Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
1968 (10) TMI 110 - SC - VAT and Sales Tax
Issues Involved:
1. Validity of the Punjab General Sales Tax (Amendment and Validation) Act, 1967. 2. Validity of the Punjab Sales Tax (Haryana Amendment and Validation) Act, 1967. 3. Conflict with Section 15 of the Central Sales Tax Act, 1956. 4. Violation of Articles 14 and 19 of the Constitution of India. 5. Retrospective application of the amendments. 6. Alleged discrimination between different types of manufacturers. 7. Delegation of legislative power. 8. Discrimination between imported and local goods. Detailed Analysis: Validity of the Punjab General Sales Tax (Amendment and Validation) Act, 1967: The petitioners challenged the amendments made by the Punjab Legislature, arguing they conflicted with Section 15 of the Central Sales Tax Act, 1956, and violated Articles 14 and 19 of the Constitution. The amendments aimed to rectify issues identified in the Bhawani Cotton Mills Ltd. case. The Court examined the amendments and found that the stage of tax was now clearly defined, and the provisions were sufficient to align with the Central Act. The amendments did not suffer from the defects identified in the previous judgment. Validity of the Punjab Sales Tax (Haryana Amendment and Validation) Act, 1967: Similar to the Punjab amendments, the Haryana amendments were also challenged on the same grounds. The Court found that the amendments did not conflict with Section 15 of the Central Act or the equality clause of the Constitution. The provisions were deemed clear and sufficient to prevent multiple stages of tax imposition. Conflict with Section 15 of the Central Sales Tax Act, 1956: Section 15 restricts the tax on declared goods to one stage and mandates a refund if the goods are sold in inter-State trade. The Court found that the amendments clearly defined the stage of tax as the last sale or purchase by a dealer liable to pay the tax, thus complying with Section 15. The amendments provided clarity and prevented multiple stages of tax imposition. Violation of Articles 14 and 19 of the Constitution of India: The petitioners argued that the amendments discriminated between different types of manufacturers and delegated legislative power without proper guidelines. The Court held that the opportunity for reassessment or to submit to the old assessment was open to every dealer, thus not creating any discrimination. The delegation of power was within the permissible limits as the Central Act allowed the State to choose a rate of tax within a specified limit. Retrospective Application of the Amendments: The petitioners contended that the retrospective application of the amendments created difficulties in determining if goods had been taxed more than once. The Court found that the dealer was in a position to know whether he was liable to pay the tax or not. The retrospective application did not create any issues as the dealer could claim a refund or exclude transactions from his taxable turnover if he was not the last dealer liable to pay the tax. Alleged Discrimination Between Different Types of Manufacturers: The petitioners argued that the definition of 'dealer' and the provisions for reassessment created discrimination. The Court held that the opportunity for reassessment was available to all dealers, and the intention was to give dealers the choice to ask for a refund or submit to the old assessment. This did not create any discrimination. Delegation of Legislative Power: The petitioners argued that the amendments created unguided delegation of legislative power. The Court found that the Central Act itself allowed the legislature to choose a rate of tax within a specified limit. The delegation was within permissible limits, and the tax levied was well within the maximum limit prescribed by the Central Act. Discrimination Between Imported and Local Goods: The petitioners argued that the amendments discriminated between imported and local goods, violating Article 304 of the Constitution. The Court held that the rate of tax was the same for both imported and local goods. The resulting tax might be higher for imported goods due to additional costs, but this did not create inequality as the rate of tax was uniform. The Court cited the State of Madras v. N.K. Nataraja Mudaliar case to support its conclusion. Conclusion: The Supreme Court dismissed the petitions, holding that the amendments to the Punjab and Haryana Sales Tax Acts did not conflict with the Central Sales Tax Act or violate the Constitution. The amendments provided clarity on the stage of tax and prevented multiple stages of tax imposition. The retrospective application and provisions for reassessment did not create any discrimination or inequality. The petitions were dismissed with costs.
|