1985 (4) TMI 278 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the demand notice for sales tax.
2. Whether the appellants were considered "dealers" under the Himachal Pradesh General Sales Tax Act, 1968.
3. Retrospective application of the Himachal Pradesh General Sales Tax (Seventh Amendment) Act, 1977.
4. Competency of the State Legislature to amend the Act with retrospective effect.
5. Maintainability of the writ petition.

Detailed Analysis:

1. Validity of the Demand Notice for Sales Tax:

The respondent filed a writ petition seeking relief for the cancellation of a demand notice regarding the payment of sales tax on the lease money of Rs. 44,006. The learned single Judge allowed the writ petition and quashed the demand notice, finding the levy of sales tax in violation of the Act's provisions. The appellants contended that the respondent was liable to pay sales tax as they were "dealers" under the amended Act. The court ultimately held that the demand notice was valid, overturning the single Judge's decision.

2. Whether the Appellants Were Considered "Dealers" Under the Himachal Pradesh General Sales Tax Act, 1968:

The single Judge ruled that the appellants were not "dealers" as defined in section 2(c) of the Act, which required the delivery of goods for consumption within Himachal Pradesh. However, the Amendment Act redefined "dealer" to include any person who carries on business of buying, selling, supplying, or distributing goods, directly or indirectly, for cash or other valuable consideration, whether regularly or otherwise. The court concluded that the appellants, who auctioned forest produce twice a year, fit this definition and were thus "dealers."

3. Retrospective Application of the Himachal Pradesh General Sales Tax (Seventh Amendment) Act, 1977:

The Amendment Act, which redefined "business," "dealer," and "goods," was given retrospective effect. The court noted that every legislation is generally prospective unless explicitly stated otherwise. The Amendment Act's language indicated a clear intention for retrospective application, thereby making the respondent liable under the amended definitions.

4. Competency of the State Legislature to Amend the Act with Retrospective Effect:

The respondent challenged the State Legislature's competency to amend the Act retrospectively. The court affirmed that a State Legislature is empowered to give retrospective effect to its legislation. The amendments made by the Himachal Pradesh General Sales Tax (Seventh Amendment) Act, 1977, were found to be valid and within the legislative competence of the State.

5. Maintainability of the Writ Petition:

The appellants raised preliminary objections, including that the Excise and Taxation Commissioner was a necessary party and that the dispute should be resolved through arbitration due to its contractual nature. The single Judge found these objections without merit, ruling that the writ jurisdiction of the court was not excluded and the writ petition was maintainable. This decision was not overturned on appeal.

Conclusion:

The court set aside the judgment of the learned single Judge, upheld the validity of the demand notice for sales tax, and dismissed the writ petition filed by the respondent. The appellants were deemed "dealers" under the amended Act, and the retrospective application of the Amendment Act was upheld. The appeal was allowed, and each party was ordered to bear its own costs.