1968 (5) TMI 48 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Violation of Article 303 of the Constitution of India by Section 5(3) of the Punjab General Sales Tax Act.
2. Violation of Article 14 of the Constitution by Section 5(3).
3. Violation of Section 15 of the Central Sales Tax Act by Section 5(3).
4. Validity of assessments quashed by the Supreme Court being validated by the Legislature.

Detailed Analysis:

Point No. (1): Violation of Article 303 of the Constitution of India

The petitioners argued that Section 5(3)(a)(ii) of the Punjab General Sales Tax Act discriminates against residents of Punjab by levying purchase tax on goods consumed within the state, while no such tax is levied if the goods are exported out of Punjab. The learned counsel for the State of Punjab contended that Article 303 does not apply to taxation laws and is limited to trade and commerce entries. The court agreed with the State's argument, stating that taxation is a distinct matter for legislative competence, and Article 303 does not come into play. The court referenced decisions from East India Sandal Oil Distilleries Ltd., M. P. V. Sundararamier & Co., and Atiabari Tea Co. Ltd. to support this view. The court concluded that there was no discrimination as alleged, and the petitioners' argument lacked merit.

Point No. (2): Violation of Article 14 of the Constitution

The petitioners contended that Section 5(3) discriminates between consumers within and outside Punjab. The court dismissed this argument, stating that there is no discrimination in the case of declared goods like cotton. The purchase tax is levied equally whether the goods are consumed within the state or sent outside in inter-State trade. Therefore, the argument of discrimination under Article 14 was rejected.

Point No. (3): Violation of Section 15 of the Central Sales Tax Act

The petitioners argued that Section 5(3) violates Section 15 of the Central Sales Tax Act by potentially exceeding the tax limit when market fees are added to the purchase tax. The court clarified that market fees are not taxes but charges for services rendered, referencing the Supreme Court decision in Mohammad Hussain Gulam Mohammad and Another v. The State of Bombay and Another. Thus, the argument was dismissed. The court also addressed the issue of determining taxable turnover, stating that the amendments to Section 5(3) removed the infirmities pointed out by the Supreme Court in Bhawani Cotton Mills' case. The court concluded that the amended Act is not open to challenge on these grounds.

Point No. (4): Validity of Assessments Quashed by the Supreme Court

The petitioners argued that the Legislature could not validate assessments quashed by the Supreme Court. The court referenced several Supreme Court decisions, including Sadasib Prakash Brahmchari v. The State of Orissa and State of Uttar Pradesh v. Dr. Vijay Anand Maharaj, to assert that the Legislature has the power to validate laws declared invalid by courts. Therefore, this contention was also rejected.

Conclusion:

The petition was dismissed, and the court found no merit in any of the contentions raised by the petitioners. There was no order as to costs.