1990 (11) TMI 401 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the tax liability on the sale of toddy for the relevant period ending June 30, 1982 under the Karnataka Sales Tax Act, 1957.
Validity of clause (32)(a) of section 3 of the Karnataka General Clauses Act, 1899, without Presidential assent.

Analysis:

1. Tax Liability on Sale of Toddy:
The petitioner, a toddy contractor, challenged the tax liability imposed by an ex parte best judgment assessment by the Assistant Commissioner of Commercial Taxes. The petitioner argued that the omission of toddy from the Second Schedule of the Karnataka Sales Tax Act, post the amendment, did not amount to a repeal and hence no tax was due. The petitioner relied on legal precedents to support the contention that the State could not legislate the amendment with retrospective effect without Presidential assent. The main relief sought was a declaration of the clause in question as void due to the absence of Presidential assent.

2. Validity of Amendment in Karnataka General Clauses Act:
The challenge centered around the insertion of clause (32)(a) to section 3 of the Karnataka General Clauses Act, which included 'omission' and 'deletion' within the term 'repeal'. The retrospective effect of this amendment from November 1, 1956, aimed to address issues of omission and deletion in legislation. The petitioner argued that the amendment required Presidential assent to be enforceable, and the absence of such assent rendered it void. However, during the hearing, the petitioner's counsel did not press this assertion but maintained that there was no tax liability on the petitioner for the toddy sales. The Court found that the petitioner had collected tax on toddy sales and that the amendment did not impede the petitioner's right to carry on trade.

3. Constitutional Rights and Tax Liability:
The Court rejected the petitioner's argument that the amendment affected the right to carry on trade guaranteed under the Constitution. It clarified that the right to trade in intoxicants was not a fundamental right. The Court emphasized that the amendment, aimed at including omission and deletion within the definition of 'repeal', did not unreasonably restrict the petitioner's trade rights. The challenge was deemed frivolous, motivated by a desire to evade tax payment, and gain unjust enrichment.

4. Judicial Precedents and Dismissal of Petition:
Citing legal precedents, including Supreme Court decisions, the Court affirmed that the petitioner's liability to pay tax on toddy sales was protected by the Karnataka General Clauses Act. The Court dismissed the petition, emphasizing that the challenge lacked merit and was an attempt to avoid tax obligations. The petitioner was directed to pay costs and advocate's fee.

In conclusion, the Court dismissed the petition challenging the tax liability on toddy sales and the validity of the amendment in the Karnataka General Clauses Act, highlighting that the petitioner's trade rights were not unreasonably restricted by the legislative changes.