1995 (11) TMI 395 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the detention of the vehicle and the demand for payment of tax.
2. Authority of the first respondent to collect tax on the consignment.
3. Compliance with Article 265 of the Constitution regarding tax collection.
4. Justification for the actions of the respondents.
5. Relief sought by the petitioner.

Issue-Wise Detailed Analysis:

1. Legality of the Detention of the Vehicle and the Demand for Payment of Tax:
The petitioner challenged the action of the first respondent in detaining vehicle No. KA. 36-1880 transporting sunflower oil and issuing a notice for the payment of "tax" as illegal and arbitrary. The court noted that the vehicle was detained at the observation point Bandamedipalli and that the notice was silent about the detention, but the vehicle was held up for the purposes of collecting "tax" of Rs. 6,150. The court found that the detention from November 7, 1995, to November 10, 1995, was grossly arbitrary and an abuse of power.

2. Authority of the First Respondent to Collect Tax on the Consignment:
The petitioner argued that the first respondent was neither an authority at the check-post nor the assessing authority, and that he detained the vehicle without proper jurisdiction. The court noted that the first respondent was instructed by the Deputy Commissioner (Commercial Taxes) to collect tax on oil and oil-seeds due to evasion in oil trade. However, the court found that the first respondent did not have the authority to collect tax merely on goods being transported under proper papers.

3. Compliance with Article 265 of the Constitution Regarding Tax Collection:
The court emphasized that no person can be taxed under the Constitution except under the authority of law, referencing Article 265 which mandates that "no tax shall be levied or collected except by authority of law." The court cited several Supreme Court cases, including Yadlapati Venkateswarlu v. State of Andhra Pradesh and Harivansh Lal Mehra v. State of Maharashtra, to underline that tax collection must be sanctioned by law.

4. Justification for the Actions of the Respondents:
The respondents justified their actions by stating that there was general evasion of sales tax in the trade of oils and that the tax was being collected to protect State revenue and check evasion. The court found these justifications insufficient and highlighted that no provision of any statute or rule was relied upon in support of the demands for the payment of the alleged "tax." The court concluded that the coercive demands were arbitrary exactions without any authority of law.

5. Relief Sought by the Petitioner:
The petitioner sought a writ of mandamus to declare the action of the first respondent as illegal, direct the release of the consignment, and prevent future detentions. The court allowed the writ petition with costs, noting that the consignment had already been released. The respondents were directed to pay exemplary costs of Rs. 1,000 to the petitioner, and a copy of the order was to be communicated to the Commissioner of Commercial Taxes, A.P.

Conclusion:
The court found that the actions of the respondents in detaining the vehicle and demanding tax were arbitrary and without legal authority, violating Article 265 of the Constitution. The writ petition was allowed, and the respondents were ordered to pay costs to the petitioner.