1992 (1) TMI 331 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutional validity of section 47(4-A) of the Gujarat Sales Tax Act, 1969.
2. Validity of section 45(5) of the Gujarat Sales Tax Act, 1969.
3. Whether section 47(4-A) is ultra vires Article 14 of the Constitution.
4. Correct interpretation of section 47(4-A) regarding the date from which or the period for which interest becomes payable.

Summary:

1. Constitutional Validity of Section 47(4-A):
The petitioners, who are assessees under the Act, challenged the constitutional validity of section 47(4-A) on the grounds that it was enacted by the Legislature in colorable exercise of its legislative powers. The Court held that the State Legislature was within its competence to enact section 47(4-A) as it is incidental and ancillary to the power to make provision for levy and collection of tax. The Court observed that the provision for payment of interest is compensatory in nature and not penal, thus rejecting the contention that it imposed a penalty without guidelines or inquiry.

2. Validity of Section 45(5):
The validity of section 45(5) was also questioned on similar grounds as section 47(4-A). However, no separate submissions were made to show how section 45(5) is violative of any provision of the Constitution. Therefore, the Court did not specifically address this issue further.

3. Ultra Vires Article 14:
The petitioners argued that section 47(4-A) was discriminatory and violated Article 14 of the Constitution because it provided different rates of interest for dealers and the department. The Court held that the provision for payment of interest in section 47(4-A) is compensatory and not arbitrary or unreasonable. It further stated that differentiation between a dealer-defaulter and the State is justified because they do not stand on the same footing. The Court cited various precedents to support the view that the State can be treated as a separate class and that different rates of interest for the State and dealers do not violate Article 14.

4. Interpretation of Section 47(4-A):
The petitioners contended that section 47(4-A) should only apply to dealers who do not furnish declarations or returns or do not pay sales tax within the prescribed time. The Court interpreted section 47(4-A) to mean that interest is payable from the time of filing the declarations or returns or from the date of expiry of the specified date. The Court held that the provision aims to ensure that the State is not deprived of its revenue and that the sales tax authorities acted legally in demanding interest accordingly.

Conclusion:
The Court dismissed the petitions, holding that section 47(4-A) is constitutionally valid, not ultra vires Article 14, and correctly interpreted to require payment of interest from the time specified. The rule issued in each of these petitions was discharged with no order as to costs.