1953 (4) TMI 12 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the imposition of sales tax on edible oils manufactured using electric power under the East Punjab General Sales Tax Act of 1948. Allegations of unconstitutional delegation of legislative power and contravention of the Essential Goods Act and Article 286(3) of the Constitution. Questioning the jurisdiction of the High Court under Article 226 without exhausting remedies under the Sales Tax Act.

Detailed Analysis:

1. Imposition of Sales Tax on Edible Oils:
The petitioners, manufacturers of edible oils, challenged the imposition of sales tax on oils manufactured using electric power under the East Punjab General Sales Tax Act of 1948. The Excise and Taxation Commissioner contended that the exemption under the Act applied only to oils extracted using human or animal power, not electric power. The petitioners argued that their oils fell under the tax-exempt category under item 57 of the Act's Schedule.

2. Constitutional Challenges:
The petitioners raised constitutional challenges, including the ultra vires nature of the Act due to the lack of a taxation limit and the alleged illegal delegation of power to fix tax rates. They also cited Act XIX of 1952, setting a tax ceiling, as unconstitutional, contravening the Essential Goods Act and Article 286(3) of the Constitution.

3. Jurisdiction of the High Court:
The Excise and Taxation Commissioner argued that the petitioners should have pursued remedies under the Sales Tax Act instead of directly approaching the High Court under Article 226. The Commissioner contended that the Act provided a comprehensive framework for tax assessment, appeals, revisions, and High Court references, similar to the Income-tax Act.

4. Precedents and Legal Remedies:
The judgment cited precedents like Raleigh Investment Co. Ltd. v. Governor-General in Council and U.C. Rekhi v. Income-tax Officer, emphasizing the statutory obligation to follow the prescribed assessment and appeal procedures. The Court highlighted that the Sales Tax Act provided avenues for redress, including revision to the Financial Commissioner and High Court references under Sections 21 and 22.

5. Dismissal of Petitions:
The Court dismissed the petitions, emphasizing the availability of adequate legal remedies under the Sales Tax Act and the petitioners' failure to exhaust those remedies before seeking relief under Article 226. The judgment underscored the importance of following statutory procedures for tax assessment and dispute resolution. The Court also noted the absence of evidence supporting the petitioners' claim of not charging sales tax to their clients.

In conclusion, the judgment upheld the dismissal of the petitions, emphasizing the need to exhaust statutory remedies before seeking judicial intervention under Article 226. The Court highlighted the importance of following prescribed legal procedures for tax assessment and dispute resolution, in line with established legal principles and precedents.