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2002 (10) TMI 750 - HC - VAT and Sales Tax
Issues:
Challenge to the applicability of section 78 of the Rajasthan Sales Tax Act, 1994 on railways and its servants; Allegations of harassment and interference by State authorities in railway operations; Validity of section 78 of the Act. Analysis: The petitioners, Union of India through General Manager, Northern Railway, New Delhi, and Divisional Railway Manager, Northern Railway, Jodhpur, sought declarations through a writ petition under Article 226 challenging the applicability of section 78 of the Rajasthan Sales Tax Act, 1994 on railways and its employees. They alleged harassment and interference by State authorities in their functioning, claiming they are not obligated to ensure sales tax payment on goods carried. The State authorities refuted these claims, asserting their duty to prevent tax evasion and highlighting instances of evasion through railway transport. The State authorities argued that it is the carrier's responsibility to ensure consignees pay state taxes, denying unnecessary interference in railway operations. They emphasized intensified checks to prevent tax evasion through railways, citing examples of evasion through fictitious consignees and shifting destinations to avoid detection. The State emphasized the need for cooperation from railway authorities in tax enforcement efforts. The Court dismissed the writ petition as misconceived, deeming the allegations vague. While acknowledging the State's duty to prevent tax evasion, the Court advised the railway administration to cooperate with the State Government in detection efforts. Regarding the validity of section 78, the Court cited precedents upholding its legality, including a Supreme Court decision and a Division Bench ruling, emphasizing the Union of India's inability to challenge a State Act's validity. In conclusion, the Court found no merit in the petition and dismissed it, upholding the applicability of section 78 of the Rajasthan Sales Tax Act, 1994 on railways and their employees. The interim order was made absolute, directing the petitioners to comply with State directions. The judgment highlights the importance of cooperation between railway authorities and the State in combating tax evasion and upholding legal provisions.
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