1957 (5) TMI 33 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the notification dated 16th December 1954.
2. Power of the Government under Section 6(1) of the Madras General Sales Tax Act, 1939.
3. Applicability of Section 3 of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952.
4. Interpretation of the term "specified class of goods" under Section 6(1)(i) of the Madras General Sales Tax Act, 1939.
5. Scope of restrictions under Section 6(2)(b) of the Madras General Sales Tax Act, 1939.

Detailed Analysis:

1. Validity of the Notification Dated 16th December 1954:
The petitioner, a dealer in vegetables, challenged the validity of the notification dated 16th December 1954, which excluded certain vegetables (yams, green chillies, and green ginger) from the tax exemption previously granted by the notification dated 25th March 1954. The court held that the notification dated 16th December 1954, was valid and within the scope of the Government's power under Section 6(1) of the Madras General Sales Tax Act, 1939. The court rejected the argument that the notification was ultra vires and concluded that the Government had the authority to modify or amend the earlier notification.

2. Power of the Government under Section 6(1) of the Madras General Sales Tax Act, 1939:
The petitioner contended that the Government did not have the power to exclude specific items from the class of goods exempted from tax once the exemption was granted. The court, however, clarified that Section 6(1) of the Act conferred the power on the Government to grant exemptions and that this power included the ability to modify or amend the exemptions as necessary. The court cited Section 13 and Section 15 of the Madras General Clauses Act, which provide that powers conferred by an Act may be exercised from time to time and include the power to rescind, revoke, amend, or vary orders.

3. Applicability of Section 3 of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952:
The petitioner argued that the levy of tax on vegetables was in contravention of Section 3 of the Essential Goods Act, 1952, which required Presidential assent for laws imposing tax on essential goods. The court dismissed this contention, stating that the Madras General Sales Tax Act, 1939, was enacted before the commencement of the Essential Goods Act, 1952. Therefore, the tax imposition was under Section 3 of the 1939 Act, not under any law made after the commencement of the 1952 Act.

4. Interpretation of the Term "Specified Class of Goods" under Section 6(1)(i) of the Madras General Sales Tax Act, 1939:
The petitioner argued that "vegetables" constituted a specified class of goods and that the Government could not exclude specific vegetables from this class. The court rejected this argument, stating that the notification should be read as an integral whole, exempting "vegetables other than the specified vegetables." The court explained that the term "specified class of goods" could include sub-classes within a broader category, and the Government had the authority to define and modify these classes.

5. Scope of Restrictions under Section 6(2)(b) of the Madras General Sales Tax Act, 1939:
The court addressed the argument that the notification dated 16th December 1954, could be considered valid under Section 6(2)(b), which allows exemptions to be subject to restrictions. The court clarified that the "restrictions" referred to in Section 6(2)(b) pertain to the manner in which a dealer conducts business (e.g., keeping accounts, filing returns) and not to the subject matter of the exemption itself. Therefore, the notification could not be justified on the basis of Section 6(2)(b).

Conclusion:
The court dismissed the petition, holding that the notification dated 16th December 1954, was valid and within the Government's power under Section 6(1) of the Madras General Sales Tax Act, 1939. The rule nisi was discharged, and the petition was dismissed without any order as to costs.