1993 (11) TMI 225 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of conditions imposed in exemption notifications.
2. Whether notifications create a liability.
3. Practicality and compliance of conditions in notifications.
4. Judicial control over delegated legislation.
5. Demands raised for non-production of declarations.

Detailed Analysis:

Issue 1: Validity of Conditions Imposed in Exemption Notifications
The appellants challenged the conditions imposed in the exemption notifications, particularly the requirement to produce a declaration form. They argued that these conditions are "unreasonable, impracticable, and onerous," and violate Article 14 of the Constitution. The court, however, upheld the validity of the notifications (S.R.O. Nos. 715, 716, and 717 of 1988) in their entirety. The court reasoned that the conditions are necessary for administrative convenience to identify the liable person for turnover tax. The exemption is a concession, and the condition for availing it cannot be separated from the exemption itself.

Issue 2: Whether Notifications Create a Liability
The appellants contended that the notifications create a liability, which is not authorized. The court clarified that the liability is created by Section 5(2A) of the Kerala General Sales Tax Act, which imposes a multi-point tax. The notifications, instead of creating a liability, actually restrict it by confining the levy to one point. The requirement to produce a declaration form is a means to locate the liable person and afford a benefit to the purchasing dealer.

Issue 3: Practicality and Compliance of Conditions in Notifications
The appellants argued that the conditions imposed by the notifications are impracticable or impossible to comply with. The court dismissed this argument, stating that the notifications should be reasonably construed but not to the extent of nullifying the conditions. The court found the conditions practical and necessary to ensure that the tax is collected at one point in the series of sales or purchases.

Issue 4: Judicial Control Over Delegated Legislation
The appellants suggested that the delegated legislation (notifications) should be controlled by appropriate judicial oversight. The court noted that the notifications are a form of delegated legislation, and the Legislature has the wisdom to decide how the policy is effectuated. The court found no reason to interfere with the Legislature's decision to impose conditions for availing the exemption.

Issue 5: Demands Raised for Non-Production of Declarations
The appellants argued that demands were raised solely for non-production of declarations, which is wrong. The court clarified that dealers could prove the requisite facts by other satisfactory evidence in lieu of the declaration. This aspect can be raised in the statutory appeal against the assessment order. The court emphasized that the learned single Judge had already permitted proving the requisite facts by other means.

Conclusion:
The court dismissed all 56 writ appeals, fully concurring with the reasoning and conclusions of the learned single Judge. The conditions imposed in the exemption notifications were upheld as valid, practical, and necessary for administrative convenience. The court found no merit in the appellants' arguments and confirmed that the notifications did not create any new liability but rather restricted the existing multi-point tax to one point. The court also clarified that dealers could use other satisfactory evidence to meet the conditions for exemption.