2001 (11) TMI 984 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of sub-rule (5-A) of rule 17 of the Andhra Pradesh General Sales Tax Rules, 1957.
2. Impact on Sales Tax Practitioners' profession.
3. Allegation of amendment being non-bona fide.
4. Ultra vires nature of sub-rule (5-A) concerning section 39 of the APGST Act.
5. Applicability of sub-rule (5-A) to assessments under the Central Sales Tax Act, 1956.
6. Retrospective vs. prospective application of sub-rule (5-A).

Issue-wise Detailed Analysis:

1. Constitutional Validity of Sub-rule (5-A) of Rule 17:
The petitioners challenged the constitutional validity of sub-rule (5-A) of rule 17 of the Andhra Pradesh General Sales Tax Rules, 1957, which mandates that every dealer with a turnover exceeding Rs. 40 lakhs must get their accounts audited by a Chartered Accountant. The court upheld the validity, stating that the rule is a statutory instrument and a piece of subordinate legislation. It is not ultra vires as it does not violate any fundamental rights guaranteed under Part III of the Constitution of India or any other constitutional limitations.

2. Impact on Sales Tax Practitioners' Profession:
The petitioners argued that the new rule adversely affects the profession of Sales Tax Practitioners. The court noted that while the rule might reduce the quantum of work for Sales Tax Practitioners, it does not entirely eliminate their role. The rule applies only to dealers with a turnover exceeding Rs. 40 lakhs, allowing those with lower turnovers to continue using the services of Sales Tax Practitioners. The court found no merit in the argument that the rule is prejudicial to the practitioners.

3. Allegation of Amendment Being Non-bona Fide:
The petitioners contended that the amendment was made at the behest of the Chairman of the South Indian Regional Committee of the Institute of Chartered Accountants of India (SIRC of ICAI) to benefit Chartered Accountants. The court dismissed this contention, stating that there was no factual matrix or proof to establish mala fide intentions. The mere reference to a representation from the Chairman of SIRC of ICAI in the government order does not establish bad faith or malice.

4. Ultra Vires Nature of Sub-rule (5-A) Concerning Section 39 of the APGST Act:
The petitioners argued that the State Government lacked the authority to frame sub-rule (5-A) under section 39 of the APGST Act. The court held that the power to frame the rule could be traced to clauses (a) and (n) of sub-section (2) of section 39, which allow the State Government to regulate the procedure and forms adopted in proceedings under the Act. The rule is within the jurisdiction of the State Government as it pertains to the procedure of assessment, a proceeding under the APGST Act.

5. Applicability of Sub-rule (5-A) to Assessments Under the Central Sales Tax Act, 1956:
The petitioners claimed that the rule should not apply to assessments under the CST Act. The court referred to sub-section (2) of section 9 of the CST Act, which allows the procedures under the general sales tax law of the State to apply to CST Act proceedings. The court concluded that the rule is not unconstitutional as it is consistent with the provisions of the CST Act and intended to carry out the purposes of both the APGST Act and the CST Act.

6. Retrospective vs. Prospective Application of Sub-rule (5-A):
The petitioners argued that the rule should apply prospectively and not retrospectively to the assessment year 2000-2001. The court held that the rule is procedural and does not affect any substantive vested rights of the dealers. Procedural laws apply to pending and future proceedings unless they impair vested rights, which is not the case here. The court found no merit in the contention that the rule should not apply to the assessment year 2000-2001.

Conclusion:
The court upheld the constitutional validity of sub-rule (5-A) of rule 17 of the APGST Rules and dismissed the writ petitions, stating that the rule is within the legislative competence of the State Government, does not violate any constitutional provisions, and is applicable to both APGST and CST Act assessments. The rule is procedural and applies to pending assessments without affecting any vested rights.

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