1997 (4) TMI 485 - AT - VAT and Sales Tax

Summary

Issues Involved:

1. Constitutionality of sub-sections (2) and (3) of section 11E of the Bengal Finance (Sales Tax) Act, 1941 and rule 54A of the Bengal Sales Tax Rules, 1941.
2. Authority of taxing authorities to refuse issuance of sales tax permits and declaration forms based on the aforementioned provisions.

Issue-wise Detailed Analysis:

1. Constitutionality of sub-sections (2) and (3) of section 11E of the Bengal Finance (Sales Tax) Act, 1941 and rule 54A of the Bengal Sales Tax Rules, 1941:

The applicants challenged the constitutionality of sub-sections (2) and (3) of section 11E and rule 54A, arguing they were ultra vires the Constitution of India and the provisions of the same statute. The Tribunal noted that the applicants did not pursue this argument during the oral arguments or in their written submissions, effectively abandoning this challenge. The Tribunal found that rule 54A, which requires self-verification of returns against books of accounts and statutory declarations, is within the scope and ambit of the proviso to section 11E(3). The rule elaborates on the legislative intent by ensuring that discrepancies leading to short payment of tax are addressed by December 31, 1995, thus avoiding penalties. The Tribunal held that the date fixed by the Legislature was reasonable and provided sufficient time for compliance. The Tribunal also confirmed that the rule-making power under section 26(1) of the Act of 1941 was broad enough to encompass the provisions of rule 54A.

2. Authority of taxing authorities to refuse issuance of sales tax permits and declaration forms based on the aforementioned provisions:

The applicants contended that the refusal to issue sales tax permits and declaration forms due to non-compliance with section 11E(3) and rule 54A was unlawful. The Tribunal agreed with this contention, stating that the proviso to section 11E(3) and rule 54A could not be invoked to refuse the issuance of permits and forms. The Tribunal clarified that these provisions were intended to allow dealers to avoid penalties by self-verifying and paying any additional tax due by the specified date. However, non-compliance with these provisions alone could not justify the refusal to issue permits and forms unless it led to an actual default in tax payment recognized by relevant provisions or rules. The Tribunal directed the respondents to dispose of applications for permits and declaration forms according to law, without using non-compliance with section 11E(3) and rule 54A as a ground for refusal.

Compensation Claim:

The applicants sought compensation for detention and additional transportation charges incurred due to the refusal to issue permits. The Tribunal found inconsistencies and lack of evidence in the applicants' claims. It was noted that the application for the permit was not filed, and the claims for detention and transportation charges were not adequately supported by the provided receipts. Consequently, the Tribunal denied the compensation claim.

Final Disposition:

The application was disposed of with the direction that the respondents should process applications for sales tax permits and declaration forms according to law, without considering non-compliance with section 11E(3) and rule 54A as a ground for refusal. No costs were awarded.