1966 (11) TMI 79 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Validity of Government Notification No. F. 5(99) E. & T./60 dated 26th March, 1962.
2. Whether "banians" and "chaddies" are considered hosiery products.
3. Whether the notification violated Article 14 of the Constitution.
4. Whether the notification was in excess of the powers of the State Government under section 4(2) of the Rajasthan Sales Tax Act, 1954.
5. Imposition of penalty under section 16(1)(b) or (c) of the Act.
6. Justification for the appellate authority's refusal to stay the recovery of tax pending appeals.

Detailed Analysis

1. Validity of Government Notification No. F. 5(99) E. & T./60 dated 26th March, 1962:
The petitioners, registered dealers under the Rajasthan Sales Tax Act, 1954, challenged the validity of the Government Notification No. F. 5(99) E. & T./60 dated 26th March, 1962. This notification superseded a previous notification and excluded hosiery products from the tax exemption on garments valued below Rs. 4. The Court found that the impugned notification was in conformity with the plain language of section 4(2) of the Act, which allows the State Government to exempt certain goods from tax in the public interest. The Court held that the notification was valid and did not exceed the powers granted by section 4(2).

2. Whether "banians" and "chaddies" are considered hosiery products:
The petitioners argued that "banians" and "chaddies" should be classified as garments and not hosiery products, thus qualifying for tax exemption. The Court referred to various dictionaries and concluded that "hosiery" includes frame-knitted garments of all types, including "banians" and "chaddies." Therefore, "banians" and "chaddies" were considered hosiery products and were excluded from the tax exemption under the impugned notification.

3. Whether the notification violated Article 14 of the Constitution:
The petitioners contended that the notification violated Article 14 of the Constitution by irrationally classifying garments and excluding hosiery products from the exemption. The Court referred to several Supreme Court judgments, emphasizing that a taxation law must pass the test of Article 14 but also acknowledging the wide discretion of the State in selecting the objects of taxation. The Court concluded that the classification between garments and hosiery products was rational and based on differences in manufacturing processes and usage. Therefore, the notification did not violate Article 14.

4. Whether the notification was in excess of the powers of the State Government under section 4(2) of the Rajasthan Sales Tax Act, 1954:
The petitioners argued that by partially withdrawing the exemption, the State Government exceeded its powers under section 4(2). The Court held that section 4(2) allows the State Government to exempt certain goods or classes of goods from tax in the public interest, including imposing conditions on such exemptions. The Court found that the notification was within the powers granted by section 4(2) and did not constitute unauthorized legislation.

5. Imposition of penalty under section 16(1)(b) or (c) of the Act:
The petitioners argued that the Commercial Taxes Officer erred in imposing penalties for non-payment of tax. However, the Court did not delve deeply into this issue, stating that the petitioners had already filed appeals against the assessment orders and should pursue their statutory remedies.

6. Justification for the appellate authority's refusal to stay the recovery of tax pending appeals:
The petitioners contended that the appellate authority unjustly refused to stay the recovery of tax pending the disposal of their appeals. The Court did not address this issue in detail, emphasizing that the petitioners should continue to pursue their appeals through the statutory process.

Conclusion
The Court dismissed all the writ petitions, upholding the validity of the impugned notification and affirming that "banians" and "chaddies" are hosiery products excluded from the tax exemption. The notification was found to be in compliance with section 4(2) of the Rajasthan Sales Tax Act, 1954, and did not violate Article 14 of the Constitution. The petitioners were advised to pursue their appeals through the statutory process.