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2008 (5) TMI 629 - HC - VAT and Sales TaxVires of rule 43(4)(a) of the U.P. Trade Tax Rules, 1948 challenged - Held that - The learned counsel for the petitioner could not show that rule 43(4)(a) of the Rules, in any manner, as such, is inconsistent to any provision of the Act. We are not impressed by the submission of the learned counsel for the petitioner that rule 43(4)(a) is against the spirit of the exemption/concession granted under section 4A and, therefore, is liable to be struck down. We are not inclined to hold that the petitioner is entitled for issuance of mandamus directing the respondents to dispense with the requirement of rule 43(4)(a) of the Rules upon the petitioner as that would amount to make a statutory provision by judicial order inapplicable upon the petitioner, though otherwise, by operation of law, it is applicable, binding and cannot be dispensed with. In view thereof, no error in the order dated September 16, 2002, impugned in this writ petition, passed by respondent No. 1. The petitioner is not entitled for any relief as sought in this writ petition.
Issues Involved:
1. Constitutionality of Rule 43(4)(a) of the U.P. Trade Tax Rules, 1948. 2. Validity of the Commissioner's order dated June 19, 2002, requiring the petitioner to pay the entire trade tax for the specified period. 3. Applicability of tax exemption and deferment provisions under Sections 4A and 8(2A) of the U.P. Trade Tax Act, 1948. 4. Alleged arbitrariness and discrimination in the denial of moratorium benefits. Issue-wise Detailed Analysis: 1. Constitutionality of Rule 43(4)(a): The petitioner challenged the vires of Rule 43(4)(a) of the U.P. Trade Tax Rules, 1948, arguing that it is contrary to the spirit and objectives of Section 4A of the U.P. Trade Tax Act, 1948. The court examined the provisions of Sections 4A and 8(2A) of the Act and Rule 43 of the Rules. Section 4A allows the State Government to grant exemptions or concessions from trade tax to certain industrial units. Section 8(2A) provides for the deferment of tax in lieu of exemption under Section 4A, subject to prescribed conditions. Rule 43 specifies the conditions for granting such moratorium. The court held that the application of Section 8(2A) operates independently and is not entirely controlled by Section 4A. The conditions under Rule 43(4)(a) are within the legislative competence of the rule-framing authority and are not inconsistent with any provision of the Act. The court emphasized that a rule must be consistent with the parent legislation and cannot be struck down based on vague concepts of the spirit of the provision. The court concluded that Rule 43(4)(a) is a valid piece of delegated legislation made in exercise of statutory powers by a competent authority. 2. Validity of the Commissioner's Order: The petitioner sought to quash the Commissioner's order dated June 19, 2002, which required the petitioner to pay the entire trade tax for the period up to February 28, 2001. The court noted that the petitioner had sold his manufacturing unit to another company and had applied for a moratorium under Section 8(2A) of the Act. However, the Commissioner rejected the application and required the petitioner to pay the entire tax. The court found that the conditions for granting a moratorium under Section 8(2A) and Rule 43 were not met due to the discontinuance of the business by the petitioner. The court upheld the Commissioner's order, stating that the petitioner was not entitled to any relief as the conditions prescribed under Rule 43(4)(a) were applicable and binding. 3. Applicability of Tax Exemption and Deferment Provisions: The petitioner argued that since he was eligible for exemption under Section 4A, he should also be entitled to a moratorium under Section 8(2A). The court clarified that while eligibility for exemption under Section 4A is a prerequisite for deferment under Section 8(2A), the conditions for deferment are governed independently by Rule 43. The court emphasized that the deferment of tax is subject to conditions prescribed by delegated legislation and is not entirely controlled by Section 4A. The court concluded that the conditions under Rule 43(4)(a) are valid and applicable, and the petitioner must comply with them to avail of the moratorium. The court rejected the argument that the conditions under Rule 43(4)(a) violate the spirit of Section 4A. 4. Alleged Arbitrariness and Discrimination: The petitioner contended that the denial of moratorium benefits was arbitrary and discriminatory, citing a similar benefit allowed to another dealer. The court held that it cannot issue a mandamus to act in breach of statutory provisions. The court emphasized that two wrongs do not make one right, and the statutory provisions under Rule 43(4)(a) must be followed. The court concluded that the petitioner is not entitled to any relief based on alleged arbitrariness or discrimination, as the statutory provisions are binding and cannot be dispensed with by judicial order. Conclusion: The writ petition was dismissed, and the court upheld the constitutionality of Rule 43(4)(a) and the validity of the Commissioner's order. The petitioner was not entitled to any relief, and the conditions for granting a moratorium under Section 8(2A) and Rule 43 were found to be valid and binding.
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