1976 (12) TMI 175 - HC - VAT and Sales Tax

Issues Involved
1. Imposition of tax by Panchayat Samiti on the sale of country liquor.
2. Constitutional validity of Section 66 of the Punjab Panchayat Samitis and Zila Parishads Act, 1961.
3. Conflict with Section 6 of the Punjab General Sales Tax Act, 1948.
4. Estoppel against the Government in imposing tax post-auction of liquor vends.
5. Equitable considerations in the imposition of tax.

Detailed Analysis

1. Imposition of Tax by Panchayat Samiti on the Sale of Country Liquor
The petitioner-firm, a licensee of country liquor vends, contested the imposition of a tax by Panchayat Samiti, Tanda, on the sale of country liquor. The tax rates were specified as follows: one rupee per bottle for quart, fifty paise per bottle for pint, and twenty paise per bottle for nip. The petitioner argued that since the sale price of bottled liquor had been fixed by the State Government, no additional tax could be levied by the Samiti. The Court, however, upheld the Samiti's authority to impose such a tax under the Punjab Panchayat Samitis and Zila Parishads Act, 1961.

2. Constitutional Validity of Section 66 of the Punjab Panchayat Samitis and Zila Parishads Act, 1961
The constitutional validity of Section 66 was challenged on the grounds that it represented an abdication of legislative functions to the executive. The Court dismissed this argument, stating that the State Legislature, by enacting the Act, was following the Directive Principles of State Policy under Article 40 of the Constitution, which mandates the organization of village panchayats with necessary powers. The Court emphasized that the legislative framework provided sufficient guidelines and safeguards to prevent arbitrary exercise of power.

3. Conflict with Section 6 of the Punjab General Sales Tax Act, 1948
The petitioner argued that the imposition of tax by the Panchayat Samiti was in conflict with Section 6 of the Punjab General Sales Tax Act, 1948, which exempts country liquor from sales tax. The Court clarified that the exemption under the Sales Tax Act pertains to the Consolidated Fund of the State, whereas the tax imposed by the Panchayat Samiti is for local benefit. Thus, the imposition of tax by the Samiti does not contravene the Sales Tax Act.

4. Estoppel Against the Government in Imposing Tax Post-Auction of Liquor Vends
The petitioner contended that the imposition of tax after the auction of vends constituted estoppel against the Government. The Court rejected this argument, citing the Supreme Court's decision in Excise Commissioner, U.P., Allahabad v. Ram Kumar, which held that there can be no estoppel against the Government in exercising its legislative, sovereign, or executive powers. The Court affirmed that the Panchayat Samiti had the authority to impose the tax despite the auction conditions.

5. Equitable Considerations in the Imposition of Tax
The petitioner urged the Court to quash the tax on equitable grounds, arguing that the imposition during the current year would cause irreparable loss. The Court dismissed this plea, stating that equitable considerations cannot influence the interpretation of a taxing statute. The Court emphasized that the legal framework must be adhered to, irrespective of the perceived fairness or equity of the tax imposition.

Conclusion
The Court found no merit in the petitions and dismissed them with costs, affirming the Panchayat Samiti's authority to impose the tax and upholding the constitutional validity of the relevant legislative provisions. The costs were set at Rs. 200 in each case, recoverable by the concerned Panchayat Samiti.

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