1989 (12) TMI 337 - HC - VAT and Sales Tax

Issues Involved:

1. Vires of the first two provisos to section 20 and the proviso to section 21 of the Tripura Sales Tax Act, 1976 as amended by the Tripura Sales Tax (Third Amendment) Act, 1984.
2. Violation of rights guaranteed under Articles 14, 19, and 21 of the Constitution of India.
3. Validity of the statutory minimum deposit requirement for appeals and revisions.
4. Discretionary powers of the Superintendent of Taxes and the absence of effective corrective machinery.

Issue-wise Detailed Analysis:

1. Vires of the First Two Provisos to Section 20 and the Proviso to Section 21:

The petitioners challenged the vires of the first two provisos to section 20 and the proviso to section 21 of the Tripura Sales Tax Act, 1976, as amended by the 1984 Amendment Act. These provisos mandated a statutory minimum deposit of 50% of the tax or penalty for entertaining appeals and revisions. The court observed that prior to the 1984 Amendment Act, the appellate authority had full discretion to admit an appeal without any deposit or to require a deposit of a portion of the tax or penalty. The 1984 Amendment Act restricted this discretion, making a minimum deposit of 50% mandatory.

2. Violation of Rights Guaranteed Under Articles 14, 19, and 21:

The petitioners argued that the impugned provisos violated their fundamental rights under Articles 14, 19(1)(g), and 21 of the Constitution. They contended that the mandatory deposit rendered the right of appeal or revision virtually nugatory, making the law excessively onerous and harsh. The court noted that taxing statutes are not beyond the limitations imposed by Articles 14 and 19 of the Constitution. It emphasized that Article 14 guarantees equality and strikes at arbitrariness, ensuring fairness and equality of treatment. The court referred to several landmark judgments, including E.P. Royappa v. State of Tamil Nadu and Maneka Gandhi v. Union of India, to highlight that arbitrariness is antithetic to Article 14.

3. Validity of the Statutory Minimum Deposit Requirement:

The court examined the consequences of the statutory minimum deposit requirement for appeals and revisions. It observed that the absence of effective corrective machinery by way of appeal or revision could render the whole procedure of levy of tax and imposition of penalty oppressive and uncontrolled. The court referred to the Supreme Court's decision in K.T. Moopil Nair v. State of Kerala, where the absence of a right of appeal against arbitrary assessments was held to be confiscatory in character and effect. The court concluded that the statutory minimum deposit requirement made the whole procedure harsh, oppressive, and unjust, violating Article 14.

4. Discretionary Powers of the Superintendent of Taxes and the Absence of Effective Corrective Machinery:

The court noted that the Superintendent of Taxes had very wide discretionary powers in the matter of levy of tax and imposition of penalty. The consequences of arbitrary or illegal assessments could be devastating for dealers, especially those who could not afford the statutory minimum deposit. The court emphasized that no authority, however high, should be left with such vast discretionary powers without any remedy against their abuse or misuse. The absence of an effective right of appeal or revision made the whole procedure oppressive and arbitrary, violating Article 14.

Conclusion:

The court held that the first and the second provisos to sub-section (1) of section 20 and the proviso to sub-section (2) of section 21 of the Tripura Sales Tax Act, 1976, were ultra vires Article 14 of the Constitution and struck them down. Consequently, the court directed that all appeals and revisions previously dismissed or not admitted due to the impugned provisos be restored and heard on merits. The court also allowed petitioners to file appeals or revisions within the prescribed time, computed from the date of this decision. The court did not find it necessary to examine the scope and ambit of Article 19(1)(g) or to decide on the violation of Article 21, as the impugned provisos were already held to be ultra vires Article 14. The writ petitions were allowed, with no order as to costs.

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