1971 (12) TMI 105 - HC - VAT and Sales Tax

Issues Involved:
1. Repugnancy of the M.P. General Sales Tax Act, 1958 with Section 15 of the Central Sales Tax Act.
2. Jurisdiction of the assessing authority to decide the validity of the Act.
3. Specificity of the stage at which sales tax on oil-seeds is to be levied under the M.P. General Sales Tax Act.
4. Interpretation of Section 2(r) of the M.P. General Sales Tax Act in relation to the stage of tax imposition.
5. Comparison with similar cases and judgments from other jurisdictions and the Supreme Court.

Issue-wise Detailed Analysis:

1. Repugnancy of the M.P. General Sales Tax Act, 1958 with Section 15 of the Central Sales Tax Act:
The petitioner contended that the provisions of the M.P. General Sales Tax Act regarding the levy of sales tax on oil-seeds were repugnant to Section 15 of the Central Sales Tax Act and, thus, void and illegal. Section 15(a) of the Central Sales Tax Act stipulates that the tax on declared goods like oil-seeds should not exceed 2% and should not be levied at more than one stage. The court examined the amendments made to Section 6 and Schedule II of the M.P. General Sales Tax Act in 1962, which omitted the specification of the stage at which the tax was to be levied.

2. Jurisdiction of the assessing authority to decide the validity of the Act:
The assessing authority overruled the petitioner's objection on the grounds that it did not have the jurisdiction to decide the validity of the Act under which it was constituted. The court did not delve deeply into this issue but focused on the substantive legal question concerning the compatibility of the state law with the central legislation.

3. Specificity of the stage at which sales tax on oil-seeds is to be levied under the M.P. General Sales Tax Act:
The petitioner argued that the M.P. General Sales Tax Act failed to specify the stage at which the tax on oil-seeds was to be levied, thereby violating Section 15(a) of the Central Sales Tax Act. The court noted that the original Section 6 and Schedule II of the Act had specified the stage, but the amendments in 1962 had removed this specification. The respondents relied on Section 2(r) of the Act, which defines "taxable turnover," to argue that the stage was implicitly prescribed.

4. Interpretation of Section 2(r) of the M.P. General Sales Tax Act in relation to the stage of tax imposition:
Section 2(r)(iv) of the M.P. General Sales Tax Act was interpreted to mean that the tax becomes exigible when a registered dealer sells the goods to a consumer or an unregistered dealer. The court reasoned that the chain of registered dealers selling to other registered dealers could continue, but the tax would be levied at the point where the goods were sold to a consumer or unregistered dealer. This interpretation was deemed sufficient to meet the requirements of Section 15(a) of the Central Sales Tax Act.

5. Comparison with similar cases and judgments from other jurisdictions and the Supreme Court:
The petitioner cited the Supreme Court's decision in Bhawani Cotton Mills v. State of Punjab, where it was held that the tax on declared goods could not be levied at more than one stage unless the Act or Rules specified the stage. The court distinguished this case by noting that the Punjab Act lacked clear provisions to ascertain the single point of tax imposition, whereas the M.P. Act, through Section 2(r)(iv), provided sufficient clarity. The court also referred to decisions from the Rajasthan High Court and the Supreme Court in Venkateswara Rice Mill v. State of A.P., which supported the view that the stage of tax imposition need not be explicitly stated if it could be discerned from the Act's provisions.

Conclusion:
The court concluded that the M.P. General Sales Tax Act did not violate Section 15(a) of the Central Sales Tax Act. The petitioner's contention that the tax could not be recovered due to the lack of a specified stage in the Act was rejected. The court found no lacuna in the provisions of the State Act and upheld the validity of the tax imposition. Consequently, the petition was dismissed with costs.

Order:
The petition fails and is dismissed with costs. Hearing fee Rs. 100. The balance, if any, of the security deposit, after deducting costs, shall be refunded to the petitioner. Petition dismissed.

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