1991 (9) TMI 325 - HC - VAT and Sales Tax

Summary

Issues:
Assessment under section 5A of the Kerala General Sales Tax Act, 1963; Legality and constitutionality of section 5A; Workability of section 5A in the absence of rules.

Detailed Analysis:

Assessment under Section 5A:
The petitioner, a hotelier, contested the assessment for the year 1987-88 under section 5A of the Kerala General Sales Tax Act, 1963. The assessing authority determined the taxable turnover at Rs. 16,63,940, with Rs. 13,53,531 identified as the turnover taxable under section 5A. The petitioner challenged the assessment as illegal and ultra vires the Constitution, primarily arguing against the tax imposition under section 5A. The initial petition raised concerns regarding the validity of the assessment and the applicability of section 5A.

Legality and Constitutionality of Section 5A:
The petitioner initially contended that section 5A of the Act was illegal and ultra vires the Constitution. However, in light of previous decisions, including the Supreme Court ruling in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 and a Kerala High Court decision in Hill Produce Corporation v. State of Kerala [1991] 80 STC 444, the challenge against section 5A was not pursued. The court upheld the validity of section 5A based on these precedents, rejecting the argument that it was illegal or unconstitutional.

Workability of Section 5A in the Absence of Rules:
The petitioner later amended the original petition to argue that section 5A of the Act was not workable due to the absence of specific rules for its implementation. The contention was that without rules, section 5A could not be enforced, rendering the assessment null and void. However, the court analyzed the provisions of section 5A and relevant rules, emphasizing that the absence of separate rules did not render section 5A inoperative. The court clarified that the same assessment procedure applicable under section 5 of the Act could be used for cases falling under section 5A. The argument that the turnover under section 5A could not be taxed without specific rules was dismissed as unfounded.

Conclusion:
The court upheld the validity of the assessment made under section 5A, finding no merit in the petitioner's arguments. The judgment dismissed the original petition and subsequent writ appeal, affirming the legality and enforceability of section 5A of the Kerala General Sales Tax Act, 1963. The court's decision was based on the interpretation of relevant legal provisions and precedents, emphasizing the applicability of existing assessment procedures to cases falling under section 5A.