1981 (8) TMI 202 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of sales tax for the year 1974-75, imposition of interest under section 8(1) of the U.P. Sales Tax Act, challenge to the vires of section 8(1) of the Act under article 14 of the Constitution, challenge to the vires of section 9(1) under article 19(1)(f) and article 31(1) of the Constitution.

Analysis:
The petitioner was assessed to sales tax for the year 1974-75, and an amount was determined as tax payable. The Sales Tax Officer initiated proceedings for imposing interest under section 8(1) of the Act based on the tax payment dates and amounts deposited by the assessee. The total interest was calculated, and the petitioner challenged the vires of section 8(1) of the Act, asserting it conflicted with section 8(1-B) and violated article 14 of the Constitution. The petitioner also challenged the vires of section 9(1) under article 19(1)(f) and article 31(1) of the Constitution, although no arguments were presented on these grounds during the proceedings.

The primary issue revolved around whether section 8(1) of the Act violated article 14 of the Constitution in light of section 8(1-B). Section 8(1) mandated the deposit of tax within a specified time, failing which interest would be imposed, while section 8(1-B) dealt with interest on unpaid tax after assessment. The Court analyzed the provisions and found no discrimination in the application of section 8(1) as it applied uniformly to all dealers who did not pay tax on time. Section 8(1-B) provided a three-month respite after assessment before interest was charged, benefiting all dealers, including those who admitted their tax liability. The Court held that section 8(1-B) did not discriminate adversely and granted an advantage by allowing a respite, thus not resulting in hostile discrimination.

The Court referenced a previous Division Bench decision to support its interpretation of sections 8(1) and 8(1-B), emphasizing that the respite under section 8(1-B) did not create discrimination against dealers who admitted their tax liability. The Court dismissed the argument that the respite provision in section 8(1-B) was discriminatory, stating that discrimination could only be alleged if it worked against a person, which was not the case here. The Court distinguished this situation from previous cases and concluded that section 8(1-B) did not lead to hostile discrimination due to the advantage it conferred.

Ultimately, the Court dismissed the petition challenging the vires of section 8(1) and section 9(1) of the Act, ruling in favor of the Sales Tax Officer. The petition was rejected, and no costs were awarded. The judgment was deemed applicable to multiple related writ petitions, which were also dismissed.