2001 (7) TMI 1257 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of Section 59AAA of the Gujarat Sales Tax Act and Rule 62AAA of the Gujarat Sales Tax Rules.
2. Requirement for importers to furnish detailed declarations in Form 45C.
3. Alleged unreasonable restrictions on the right to trade and inter-State commerce.
4. Legislative competence of the State to impose such requirements.
5. Practical difficulties and burdensome nature of compliance with the provisions.
6. Discriminatory treatment of inter-State trade in cement.

Issue-wise Detailed Analysis:

1. Constitutional Validity of Section 59AAA and Rule 62AAA:
The petitioners challenged the provisions under Article 226 of the Constitution, claiming they violated Articles 14, 19(1)(g), 301, 303, and 304. Section 59AAA empowers the State Government to specify goods likely to evade tax and obligates importers to make declarations and furnish statements regarding such goods. Rule 62AAA mandates importers to declare specified goods in Form 45C at check-posts. The Court upheld these provisions, finding no constitutional infirmity, as they are regulatory measures intended to prevent tax evasion and ensure the identification of goods sold and purchased within the State.

2. Requirement for Importers to Furnish Detailed Declarations in Form 45C:
The petitioners argued that the detailed information required in Form 45C, such as the complete address of the consignor, invoice number, and vehicle registration, was impractical and burdensome. The Court acknowledged the practical difficulties but emphasized that these requirements were necessary to prevent tax evasion. However, it agreed to read down certain provisions to make them more reasonable and practicable, allowing importers to declare only the information they possess and not penalizing them for incomplete details.

3. Alleged Unreasonable Restrictions on the Right to Trade and Inter-State Commerce:
The petitioners contended that the provisions imposed unreasonable restrictions on their fundamental right to trade and restricted inter-State commerce. The Court held that the provisions were regulatory and did not directly impede free-flow of inter-State trade. They were considered reasonable restrictions under Articles 301, 303, and 304, aimed at preventing tax evasion and ensuring proper tax collection.

4. Legislative Competence of the State to Impose Such Requirements:
The petitioners argued that the State lacked legislative competence to impose such requirements on goods imported from other States, as they should be subject to Central Sales Tax. The Court found that the provisions were within the legislative competence of the State under Entry 54 of the State List, which includes the power to make ancillary provisions to prevent tax evasion.

5. Practical Difficulties and Burdensome Nature of Compliance with the Provisions:
The petitioners highlighted the impracticality of complying with the requirements, such as obtaining detailed information from consignors and transporters. The Court acknowledged these difficulties and, based on the State's concession, read down certain provisions to relieve importers from the burden of providing information that could be obtained from transporters.

6. Discriminatory Treatment of Inter-State Trade in Cement:
The petitioners claimed that the provisions discriminated against inter-State trade in cement, favoring local manufacturers. The Court found that the provisions were enacted to address tax evasion due to price variations in cement and did not constitute unreasonable or discriminatory restrictions on inter-State trade.

Conclusion:
The Court upheld the constitutional validity of Section 59AAA and Rule 62AAA, finding them necessary regulatory measures to prevent tax evasion. It read down certain provisions to make compliance more reasonable and practicable, ensuring that importers were not unduly burdened. The Court directed the State to issue fresh circulars to clarify the requirements and dispel any confusion. Petitions were partly allowed to the extent of reading down specific provisions.

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