1990 (12) TMI 313 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the amendments to Rule 26 of the Tamil Nadu General Sales Tax Rules, 1959.
2. Alleged violation of Articles 14, 19(1)(g), 21, and 300A of the Constitution of India.
3. Practical difficulties in compliance with the amended rules.

Issue-Wise Detailed Analysis:

1. Validity of the Amendments to Rule 26 of the Tamil Nadu General Sales Tax Rules, 1959:
The petitioners, organizing agents for lotteries, challenged the amendments to Rule 26 of the Tamil Nadu General Sales Tax Rules, 1959, introduced by G.O. Ps. No. 1158, dated October 20, 1984. These amendments introduced sub-rules (18), (19), and (20), which mandated dealers to maintain detailed accounts of lottery ticket sales and required all lottery tickets sold within Tamil Nadu to bear the seal of the assessing authority. The court noted that these rules were framed to carry out the legislative purpose of levying tax on the sale of lottery tickets and were not inconsistent with any provisions of the Act or the Constitution.

2. Alleged Violation of Articles 14, 19(1)(g), 21, and 300A of the Constitution of India:
The petitioners contended that the amendments violated Articles 14, 19(1)(g), 21, and 300A of the Constitution. They argued that the rules were arbitrary, unreasonable, and imposed a disproportionate burden, thus fettering their right to deal with property. The court, however, found that the rules did not discriminate among dealers and were equally applicable to all dealers in lottery tickets, thereby not offending Article 14. The court also held that the rules were not confiscatory and did not violate Article 19(1)(g) as they were framed to prevent tax evasion and ensure effective tax collection. Furthermore, there was no deprivation of personal liberty or property to claim a violation of Articles 21 and 300A.

3. Practical Difficulties in Compliance with the Amended Rules:
The petitioners highlighted practical difficulties in complying with the amendments, particularly the requirement to maintain day-to-day sales-cum-stock accounts and the sealing of all lottery tickets before sale. They argued that maintaining such detailed accounts daily was impractical given the nature of their business. The court acknowledged these difficulties but clarified that the forms (XXX-A, XXX-B, and XXX-C) did not require details to be filled on the very same day. The court suggested that the State Government should alleviate these hardships by improving the State machinery and providing adequate staff to ensure the sealing of all tickets produced each day.

Conclusion:
The court concluded that the amended rules were valid and not violative of the Constitution. The practical difficulties faced by the petitioners were acknowledged, and the State Government was advised to improve its machinery to address these issues. The writ petitions were dismissed with no costs.