1983 (4) TMI 234 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of Section 4(1) of the Jammu and Kashmir General Sales Tax Act, 1962.
2. Impact of the Full Bench's judgment in Sain Dass's case on the revival of entry No. 68.
3. Discrimination and exemption status of bakerywallas and halwais under SRO No. 187.
4. Clubbing of halwais with hoteliers and its discriminatory nature.
5. Retrospective imposition of tax by SRO No. 187.
6. Applicability of entry No. 45 to goods sold by halwais.

Issue-wise Analysis:

1. Constitutional Validity of Section 4(1):
The petitioners argued that Section 4(1) of the Act was ultra vires of the Constitution due to excessive delegation of powers. However, the Full Bench had previously upheld its validity in Sain Dass's case, based on various Supreme Court decisions. The court found no substantial reason to reconsider this view and upheld the constitutional validity of Section 4(1), dismissing this ground.

2. Impact of Full Bench's Judgment in Sain Dass's Case:
The petitioners contended that the Full Bench's judgment in Sain Dass's case revived entry No. 68 in its original form, thus exempting halwais from sales tax. The court clarified that the Full Bench had struck down entry No. 34 and the second proviso of SRO No. 729, which specifically subjected halwais to sales tax. The court concluded that the Full Bench intended to uphold the exemption for halwais but not for other categories like dhabawallas and lohwallas. Therefore, the exemption for halwais was revived, and they could not be taxed so long as bakerywallas enjoyed exemption.

3. Discrimination and Exemption Status under SRO No. 187:
The petitioners argued that SRO No. 187 was discriminatory as it did not revive the exemption for bakerywallas, thus subjecting halwais to hostile discrimination. The court noted that SRO No. 121 had already withdrawn the exemption for bakerywallas, and SRO No. 187 placed all dealers, including halwais and bakerywallas, under a unified tax regime based on turnover. The court found no discrimination in SRO No. 187, as it applied uniformly to all relevant categories, and dismissed this ground.

4. Clubbing Halwais with Hoteliers:
This ground was neither specifically taken in the writ petitions nor supported by necessary facts. The court found no merit in this ground and dismissed it.

5. Retrospective Imposition of Tax by SRO No. 187:
The petitioners challenged the retrospective effect of SRO No. 187 from 1st April 1977. The court held that Section 4 of the Act did not authorize the government to impose sales tax retrospectively. Consequently, SRO No. 187 could not be made effective from 1st April 1977, and it took effect only from 31st March 1978. This ground succeeded.

6. Applicability of Entry No. 45 to Halwais:
The petitioners argued that entry No. 45, which taxed sweetmeats, implicitly included halwais. The court found that sweetmeats could be prepared by both bakerywallas and halwais. However, in the absence of a specific mention of halwais in entry No. 45, the court applied the principle that the interpretation favorable to the assessee should be preferred. Thus, halwais were not liable to pay sales tax under entry No. 45. This ground succeeded.

Conclusion:
1. Halwais were exempt from sales tax until 31st March 1978 and became liable at 7% from 1st April 1978, provided their annual turnover exceeded Rs. 1,00,000.
2. Dhabawallas, lohwallas, tandoorwallas, and tea-stall holders were liable to pay 2% sales tax from 11th October 1972 to 31st March 1978, and 7% from 1st April 1978 if their turnover exceeded Rs. 1,00,000.
3. Bakerywallas were exempt until 8th March 1976, liable at 4% until 31st March 1978, and 7% from 1st April 1978 if their turnover exceeded Rs. 1,00,000.

Judgment:
Writ Petition No. 37 of 1978 was dismissed. All other petitions were allowed to the extent of challenging pre-1st April 1978 notices, which were quashed. The respondents were restrained from charging sales tax from halwais for any period prior to 1st April 1978. Parties were left to bear their own costs.

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