1957 (5) TMI 32 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the validity of a notification levying double the rate of tax under the East Punjab General Sales Tax Act, 1948 based on procedural grounds and violation of fundamental rights under Articles 14 and 19(1)(g) of the Constitution.

Analysis:
The petitioners, registered dealers under the East Punjab General Sales Tax Act, 1948, challenged a notification issued by the Government levying double the rate of tax on luxury goods. The petitioners argued that the notification was not published in accordance with the law and violated Articles 14 and 19(1)(g) of the Constitution. The Court analyzed the proviso in the Act, which required a three months' notice for amending the Schedule but did not specify a time frame for doubling the tax rate. The Court held that the notification was valid, as no specific time frame was prescribed for doubling the tax rate, and the proviso referred to amending the Schedule, not doubling the rate.

The petitioners further contended that the tax imposed by the Government violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. They argued that the Act unfairly burdened dealers with large businesses with higher taxes compared to those with small businesses. The Court referred to precedents, including the Bidi Supply Co. case, emphasizing that reasonable classification for legislation is permissible under Article 14. The Court held that the Act's classification based on the extent of business was reasonable and did not violate the Constitution. Drawing from the United Motors case, the Court highlighted that such classifications are necessary for administrative feasibility and do not constitute discrimination.

In conclusion, the Court dismissed the petition, stating that the notification levying double the tax rate was valid, and the Act's classification based on business extent was reasonable and not discriminatory. The parties were left to bear their own costs, and the petition was dismissed.