Officer, Esplanade Charge, not to give effect to the said notice.
(2.) The petition to this Court which was affirmed on 5th September, 1955, was amended twice, first by an order dated 29th May, 1957, and again by another order dated 11th January, 1962. In the petition as originally presented the material averments were as follows:- (1) The petitioner carried on business in the production and distribution of iron rods, galvanised iron wires etc. Its workshop and factory were situated at Indranagar, District Singhbhum in Bihar. The management and control of its business including sales of the articles were done at its office situated in Bihar. (2) The petitioner had a registered office at No. 7, Wellesley Place, Calcutta, and this was merely a statutory office. (3) The production and sale of the articles manufactured by the petitioner were controlled by the Iron and Steel (Control of Production and Distribution) Order, 1941, promulgated under Rule 81(2) of the Defence of India Rules. (4) Notifications under the said Order were from time to time issued by the Iron and Steel Controller declaring the conditions under and prices at which the articles produced by the petitioner were to be sold to its customers. (5) In proceedings started under the Bengal Finance (Sales Tax) Act, 1941, against the petitioner, an order dated 23rd September, 1946, was passed by the Assistant Commissioner of Commercial Taxes, Calcutta, holding that the petitioner was not a dealer within the meaning of Section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. (6) In spite of the above the Assistant Commissioner of Commercial Taxes issued a notice dated 9th August, 1955, to the effect that he was satisfied on information received that the petitioner had been liable to pay tax under the Bengal Finance (Sales Tax) Act, 1941, in respect of the period commencing on 1st February, 1951, and ending with 31st March, 1951, but had failed to get itself registered under Section 7 of the Act. The notice called upon the petitioner to produce at the appointed place on 1st September, 1955, accounts and documents specified in the notice for the purpose of assessment and to show cause why, in addition to the amount of tax to be assessed for the period 1st February, 1951 to 31st March, 1951, and all subsequent periods, a penalty not exceeding one and a half times the amount assessed should not be imposed on the petitioner under Sub-sections (1) and (2) of Section 11 of the Bengal Finance (Sales Tax) Act. The documents and accounts required to be produced were rather comprehensive in nature including cash book, bank pass book, general ledger, personal ledger, journal, bill register, counterfoils or copies of bills and cash memos etc. (7) The petitioner appeared before the Commercial Tax Officer on 1st September, 1955, and contended, inter alia, that it was not a dealer within the meaning of the Bengal Act as it sold the goods at Indranagar at the site of the workshop, that in any event the sales being inter-State sales were exempt from taxation under Article 286(1) of the Constitution and that the definitions of "dealer" [section 2(c)] and "sale" [section 2(g)] in the said Act were ultra vires Article 286 of the Constitution. (8) The petitioner's representation that the proceeding should be dropped was not acceded to and the Tax Officer threatened to proceed with the assessment. (9) There being no adequate or complete remedy in law the petitioner was compelled to come to this Court on several grounds including :- (a) that iron and steel had been exempted from taxation by the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act; (b) that the sales being inter-State were exempt from taxation; and (c) the petitioner was not a dealer within the meaning of the Act. A rule was issued by this Court on the basis of this petition on 6th September, 1955. There were only two annexures to the petition, the first being the order of the Assistant Commissioner of Commercial Taxes dated 23rd September, 1946, and the second a notice under Section 11 of the Act dated 9th August, 1955.
(3.) The Commercial Tax Officer affirmed an affidavit-in-opposition on 20th December, 1955 The facts alleged and the contentions raised in this affidavit were as follows :- (a) The petitioner had its registered office at No. 7, Wellesley Place, Calcutta, and controlled and managed its business from the said office. The petitioner was a dealer within the meaning of the Act as amended in 1950. (b) On receipt of certain communication from the Central Section of the Directorate of Commercial Taxes it appeared that the petitioner had for some years past been selling goods of considerable value for which it was liable to pay sales tax. Thereupon the notice was issued under Section 14(1) of the Act for production of the books of account of the petitioner to verify the sales. The petitioner produced certain registers of sale from which it appeared that it had been selling goods extensively in the State of West Bengal. (c) On 5th August, 1955, the authorised representative of the petitioner one L. Mukherjee, submitted a statement of sales made in West Bengal for the period 6th November, 1950 to 31st March, 1951, and for the period 1st April, 1951 to 31st March, 1952. In consideration of all the facts the notice dated 9th August, 1955, was issued. (d) On 1st September, 1955, the petitioner appeared before the Commercial Tax Officer through an Advocate and two assistants. They produced books from which it appeared that huge sales had been effected by the petitioner in the State of West Bengal. On the said date the Advocate appearing on behalf of the petitioner submitted certain statement of account of sales effected in the State of West Bengal headed "sales to West Bengal during the years 1954 and 1955". On the Commercial Tax Officer's pointing out that there was an admission of sales in West Bengal the Advocate for the petitioner altered the heading to read "despatch to West Bengal from Tatanagar workshop during the years 1954 and 1955". The said alteration was an afterthought and was incorrect as from the statements filed it appeared that the petitioner had effected sales in West Bengal to the extent of Rs. 36,255,691-10-0 during the period 6th November, 1950 to 31st March, 1955. On 1st September, 1955, the petitioner filed an application before the Commercial Tax Officer that if after consideration of the facts stated the petitioner was held to be a dealer three months' time should be granted to the petitioner to enable it to make a claim for deductions.;