1985 (9) TMI 323 - HC - VAT and Sales Tax

Summary

Issues:
1. Constitutional validity of section 28(8) of the Kerala General Sales Tax Act, 1963.
2. Power of the State Legislature to make provisions regarding the levy of penalty in relation to offenses under Sales Tax Laws.
3. Imposition of penalty before the tax is levied.
4. Allegation of arbitrary levy and reduction in penalty.

Analysis:

Constitutional Validity of Section 28(8):
The petitioner challenged the constitutional validity of section 28(8) of the Act, arguing that it exceeded the State Legislature's powers under Entry 54 of List II of Schedule VII of the Constitution. However, the Court held that Entry 54 must be read in conjunction with Entry 64, which empowers the State Legislature to make provisions regarding the levy of penalties in relation to offenses under Sales Tax Laws. The Court found no merit in the challenge against the constitutional validity of the provision.

Power of State Legislature:
The Court emphasized that Entry 54 and Entry 64 of List II of Schedule VII provide ample power to the State Legislature to enact provisions related to the levy of penalties in Sales Tax Laws. It concluded that the State Legislature was within its legislative powers to introduce section 28(8) of the Act, allowing for the imposition of penalties not exceeding fifty percent of the value of goods not accounted for.

Imposition of Penalty Before Tax Levy:
The Court distinguished cases from the Rajasthan and Madras High Courts and the Supreme Court, where penalties were related to the tax imposed or imposable. In contrast, under section 28(8) of the Act, the determination of tax is not a condition precedent for imposing penalties. The Court clarified that the identification of the taxable event and the determination of tax are not relevant factors for fixing penalties under this provision.

Allegations of Arbitrary Levy:
The petitioner contended that the penalty was levied arbitrarily, seeking a reduction in the penalty amount. However, the Court declined to entertain this plea, citing the limited scope of jurisdiction under Article 226 of the Constitution. Consequently, the Court dismissed the writ petition without any order as to costs.

This judgment reaffirms the constitutionality of section 28(8) of the Kerala General Sales Tax Act, upholding the State Legislature's authority to prescribe penalties for offenses under Sales Tax Laws. The Court's analysis clarifies the legislative intent behind the provision and underscores the distinction between tax determination and penalty imposition.