1978 (12) TMI 176 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the validity of section 9(2A) of the Central Sales Tax Act, 1956 on grounds of excessive delegation of legislative functions and abdication of essential legislative function by the Parliament.

Analysis:
The petitioner challenged the validity of section 9(2A) of the Act, claiming that the Parliament delegated its essential legislative functions to the State Legislature by allowing penalties under the Act to be the same as fixed under State law. The petitioner, a registered dealer, faced a penalty for underreporting turnover. The Assessing Authority imposed a penalty of Rs. 2,25,000 under section 9(2) of the Act. The petitioner relied on a Supreme Court decision stating that penalties must be clearly enacted. The Parliament later added subsection (2A) to section 9, aligning penalties under the Act with State laws. The petitioner argued that since the penalty amount is not fixed by Parliament and can vary, it amounts to abdication of legislative functions.

The respondents cited a Supreme Court case where adopting State tax rates was deemed valid. The court held that the Parliament's amendment to section 9(2) by adding sub-clause (2A) showed a considered decision to align penalties with State laws. The court noted that the tax collected under the Act aims to augment State revenues, and the delegation of power to set penalty limits was made responsibly. The court found no excessive delegation or abdication of legislative powers in section 9(2A).

The petitioner contended that the amendment's application to past transactions violated constitutional guarantees. The court rejected this argument, stating that article 20 prohibits ex post facto laws in criminal prosecutions, not penalties for tax non-payment. The petitioner also argued that the penalty was excessive for a minor error in reporting. The court advised seeking redress through statutory remedies, as the matter could have been raised before appellate authorities. Ultimately, the court dismissed the petition, finding no merit in the challenges to section 9(2A) of the Act.

In conclusion, the court upheld the validity of section 9(2A) of the Central Sales Tax Act, 1956, rejecting the petitioner's claims of excessive delegation and abdication of legislative functions by the Parliament. The court emphasized that penalties under the Act aligning with State laws serve the purpose of revenue augmentation, and the delegation of power to set penalty limits was within permissible limits. The court dismissed the petition and disposed of related cases.