1982 (2) TMI 277 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the notifications enhancing the rate of sales tax.
2. Delegation of legislative power.
3. Authority of the Chief Commissioner to issue notifications.
4. Review of the previous judgment.
5. Equitable considerations regarding collected taxes.

Detailed Analysis:

1. Validity of the Notifications Enhancing the Rate of Sales Tax:
The petitioner challenged the validity of three notifications dated 18th April 1968, 11th June 1969, and 13th June 1975, issued by the Chief Commissioner, Union Territory, Chandigarh, which enhanced the rate of sales tax under section 5(1) of the Punjab General Sales Tax Act, 1948. The court focused on the notification dated 13th June 1975 (annexure P-11), which substituted the word "three" with "four" in a proviso of an earlier notification.

2. Delegation of Legislative Power:
The petitioner argued that the power to issue such notifications was a delegated legislative power that could only be exercised by the Central Government. The respondent-authorities contended that the power under section 5(1) of the Act was administrative or executive, not legislative. The court held that the power to fix a rate of tax is inherently legislative and cannot be delegated further by the Central Government to the Chief Commissioner. The court cited the Supreme Court judgment in Sita Ram Bishambhar Dayal v. State of U.P. [1972] 29 STC 206 (SC) to support this view.

3. Authority of the Chief Commissioner to Issue Notifications:
The respondent-authorities maintained that the Chief Commissioner was competent to issue the notifications based on a notification dated 1st November 1966 (annexure B), which allowed the Administrator to exercise all powers and functions of the State Government under any Punjab law. The court disagreed, stating that the Central Government had not delegated legislative power to the Chief Commissioner. The court emphasized that the Adaptation Order must be read in the context of article 239 of the Constitution, which distinguishes between legislative and executive powers.

4. Review of the Previous Judgment:
The respondents sought a review of the court's order dated 17th November 1981, arguing that section 3(8)(b)(iii) of the General Clauses Act, 1897, and a relevant notification (annexure D) were not considered. The court reaffirmed its previous decision, stating that the power to enhance the rate of sales tax is legislative and cannot be delegated to the Chief Commissioner. The court examined the definition of "Central Government" and article 239 of the Constitution, concluding that the President's delegation of administrative powers to the Chief Commissioner did not include legislative powers.

5. Equitable Considerations Regarding Collected Taxes:
The respondents argued that the petitioners had already collected the enhanced tax from consumers and that quashing the notifications would unjustly enrich the petitioners. The court agreed, stating that discretionary relief under article 226 of the Constitution should not be granted if it results in injustice. The court modified its earlier order to clarify that the petitioners would be absolved of liability only prospectively, not retrospectively, and would not be entitled to a refund of taxes already collected.

Conclusion:
The court quashed the impugned notifications, holding that the Chief Commissioner lacked the authority to issue them. However, it limited the relief to prospective effect, ensuring that the petitioners would not benefit unjustly from taxes already collected. No order as to costs was made.

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