1968 (3) TMI 99 - HC - VAT and Sales Tax

Issues Involved:
1. Power to levy penalty for non-production of way bills.
2. Power to confiscate and forfeit unaccounted goods.
3. Constitutionality of the Andhra Pradesh General Sales Tax Act, 1957, specifically sections 28(6) and 29(3) and (4).
4. Alleged violation of Articles 14, 19(1)(f) and (g), and 31 of the Constitution.

Issue-wise Detailed Analysis:

1. Power to Levy Penalty for Non-Production of Way Bills:
The judgment addressed whether the Sales Tax Authorities have the power to levy penalties for non-production of way bills under section 29(3) and (4) of the Andhra Pradesh General Sales Tax Act, 1957. The petitioners contended that these provisions are ultra vires the State Legislature and violate constitutional protections. The court upheld these provisions, stating that the power to levy penalties for non-production of way bills is ancillary to the power to levy tax and is necessary to prevent tax evasion. The court emphasized that the provisions are regulatory and designed to prevent evasion, thus falling within the legislative competence of the State under entry 54 of List II of the Seventh Schedule to the Constitution.

2. Power to Confiscate and Forfeit Unaccounted Goods:
The court examined the power of Sales Tax Authorities to confiscate and forfeit goods found unaccounted for under section 28(6) of the Act. The petitioners argued that this power is not ancillary to the power to levy tax and is ultra vires. The court referred to a previous decision in K.S. Papanna v. Deputy Commercial Tax Officer, which held that the power to confiscate goods is incidental to the power to levy tax and is necessary to prevent tax evasion. The court reiterated that the power to confiscate unaccounted goods is a punishment for non-compliance with the Act and is not related to the actual evasion of tax. The court concluded that this power is within the legislative competence of the State and does not violate constitutional provisions.

3. Constitutionality of the Andhra Pradesh General Sales Tax Act, 1957:
The petitioners challenged the constitutionality of sections 28(6) and 29(3) and (4) of the Act, arguing that they violate Articles 14, 19(1)(f) and (g), and 31 of the Constitution. The court addressed each of these arguments in detail:
- Article 14 (Equality Before Law): The petitioners contended that the provisions treat persons who attempt to evade tax more harshly than those who actually evade tax, thus violating Article 14. The court rejected this argument, stating that the provisions are designed to prevent evasion and are a class by themselves. The court emphasized that the legislative intent is to provide appropriate punishment to deter evasion and that the provisions are not discriminatory.
- Article 19(1)(f) and (g) (Right to Property and Trade): The petitioners argued that the provisions impose unreasonable restrictions on their rights under Article 19(1)(f) and (g). The court held that the provisions are reasonable restrictions designed to prevent tax evasion and are within the legislative competence of the State. The court referred to previous decisions upholding similar provisions in other tax laws and concluded that the provisions do not violate Article 19.
- Article 31 (Right to Property): The petitioners argued that the provisions are expropriatory and violate Article 31. The court dismissed this argument, stating that the confiscation of goods is a penalty for non-compliance with the Act and not an acquisition of property by the State. The court also noted that Article 31(5) exempts laws imposing penalties from the provisions of Article 31(2).

4. Alleged Violation of Articles 14, 19(1)(f) and (g), and 31 of the Constitution:
The court thoroughly examined the petitioners' arguments regarding the alleged violation of constitutional provisions:
- Article 14: The court held that the provisions do not violate Article 14 as they are designed to prevent tax evasion and are not discriminatory. The court emphasized that the provisions are ancillary to the power to levy tax and are necessary to achieve the legislative objective of preventing tax evasion.
- Article 19(1)(f) and (g): The court concluded that the provisions are reasonable restrictions on the petitioners' rights under Article 19 and are within the legislative competence of the State. The court referred to previous decisions upholding similar provisions in other tax laws and emphasized that the provisions are necessary to prevent tax evasion.
- Article 31: The court dismissed the argument that the provisions violate Article 31, stating that the confiscation of goods is a penalty for non-compliance with the Act and not an acquisition of property by the State. The court also noted that Article 31(5) exempts laws imposing penalties from the provisions of Article 31(2).

Conclusion:
The court dismissed the writ petitions, upholding the constitutionality of sections 28(6) and 29(3) and (4) of the Andhra Pradesh General Sales Tax Act, 1957. The court emphasized that these provisions are necessary to prevent tax evasion and are within the legislative competence of the State. The court also held that the provisions do not violate Articles 14, 19(1)(f) and (g), or 31 of the Constitution. The court awarded costs to the respondents, with an advocate's fee of Rs. 50 in each petition.

← Previous Next →