1959 (12) TMI 21 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of Rule 16 of the Turnover and Assessment Rules under the Madras General Sales Tax Act, 1939.
2. Compliance with Section 19(4) of the Madras General Sales Tax Act.
3. Application of Section 7(e) of the Madras General Clauses Act.
4. Effect of Section 9 of the Madras General Sales Tax etc. Amendment Act (I of 1957) on the rules.
5. Validity of assessments under the old rules if the new rules are invalid.

Issue-wise Analysis:

1. Validity of Rule 16 of the Turnover and Assessment Rules under the Madras General Sales Tax Act, 1939:
The appeal, petitions, and tax case involved several dealers in hides and skins challenging the validity of Rule 16 of the Turnover and Assessment Rules. The rule was promulgated by the Government in G.O. No. 2733 (Rev.) dated 3rd September 1955, under Section 19 of the Madras General Sales Tax Act, 1939. The court had previously upheld the rule's validity against objections related to Article 286(3) and Article 304 of the Constitution. The current challenge was based on the non-compliance with Section 19(4) of the Act.

2. Compliance with Section 19(4) of the Madras General Sales Tax Act:
Section 19(4) mandated a publication of the rules for a period of not less than four weeks before they were finalized. The impugned rules were not published in accordance with this provision. The court noted that the provisions of Section 19(4) were mandatory, and non-compliance would typically invalidate the rules. However, the court examined whether the rules could still be considered valid under other statutory provisions.

3. Application of Section 7(e) of the Madras General Clauses Act:
Section 7(e) of the Madras General Clauses Act states that the final publication in the Official Gazette of a rule purporting to have been made in exercise of a power to make rules after previous publication shall be conclusive proof that the rule has been duly made. The court found that the rules were purported to be made under the powers conferred by the Act, satisfying the conditions for the application of Section 7(e). Consequently, the court held that it could not investigate the non-compliance with Section 19(4) due to the conclusive proof provided by Section 7(e).

4. Effect of Section 9 of the Madras General Sales Tax etc. Amendment Act (I of 1957) on the rules:
Section 9 of Act I of 1957 was enacted to validate the assessment and levy of tax and license fees for the year 1955-56, notwithstanding the retrospective operation of the amendments to the rules. The court agreed that Section 9 validated the rules for the year 1955-56, but it did not extend beyond that period. Therefore, assessments for the year 1955-56 were valid regardless of the compliance with Section 19(4).

5. Validity of assessments under the old rules if the new rules are invalid:
The court considered the argument that if the new Rule 16 was invalid, the old rule should still be in effect. The court agreed with this contention, stating that if the new rules were invalid, the old rules would remain in force. The assessments could be justified under the old rules, which were substantially identical to the new rules. Therefore, the assessments made under the old rules would still be valid.

Conclusion:
The court dismissed the appeal and petitions, upholding the validity of Rule 16 under the provisions of Section 7(e) of the Madras General Clauses Act. The assessments for the year 1955-56 were validated by Section 9 of Act I of 1957. The court also held that the old rules would remain in force if the new rules were invalid, ensuring the validity of the assessments.

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