1989 (5) TMI 308 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of Section 37 of the Haryana General Sales Tax Act, 1973.
2. Applicability of various sub-sections of Section 37 to the petitioners.

Detailed Analysis:

1. Constitutional Validity of Section 37 of the Haryana General Sales Tax Act, 1973:

The petitioners challenged the constitutional validity of Section 37 of the Haryana General Sales Tax Act, 1973, and Rule 45 of the Haryana General Sales Tax Rules, 1975, arguing that these provisions violate Articles 14, 19, 301, and 304 of the Constitution of India. The main contention was that the provisions lead to harassment and unnecessary detention of goods and vehicles, causing loss and inconvenience to the petitioners.

The court referred to the Supreme Court's decision in Delite Carriers (Regd.) v. State of Haryana [1990] 77 STC 170, where the vires of Section 37 and Rule 45 were upheld. It was noted that the Supreme Court had explained the purpose of establishing check-posts and introducing provisions in sales tax laws to facilitate the inspection of goods transported through states. The court cited the case of Sodhi Transport Co. v. State of U.P. [1986] 62 STC 381, where analogous provisions in the U.P. Sales Tax Act, 1948, were upheld. The provisions were deemed necessary for checking tax evasion and providing machinery for levying tax, thus not unconstitutional.

2. Applicability of Various Sub-sections of Section 37 to the Petitioners:

The petitioners argued that the provisions of Section 37, except the first proviso to sub-section (4), should not apply to them. Section 37 outlines the establishment of check-posts or barriers and inspection of goods in transit to prevent tax evasion.

- Sub-section (1): Allows the establishment of check-posts or barriers at notified places.
- Sub-section (2): Requires the person in charge of goods or the driver to carry relevant documents and produce them for inspection.
- Sub-section (3): Obligates the driver or person in charge to stop the vehicle for inspection.
- Sub-section (4): Mandates furnishing a declaration in duplicate before entering or leaving the state and producing it at the exit point.
- First Proviso to Sub-section (4): Specifically deals with goods carriers passing through the state, requiring them to furnish a declaration and deliver it within 24 hours at the exit point, failing which a penalty is imposed.

The petitioners contended that this proviso should be read independently, exempting them from the other sub-sections. However, the court disagreed, stating that the proviso is an exception to the general principle in sub-section (4) and does not function as an independent clause. The court emphasized that the provisions of Section 37 apply to all goods carriers entering or passing through Haryana, regardless of whether they unload or load goods in the state.

The respondents argued that these provisions are essential for detecting tax evasion, as goods are sometimes transported without proper documentation or in excess of the declared quantity. The court found these arguments valid, noting that the provisions facilitate quick transit of goods while ensuring compliance with tax laws.

Conclusion:

The court dismissed the writ petitions, finding no merit in the challenges raised. The provisions of Section 37 of the Haryana General Sales Tax Act, 1973, and Rule 45 of the Haryana General Sales Tax Rules, 1975, were upheld as constitutional and applicable to the petitioners. The court also noted that some petitioners had previously raised similar issues in the Supreme Court, which had been rejected, thus barring them from re-raising these pleas due to the principle of constructive res judicata.

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