2001 (1) TMI 944 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Legality and validity of the office memorandum dated September 27, 2000, issued by the Commissioner of Taxes, Manipur.
2. Authority and jurisdiction of the Commissioner of Taxes to issue the office memorandum.
3. Compliance with procedural requirements under the Manipur Sales Tax Act, 1990.
4. Alleged discrimination and arbitrariness in the imposition of advance tax on specific goods.

Detailed Analysis

1. Legality and Validity of the Office Memorandum
The sole issue addressed in the application under Article 226 of the Constitution pertains to the legality and validity of the office memorandum dated September 27, 2000, issued by the Commissioner of Taxes, Manipur. This memorandum required traders dealing in cement, iron, steel, and chemical fertilizers to pay lump sum advance sales tax.

2. Authority and Jurisdiction of the Commissioner of Taxes
The petitioner contended that the Commissioner of Taxes lacked the authority and jurisdiction to issue such a memorandum. The court examined Sections 5, 6, and 7 of the Manipur Sales Tax Act, 1990, which clearly indicate that any tax imposition must be done by the State Government through notification in the Official Gazette. The court found that the Commissioner, being only a departmental head, had no authority to issue such an office memorandum, as it violated Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by the authority of law.

3. Compliance with Procedural Requirements
The petitioner argued that the impugned office memorandum was issued without prior notification as required under Section 6(2) of the Act. The court noted that the State Government must notify any change or modification in the Official Gazette for inviting objections and suggestions from the public. In this case, no such notification was published, nor was there prior information to the public regarding the imposition of advance tax. The court emphasized that all fiscal enactments must be strictly construed, and any imposition of tax must comply with the statute enacted for this purpose.

4. Alleged Discrimination and Arbitrariness
The petitioner also argued that the memorandum was discriminatory and arbitrary, as it singled out specific items-iron and steel, cement, and chemical fertilizers-while excluding other items. The court agreed with this contention, noting that the selective imposition of advance tax on these items was arbitrary and violated Article 14 of the Constitution.

Conclusion
The court concluded that the impugned office memorandum was issued without any authority of law, as there was no provision in the Act for imposing such advance tax. The Commissioner of Tax had no power, authority, or jurisdiction to issue the memorandum. Therefore, the office memorandum dated September 27, 2000, was quashed and set aside. The writ petition was allowed, and each party was ordered to bear its own costs.