1963 (11) TMI 67 - HC - VAT and Sales Tax

Summary

Issues:
Validity of the second proviso of section 8-A(6) of the U.P. Sales Tax Act in relation to fundamental rights guaranteed by the Constitution and its impact on the freedom of carrying on business.

Analysis:
The case involved a dealer in glass bangles who was called upon to furnish security for the continuance of their registration certificate under the U.P. Sales Tax Act. The dealer failed to provide the security, leading to the cancellation of the registration certificate by the Sales Tax Officer. The dealer filed a revision application against the cancellation, challenging the requirement of furnishing security before filing the revision application. The Judge (Revisions) held that this proviso contravened the dealer's fundamental right under Article 19(1)(g) of the Constitution and allowed the revision application, setting aside the cancellation order.

The High Court analyzed the provisions of section 8-A(6) of the Act, which empowers the assessing authority to demand security from dealers for registration and to continue the effect of the certificate. The first proviso requires prior approval of the Commissioner for such action, while the second proviso restricts the right to file a revision until the security is furnished. The Judge (Revisions) found this condition unreasonable, as it hindered the dealer's ability to challenge potentially wrongful or illegal orders regarding registration, impacting their business rights under Article 19(1)(g).

However, the High Court disagreed with this reasoning, stating that the condition applied to the filing of a revision application, not the business operations of the dealer. The right to file a revision was statutory, not a fundamental or constitutional right. The Court emphasized that the Legislature was not obligated to provide the right to file a revision, and if granted, could impose conditions on its exercise. Therefore, the requirement of security before filing a revision did not violate any fundamental rights and was a valid condition under the law.

In conclusion, the High Court answered the question regarding the validity of the second proviso of section 8-A(6) in the negative, upholding the legality of the condition requiring security before filing a revision application. The judgment directed the distribution of copies to relevant authorities and stated that each party would bear their own costs, with the counsel's fee assessed at Rs. 50.