1955 (12) TMI 34 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of notification cancelling exemption on tobacco sales under Sales Tax Act.
2. Interpretation of section 6(1) of the Travancore-Cochin General Sales Tax Act.
3. Application of section 20 of the Travancore-Cochin Interpretation and General Clauses Act.
4. Constitutionality of the notification under Article 265 of the Constitution.

Detailed Analysis:
1. The appellant challenged a notification cancelling the exemption on tobacco sales under the Sales Tax Act. The first notification granted exemption from tax on tobacco sales, but this was later cancelled by a subsequent notification. The appellant argued that the cancellation was ultra vires the powers of the Government under section 6(1) of the Act. The court noted that the power to grant exemption under section 6(1) includes the power to revoke or cancel such exemption. The cancellation did not impose a new tax but merely removed the exemption, allowing the tax already imposed by the Act to be levied. Therefore, the court held that the cancellation was within the Government's powers.

2. Section 6(1) of the Sales Tax Act empowers the Government to make exemptions or reductions in tax rates through notifications. The appellant contended that the Government exceeded its authority by cancelling the exemption through a subsequent notification. However, the court relied on section 20 of the Travancore-Cochin Interpretation and General Clauses Act, which allows for the revocation or cancellation of notifications previously issued. The court emphasized that the power to cancel exemptions is inherent in the power to grant them, as provided by the relevant legal provisions.

3. Section 20 of the General Clauses Act was crucial in determining the validity of the Government's action in cancelling the exemption on tobacco sales. This section clarifies that the power to issue notifications includes the power to amend, vary, or rescind them. The court found that the procedure outlined in this section was followed in cancelling the exemption on tobacco sales. The appellant's argument that the cancellation imposed a new tax was dismissed, as the tax liability existed prior to the exemption and was merely reinstated by the cancellation of the exemption.

4. The appellant also raised the issue of the constitutionality of the notification under Article 265 of the Constitution, which states that no tax can be imposed without statutory authority. The court clarified that the notification did not impose a new tax but reinstated the tax liability that already existed under the Sales Tax Act. As such, the court held that the notification was not in violation of Article 265 and affirmed the lower court's decision to dismiss the appellant's petition. The appeal was ultimately dismissed with costs.