1999 (1) TMI 520 - HC - VAT and Sales Tax

Summary

Issues:
1. Illegal and arbitrary use of power under section 44 of the Assam General Sales Tax Act, 1993 and rules 42, 43(7)(j) of the Assam General Sales Tax Rules, 1993.
2. Illegal process of demanding security deposit for each consignment from the member mills of the petitioner-association despite having valid documents and paying duties.

Analysis:
Issue 1:
The petitioners raised concerns regarding the alleged illegal and arbitrary use of power under specific sections and rules of the Assam General Sales Tax Act. They argued that the Superintendent of Taxes at the check-posts was demanding security deposits even when the mills had valid permits and documents for transporting goods. The petitioners sought a mandamus to stop this practice, citing harassment and the possession of all necessary valid documents. The respondents, in their affidavit-in-opposition, justified the security deposit requirement under the Act to prevent tax evasion and clandestine selling of goods within the state. They referred to a Supreme Court case to support the constitutionality of such provisions. The court considered these arguments and the necessity of security measures to prevent tax evasion, ultimately dismissing the writ application.

Issue 2:
The petitioners contended that despite holding valid permits and documents, they were still required to provide security deposits for each consignment transported by their member mills. The court examined the relevant provisions of the Assam General Sales Tax Rules, particularly emphasizing the requirement to obtain transit passes and the consequences of failing to comply. The court noted that the security deposit was a precautionary measure to prevent tax evasion and ensure that goods meant for other states were not sold within Assam. Referring to a previous judgment upholding the validity of the Act as a measure to prevent tax evasion, the court found the security deposit requirement to be justified and necessary. It highlighted the importance of such measures in safeguarding the state's revenue and preventing tax losses. Consequently, the court dismissed the writ application while cautioning against undue harassment by the authorities.

In conclusion, the court upheld the legality of the security deposit requirement under the Assam General Sales Tax Act, emphasizing its role in preventing tax evasion and ensuring compliance with transit regulations. The judgment dismissed the writ application while emphasizing the importance of these measures in safeguarding the state's revenue.