1966 (11) TMI 77 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Violation of legislative power under Entry 54 of List II of Schedule VII of the Constitution of India.
2. Violation of Articles 14 and 19(1)(f) and (g) of the Constitution of India.

Detailed Analysis:

Point 1: Violation of Legislative Power under Entry 54 of List II of Schedule VII of the Constitution of India

The petitioners challenged the validity of Section 28(6) and Section 29(3) of the Andhra Pradesh General Sales Tax Act, 1957, arguing that these sections, which provide for the confiscation of goods, are ultra vires of the State Legislature. The court examined the relevant provisions of the Act, noting that Section 28 authorizes officers to inspect, seize, and confiscate goods not accounted for in the dealer's records, while Section 29 pertains to the inspection and confiscation of goods in transit.

The court referred to several Supreme Court decisions, such as Chaturbhai v. Union of India and Baldev Singh v. Income-tax Commissioner, which established that the power to levy a tax includes all incidental powers to prevent its evasion. The court emphasized that legislative entries should be interpreted broadly to include ancillary matters. The court also cited Abdul Quader and Co. v. Sales Tax Officer, which highlighted that incidental powers must aid the main topic of legislation.

The court concluded that the power to confiscate goods is ancillary to preventing tax evasion, aligning with the principles laid out in Venkatachalapathi v. Commercial Tax Inspector and R. S. Jhaver v. Commissioner of Commercial Taxes. The court favored the Mysore High Court's view, which upheld the legislative vires of similar provisions, over the Madras High Court's view, which struck down the power of confiscation as not being ancillary to the power to tax.

Point 2: Violation of Articles 14 and 19(1)(f) and (g) of the Constitution of India

The petitioners contended that the provisions for confiscation of goods confer excessive and arbitrary power on the authorities, violating Articles 14 and 19(1)(f) and (g) of the Constitution. The court examined the procedural safeguards provided under the Andhra Pradesh General Sales Tax Rules of 1957, which include giving the affected party an opportunity to be heard and the right to appeal against confiscation orders.

The court referenced Chaturbhai v. Union of India and Collector of Customs v. Sampathu Chetty, where the Supreme Court upheld similar provisions, stating that the possibility of abuse does not render a statute invalid. The court also cited Balaji v. Income-tax Officer, which emphasized that the reasonableness of restrictions must be judged by the magnitude of the evil sought to be remedied.

The court concluded that the procedural safeguards under the Andhra Pradesh General Sales Tax Rules ensure that the powers conferred are not arbitrary or unreasonable, and therefore, do not violate Articles 14 and 19(1)(f) and (g).

Specific Case Outcomes:

- W.P. No. 971 of 1962: The court noted that no order of confiscation had been passed for the 115 bags of jaggery covered by the way-bill, and hence, their seizure was unjustified. The petitioner was allowed to take delivery of these bags after furnishing security. The writ petition was allowed in part concerning these 115 bags, and the security was ordered to be canceled. However, for the remaining five bags, the Commercial Tax Officer was directed to hold an inquiry as per law.

- W.P. No. 1044 of 1962: The court dismissed this petition with costs, as the petitioner had not pursued the remedies provided under the Act before approaching the court.

Conclusion:
The court upheld the legislative validity of Sections 28(6) and 29(3) of the Andhra Pradesh General Sales Tax Act, 1957, and found that the procedural safeguards provided under the rules ensure that the powers conferred are not arbitrary or unreasonable, thereby not violating Articles 14 and 19(1)(f) and (g) of the Constitution.