1994 (3) TMI 375 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Challenge to the increase of sales tax to 40% under section 7(14) of the KGST Act.
2. Request for instalment facility for payment of the compounded tax amount.

Issue-wise Detailed Analysis:

1. Challenge to the Increase of Sales Tax to 40% under Section 7(14) of the KGST Act:
The petitioners, nine abkari contractors, initially challenged the amendment to section 7(14) of the Kerala General Sales Tax Act, 1963 (KGST Act), which increased the sales tax on arrack from 20% to 40% of the total rental amount payable under the Abkari Act for the licence year 1993-94. However, during the admission of the writ petition, counsel for the petitioners stated that they were not pressing this challenge. Thus, the challenge to the amended provisions of sub-clause (14) of section 7 of the KGST Act as illegal, unconstitutional, and void was withdrawn unconditionally.

2. Request for Instalment Facility for Payment of the Compounded Tax Amount:
The primary relief sought by the petitioners was to be allowed to pay the balance amount of tax due at the compounded rate in instalments. The petitioners argued that this Court, exercising jurisdiction under Article 226 of the Constitution, should grant the benefit of payment in easy instalments. The respondents, represented by the Special Government Pleader for Taxes, opposed this motion.

The Court examined the history of similar litigations, noting that previous requests for stay on the operation of the amendment were consistently rejected. The Court referenced earlier interlocutory orders and a Division Bench's decision which had granted temporary instalment benefits but later vacated the same upon review, deeming the writ appeals not maintainable.

The Court emphasized that, under section 7(15) of the KGST Act, the compounded tax amount is to be paid in monthly instalments. Non-payment on due dates incurs penal interest and recovery proceedings as per section 23(3). The Court held that it cannot issue directions contrary to statutory provisions, as the petitioners have no legal right to insist on instalment payments beyond what is prescribed by the statute.

The petitioners' reliance on the Division Bench's earlier decision was deemed misplaced, as the Division Bench did not intend to lay down any binding principle of law applicable universally. The Court noted that the State, as the creditor, should decide what is in its best interest, and the petitioners cannot claim instalment benefits as a matter of right.

The Court cited previous judgments, including Haridas v. Assistant Commissioner, Sales Tax, and Sreekumar v. State of Kerala, which established that there is no provision in the KGST Act allowing even the Government to permit instalment payments of tax due.

Conclusively, the Court declined the petitioners' request for instalment facility, emphasizing the necessity of adhering to statutory mandates and the absence of any extraordinary circumstances warranting such relief under Article 226. The petition was dismissed, and the challenge to the amendment was recorded as not pressed.

Conclusion:
The writ petition was dismissed, and the Court declined to grant the instalment facility for the payment of the compounded tax amount. The challenge to the amendment increasing the sales tax to 40% was not pressed by the petitioners and thus not considered by the Court.