1989 (7) TMI 332 - AT - VAT and Sales Tax

Issues Involved:
1. Extension of interim order by the High Court.
2. Demand of security by the Commercial Tax Officer.
3. Legislative competence of the State to demand security.
4. Alleged violation of constitutional rights.
5. Applicability of section 7(4a)(iii) of the Bengal Finance (Sales Tax) Act, 1941.
6. Movement of trade and commerce under article 301 of the Constitution.

Issue-wise Detailed Analysis:

1. Extension of Interim Order by the High Court:
The Tribunal noted that an application was made for the extension of an interim order issued by the High Court. However, since the interim order had already taken effect, there was nothing to extend, and the interim application was disposed of.

2. Demand of Security by the Commercial Tax Officer:
The applicant, a registered dealer, contended that the demand for security in the form of a bank guarantee for the clearance of imported woodlogs was discriminatory and beyond the legislative competence of the State. The respondents justified the demand citing past instances where the applicant had sold part of the consignment within West Bengal despite undertaking to transport it to Assam.

3. Legislative Competence of the State to Demand Security:
The applicant argued that the demand for security was beyond the legislative competence of the State as it pertained to inter-State transactions. The Tribunal, however, found that the applicant had sold a substantial portion of the goods in West Bengal under the guise of inter-State transactions. Hence, the demand for security was considered a machinery provision within the legislative competence of the State, supported by the ratio in Harihar Prasad Debuka's case.

4. Alleged Violation of Constitutional Rights:
The applicant claimed that the demand for security was discriminatory, unjust, unreasonable, and arbitrary, violating articles 14 and 19 of the Constitution. The Tribunal, however, did not find the demand for security to be unjustified or arbitrary, nor did it consider it an unreasonable restriction on the right to carry on trade or business.

5. Applicability of Section 7(4a)(iii) of the Bengal Finance (Sales Tax) Act, 1941:
The applicant contended that section 7(4a)(iii) did not apply to it as a registered dealer. The Tribunal disagreed, stating that "any person" in sub-clause (iii) covers a class of persons, including registered dealers, who import notified goods into West Bengal.

6. Movement of Trade and Commerce under Article 301 of the Constitution:
The applicant argued that the demand for security imposed unreasonable restrictions on trade, commerce, and intercourse guaranteed by article 301 of the Constitution. The Tribunal referred to the Supreme Court's observation in Hansraj Bagrecha's case, noting that the demand for security did not directly and immediately affect the movement of trade and therefore did not violate article 301.

Conclusion:
The Tribunal concluded that the demand for security by the commercial tax authorities was not illegal. The main prayer of the applicant for the withdrawal, cancellation, or rescindment of the demand for security became infructuous due to the interim order issued by the High Court. The application was thus disposed of without costs.

Judgment:
The judgment was concurred by all members of the Tribunal, with B.C. Chakrabarti (Chairman) and L.N. Ray (Judicial Member) agreeing with the decision.

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