2004 (6) TMI 615 - HC - VAT and Sales Tax

Summary

Issues: Validity of section 14A of the Kerala General Sales Tax Act, 1963

Analysis:
The judgment in this case revolves around the validity of section 14A of the Kerala General Sales Tax Act, 1963, introduced by the Kerala Finance Act, 1998. The petitioners had their registrations suspended under the KGST Act and Central Sales Tax Act due to alleged obstruction during inspections by the Sales Tax Department. The petitioners argued that the suspension was unjustified and violated their fundamental right to carry on business. They contended that there was insufficient evidence of obstruction and pointed out flaws in the inspection process. The counsel for the petitioners raised serious objections to section 14A, citing Supreme Court decisions and lack of safeguards for the petitioners.

The Special Government Pleader defended the impugned orders, stating that the suspension was justified as some partners of the petitioners' firms were involved in obstruction during inspections. He argued that section 14A was necessary to ensure proper tax collection and prevent hindrance to inspections by Sales Tax Department officers. The court considered both sides' arguments and observed that, given the cordial relationship between the department and the petitioners post the suspension orders, it was unnecessary to rule on the validity of section 14A. Consequently, the court quashed the impugned orders, finding them unsustainable in the circumstances.

In conclusion, the court disposed of the Original Petitions by quashing the impugned orders and left the question of the validity of section 14A open for future consideration. The judgment emphasized the importance of cooperation between the tax department and taxpayers, ultimately leading to the dismissal of the order on a related application.