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1972 (3) TMI 72 - HC - VAT and Sales Tax
Issues:
1. Validity of penalty under section 8(2) of the M.P. General Sales Tax Act, 1958. 2. Constitutionality of section 8(2) in relation to fundamental rights under articles 19(1)(g), 301, and 304 of the Constitution. Detailed Analysis: Issue 1: The petitioner challenged the assessment order imposing a penalty under section 8(2) of the Act. The penalty was imposed for utilizing raw material purchased at a concessional rate for a purpose other than specified in the section. The court examined the scheme of the Act, which provided for a concessional rate under section 8(1) for specific purposes. It held that the imposition of penalty under section 8(2) was within the legislative competence to prevent abuse of the concession and ensure compliance with the conditions attached to the concessional rate. The court emphasized that the penalty was ancillary and incidental to enforcing the concessional provisions, making it valid under entry 54, List II of the 7th Schedule. Issue 2: The petitioner contended that the penalty under section 8(2) violated its fundamental right under article 19(1)(g) and was unconstitutional under articles 301 and 304 of the Constitution. The court analyzed the restrictions imposed by section 8(2) in light of the constitutional provisions. It held that the conditions attached to the concessional rate were reasonable and aimed at promoting trade within the state or in inter-State transactions. The court emphasized that the power to prescribe concessional rates and prevent tax evasion was in the public interest. Referring to relevant case law, the court upheld the constitutionality of section 8(2) and dismissed the petition challenging the penalty imposed on the petitioner for utilizing raw material purchased at a concessional rate for a different purpose. In conclusion, the court upheld the validity of the penalty imposed under section 8(2) of the Act, emphasizing its role in preventing abuse of concessional provisions. The court also ruled that the restrictions imposed by the section were reasonable and constitutional, in line with the public interest and the promotion of trade within the state. The petition challenging the penalty was dismissed, and the petitioner was directed to pay costs while the security deposit was to be refunded.
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