P. K. BANERJEE, C. J. - (1.) IN this rule, the petitioner has challenged the notice dt. 19-11-1974 u/s 7b of the Rajasthan ST Act on various grounds.
(2.) THE petitioner is a firm carrying on business of sale and purchase of the grains including gram at Kota and is registered both under the CST Act and Rajasthan ST Act. THE non-petitioner No. 2 is the assessing authority of the petitioner and non petitioner No. 3 served the petitioner with a notice u/s 7b of the Rajasthan ST Act r/w s. 9 (2) of the CST Act. It further appears that the accounting year of the petitioner commences from Dewali every year and the petitioner submitted all its quarterly returns for the Samwat year 2026-27, that is, for the period commencing from October 1969 to October, 1970 the asst. year being 1970-71 under both the Acts. During that period, the petitioner sold gram worth Rs. 3,54,915 between the period commencing from 23-4-1970 to 20-6-1970 during the course of inter-State trade and the petitioner had shown the aforesaid sales in the returns as tax paid under the Rajasthan ST Act at the rate of 2% and it has not attracted any inter-State Sales Tax in view of the notification dated 9-3-1970 and as such inter-State tax was not paid along with the returns. It appears, no final assessment order in respect of the Central Sales Tax has been passed by the assessing authority in respect of the said assessment year as yet. Non-petitioner No. 3 served the petitioner with a notice u/s 7b of the Rajasthan ST Act on 12-3-1973 and 19-11-1974 informing the petitioner that the petitioner has sold gram worth Rs. 3,54,915 and 5249 bags and he asked the petitioner to show-cause why the Central Sales Tax on the said items may not be realised and further as to why penalty may not be imposed u/s 16 (1) (i of the Rajasthan ST Act. Being aggrieved by the said notice, the petitioner moved this Court and obtained the present rule. On behalf of the respondent, affidavits have been filed stating therein, inter alia, that although CTO. Circle 'a', Kota is the regular assessing authority yet the CTO, Anti-evasion, Kota, acquired the jurisdiction over the dealer on detection of evasion case against the dealer on 30-12-1971 in view of notification dt. 30-10-1967 and later on vide order dt. 8-9-1972 of the Additional Commissioner, Commercial Taxes Department Rajasthan, Jaipur, this case was transferred u/r 52 of the Rajasthan ST Rules, 1955 from the jurisdiction of CTO, Anti-evasion, Kota, to the jurisdiction of Asstt. CTO, Anti-evasion, Kota who issued notice to the dealer u/s 7b of the Rajasthan ST Act r/w s. 9 (2) of the CST Act. It is admitted that the dealers, accounting year is Dewali and during the year 1970 71, the dealer sold gram worth Rs 3,54,915, between the period from 23-4-1970 to 20-6-70 during the course of inter-State trade (sales ). The sales attracted inter-State Sales Tax at the rate of 1% in view of the notification dt. 9-3-1970 presuming that the dealer will prove to the satisfaction of the assessing authority that the above gram suffered 2% tax under Rajasthan ST Act. It is wrong to say that the above inter-State sales of gram does not attract inter-State Sales Tax in view of the notification dt. 9-3-1970 because this notification applies to the inter-State sales of gram which is pulse and not cereal and that the notification dt. 9-3-1970 is applicable to the inter-State sales of pulses. It is further stated in the affidavit that notices have been issued on the petitioner to show as to why taxes under the CST Act on the sale of gram worth Rs. 3,54. 915 and 5249 bags may not be recovered and as to why penalty may not be imposed u/s 16 (1) (i) of the Rajasthan ST Act r/w s. 9 (2) of the CST Act. This is, in short, the case of the parties. On behalf of the petitioner, it is contended firstly that CST Act, as obtaining now, is not applicable in respect of the sale in question because the CST Act came into force on 5-1-1957, rather the relevant Act is the Rajasthan ST Act as prevailing on the date and not as subsequently amended. Secoudly, it has been contended by Mr. Mehta on behalf of the petitioner that the gunny bags were the part of the same transaction and there was not a separate contract for sale of the gunny bags and, therefore, in the sale of gram, the sale of gunny bags cannot be said to be a different sale transaction. Further it was contended by Mr. Mehta that unless the proceeding u/s 10 is initiated and completed, s. 7b has no application. Sec. 10 only applies because the petitioner has alreadly filed return for the whole period and, therefore, s 7b in terms is not applicable. On behalf of the Revenue, Mr. Sharma however contended that CST Act having been amended in 1976 by incorporation therein of s. 9 (2) (A) of the Act, the only amendment subsequent to the coming into force of CST Act and vis a vis all the amendments of Rajasthan ST Act will be applicable in so far as s. 9 (2) (A) is concerned. It is also argued by Mr. Sharma that this legislation CST Act is legislation by reference and not by incorporation and, therefore, all amendments subsequent to the CST Act came into force in the State amendments in respect of the ST Act of the State will be applicable in the case. It was argued by Mr. Sharma that s 7b only gives a notice if there is evasion and not otherwise and it is for the petitioner to go before the assessing authority to prove that there was no evasion at all and he cannot move this Court at this stage. Mr. . Sharma contended that whether the sale of gunny bags is a sale or not is a question of fact and no question of law is involved and, therefore, in the writ jurisdiction, the matter should not be interfered with, Number of cases have been cited at the Bar by both the parties but before I deal with them, I will refer to the question relating to s. 7b and s. 10 of the Rajasthan ST Act. It appears to me that when the petitioner has already filed the return for the whole year, it was necessary for the respondent to go into the question whether there is evasion or not and if it is found that there is evasion or the petitioner has deliberately concealed any transaction of sale or purchase from the books of account or registers u/s 21, only then he will be penalised u/s 16 (1) (i) of the Act. In so far as s. 10 is concerned, it is quite clear if the petitioner has already filed the return for the whole year u/s 7 of the Act the authorities concerned have no option but to proceed on this return till they came to a decision on this question and supposing, after that, it is found that in fact the petitioner has concealed deliberately the sales and purchases of a particular transaction, he can be penalised u/s 16 (1) (i) of the Act. Sec. 7b, in my opinion, is not called for at this stage. It is quite possible for the respondent to proceed against the petitioner u/s 7b of the Rajasthan ST Act at the stage when the information has been received by them and the assessing authority has reason to believe that the dealer has evaded or avoided the tax, he may, after giving a reasonable opportunity of being heard, determine at any time and for any period the taxable turnover of such a dealer and assess the tax to the best of his judgment. Sec. 7b, therefore, can only be applicable in respect of persons not only those who are registered dealers but also a dealer who is not registered. In so far as registered dealers are concerned, in my opinion, unless a belief is formed that he has evaded or avoided tax then and then only s 7b is applicable. In the present case, however, the return has already been filed before the Commercial Taxes Authority and it is pending. In that view of the matter, in my opinion, it is not for me to go into the other question whether the gunny bags are taxable or not because that will be decided under the proceedings u/s 10 of the Rajasthan ST Act by the Commercial Taxes Authority concerned. Therefore, in my opinion, the arguments of Mr. Mehta as well as Mr. Sharma on these two grounds need not be elucidated further.
