2003 (7) TMI 668 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutionality of Section 3(c) of the Kerala General Sales Tax (Amendment) Act, 2002.
2. Validity of retrospective levy of tax.
3. Adequacy of the promulgation and publication of the Ordinances.
4. Justification for re-promulgation of the Ordinance.
5. Impact of non-collection of tax by dealers.

Detailed Analysis:

1. Constitutionality of Section 3(c) of the Kerala General Sales Tax (Amendment) Act, 2002:
The primary issue was whether Section 3(c) of the Kerala General Sales Tax (Amendment) Act, 2002, which raised the tax rate on the sale of paper from 4% to 8% effective December 31, 2001, was unconstitutional. The court held that Article 213 empowers the Governor to issue an Ordinance, which is a legislative power exercised on the aid and advice of the Council of Ministers. The Ordinances were duly promulgated and published in the Official Gazette, making them as effective as an Act of the Legislature. The court found no merit in the challenge to the constitutionality of Section 3(c).

2. Validity of Retrospective Levy of Tax:
The appellants argued that the retrospective levy of tax was unreasonable and violated Articles 14 and 19(1)(g). The court held that the Act was not retrospective in its operation but maintained continuity from the Ordinance. The retrospective levy was not a curative or remedial measure but a continuation of the revised tax rate established by the Ordinance. The court found the retrospective levy justified and not in violation of constitutional provisions.

3. Adequacy of the Promulgation and Publication of the Ordinances:
The appellants contended that the change in the tax rate was not made known to the dealers or the public, and even departmental officers were unaware of it. The court emphasized that publication in the Official Gazette is considered sufficient notice to the public. The General Clauses Act provides that publication in the Gazette is a recognized method of promulgation, and it must be assumed that everyone is made aware of the law upon its publication. The court rejected the argument that the lack of individual notice invalidated the tax levy.

4. Justification for Re-promulgation of the Ordinance:
The appellants argued that the re-promulgation of the Ordinance was a "fraud on the power" as it was not placed before the Legislative Assembly during its session. The court acknowledged that the Assembly was prematurely prorogued, making it difficult to transact any business. The re-promulgation was not a deliberate bypass of the Legislature but a necessity due to the Assembly's premature prorogation. The court found the explanation reasonable and held that the action did not constitute a colorable exercise of power.

5. Impact of Non-collection of Tax by Dealers:
The appellants claimed that they did not collect the tax at the higher rate due to unawareness of the Ordinance. The court held that ignorance of the law is no excuse, and the appellants were bound by the law as published in the Official Gazette. The non-collection of tax by the dealers was of no consequence, and they could not blame the respondents for their failure to comply with the law. The court reiterated that considerations of hardship or injustice are not relevant in the context of validly imposed taxing statutes.

Conclusion:
The court dismissed all writ appeals and the writ petition, finding no merit in the challenges raised by the appellants. The court upheld the constitutionality of Section 3(c) of the Kerala General Sales Tax (Amendment) Act, 2002, the validity of the retrospective levy, and the adequacy of the promulgation and publication of the Ordinances. The court also found the re-promulgation of the Ordinance justified and held that the non-collection of tax by the dealers did not invalidate the tax levy. The parties were left to bear their own costs.

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