1999 (9) TMI 11 - HC - Income Tax

Summary

Issues Involved:
1. Requirement of tax clearance certificates for transportation of tea.
2. Authority to issue and demand tax clearance certificates.
3. Compliance with Assam Agricultural Income-tax Act, 1939 and Assam General Sales Tax Act, 1993.
4. Violation of constitutional rights under Article 19(1)(g).

Detailed Analysis:

1. Requirement of Tax Clearance Certificates for Transportation of Tea:
The petitioners, owners of various tea estates, sought to restrain the respondents from demanding tax clearance certificates for transporting tea. They argued that neither the Assam Agricultural Income-tax Act, 1939 nor the Assam General Sales Tax Act, 1993, required the production of such certificates at check posts. Historically, only a declaration was needed for transportation, but since January 1994, officials began insisting on tax clearance certificates, causing significant business disruptions.

2. Authority to Issue and Demand Tax Clearance Certificates:
The court examined the statutory provisions and found no requirement for tea estates to produce sales tax clearance certificates under either the 1947 Act or the 1993 Act. The rules under the 1993 Act, specifically Rules 33 and 34, did not mandate such certificates for transporting goods. The court noted that the insistence on agricultural income-tax clearance certificates was also unsupported by the Assam Agricultural Income-tax Act, 1939, leading to unnecessary harassment and business dislocation for the petitioners.

3. Compliance with Assam Agricultural Income-tax Act, 1939 and Assam General Sales Tax Act, 1993:
The court referenced a previous judgment (Civil Rule No. 2000 of 1994) where it was determined that there was no legal basis for demanding agricultural income-tax clearance certificates. The court reiterated that the relevant Acts and Rules did not support the respondents' actions. Specifically, Section 46(4) of the Assam General Sales Tax Act, 1993, allowed officers to inspect documents to ensure tax compliance but did not explicitly require tax clearance certificates. The court found Rule 43(7)(j), which listed multiple documents including tax clearance certificates, to be contrary to the Act's provisions, which mentioned documents in the alternative.

4. Violation of Constitutional Rights under Article 19(1)(g):
The petitioners argued that the actions of the respondents violated their right to carry on their business under Article 19(1)(g) of the Constitution. The court agreed that the requirement for multiple documents and the detention of trucks without legal basis constituted an unreasonable restriction on their trade. However, the court also noted that the provision in Section 46(4) itself, which aimed to ensure tax compliance, was reasonable and did not violate constitutional rights.

Conclusion:
The court allowed the writ petitions, directing the respondents not to insist on agricultural income-tax or sales tax clearance certificates at check posts unless the law is suitably amended. It also restrained the respondents from demanding more than one of the documents listed in Rule 43(7)(j). The court emphasized that the provisions of Section 46(4) were reasonable and aimed at ensuring lawful tax payment but required proper legislative support to enforce additional document requirements. No order as to costs was made.