1957 (2) TMI 50 - HC - VAT and Sales Tax

Issues Involved:
1. Liability to pay sales tax based on turnover.
2. Constitutionality of sections 2(p), 2(q), and 3(1) of the Madhya Bharat Sales Tax Act under Article 14 of the Constitution.
3. Violation of fundamental rights under Article 19(1)(g) of the Constitution.
4. Maintainability of a composite petition for multiple assessment years.
5. Availability of an alternative remedy under the Act.

Detailed Analysis:

1. Liability to Pay Sales Tax Based on Turnover:
The petitioner argued that his turnover of imported goods did not exceed Rs. 5,000 during each of the assessment years 1951-52, 1952-53, and 1953-54, and thus, he should not be liable for sales tax. The Sales Tax Officer combined the turnover of the cycle shop and the pan shop, concluding that the total exceeded Rs. 5,000, making the petitioner liable under section 3(1) of the Madhya Bharat Sales Tax Act. The court held that the turnover of imported goods alone must exceed Rs. 5,000 to impose tax liability, not the combined turnover of all businesses. This interpretation was supported by the precedent set in Ayodhyaprasad Suklal v. The Crown.

2. Constitutionality Under Article 14:
The petitioner contended that sections 2(p), 2(q), and 3(1) of the Madhya Bharat Sales Tax Act were ultra vires the Madhya Bharat Legislature and violated Article 14 of the Constitution by discriminating between different importers and dealers. The court found that the classification made by the legislature was rational and had a proper nexus with the object sought to be achieved by the Act, thus upholding the constitutionality of the provisions.

3. Violation of Fundamental Rights Under Article 19(1)(g):
The petitioner claimed that the imposition of tax, penalty, and the requirement to obtain a license infringed on his fundamental right to carry on trade under Article 19(1)(g). The court referenced Mohammad Yasin v. The Town Area Committee, Jalalabad, stating that an illegal impost constitutes an unreasonable restriction on the right to trade. Since the petitioner was not liable to tax, the requirement to obtain a license and pay fees was deemed an unreasonable restriction.

4. Maintainability of a Composite Petition:
The Sales Tax Officer argued that a composite petition for multiple assessment years was not maintainable. The court rejected this objection, stating that a composite petition is maintainable when common grounds of attack and simultaneous orders are involved, as in this case.

5. Availability of an Alternative Remedy:
The Sales Tax Officer contended that the petitioner had an equally efficacious remedy under section 13 of the Act. The court held that the availability of an alternative remedy does not preclude the petitioner from seeking redress for the violation of fundamental rights, referencing Himmatlal Harilal Mehta v. State of Madhya Pradesh.

Conclusion:
The petition was allowed, and the petitioner was held not liable to pay tax, obtain a license, or pay registration fees for the assessment years 1951-52, 1952-53, and 1953-54. The orders imposing penalties and recovering tax and registration fees were quashed. Additionally, the petitioner was not liable to pay sales tax for the assessment year 1954-55 as long as his sales of imported cycle parts did not exceed Rs. 5,000. A writ of prohibition was issued to prevent the Sales Tax Officer from recovering tax and imposing penalties under these conditions. Each party was ordered to bear their own costs.

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