1977 (3) TMI 132 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Imposition of tax on the sale of country liquor by Panchayat Samitis.
2. Legislative policy and delegation of authority.
3. Validity of the Punjab Panchayat Samitis (Sale of Liquor) Rules, 1976.
4. Compliance with statutory provisions regarding notification and assessment.
5. Effect of non-laying of rules before the legislature.

Detailed Analysis:

1. Imposition of Tax on the Sale of Country Liquor by Panchayat Samitis:
The petitioners, licensees under the Punjab Excise Act, objected to the imposition of tax on the sale of country liquor by various Panchayat Samitis in Punjab. They argued that the notifications issued under section 67(5) of the Punjab Panchayat Samitis and Zila Parishads Act were contrary to section 6 read with entry 37 of Schedule B of the Punjab General Sales Tax Act, which exempts such sales from tax.

2. Legislative Policy and Delegation of Authority:
The court examined whether the imposition of tax by Panchayat Samitis contravened the legislative policy underlying the Punjab General Sales Tax Act. It was argued that the legislative policy exempted goods on which excise duty was leviable from sales tax. However, the court held that the legislature could authorize local authorities to impose taxes, and the existence of two taxes on the same commodity under different enactments was permissible. The court rejected the argument of impermissible delegation, stating that the Panchayat Samiti was directly empowered by the legislature, not as a sub-delegate of the government.

3. Validity of the Punjab Panchayat Samitis (Sale of Liquor) Rules, 1976:
The petitioners contended that the rules were not validly made as they were not laid before the legislature as required by section 115(4) of the Punjab Panchayat Samitis and Zila Parishads Act. The court acknowledged the seriousness of non-laying but concluded, based on precedent, that non-laying did not invalidate the rules unless the legislature prescribed a consequence for such non-laying.

4. Compliance with Statutory Provisions Regarding Notification and Assessment:
The court addressed the argument that the notifications did not specify who was liable to pay the tax or who would assess it. It was found that the proposals by the Panchayat Samitis clearly specified "country liquor vendors" as liable, and the rules prescribed the Executive Officer of the Panchayat Samiti as the assessing authority. The court held that the imposition of tax was effective from the notified date, and any issues with demand slips without assessments could be addressed through appeals under section 73 of the Act.

5. Effect of Non-Laying of Rules Before the Legislature:
The court discussed the implications of non-laying of rules before the legislature. While recognizing the importance of legislative control over executive actions, the court, following the Supreme Court's precedent, held that non-laying did not invalidate the rules unless explicitly stated by the legislature. Thus, the rules remained valid despite not being laid before the legislature.

Conclusion:
The court dismissed all the writ petitions, upholding the imposition of tax on the sale of country liquor by Panchayat Samitis and validating the Punjab Panchayat Samitis (Sale of Liquor) Rules, 1976, despite the non-laying before the legislature. The court emphasized the legislative competence to authorize local authorities to levy taxes and the absence of any statutory consequence for non-laying of rules.