1991 (8) TMI 313 - HC - VAT and Sales Tax

Issues:
1. Challenge to the vires of rule 39-A(8) of the Haryana General Sales Tax Rules, 1975.
2. Interpretation of section 26 of the Haryana General Sales Tax Act, 1973.
3. Retroactive application of a proviso to rule 39-A(8) of the Rules.
4. Liability to pay sales tax prior to a specific date.

Detailed Analysis:
1. The petitioner, a partnership concern operating a brick-kiln business, challenged the vires of rule 39-A(8) of the Haryana General Sales Tax Rules, 1975, contending that it was beyond the legislative competence of the State Government. The petitioner sought relief from the liability to pay any tax prior to November 2, 1989, the date from which their tax liability commenced. The respondent, in their return, maintained that the rule was valid and that the petitioner was liable to pay a lump sum amount for the entire year under the said rule. The court noted that a proviso was added to sub-rule (8) of rule 39-A, specifying that new brick-kiln owners must pay a lump sum in lieu of sales tax from the quarter in which the brick-kiln was operated. However, the petitioner was denied the benefit of this proviso on the grounds of non-retrospectivity. The court analyzed the relevant provisions and emphasized that tax liability cannot be extended to a period before the business commenced, ultimately ruling in favor of the petitioner's challenge to the rule's vires.

2. The court delved into the interpretation of section 26 of the Haryana General Sales Tax Act, 1973, which pertains to the payment of a lump sum in lieu of sales tax. The section grants the State Government the authority to accept a lump sum from dealers instead of the tax payable under the Act, subject to prescribed conditions. The court highlighted the significance of the provisions allowing for the determination of the lump sum amount and the intervals of payment. By referencing the added proviso to rule 39-A(8) and the clarification it provided, the court underscored that the legislative intent did not encompass levying tax before the business commenced, especially in the case where the tax liability began on a specific date.

3. The issue of retroactive application arose concerning the proviso added to rule 39-A(8) of the Rules. The petitioner contended that they should benefit from the proviso, which was not applied retrospectively by the authorities. The court acknowledged the non-retrospective application of the proviso but emphasized that the legislative framework did not intend to impose tax liabilities before the business operations commenced. The court's decision to allow the writ petition and relieve the petitioner from paying sales tax before November 2, 1989, reflected the understanding that tax liability should align with the actual period of business activity.

4. The court ultimately ruled in favor of the petitioner, declaring that they were not liable to pay sales tax before November 2, 1989. The court directed the adjustment of the tax already paid under protest in accordance with the period for which the petitioner was actually liable to pay tax. By disposing of the writ petition in these terms, the court provided a clear resolution to the issue of the petitioner's tax liability, ensuring that it aligned with the commencement date of their business activities.

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