1968 (7) TMI 68 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of sales tax on imported "bardana".
2. Alleged violation of Article 301 of the Constitution.
3. Applicability of Article 304(a) of the Constitution.
4. Imposition of penalties for late filing of returns.
5. Request for refund of the tax paid.

Issue-wise Detailed Analysis:

1. Validity of Sales Tax on Imported "Bardana":
The petitioner, a registered partnership firm dealing in gunny bags, challenged the assessment orders dated 18th February 1965, for the years 1963-64 and 1964-65, arguing that the sales tax on imported "bardana" was invalid. The petitioner claimed an exemption based on a notification issued under section 4(2) of the Rajasthan Sales Tax Act, 1954, which exempted the sale of "bardana" except at the first point at the hands of an importer. The petitioner contended that the tax was unconstitutional and impeded inter-State trade and commerce.

2. Alleged Violation of Article 301 of the Constitution:
The petitioner argued that the sales tax on imported "bardana" violated Article 301 of the Constitution, which ensures the freedom of trade, commerce, and intercourse throughout India. The petitioner relied on the Supreme Court judgment in State of Madhya Pradesh and Another v. Bhailal Bhai and Others, where it was held that a tax on imported goods that impedes inter-State trade contravenes Article 301.

3. Applicability of Article 304(a) of the Constitution:
The State argued that the tax was saved by Article 304(a) of the Constitution, which allows the imposition of tax on imported goods if similar goods manufactured or produced in the State are also taxed. The Court, however, found that the term "bardana" included various types of containers, not just gunny bags, and noted that the State had not demonstrated that no other types of "bardana" were produced or manufactured in Rajasthan. Consequently, the tax on imported "bardana" was not within the saving provisions of Article 304(a) and violated Article 301.

4. Imposition of Penalties for Late Filing of Returns:
The petitioner was also penalized Rs. 25,000 for the year 1963-64 and Rs. 17,000 for the year 1964-65 for not filing the returns in time. Since the assessment orders were deemed invalid, the penalties imposed were also quashed. The Court noted that if the assessment orders were invalid, the penalties based on those assessments could not stand.

5. Request for Refund of the Tax Paid:
The petitioner requested a refund of the tax paid under the invalid assessment orders. The Court acknowledged that the Government must repay tax paid under a mistake but did not issue a writ of mandamus for the refund due to the lack of details regarding the amount and timing of the tax payments in the petition. The petitioner was advised to pursue an appropriate remedy under the Rajasthan Sales Tax Act or ordinary civil law for the refund.

Conclusion:
The Court allowed the writ petition in part, holding that the sales tax on imported "bardana" was invalid and unconstitutional, and the penalties imposed were also quashed. The assessment orders for the years 1963-64 and 1964-65 were set aside. The Court did not grant a refund of the tax paid, leaving the petitioner to seek an appropriate remedy for repayment. The parties were directed to bear their own costs.

Petition partly allowed.