2001 (9) TMI 1083 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the notification dated March 30, 1988, concerning the concession of sales tax for fuel-efficient vehicles.
2. Allegation of arbitrariness and discrimination under Article 14 of the Constitution.
3. Allegation of violation of the fundamental right under Article 19(1)(g) of the Constitution.

Issue-wise Detailed Analysis:

1. Validity of the Notification Dated March 30, 1988:
The appellant challenged the notification dated March 30, 1988, issued by the Government, which refused to grant or extend the benefit of concession in the matter of levy of sales tax to the appellant's vehicle, TATA 407. The appellant argued that the notification was arbitrary and discriminatory as it excluded their vehicle from the entitlement of the concession despite fulfilling the criteria of fuel efficiency and roadworthiness. The appellant claimed that the notification was designed to favor a particular manufacturer, namely Swaraj Mazda, by setting a cubic capacity criterion that their vehicle did not meet.

2. Allegation of Arbitrariness and Discrimination under Article 14 of the Constitution:
The learned single Judge rejected the appellant's claim, stating that the notification did not suffer from discrimination or arbitrariness. The judgment emphasized that the Government, in its wisdom, considered two factors: fuel efficiency and the cubic capacity of the vehicle (3200 to 3500 cc). The Court held that these factors were relevant and that the notification did not violate Article 14 because it treated equally situated persons similarly and was based on relevant considerations like safety, operational economy, and capability to handle difficult terrains.

However, upon appeal, it was argued that the introduction of cubic capacity had no relation to the objective of encouraging fuel-efficient vehicles. The appellate court found that the notification created an artificial classification by adding specifications extraneous to the basic object of fuel efficiency, thus violating Article 14. The court stated, "The concession cannot be based on the cubic capacity of the vehicle because it has no nexus with fuel efficiency."

3. Allegation of Violation of Fundamental Right under Article 19(1)(g) of the Constitution:
The learned single Judge also rejected the appellant's contention that the notification violated their fundamental right under Article 19(1)(g). The judgment held that the notification did not create obstacles or restrictions for the appellant in enjoying their right to business and trade.

Separate Judgments:
The appellate court, disagreeing with the learned single Judge, concluded that the notification dated March 30, 1988, was arbitrary and discriminatory. The court declared the notification invalid as it created invidious classification amongst vehicles based on considerations extraneous to the main objective of encouraging fuel-efficient vehicles. However, it was noted that the appellant would not benefit from this declaration because, from April 2000, sales tax was being charged uniformly on all vehicles.

Conclusion:
The appeal was allowed, and the judgment of the learned single Judge was set aside. The notification dated March 30, 1988, was declared arbitrary and discriminatory. However, the appellant was not entitled to any benefit due to the uniform sales tax rate implemented from April 2000.