1984 (6) TMI 214 - HC - VAT and Sales Tax

Summary

Issues:
Constitutional validity of section 6C of the Karnataka Sales Tax Act, 1957 challenged under article 226 of the Constitution.

Analysis:
The petitioner challenged the constitutional validity of section 6C of the Karnataka Sales Tax Act, 1957, introduced by the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1979. The petitioner also contested an assessment order made under this section. However, during the hearing, the petitioner's counsel requested to withdraw the challenge to the assessment order and pursue the legal remedy of appeal already pending. The court granted permission for this withdrawal and rejected the challenge to the assessment order. The counsel for the petitioner argued that section 6C is violative of article 271 of the Constitution.

Section 6C of the Act introduces a surcharge on taxes levied under the Act. The surcharge is calculated at a rate of ten percent of the tax payable under specific sections, with provisions for reduction in certain cases. The court emphasized that the power of Parliament to levy surcharge under article 271 does not restrict the plenary power of State Legislatures to legislate on matters within their jurisdiction under article 246. The court cited precedent to establish that when additional tax or surcharge on sales tax is imposed, it remains a tax on sale or purchase.

The court concluded that the Karnataka State Legislature was within its competence to enact section 6C of the Act, and it does not contravene article 271 of the Constitution. The challenge by the petitioner was deemed misconceived and lacking merit. Consequently, the court held that the writ petition was to be rejected at the preliminary hearing stage without notice to the respondents.