1990 (2) TMI 270 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to notification converting registered dealers into casual dealers and imposing tax at every transaction.

Analysis:
The petitioner challenged a notification dated January 12, 1990, which amended a previous notification, alleging that registered dealers were being treated as casual dealers and subjected to paying tax at every transaction. The original notification specified intervals for tax payment for different classes of dealers under the Rajasthan Sales Tax Act, 1954. The amendment introduced a new category of dealers and mentioned payment intervals in accordance with section 10A of the Act.

The petitioner argued that incorporating section 10A into the notification would subject registered dealers to the liabilities of casual dealers. However, the court held that the notifications were issued to prescribe tax payment intervals only, not to impose additional liabilities. The court clarified that the incorporation of section 10A was limited to specifying payment intervals, not extending all provisions of section 10A to registered dealers.

The court addressed the argument that section 10A did not provide intervals for tax payment, contending that the term "interval" could include immediate payment after a sale. The court cited precedents to support that tax liability arises upon completion of a sale, and the manner of enforcement can vary. The court emphasized that the purpose was to prevent tax evasion by collecting tax at the time of sale.

Regarding delegation of powers under section 10A, the court clarified that the notification only related to payment intervals, not the manner of depositing tax. The court also rejected the argument that check-posts were misused for tax collection, stating they were used to prevent tax evasion by collecting tax at the time of sale.

The court dismissed the contention that the notification allowed tax collection based on assumptions or expectations of sales, emphasizing that tax was only payable upon completion of a sale. The court highlighted that any incorrect tax imposition could be addressed through other remedies, not by challenging the notification itself.

The court emphasized the need to interpret taxing statutes strictly but noted a distinction between charging and machinery sections. The court upheld the notification's validity, citing increased tax recoveries and successful implementation in the marble trade at Makrana.

In conclusion, the court dismissed the writ petition, finding no substance in the petitioner's arguments and no order as to costs was issued.