1996 (8) TMI 502 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Validity and constitutionality of sections 2(6), 11, and 14 of the West Bengal Sales Tax Act, 1994, and rules 172, 173, 174, 174A, 174B, 188, and 189 of the West Bengal Sales Tax Rules, 1995.
2. Applicability of these provisions to transporters.
3. Legislative competence of the State Legislature under entry 54 of List II of the Seventh Schedule to the Constitution.
4. Allegations of harassment and illegal actions by respondents.
5. Validity of the requirement for transporters to furnish registration details of consignors or consignees.
6. Constitutionality of the deemed sale and deemed purchase provisions.
7. Validity of advance tax and security provisions under sections 11(7) and 11(8).

Detailed Analysis:

1. Validity and Constitutionality of Sections 2(6), 11, and 14 of the West Bengal Sales Tax Act, 1994:
The main question was whether these sections and the corresponding rules and forms were ultra vires articles 14, 19(1)(g), 265, and 301 of the Constitution. The Tribunal held that section 2(6) was valid and constitutional but suspended the provision requiring disclosure of names and addresses of consignors or consignees until the manner of disclosure was prescribed. The Explanation below section 11(1) was declared unreasonable and ultra vires the Constitution and was struck down. Parts of sub-section (5) of section 11 and sub-section (4) of section 14 were declared invalid and unconstitutional to the extent they applied to transporters. Sub-sections (7) and (8) of section 11 and related provisions were also struck down as unconstitutional and beyond the competence of the State Legislature.

2. Applicability to Transporters:
The Tribunal noted that the definition of "transporter" included the owner of the goods vehicle, the person having possession or control of the vehicle, the person in whose name the vehicle is registered, the driver, and any other person in charge of the vehicle. The Tribunal held that the provisions of the 1994 Act applied to transporters but emphasized that the responsibility of transporters in furnishing documents and disclosing particulars was limited to what they could reasonably be expected to provide in the customary course of their business.

3. Legislative Competence:
The Tribunal examined the legislative competence of the State Legislature under entry 54 of List II of the Seventh Schedule to the Constitution. It held that the State Legislature did not have the power to levy tax on deemed purchases or sales where no actual transaction of sale or purchase had taken place. The Tribunal emphasized that entry 54 read with article 366(29A) did not confer the competence to levy tax on deemed sales or purchases.

4. Allegations of Harassment:
The applicants alleged harassment by the respondents, including interception and detention of vehicles, seizure of goods, and coercive collection of taxes. The Tribunal did not express an opinion on these allegations but allowed the applicants to challenge such actions before the appropriate forum within eight weeks.

5. Requirement of Registration Details:
The Tribunal held that it was unreasonable and unconstitutional to require transporters to furnish the registration number of consignors or consignees, as there was no statutory obligation on consignors or consignees to provide such information to transporters. This requirement was declared invalid and unconstitutional to the extent it applied to transporters.

6. Deemed Sale and Deemed Purchase Provisions:
The Tribunal struck down the deemed sale provision in the Explanation below section 11(1) as unreasonable and beyond the legislative competence of the State under entry 54. It held that a transporter could not be presumed to have sold goods merely because they were disposed of. Similarly, the deemed purchase provision in section 2(6) was limited to the purpose of definition and could not be the basis for levying tax under sections 11(1) or 14(1).

7. Advance Tax and Security Provisions:
The Tribunal declared sub-sections (7) and (8) of section 11, which provided for the collection of advance tax or security, as unconstitutional. It held that these provisions were beyond the legislative competence of the State Legislature, as they sought to levy tax without any actual sale or purchase transaction. Consequently, rules 172 and 173, which implemented these provisions, were also struck down.

Conclusion:
The Tribunal allowed the application in part, declaring specific provisions and rules as unconstitutional and beyond the competence of the State Legislature. The interim orders were made absolute to the extent they conformed to the judgment. The operation of the judgment was stayed for 12 weeks.