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2014 (7) TMI 320 - HC - VAT and Sales TaxConstitutional validity of Section 4 - Assam General Sales Tax (Amendment) Act, 2002 - Sale of controlled commodities - Portable alcohol/rectified spirit - assessee entered into contract for wholesale supply to excise warehouse - demand of payment of sales tax from the petitioner on account of the sale of the country spirit transported by him - Assessee contends that the contractual assignments undertaken by him in transporting the country spirit did not constitute a sale exigible to sales tax but is only a transportation contract - Revenue contends that assessee has been supplying the country spirit to the retail vendors within the meaning of the charging provisions of the extent sales tax legislation thereby making him liable to pay sales tax irrespective of whether he realizes such taxes from his buyers or not - what is the nature of the transaction which was actually undertaken by the petitioner in supplying the country spirit to the specified warehouses of Assam during the relevant period. Held that - If a sale, express or implied, is found to exist then the tax must follow. In other words, so long as mutual assent, express or implied, is not totally excluded, the transaction will amount to a sale. In the case at hand, the nature of the contract executed between the petitioner and the Staterespondents plainly shows that the four elements to constitute a sale, namely, competency of parties, mutual assent of the parties even though the same may not be total, passing of property in the goods supplied by the petitioner to the licensed retail vendors via the officer-in-charge of the warehouse/excise and treasury, and lastly, payment of price, though statutorily controlled, were all present to render the transaction liable to sales tax. Explanation 3(ii) to section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002, is intra vires the Constitution and the sales tax imposed thereby cannot be construed to be a tax on income beyond the legislative competence of the State Legislature of Assam. - Decided against the assessee. Jurisdiction of High Court - writ jurisdiction - Held that - Revenue authorities appointed under section 3 of the Act are also Tribunals or, at any rate, have the trappings of a Tribunal as they are exercising quasi-judicial functions. Ouster of jurisdiction by statutory provision may either be express or implied. When the exclusion of jurisdiction is also not expressly stated in the statute, it can be implied. In the instant case, though the language of section 4 does not say so in many words that even the jurisdiction of this court under article 226 of the Constitution to issue a writ of certiorari is barred, yet it is to be necessarily implied. When the Legislature intends to oust the jurisdiction of only civil courts and not the High Courts or the Supreme Court, it has been made apparent by them as indicated by section 39 of the Act. We, therefore, hold that section 4 violates the basic feature of the Constitution, and cannot be sustained in law. The impugned assessment orders dated July 20, 2004 in the three writ petitions are valid and enforceable - Section 4 of the Act, in so far as it ousts the jurisdiction of the High Court under articles 226 and 227 of the Constitution to question the legality of the exercise of jurisdiction by the Revenue authorities under section 3, is violative of the basic structure of the Constitution and is, therefore, declared as unconstitutional - However, instead of striking down section 4 lock stock and barrel, the words except in the High Court under articles 226 and 227 of the Constitution shall be read into between the words call in question and the jurisdiction of any authority under section 3 of section 4 of the Act - Decided partly in favour of assessee.
Issues Involved:
1. Constitutional validity of Explanation (ii) to section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002. 2. Legality of the assessment orders dated July 30, 2004, issued by the Superintendent of Taxes, Unit D, Assam. 3. Whether the supply of country spirit by the petitioner constitutes a sale exigible to sales tax. 4. Whether section 4 of the Assam General Sales Tax Act, 1993, violates the basic structure of the Constitution by ousting the jurisdiction of the High Court under articles 226 and 227 of the Constitution. Detailed Analysis: 1. Constitutional Validity of Explanation (ii) to Section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002: The petitioner challenged the constitutional validity of Explanation (ii) to section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002, which deemed the licensed contractor who sells or supplies country spirit to a licensed retail vendor as the first point seller liable to pay tax. The court examined whether the supply of country spirit by the petitioner constituted a sale. The court referred to various legal precedents and statutory provisions to determine that the transaction in question was indeed a sale, albeit a regulated one. Consequently, Explanation (ii) to section 8(1)(a) was held to be intra vires the Constitution, and the sales tax imposed was not beyond the legislative competence of the State Legislature of Assam. 2. Legality of the Assessment Orders Dated July 30, 2004: The petitioner contested the legality of three assessment orders issued on July 30, 2004, by the Superintendent of Taxes, Unit D, Assam, which assessed sales tax amounts based on best judgment assessment. The court found that the petitioner, under the statutory and contractual framework, was responsible for the supply of country spirit, which constituted a sale. Therefore, the assessment orders were valid and enforceable. The court dismissed the argument that the petitioner was merely a transporter, highlighting the comprehensive responsibilities and controls imposed on the petitioner under the contract and excise rules. 3. Whether the Supply of Country Spirit Constitutes a Sale Exigible to Sales Tax: The court analyzed the nature of the transaction between the petitioner and the State respondents, considering the statutory and contractual obligations. It concluded that the transaction had all the elements of a sale, including competency of parties, mutual assent, passing of property, and payment of price. Despite the regulatory framework, the transaction was deemed a sale, making it liable to sales tax. The court relied on precedents like Salar Jung Sugar Mills Ltd. [1972] and Vishnu Agencies (Pvt) Ltd. v. Commercial Tax Officer [1978] to support its conclusion. 4. Whether Section 4 of the Assam General Sales Tax Act, 1993, Violates the Basic Structure of the Constitution: The petitioner argued that section 4 of the Assam General Sales Tax Act, 1993, which barred any person from questioning the jurisdiction of revenue authorities after 90 days of receiving a notice, violated the basic structure of the Constitution by ousting the jurisdiction of the High Court under articles 226 and 227. The court agreed, holding that section 4, in so far as it ousted the jurisdiction of the High Court, was unconstitutional. However, instead of striking down the entire section, the court read down the provision to exclude the High Court's jurisdiction under articles 226 and 227, thereby preserving the power of judicial review. Conclusion: The court upheld the constitutional validity of Explanation (ii) to section 8(1)(a) of the Assam General Sales Tax (Amendment) Act, 2002, and validated the assessment orders dated July 30, 2004. It concluded that the supply of country spirit by the petitioner constituted a sale exigible to sales tax. Additionally, the court declared section 4 of the Assam General Sales Tax Act, 1993, unconstitutional to the extent that it ousted the jurisdiction of the High Court under articles 226 and 227 of the Constitution but read down the provision to preserve judicial review. The parties were directed to bear their respective costs.
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