2007 (8) TMI 828 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to the constitutionality of Section 6A of the Haryana General Sales Tax Act, 1973 and its legislative competence.

Detailed Analysis:

1. Introduction:
The judgment addresses seven writ petitions challenging the constitutional validity of Section 6A of the Haryana General Sales Tax Act, 1973, raising common issues. The primary prayer seeks a declaration of Section 6A as ultra vires of the Constitution and beyond the State Legislature's legislative competence, with a further request for the State to levy sales tax based on the actual sale price negotiated between the petitioners and their customers.

2. Facts and Background:
The petitioners, engaged in cement manufacturing and sales, are registered under the Haryana Act and the Central Sales Tax Act, operating in Haryana. The State amended the Act through the Haryana General Sales Tax (Amendment) Act, 2002, introducing Section 6A. This provision mandates the levy of sales tax on the Maximum Retail Price (MRP) of goods listed in the Schedule, instead of the actual sale price, charged only at the final retail sale point.

3. Legal Arguments:
Counsel for the petitioners contended that Section 6A is similar to Section 4A of the Rajasthan Sales Tax Act, citing a Rajasthan High Court judgment and subsequent Supreme Court validation. The State counsel attempted to distinguish the provisions but failed to establish significant differences between them.

4. Judicial Analysis:
After comparing Section 6A of the Act with Section 4A of the Rajasthan Act, the Court found them materially similar. Both provisions start with a non-obstante clause, with minor distinctions in specifying taxable goods. The Court concluded that the Supreme Court's ruling in the Rajasthan Chemists Association case applies to the current dispute.

5. Court's Decision:
Relying on the Supreme Court precedent, the Court held that tax on the first point sale from manufacturer to retailer cannot be based on the published MRP when it is not actually charged or payable by the retailer. The Court emphasized that the tax rate should not be linked to the MRP, which is not part of the transaction between the parties. Consequently, the writ petitions were allowed, and the Court disposed of the case in line with the Supreme Court's decision.

In conclusion, the judgment critically analyzes the provisions of the Acts, compares them with relevant precedents, and ultimately rules in favor of the petitioners by declaring Section 6A unconstitutional and allowing the petitions based on established legal principles.