(3.) IN so far as the main question is concerned that whether the CST will be applicable as on the date when it came into force, that is. 5-1-1957 or the Act of Rajasthan, unamended on that date should be applicable, in my opinion, the question further arises whether the legislation is by reference or by incorporation. While Mr. Sharma contended that the legislation is by reference to another Act but not by incorporation, Mr. Mehta contended that the legislation is by incorporation and not by reference. The distinction between these two is well settled now. It appears, however, in Shiv Dutt Rai Fateh Chand vs. Union of Jndia (1), the Supreme Court has held, that the second point argued on behalf of the petitioners is that sub. s. (2a) of s. 9 of the Act suffers from the vice of excessive delegation of legislative powers. We are not concerned with this point here as in this case this question has not been argued. Their Lordships of the Supreme Court held that what is done by Parliament by enacting sub s. (2a) of s. 9 is that whatever provisions relating to offences and penalties were there in the general Sales Tax Laws of the States would be applicable with appropriate modifications to assessment, re-assessment, collection and enforcement of the provisions of the Act. Legislation by incorporation of provisions of another statute even though passed by different legislature is a well known method of legislation particularly when the scheme of the other statute is similar and such incorporation is relevant and necessary for the purpose of advancing the objects and purposes of the legislation. IN view of this statement of law by the Supreme Court, it is no longer open to Mr. Sharma to argue that legislation was not by incorporation but by reference. Next we come to the objects and reasons for the purpose of incorporation of s. 9 sub-s. (2a) of the CST Act, which runs as follows : "sub clause (c) seeks to insert a new sub-section (2a) in section 9 to provide that provisions relating to offences and penalties (including provisions relating to penalties in lieu of prosecution for an offence but excluding the provisions relating to matters provided for in sections 10 and 13 (A) of the general Sales Tax Law of each State shall with necessary modifications apply in relation to the assessment, re-assessment, collection and enforcement of payment of any tax required to be collected under this Act. " It will be clear, therefore, this section was retrospectively amended and provisions relating to charging of payment of interest in the general Sales Tax Law of the State were made applicable for the purpose of CST laws. Mr. Sharma referred to the State of Tamil Nadu vs. K. A. Ramulu Chettiar & Co (2), where their Lordships of the Supreme Court were considering whether the AAC had powers in view of the amended s. (2) of the CST Act which came into force in 1959, had power at the time he decided the appeal of the assessee, to enhance the assessment because of the existence of such power under the Madras General ST Act, 1959 though such a power was not available to him under the 1939 Act which was the Sale Tax Law that was in force in the State of Madras when the CST Act was enacted in 1956. Their Lordships of the Supreme Court held, inter alia, as follows : ". . . . the powers of the authorities in the State of Madras assessing under the Central Sales Tax Act, are those conferred on them under the Madras General Sales Tax Act, 1939 till the Madras General Sales Tax Act, 1959 came into force and thereafter their powers are those conferred on them by the Madras General Sales Tax Act, 1959. Therefore, the enhancement made by the Appellate Assistant Commissioner was well within his powers. " It appears, in view of this, it is quite clear that 1959 Act was not in force at the time when the General Sales Tax Law in Madras was brought into being and, therefore, their Lordships of the Supreme Court held that the powers of enhancement as in 1959 Act will be applicable in such cases. In a case reported in Auto Pins (India) vs. The State of Haryana (3), their Lordships of the Punjab and Haryana High Court held, inter alia, at page 474, differing with the Madras High Court decisions in different cases, namely D H. Shah v. The State of Madras (4), State of Madras v. M. Angappa Chettiar (5), and K. A. Ramulu Chettiar & Co. vs. The State of Madras (6), as follows: "we are hence of the view that the Parliament was entitled to enact sub-section (3) of Section 9 of the Central Act. That being so, the language of the sub-section is a clear pointer to the fact that the Parliament was adopting the State Legislation with any future modification which may be made therein by the appropriate States. " Their Lordships of the Punjab and Haryana High Court however differed with the contrary view taken by the Madras High Court and relied upon the Mysore High Court and M. P. High Court. In the said case, however, it must be stated that their Lordships of the Punjab and Haryana High Court were not considering the amendment of sub s. (2a) of s. 9 of the CST Act, I have already said in reference to the Supreme Court case that this Legislation is by incorporation and not by reference as argued by Mr. Sharma. ;