1978 (8) TMI 194 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Competency of the legislature to enact Section 49 of the Haryana Act.
2. Retrospective effect of Section 49 of the Haryana Act.
3. Applicability of the saving provision in Section 65 of the Haryana Act.
4. Imposition of penalty under Section 49 of the Haryana Act in the absence of a corresponding provision in the Central Sales Tax Act.

Issue-wise Detailed Analysis:

Issue 1: Competency of the Legislature to Enact Section 49 of the Haryana Act

The petitioners challenged the competency of the legislature to enact Section 49 of the Haryana Act. Section 49 prohibits the collection of tax amounts in excess of what is permissible and imposes penalties for such actions. The court referenced the Supreme Court's judgment in *R. S. Joshi, Sales Tax Officer, Gujarat v. Ajit Mills Ltd.* [1977] 40 S.T.C. 497 (S.C.), which upheld similar provisions in the Bombay Sales Tax Act. The Supreme Court had ruled that such provisions fall within the ancillary or incidental powers of the State Legislature under entry 54 of List II of the Seventh Schedule of the Constitution of India. Therefore, the court held that Section 49 of the Haryana Act is a competent piece of legislation.

Issue 2: Retrospective Effect of Section 49 of the Haryana Act

The petitioners argued that the legislature was not competent to give retrospective effect to Section 49. The court dismissed this contention, citing the Supreme Court's established position that the legislature has the power to enact laws with retrospective effect, provided there are no constitutional limitations. The court held that Section 49 of the Haryana Act, which operates retrospectively from 14th November 1967, is not ultra vires the powers of the legislature.

Issue 3: Applicability of the Saving Provision in Section 65 of the Haryana Act

The petitioners contended that the saving provision in Section 65 of the Haryana Act, which repeals the Punjab General Sales Tax Act, 1948, should protect them from penalties for excess tax collection. The court clarified that the proviso to Section 65 is intended to preserve rights and liabilities under the repealed Act. Since the repealed Act did not grant immunity from penalties for excess tax collection, no such right could have accrued to the petitioners. The court found this contention to be without merit and rejected it.

Issue 4: Imposition of Penalty Under Section 49 in the Absence of a Corresponding Provision in the Central Act

The petitioners argued that Section 49 of the Haryana Act could not be invoked to impose penalties for excess tax collection in the absence of a similar provision in the Central Sales Tax Act. They relied on the Supreme Court's judgment in *Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra* [1975] 35 S.T.C. 571 (S.C.), which held that State provisions for penalties could not be applied to the Central Act. However, the court noted that the Central Sales Tax (Amendment) Act, 1976, had introduced sub-section (2A) to Section 9 of the Central Act, allowing State provisions on penalties to apply to the Central Act. Given this legislative change, the court held that the imposition of penalties under Section 49 of the Haryana Act is legal and valid.

Conclusion

Both writ petitions were dismissed as meritless. The court upheld the legality of the impugned notices and the proposed actions to levy penalties, finding no order as to costs. The judgments were concurred by both judges, resulting in the dismissal of the petitions.