Judgment:
ORDER
A.R. Tiwari, J.
1. This is a petition under Articles 226/227 of the Constitution of India.
2. Briefly stated, the facts of the case are that the petitioner is running a mill-canteen at the premises of Binod Mills Co. Ltd, Ujjain for and on behalf of the said mill. The respondents assessed the petitioner for the period from 18-6-1980 to 18-6-1981 under the M. P. General Sales Tax Act as also consequential assessment under the Entry Tax Act. The aforesaid mill is a company incorporated under the provisions of the Companies Act and is carrying on the business of manufacturing and sale of cloth and is a registered dealer under the provisions of the M. P. General Sales Tax Act. The mill is paying sales tax as also the entry tax on the excisable transactions. Under Section 46 of the Factories Act, the mill is under obligation to provide and maintain canteen for the use of workers employed by it. The activity is, therefore, incidental and integral one. The mill entrusted this work to the petitioner under a valid contract who performed this activity, fixed under the statute as representative and agent of the mill (Annexures P/1 and P/2). The petitioner, possessed no independent right to employ workers to run this canteen. The mill exercised the entire control over the management and the employees of the canteen. The respondent No. 3 (Sales Tax Officer) completed the assessment for the aforesaid period vide order dated 29-10-1982 (Annexure P/3), and imposed the liability on the assumption of sale of edible articles to the customers, who were none other than the workers of the mill. Aggrieved, the petitioner preferred revision petition before the Respondent No. 2 the Commissioner of Sales Tax Department under Section 39(1) of the aforesaid Act impugning the order of assessment on the aforesaid grounds. The order was also challenged as being in violation of the principles of natural justice. The Regional Dy. Commissioner accepted the revision and set aside the order on 8-2-1983 (Annexures P/4 and P/5). The case was remanded for fresh assessment after investigation of requisite facts. The Additional Sales Tax Officer took up the matter in pursuance of the order of remand and issued notices to the petitioner. The petitioner filed an affidavit in support of his contention. He also contended that non-registration was due to bona fide belief that he was not liable to pay any tax. The Addl. Sales Tax Officer, however, overruled all the objections and completed the assessment on 30-6-1983 and assessed the petitioner to levy and collect the tax and penalty quantified at Rs. 51,636 (Annexures P/6 and P/7). The Sales Tax Officer also levied Entry Tax and penalty under the provisions of the Entry Tax (Annexure P/8). The petitioner, feeling aggrieved, preferred an appeal before the Appellate Authority i.e. the Dy. Commissioner of Sales Tax (Annexures P/11, P/9 and P10). The Appellate Authority however, sustained the order of Addl. Sales Tax Officer. Aggrieved, the petitioner preferred Second Appeals before the Board of Revenue. The Board of Revenue dismissed the appeals by a common order dated 30-4-1985 (Annexure P/14). The petitioner is aggrieved by the orders passed by the assessing authority, revisional authority and the appellate authority and thus, seeks quashment of the orders marked as Annexures P/3, P/7, P/5, P/8, P/11 and P/14.
3. The respondents have filed the return in opposition.
4. I have heard both sides.
5. The short question that arises for consideration in this petition is whether the activity pursued in the canteen amounts to sale liable to tax or amounts to service to the workers of the mill and, therefore, not liable to tax.
6. The counsel for the petitioner has placed reliance on 20 VKN 351.
7. The learned G.A. has sought to distinguish this authority on the ground that the facts in the aforesaid decision were that the canteen was run by an association and not by an individual whereas in the instant case the canteen was run by an individual i.e. the petitioner on the basis of the contract executed by the Binod Mills in his favour. According to the Government Advocate, the activity pursued by an individual amounted to sale. He, therefore, attempted to support the order passed by various authorities as noted above.
8. The counsel for the petitioner forcefully submitted that the aforesaid authority is not distinguishable in the manner the attempt has been made and on the basis of the aforesaid authority, - levy and collection of tax is totally without jurisdiction, and as such, the orders deserve to be incinerated.
9. With this backdrop, I proceed to examine the worth of the rival contentions.
10. Imposition of sales tax luculently depends on sale by 'X' and purchase by 'Y'. Incidence of Sale-Purchase is sine-qua-non for attraction of liability. The dictionary meaning of Sale is exchange of commodity for money and of service is act of serving. Normally, food is served, not sold, more so when it is the case of hotel, restaurant or canteen. Respondents sedulously assessed the petitioner on the linchpin of sale and serenely avoided to treat the activity as one of service.
11. Judicial review exists to examine the validity of orders. 'Lord Denning put in elegantly in Breen v. Amalgamated Engineering Union, (1971) 1 All.E.R. 148 and Supreme Court stated in Khudi Ram's case, (1975) 2 SCR 832 = AIR 1975 SC 550 that in a Government of laws 'there is nothing like unfettered discretion immune from judicial review-ability'. Fairness, founded on reason, is the essence of the guarantee epitomised in Article 14.'
