1995 (3) TMI 455 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Competence of the State Legislature to legislate on a tax on consignments in the course of inter-State trade and commerce.
2. Violation of Articles 14, 19(1)(g), and 301 of the Constitution due to retrospective taxation without necessary machinery provisions.
3. Competence of the State Legislature to validate any tax or levy and collection thereof.

Detailed Analysis:

1. Competence of the State Legislature to Legislate on a Tax on Consignments in the Course of Inter-State Trade and Commerce:
The propriety of imposition of purchase tax under section 4(6)(ii) of the Bengal Finance (Sales Tax) Act, 1941, was challenged, particularly after the Supreme Court judgment in Devi Dass Gopal Krishan Pvt. Ltd. v. State of Punjab [1994] 95 STC 170, which upheld the constitutional validity of levy of purchase tax. The Tribunal previously held in Rasoi Limited v. State of West Bengal [1991] 80 STC 356 that the provisions of section 4(6)(ii) of the Act of 1941 and section 4(2)(i) of the Act of 1954 were ultra vires the Constitution. However, the Supreme Court's subsequent judgments in Hotel Balaji v. State of Andhra Pradesh and Devi Dass Gopal Krishan Pvt. Ltd. v. State of Punjab reversed this stance, declaring the provisions valid and within the competence of the State Legislature.

2. Violation of Articles 14, 19(1)(g), and 301 of the Constitution:
The applicants contended that the retrospective levy of purchase tax from October 10, 1977, by the amending Act of 1990 violated Articles 14 (equality before the law), 19(1)(g) (right to practice any profession or to carry on any occupation, trade, or business), and 301 (freedom of trade, commerce, and intercourse) of the Constitution. They argued that the retrospective imposition lacked necessary machinery provisions for assessment, appeal, etc. Despite these arguments, the Tribunal emphasized that it was bound by the Supreme Court's decision in Devi Dass Gopal Krishan, which did not address these specific constitutional violations but upheld the legislative competence for the tax.

3. Competence of the State Legislature to Validate Any Tax or Levy and Collection Thereof:
The applicants challenged the competence of the State Legislature to validate any tax or levy and its collection by introducing subsections (2A) and (2B) in section 26A of the Act of 1941 and section 28 in the Act of 1954. They argued that the State Government was not competent to legislate on consignment tax and that the amendments in 1990 did not remove the legislative infirmities. The Tribunal concluded that, in light of the Supreme Court's judgment in Devi Dass Gopal Krishan, it could not consider these points, as they were not addressed by the Supreme Court and thus remained outside the Tribunal's purview.

Conclusion:
The Tribunal dismissed the application, holding that it was bound by the Supreme Court's decision in Devi Dass Gopal Krishan, which upheld the legislative competence of the State to impose the purchase tax. The Tribunal could not entertain the other points raised in Rasoi Limited regarding constitutional violations and legislative competence to validate the tax, as these were not decided by the Supreme Court. The application was accordingly dismissed without any order as to costs.