2000 (3) TMI 949 - SC - VAT and Sales Tax

Validity of section 12-A of the Himachal Pradesh General Sales Tax Act 1968 and rule 31-A of the Himachal Pradesh General Sales Tax Rules questioned Held that - Appeal allowed. Following the decision in Steel Authority of India case 2000 (2) TMI 729 - SUPREME COURT OF INDIA set aside the order made by the High Court by allowing the writ petition and quashing the aforesaid provisions as being beyond the purview of the Himachal Pradesh State Legislature

Summary

Issues:
Validity of section 12-A of the Himachal Pradesh General Sales Tax Act, 1968 and rule 31-A of the Himachal Pradesh General Sales Tax Rules challenged before the High Court. Interpretation of the provisions for deduction from payments to works contractors. Distinction between section 13-AA of the Orissa Sales Tax Act and section 12-A of the Act. Obligation to deduct amounts from transactions related to works contracts. Arbitrariness in the deduction process. Refund of amounts collected under the provisions.

Analysis:
The appellant questioned the validity of section 12-A of the Himachal Pradesh General Sales Tax Act, 1968, and rule 31-A of the Himachal Pradesh General Sales Tax Rules before the High Court. The High Court interpreted that the deduction should be from the bills or invoices of works contractors, specifically for the transfer of property in goods involved in works contracts, not the entire value of the contract. The High Court held that the State Legislature did not exceed its competence in enacting these provisions and dismissed the writ petitions challenging them.

The appellant argued that the provisions for compulsory deduction do not exclude cases where transactions may not amount to sales at all. The recovery was imposed on events that do not attract tax, leading to concerns about the lack of mechanisms for contractors to claim that a transaction does not amount to a sale. The provisions in question were compared to those considered by the Court in a previous case, highlighting the identical nature of the provisions.

The State's Senior Advocate attempted to distinguish the decision in a previous case, asserting that the provisions in question were not similar. However, a comparison of the provisions revealed an obligation to deduct amounts from transactions related to works contracts, regardless of the nature of the sales or the tax liability. The Court emphasized the arbitrary powers conferred on authorities for deductions, leading to a rejection of the State's contentions.

In line with the decision in a previous case, the Court allowed the appeal, setting aside the High Court's order and quashing the provisions challenged. The State was directed to refund any amounts collected under the provisions, with interest if applicable. The judgment in the main case was followed in related appeals and a writ petition, leading to similar outcomes of allowing the appeals and ordering refunds of collected amounts.

This detailed analysis covers the interpretation of the provisions, the arguments presented, the Court's findings, and the final decision regarding the validity of the challenged provisions and the refund of collected amounts.