1970 (1) TMI 65 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutional validity of Section 21 of the Bihar Sales Tax Act, 1959.
2. Arbitrary exercise of power under Section 21 of the Act by the Superintendent of Commercial Taxes.

Analysis of the Judgment:

1. Constitutional Validity of Section 21 of the Bihar Sales Tax Act, 1959:
The petitioners challenged the validity of Section 21 on the grounds that it infringes Article 14 of the Constitution. They argued that Section 21 provides an unfettered and unbridled special mode of recovery without indicating principles or guidelines, leading to potential discrimination among similarly situated dealers. The court analyzed the arguments and referred to previous judgments, including Vishwakarma's case, which had struck down a similar provision for being too drastic and onerous. However, the court upheld the constitutional validity of Section 21 by interpreting that the power to investigate objections is inherent in the prescribed authority under Section 21(2). This interpretation ensures that the dealer has the opportunity to object and seek redress, thus preventing arbitrary discrimination and aligning with the principles of Article 14. The court concluded that the special mode of recovery under Section 21 is not inherently discriminatory, as long as the dealer is provided with adequate procedural safeguards to contest the demand.

2. Arbitrary Exercise of Power under Section 21 of the Act:
The petitioners contended that the Superintendent of Commercial Taxes arbitrarily exercised his power under Section 21 without providing any basis or explanation for the varying figures mentioned in different notices. The court found merit in this contention, noting that the Superintendent issued notices for different amounts without any clear explanation or basis, and failed to address the objections raised by the petitioner-company adequately. The court observed that the Superintendent's actions demonstrated a lack of proper consideration of the petitioner's objections and a failure to provide necessary facts and figures to justify the amounts claimed. Consequently, the court quashed the order dated 1st April 1969 and remitted the case back to the Superintendent for a rehearing of the objections filed by the petitioner-company, directing him to decide the matter afresh in accordance with the law and to amend or revoke the notice if necessary.

Conclusion:
The court upheld the constitutional validity of Section 21 of the Bihar Sales Tax Act, 1959, by interpreting it in a manner that ensures procedural safeguards for the dealer, thereby preventing arbitrary discrimination. However, the court found that the Superintendent of Commercial Taxes had arbitrarily exercised his power under Section 21, leading to the quashing of the order dated 1st April 1969 and remitting the case for a fresh decision.