1985 (1) TMI 302 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether section 22-A of the Karnataka Sales Tax Act, 1957, confers power on the Commissioner to interfere with an order made by an appellate authority under section 20 of the Act.
2. If the answer to the first question is in the affirmative, whether section 22-A of the Act is void as offending article 14 of the Constitution.

Detailed Analysis:

Re. Question No. (1)

Issue: Interpretation of Section 22-A of the Karnataka Sales Tax Act, 1957

The petitioner, engaged in the manufacture and sale of tobacco products, challenged the reassessment of sales turnover by the Commercial Tax Officer (CTO) under section 12-A of the Act. The Deputy Commissioner of Commercial Taxes (DC) allowed the appeal against the CTO's order. Subsequently, the Commissioner of Commercial Taxes issued a show cause notice under section 22-A to revise the DC's order. The petitioner contested the constitutional validity of section 22-A and the Commissioner's jurisdiction.

Arguments:

1. Petitioner's Counsel: Urged for a negative answer to the question, arguing that section 22-A does not empower the Commissioner to revise orders made by an appellate authority.
2. Respondent's Counsel: Argued for an affirmative answer, asserting that section 22-A does confer such power.

Court's Analysis:

The court examined the language and intent of section 22-A, emphasizing that the statute should be interpreted according to the legislature's intent. The court cited various precedents and principles of statutory interpretation, including Maxwell on "The Interpretation of Statutes," and rulings from the Supreme Court and other High Courts.

Key Points:

- Statutory Interpretation: The court highlighted the fundamental rule that a statute should be expounded according to the intent of the legislature. The words of the statute, if precise and unambiguous, should be interpreted in their natural and ordinary sense.
- Historical Context: The court reviewed the legislative history and amendments to the Act, noting that section 22-A was introduced to empower the Commissioner to revise orders prejudicial to revenue.
- Subordination: The court affirmed that the Deputy Commissioner, acting as an appellate authority, is still an officer subordinate to the Commissioner. Therefore, the Commissioner has the authority to revise such orders under section 22-A.

Conclusion:

The court concluded that section 22-A of the Act does confer power on the Commissioner to interfere with an order made by an appellate authority under section 20 of the Act. The answer to question No. (1) was affirmative.

Re. Question No. (2)

Issue: Constitutionality of Section 22-A under Article 14 of the Constitution

The petitioner argued that section 22-A is violative of Article 14 of the Constitution, which guarantees equality before the law.

Arguments:

1. Petitioner's Counsel: Contended that section 22-A confers unguided, uncanalised, and arbitrary power on the Commissioner, violating Article 14.
2. Respondent's Counsel: Argued that section 22-A is not violative of Article 14, asserting that the provision has sufficient safeguards and guidelines.

Court's Analysis:

The court reviewed the scope and ambit of Article 14, emphasizing that it commands the State to ensure equality before the law. The court examined whether the State, in enacting a taxation law, should place itself in the same position as other persons or assessees.

Key Points:

- State as a Person: The court opined that the State, within its own jurisdiction, is not a "person" under Article 14 and is not subject to the same requirements as other persons.
- Guidelines and Safeguards: The court noted that section 22-A provides clear guidelines for the exercise of the Commissioner's power, including the requirement that the order must be erroneous and prejudicial to revenue, adherence to principles of natural justice, and a specified time limit for exercising the power.
- Precedents: The court referred to various judgments, including those from the Supreme Court, which upheld provisions granting special powers to authorities in taxation matters as not violative of Article 14.

Conclusion:

The court concluded that section 22-A of the Act is not violative of Article 14 of the Constitution. The answer to question No. (2) was negative.

Final Directions:

The court directed the Registrar to place the papers before the Honourable Chief Justice for posting the case before a Division Bench for final disposal.