12. In Council of Civil Service Union v. Minister for the Civil Service, (1984) 3 WLR 1174 (HL) Lord Deplock stated in classic terms that -
'.........Judicial review has I think, developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds upon which administrative action is subject to control by judicial review. The first ground I would call 'illegality', the second 'irrationality' and the third 'procedural impropriety'. That is not to say that further development on a case by case basis may not in course of time add further grounds.'
13. In (1978) 2 SCR 272, Mohinder Singh Gill v. Chief Election Commissioner, New Delhi, it is held that -
Independently of natural justice, judicial review extends to an examination of the order as to its being perverse, irrational bereft of application of the mind or without any evidentiary backing.'
14. Some do hold that tax evasion has been the national sport of India, a situation which needs to be sent on holiday. This has to be changed. Jean Monnel, however, observed the 'Men will only accept change in the face of necessity and they see that necessity only when confronted by crisis'. In 1979 Ireland abolished Wealth-Tax, Germany appreciably lowered it, U.S.A. reduced Capital Gains Tax and U.K. slashed its maximum rate of personal tax from 83 to 60 percent. It seems that our economic efficiency and efficacy still depends on level of taxation which may appear to be bit-tortourous and may induce the individual, falling in the net, to turn tax-avoiders, if not tax-evaders. Individual should not be allowed to escape the rigour of law in case of proved escapement in assessment. This is why taxation law meaningfully provides the power to reopen and reassess. But such exercise cannot be seen to degenerate as energumen. The limits of law, noticeable as 'Lakshaman Rekha', lapidates the overstepping and declares the course for recourse. All occasions demand duties to preserve truth. Poet James Russel Lowell very appropriately observed -
New occasions teach new duties Time makes ancient good uncouth They must upward still and onward Who would keep abreast of truth.'
So charged with duties, authorities have rights as well as responsibilities. Right is available under Section 18(6) of the Act and responsibilities is to operate within the limits of that provision. This is the 'more and less' of the game. Nothing should be done which may fall foul of the law. The emphasis is the need to eradicate and end evil. Whenever insight, within the periphery of provision. There is no charm in knowing the right and doing the wrong. The scheme of law spurns tenebrosity and is luculent indeed. The enabling section as noted above, is manifestly absolute in terms, absolute to intent and thus absolute in effect. So far and no further is the echo audible enough. Section 18(6) of the Act thus does not seem to be the protective umbrella. Remedy, as noted, is evidently non-existent. Right thing is to be done rightly.
15. Ours is a litigious society where perhaps receipt of tax is less, but tax-cases are more. System which may provoke one to become a tax avoider or a tax evader needs to be spurned. No one, apparently not taxable, should be kept lugged in litigation in pursuit of justice. The case on hand, demonstrative of such a course, depended on proper appreciation of facts and purposeful application of the law. Where was the conundrum or confusion? As to the contention as already noted above, it is little difficult to digest the discerption that tax was not leviable if canteen was run by the Mill or association of its workers, but it was impossible when the canteen was permitted to be run by an individual on contract from the Mill. As observed, this contention is intensively inert, insipid and inutile.
16. In (1987) 20 VKN 351, Commissioner of Sales Tax, M. P. v. Hukum Chand Mills Ltd., Indore, it is held that -
'The aforesaid provisions contained in Section 46 read with the rules referred to above, leave no room for doubt that the dominant object of running the canteen is rendering service as a welfare measure under the Factories Act and the Rules. Consequently, the substance of the transaction in canteen sales, evidenced by its dominant object, is not sale of food, but rendering of services as a welfare activity as enjoined by the Factories Act and the State Rules.'
17. On facts as unfolded, the attempt to distinguish the above quoted authority on the fulcrum of 'association' and 'individual' under contract is thus manifestly infirm and is an exercise which deserves to be greeted with futility. In essence, it is the 'nature' of the activity, rather than the status of actors, which should answer the question. That course is pre-eminently legal and logical.
18. In other words, it can be stated that there is no dependable material to sustain the assumption of 'sale' and to shatter the contention of 'service'. There is nothing worth-while to show or suggest that any one came to the canteen to purchase the food or any article for consumption else where. More to the point, the decision, cited above, cogently contains the answer against the respondents.
19. So viewed, stage is reached to say omega. Accordingly, I say it and dispose of this petition with issuance of writs as under -
a) The orders (Annexures P/3, P/7, P/5, P/8, P/11 and P/14) as impugned, being infirm and invalid, passed by the Respondents are consequently quashed.
b) The Respondents are prohibited to treat the petitioner liable to pay tax on transactions in question of the canteen of Binod Mills as the same are in the nature of the 'service to the workers' and are not capable of being categorised as 'sales' within the meaning of the charging Act.
20. The petition is thus, allowed in terms as noted above with no orders as to costs, Refund security deposit to the petitioner after requisite verification.