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2015 (8) TMI 1397 - HC - VAT and Sales Tax


Issues Involved: Constitutionality of Puducherry Value Added Tax (Amendment) Act, 2012; Discrimination and violation of Article 14 of the Constitution of India; Tax imposition on live chicken in Mahe region.

Issue-wise Detailed Analysis:

1. Constitutionality of Puducherry Value Added Tax (Amendment) Act, 2012:

The petitioners, registered dealers under the Central Sales Tax Act and the Puducherry Value Added Tax Act, 2007, challenged the Puducherry Value Added Tax (Amendment) Act, 2012, seeking a declaration that it is unconstitutional, illegal, and void. They argued that live chicken falls within the meaning of "live stock" under Entry 39 of the First Schedule of the Act and is hence exempt from tax. However, the amendment split Entry 39 into 39A and 39B, thereby excluding live chicken sold in Mahe region from the exemption. The court noted that the amendment, which came into effect on 01.01.2012, was reasonable and justified, as it aimed to generate additional revenue for developmental activities and was based on valid and reasonable classification.

2. Discrimination and Violation of Article 14 of the Constitution of India:

The petitioners contended that levying tax on live chicken sold only in Mahe region was discriminatory and violated Article 14 of the Constitution, which ensures equality before law. They argued that such selective taxation created an improper class within a class, as other regions in Puducherry were exempt from this tax. The court, however, observed that the classification was reasonable and based on the geographical and economic context. Mahe region, adjoining Kerala where live chicken is taxed at 14.5%, saw dealers selling at Kerala's rates despite the exemption, thus not passing the benefit to consumers. The court held that the amendment did not amount to improper discrimination or class legislation, and the State enjoys wide discretion in taxation matters.

3. Tax Imposition on Live Chicken in Mahe Region:

The petitioners argued that the imposition of a 5% tax on live chicken in Mahe region was arbitrary and discriminatory. The court found that the imposition was justified as it aimed to prevent dealers from unfairly benefiting from the exemption while selling at higher Kerala rates. The additional revenue generated (Rs. 6.7 crores annually) was utilized for welfare measures, indicating a valid and reasonable basis for the tax. The court emphasized that the State has a wide discretion in classifying objects for taxation and the petitioners failed to prove that the amendment was arbitrary or discriminatory.

Conclusion:

The court concluded that the amendment to the Puducherry Value Added Tax Act was based on valid and reasonable classification, did not violate Article 14 of the Constitution, and was not discriminatory. The petitioners' challenge was dismissed, and the court noted that the petitioners had defaulted on tax payments and appeared to be attempting to avoid their tax liability. The writ petitions were dismissed with no costs, and the connected miscellaneous petition was closed.

 

 

 

 

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