1995 (8) TMI 296 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of Sections 9 and 15A of the Haryana General Sales Tax Act, 1973
2. Liability to Pay Purchase Tax on Paddy Used for Export of Rice
3. Legislative Competence to Enact Retrospective Tax Laws
4. Validity of Notice Issued u/s 40 of the Haryana General Sales Tax Act
5. Liability to Pay Interest on Tax Due

Summary:

1. Constitutionality of Sections 9 and 15A of the Haryana General Sales Tax Act, 1973:
The petitioners challenged the constitutionality of section 15A substituted by Haryana Ordinance No. 1 of 1992 and Act No. 9 of 1993, alleging it to be unconstitutional and void. The court upheld the legislative competence of the State Legislature to enact and amend the Act, including the retrospective application of sections 6, 9, and 15A. The court found no merit in the argument that section 15A was violative of Article 14 of the Constitution.

2. Liability to Pay Purchase Tax on Paddy Used for Export of Rice:
The pivotal question was whether the petitioners, who exported rice after purchasing paddy, were liable to pay purchase tax on the paddy. The court held that the petitioners were liable to pay purchase tax on paddy used for extracting rice for export, as no specific or implied exemption existed after the omission of section 9 and the amendment of sections 6 and 15A. The court rejected the argument that section 9 provided an exemption from purchase tax.

3. Legislative Competence to Enact Retrospective Tax Laws:
The court affirmed the legislative power to enact laws with retrospective effect, citing several precedents. It held that the legislative power includes the authority to cure defects in statutes and to validate laws retrospectively, provided the Legislature has the competence to legislate on the subject. The retrospective application of sections 6, 9, and 15A was deemed valid and within the legislative competence of the State.

4. Validity of Notice Issued u/s 40 of the Haryana General Sales Tax Act:
The petitioners contended that the notice issued u/s 40 of the Act was without jurisdiction and based on inapplicable provisions. The court found the notice to be legal and valid, as the Deputy Excise and Taxation Commissioner was justified in issuing the notice for suo motu revision of the assessment order to correct discrepancies.

5. Liability to Pay Interest on Tax Due:
The court addressed the petitioners' argument that they should not be liable to pay interest due to the bona fide dispute over tax liability. The court held that the demand for interest was vague and ambiguous, and the petitioners could not be compelled to pay interest for any period prior to the actual demand notice. The court quashed the impugned order directing the payment of interest but allowed the Assessing Authority to determine interest liability afresh from the date of the demand notice.

Conclusion:
The court upheld the constitutionality of the amendments and the retrospective application of the tax provisions. The petitioners were held liable to pay purchase tax on paddy used for exporting rice, but the demand for interest was quashed due to the bona fide dispute over tax liability. The notice issued u/s 40 was deemed valid.