2008 (7) TMI 881 - HC - VAT and Sales Tax

Section 45A of the M. P. Commercial Tax Act, 1994 - petition to declare as ultra vires and quash notice (P4) issued in form No. 76 dated December 9, 2003 and the penalty imposed as per order under section 45A(12) of the Commercial Tax Act dated December 10, 2003 Held that - The provision of section 45A is held to be intra vires. No case is made out to make interference in the show-cause notice and the penalty order (P9) dated December 10, 2003. The petitioner is given 30 days time to prefer an appeal which is also the prescribed period of limitation. In case the petitioner prefers an appeal within 30 days, the same shall be treated within limitation by the appropriate authority as agreed to by Shri V.K. Shukla, Deputy Advocate-General. The petitioner is free to raise all objections in the reply/additional reply to the show-cause notice to be filed in 30 days with respect to tenability of the show-cause and a considered and reasoned decision will be rendered by the concerned authority. Appeal dismissed.

Issues Involved:
1. Constitutionality of Section 45A of the M.P. Commercial Tax Act, 1994.
2. Legality of the notice issued in Form No. 76 dated December 9, 2003.
3. Imposition of penalty under Section 45A(12) of the M.P. Commercial Tax Act.
4. Release of the detained vehicles.
5. Applicability of Section 45A to goods transported inter-state or not sold within the State of M.P.
6. Discrepancy in transport documents and potential tax evasion.
7. Legislative competence of the State to enact Section 45A under Article 246 of the Constitution.

Detailed Analysis:

1. Constitutionality of Section 45A of the M.P. Commercial Tax Act, 1994:
The petitioner challenged the constitutionality of Section 45A, arguing that it is ultra vires and imposes restrictions on inter-State trade, which should be under the Union's jurisdiction. The court held that Section 45A is pari materia with Section 29A of the M.P. General Sales Tax Act and similar provisions in other state laws, whose validity has been upheld by the Supreme Court in Sodhi Transport Co. v. State of U.P. The court concluded that Section 45A is intra vires and within the legislative competence of the State, rejecting the petitioner's reliance on Check-post Officer v. K.P. Abdulla and Bros., as it was rendered in a different context.

2. Legality of the Notice Issued in Form No. 76:
The petitioner contended that the show-cause notice issued in Form No. 76 was unauthorized because the goods were not sold within M.P. but were in the process of manufacture. The court found that the notice was issued based on discrepancies in the transport documents and potential tax evasion, which justified the check-post officer's actions under Section 45A. The court held that the issuance of the notice was not without jurisdiction, especially considering the notification dated May 6, 2002.

3. Imposition of Penalty under Section 45A(12):
The petitioner argued that the penalty imposed was without authority since the goods were not subject to tax under the Commercial Tax Act but were liable for additional excise duty. The court noted that the penalty was imposed due to discrepancies in the transport documents, indicating possible tax evasion. The court emphasized that the factual determination of whether the goods were in the course of production or sale was necessary and should be decided by the appropriate authority.

4. Release of the Detained Vehicles:
The petitioner sought the release of the detained vehicles, arguing that the detention was unauthorized. The court did not specifically address the release of vehicles but focused on the broader issue of the legality of the notice and penalty. The court implied that the vehicles' detention was justified pending the resolution of the show-cause notice and penalty proceedings.

5. Applicability of Section 45A to Goods Transported Inter-State or Not Sold within M.P.:
The petitioner claimed that Section 45A should not apply to goods transported inter-state or not sold within M.P. The court rejected this argument, stating that the provision applies to any discrepancies in transport documents and potential tax evasion, regardless of whether the goods were sold within the State. The court held that the provision was valid and applicable in the present case.

6. Discrepancy in Transport Documents and Potential Tax Evasion:
The court found significant discrepancies in the transport documents, including differences in the names of the consignor, consignee, and purchaser. These discrepancies justified the check-post officer's actions under Section 45A to prevent potential tax evasion. The court held that the factual determination of these discrepancies should be made by the authority issuing the notice.

7. Legislative Competence of the State to Enact Section 45A under Article 246:
The petitioner argued that the State lacked legislative competence to enact Section 45A, as it pertains to excise duties under the Union's jurisdiction. The court held that the provision was within the State's legislative competence under Article 246, as it relates to sales tax and entry tax, which are within the State's purview. The court upheld the validity of Section 45A, rejecting the petitioner's argument.

Conclusion:
The court upheld the constitutionality and applicability of Section 45A of the M.P. Commercial Tax Act, 1994, and found that the notice and penalty imposed were justified based on discrepancies in transport documents indicating potential tax evasion. The court directed the petitioner to file an appeal within 30 days and allowed the petitioner to raise all objections in the reply to the show-cause notice. The petition was disposed of with these directions, and no costs were awarded.

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