1995 (7) TMI 377 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of Rule 62-A(2) to 62-A(6) and Forms 45-B and 45-C under the Gujarat Sales Tax Rules.
2. Alleged contravention of Articles 14, 19(1)(g), and 301 of the Constitution of India.
3. Excess of delegation of authority under Section 59-A of the Gujarat Sales Tax Act.
4. Discrimination against goods imported from other states under Articles 303 and 304(a).
5. Reasonableness of restrictions under Article 304(b).

Detailed Analysis:

1. Constitutionality of Rule 62-A(2) to 62-A(6) and Forms 45-B and 45-C under the Gujarat Sales Tax Rules:
The petition questioned whether Rule 62-A(2) to 62-A(6) and Forms 45-B and 45-C, prescribed under the Gujarat Sales Tax Rules, contravened constitutional provisions and exceeded the delegated authority under Section 59-A of the Gujarat Sales Tax Act. The court examined the backdrop of the notification and the legislative intent behind Section 59-A, which was inserted to prevent tax evasion through the establishment of check-posts and barriers for inspecting goods in transit.

2. Alleged Contravention of Articles 14, 19(1)(g), and 301 of the Constitution of India:
The court analyzed the petitioners' contentions that the impugned rules and forms imposed unreasonable restrictions on the free movement of goods, thereby violating Articles 14, 19(1)(g), and 301. It was argued that the rules were discriminatory and impeded free trade by imposing additional requirements on importers of cement, which were not applicable to other goods or transactions within the state.

3. Excess of Delegation of Authority under Section 59-A of the Gujarat Sales Tax Act:
The court scrutinized whether the rule-making authority exceeded its delegated powers under Section 59-A(3)(a), which allowed prescribing documents to be carried with goods in transit. The court concluded that the rules and forms went beyond the scope of the delegated authority by imposing conditions and requiring declarations from importers, which were not envisaged by the parent Act.

4. Discrimination Against Goods Imported from Other States under Articles 303 and 304(a):
The court found that the impugned rules discriminated against goods imported from other states by subjecting only cement to additional requirements, thereby giving preferential treatment to locally manufactured cement. This was held to be in violation of Articles 303 and 304(a), which prohibit discriminatory treatment between goods imported from other states and those manufactured within the state.

5. Reasonableness of Restrictions under Article 304(b):
The court examined whether the restrictions imposed by the impugned rules were reasonable and in the public interest as required under Article 304(b). It was determined that the rules imposed unreasonable fetters on free trade, commerce, and intercourse, as they required importers to fulfill conditions unrelated to the prevention of tax evasion, thereby violating Article 304(b).

Conclusion:
The court declared Rules 62-A(2) to (6) and Forms 45-B and 45-C ultra vires Section 59-A(3) and the Constitution. The rules were found to be discriminatory, imposed unreasonable restrictions on free trade, and were enacted in colorable exercise of delegated powers. The petition was allowed, and the impugned provisions were struck down.