1996 (2) TMI 504 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of Sections 42 and 44 of the Assam General Sales Tax Act, 1993, regarding obligations on transporters.
2. Retrospective application of Sections 42 and 44 of the Act.

Detailed Analysis:

Issue 1: Legality of Sections 42 and 44
The petitioners challenged the seizure of books of accounts and documents under the Assam General Sales Tax Act, 1993, and the notices issued by the Superintendent of Taxes. They argued that the provisions in Sections 42 and 44 imposing obligations on transporters to furnish particulars and maintain accounts were ultra vires. The petitioners contended that the transporters were not involved in the sale or purchase of goods and, therefore, the State Legislature had no authority to enact such provisions under entry 54 of List II of the Seventh Schedule to the Constitution.

Section 42 mandates every clearing, booking, or forwarding agent or any person transporting goods to furnish true and complete particulars to the prescribed authority and maintain accounts. Section 44 empowers authorities to search and seize accounts, registers, or documents if there is suspicion of tax evasion. These provisions were introduced for the first time in the 1993 Act and were not present in the repealed Acts.

The court analyzed the scope of entry 54 of List II, which empowers the State Legislature to impose tax on the sale or purchase of goods. It concluded that the transporters, who merely carry goods and do not engage in the sale, cannot be subjected to such obligations. The court referenced the Supreme Court decision in State of Haryana v. Sant Lal, which held that requiring clearing or forwarding agents to furnish particulars and obtain licenses was beyond the State Legislature's purview. Following this precedent, the court held that Sections 42 and 44, as they relate to transporters, were beyond the legislative competence of the State and were ultra vires and bad in law.

Issue 2: Retrospective Application of Sections 42 and 44
The petitioners argued that the Act, which came into force on July 1, 1993, could not be applied retrospectively to demand books of accounts and documents for periods before its enactment. The court agreed, noting that the Act is prospective in nature. It emphasized that statutes are generally construed to operate only on facts that come into existence after their enactment unless a retrospective effect is clearly intended. The court cited established legal principles that a statute should not impair existing rights or obligations unless explicitly stated.

The court held that the provisions of Sections 42 and 44 could not be applied retrospectively. Therefore, the authority had no jurisdiction to demand books of accounts for periods prior to July 1, 1993. The notices issued to the petitioners to produce documents for periods before the Act's commencement were deemed illegal and set aside.

Conclusion
The court declared Sections 42 and 44 of the Assam General Sales Tax Act, 1993, as ultra vires and bad in law concerning transporters. It also held that the Act could not be applied retrospectively to demand documents for periods before July 1, 1993. Consequently, the petitions were allowed, and the impugned notices were quashed. Both parties were directed to bear their own costs.