1970 (2) TMI 114 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Power of the assessing authority to impose a penalty under section 9(3) of the Central Sales Tax Act, 1956, read with section 10(6) of the Punjab General Sales Tax Act, 1948.
2. Validity of adopting future amendments made by State Legislatures in the context of the Central Sales Tax Act.
3. Applicability of the Central Sales Tax (Punjab) Rules, 1957, particularly rules 7-A and 9, in relation to penalties for non-payment of tax.

Detailed Analysis:

1. Power of the Assessing Authority to Impose a Penalty:
The primary issue was whether the assessing authority had the power to impose a penalty under section 9(3) of the Central Sales Tax Act, 1956, read with section 10(6) of the Punjab General Sales Tax Act, 1948. The petitioners argued that the Central Act of 1956 could only adopt the existing provisions of section 10 of the Punjab Act as they stood in 1956, and not any subsequent amendments, including the addition of sub-section (6) in 1960, which provided for penalties. The court held that Parliament was fully competent to adopt existing State legislations for the purpose of assessment, collection, and enforcement of tax, including any future modifications. The court concluded that the power to impose penalties under section 10(6) of the Punjab Act, as adopted by section 9(3) of the Central Act, was valid.

2. Validity of Adopting Future Amendments:
The court examined whether Parliament could delegate its legislative functions to State Legislatures, allowing them to adopt future amendments for the purposes of the Central Sales Tax. The court cited the Supreme Court's judgment in In re Article 143, Constitution of India and Delhi Laws Act, which upheld the validity of delegated legislation. The court found that Parliament had sovereign and plenary powers to legislate for the imposition of Central sales tax and could reasonably delegate this power to State Legislatures. The court noted that adopting future amendments made by State Legislatures did not amount to an abdication of legislative power by Parliament. Therefore, the adoption of future amendments by the State Legislatures was held to be constitutional and valid.

3. Applicability of Central Sales Tax (Punjab) Rules, 1957:
The petitioners contended that rule 9 of the Central Sales Tax (Punjab) Rules, 1957, which provides penalties for breaches of the rules, should override the penalty provisions of the Punjab Act. The court disagreed, stating that the Central Sales Tax (Punjab) Rules occupied a different field and had no bearing on the powers of assessment, collection, and imposition of penalties for non-payment of tax. The liability to pay tax was imposed by section 10(4) of the Punjab Act, and a contravention of these provisions attracted the penalty under section 10(6) of the Punjab Act. The court held that rule 9 of the Central Sales Tax (Punjab) Rules created a criminal offence for breach of the rules, while section 10(6) of the Punjab Act provided for a civil penalty. Thus, the penalty under section 10(6) of the Punjab Act was valid and enforceable.

Conclusion:
The court dismissed all the petitions, upholding the power of the assessing authority to impose penalties under section 9(3) of the Central Sales Tax Act, 1956, read with section 10(6) of the Punjab General Sales Tax Act, 1948. The court affirmed the validity of adopting future amendments made by State Legislatures and clarified that the Central Sales Tax (Punjab) Rules, 1957, did not override the penalty provisions of the Punjab Act. The petitions were dismissed without any order as to costs.