1995 (11) TMI 424 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the constitutionality of provisions of the Tamil Nadu General Sales Tax Act regarding levy of sales tax on certain charges.

Analysis:
The petitioner, a proprietor of a business, filed a writ petition challenging the constitutionality of sections 2(n), 2(g), and 2(j) of the Tamil Nadu General Sales Tax Act, claiming that charges for services like polishing, dressing, handling, and transport should not be considered as sale proceeds subject to sales tax. The petitioner argued that these charges were for labor and not for the transfer of property, thus not taxable under the Act. The petitioner contended that the provisions allowing for the levy of sales tax on such charges were beyond the State Legislature's powers under the Constitution.

The State department countered, stating that the charges in question were included in the turnover for sales tax assessment. The assessing authority had initially exempted these charges but later included them in the turnover after reopening assessments. The department argued that the petitioner should have provided evidence to claim exemptions under the Act instead of challenging the constitutionality of the provisions through a writ petition. The department maintained that the provisions were within the legislative competence of the State and that the petitioner had not demonstrated any grounds for declaring them unconstitutional.

The Court noted that the petitioner had previously submitted to the jurisdiction of the statutory authorities regarding the assessments. The Court emphasized that the petitioner needed to establish his case for exemption under the Act based on facts and evidence. As the petitioner failed to provide evidence for claiming exemptions during the assessment proceedings, the Court found no grounds to declare the challenged provisions unconstitutional. The Court held that since the legislative competence was not challenged, and no specific constitutional basis was provided for declaring the provisions ultra vires, the writ petition was not maintainable. Consequently, the Court dismissed the writ petition, emphasizing that the petitioner had not met the burden of proving the unconstitutionality of the relevant sections.

In conclusion, the Court dismissed the writ petition challenging the constitutionality of sections 2(n), 2(g), and 2(j) of the Tamil Nadu General Sales Tax Act, as the petitioner failed to substantiate the claim of unconstitutionality. The Court highlighted the importance of providing evidence for claiming exemptions under the Act rather than resorting to writ jurisdiction to challenge the legislative provisions. The dismissal of the writ petition also led to the vacation of an interim injunction previously granted in a related matter.