2017 (9) TMI 322 - HC - VAT and Sales Tax

Validity of circular dated 5.6.2000 - encouraging and developing Khadi and Village Industry. - circular is challenged on the ground that it is discriminatory in nature and it violates the provisions of Articles 14, 19 (1) (g) of Constitution of India - direction is also claimed to strike down notification dated 7.6.2001 by which amendment in Bombay Sales Tax Act concerning the hand made paper industry is made - Held that - In view of coming in to force of Goods and Service Tax, the provisions of Sales Act etc. will not be used against the petitioner and further, for the applicability of GST, there are different conditions/requirements and those conditions/requirements will be considered for taxing now. Thus, nothing survives in the present matter - petition dismissed.

Summary

Issues:
Challenge to circular dated 5.6.2000 for being discriminatory and violating constitutional provisions. Claim for striking down notification dated 7.6.2001 amending Bombay Sales Tax Act. Discriminatory treatment towards hand made paper manufacturers by respondent No. 1.

Analysis:
The petitioner, an association of hand made paper manufacturers, challenged a circular issued by respondent No. 1 as discriminatory and violative of constitutional provisions. The circular, dated 5.6.2000, outlined a policy that granted benefits only to co-operative societies and artisans who received financial assistance from respondent No. 1 or related institutions. This policy excluded members of the petitioner association from receiving benefits, leading to alleged discrimination without reasonable basis. The petitioner contended that the circular prevented them from obtaining registration and accessing exemptions from sales tax.

The Act of 1960 established that the State Government holds the ultimate decision-making authority regarding the policy framework for respondent No. 1. Despite representations made by the petitioner to both the Government and respondent No. 1, no satisfactory response was received. Respondent No. 1 justified the circular by asserting its regulatory powers and the government's tacit approval of the policy. The respondent argued that entitlement to government schemes under Excise or Sales Tax Acts is subject to fulfilling specific conditions outlined in the policy. The respondent maintained that the circular was not arbitrary but aimed at assisting those in need for survival and competition in manufacturing.

Moreover, the respondent highlighted the implementation of Goods and Service Tax (GST), rendering the Sales Tax Act provisions irrelevant for the petitioner. The shift to GST would introduce different conditions for taxation, making the current matter obsolete. The respondent emphasized that the Government had the authority to frame policies and make regulations under the Act of 1960, indicating no objection to the circular in question. Consequently, the petition was dismissed, and the rule was discharged, as per the judgment delivered by T. V. Nalawade, J.