2000 (12) TMI 882 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutionality of amendments to Section 14-B of the Punjab General Sales Tax Act, 1948.
2. Legislative competence of the State under Article 246(3) read with Entry 54 of List II of the Seventh Schedule of the Constitution.
3. Violation of fundamental rights under Article 19(1)(g) and Article 301 of the Constitution.
4. Requirement of Presidential sanction under Article 304(b) of the Constitution.

Summary of Judgment:

Issue 1: Constitutionality of Amendments
The primary object of Section 14-B is to prevent the evasion of sales tax. The amendments introduced stringent provisions requiring the owner, driver, or person-in-charge of the transport vehicle to carry documents evidencing the genuineness of transactions and payment of tax. The court found that these provisions are within the legislative competence of the State and do not violate the petitioners' fundamental rights.

Issue 2: Legislative Competence
The court held that the power vested in the State under Entry 54 of List II of the Seventh Schedule includes the power to legislate on ancillary and incidental matters, including provisions for preventing tax evasion. Therefore, Section 14-B(6)(ii) and (7)(iii) fall within the legislative competence of the State.

Issue 3: Violation of Fundamental Rights
The court rejected the challenge to the vires of Section 14-B(6)(ii) on the ground that it imposes unreasonable restrictions on the petitioners' right to carry on trade and business or their right to freedom of trade, commerce, and intercourse. However, the mandatory imposition of a penalty equivalent to 50% of the value of the goods under Section 14-B(7)(iii) was found to be unconscionable and violative of Articles 14 and 19(1)(g) of the Constitution.

Issue 4: Requirement of Presidential Sanction
The court held that the notification dated September 29, 1999, cannot be declared bad for want of Presidential sanction. The amendments did not impose additional restrictions on the petitioners' right to freedom of trade, commerce, and intercourse guaranteed under Article 301 of the Constitution.

Conclusion:
1. Section 14-B(6)(ii) is declared intra vires to the provisions of the 1948 Act.
2. Section 14-B(7)(iii) is partly declared unconstitutional inasmuch as it makes the imposition of a penalty equivalent to 50% of the value of the goods mandatory. The State is free to introduce provisions for the imposition of appropriate penalties for non-compliance with sub-sections (2) and (4) of Section 14-B.
3. The concerned authority is free to pass appropriate orders under Section 14-B(7)(iii), and persons aggrieved by such orders are entitled to avail appropriate legal remedies by filing appeals, etc.

Writ petitions disposed of accordingly.