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1986 (7) TMI 398
Issues: Contravention of the Foreign Exchange Regulation Act - Sections 5(1)(c) and 9(1)(a) regarding payments made without permission from the Reserve Bank of India.
Analysis:
1. The appellant was found guilty of contravening Sections 5(1)(c) and 9(1)(a) of the Foreign Exchange Regulation Act for making payments without the necessary permissions. The charges included payments made on behalf of foreign companies without the required authorization from the Reserve Bank of India.
2. The appellant admitted to the payments but argued that they were acting as agents for foreign companies and handling funds on their behalf out of freight proceeds. They claimed that all transactions were reflected in their accounts and submitted to the Reserve Bank of India for approval, believing there was no concealment. The original and appellate authorities acknowledged the contraventions but reduced the penalties imposed.
3. The key legal question raised was whether, given the nature of the appellant's business and authorization to handle foreign funds, the authorities were correct in finding a contravention of the Act. The appellant contended that they were following instructions from foreign principals and operating in the normal course of business.
4. The appellate authority recognized that the appellant was acting as an agent for foreign companies, maintaining a running account for freight collection and expenses. It was acknowledged that the appellant had no discretion but to follow instructions from foreign principals, and there was no withholding of information regarding the funds handled.
5. The court emphasized that the appellant was obligated to comply with instructions from foreign entities and had no choice but to carry out transactions as directed. However, it was noted that the appellant could refuse to contravene Indian laws while following foreign instructions.
6. The Tribunal concluded that the appellant had no alternative way of conducting their business and that timely disclosures were made to the Reserve Bank of India. The court agreed that in similar circumstances, permissions were usually granted, and the nominal penalties imposed were not justified. Therefore, the appellant succeeded in the appeal due to the nature of their business operations and compliance with disclosure requirements.
7. Consequently, the appeal was allowed, and no costs were awarded in this matter.
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1986 (7) TMI 397
Issues:
1. Non-compliance of provisions of subsection (4) of Section 100 Criminal Procedure Code.
Analysis:
The judgment revolves around the determination of the effect of non-compliance of the provisions of subsection (4) of Section 100 Criminal Procedure Code in a criminal revision case. The prosecution's case involved a raid conducted by a police head constable and a raiding party resulting in the recovery of illicit liquor. The prosecution's evidence highlighted the involvement of witnesses who were not categorized as independent and respectable inhabitants of the locality as required by the law. Despite the prosecution establishing guilt, the failure to associate two more independent and respectable witnesses raised doubts benefiting the accused.
The judgment delves into the interpretation of sub-sections (4), (5), and (8) of Section 100 Criminal Procedure Code, emphasizing the requirement for the presence of independent and respectable witnesses during a search. The court noted the stringent nature of these provisions and the consequences of non-compliance, making it an offense under the Indian Penal Code. The judgment highlighted the duty imposed on the conducting officer to ensure the presence of such witnesses during a search.
Furthermore, the judgment discussed the possibility of non-compliance not always being fatal to the prosecution, as certain circumstances might make it impracticable to procure such witnesses. Citing a Supreme Court case, the judgment emphasized the prosecution's onus to prove the impossibility of meeting the requirements of Section 100 Criminal Procedure Code. In the case at hand, the prosecution failed to demonstrate the unavailability of independent witnesses, leading to doubts about the prosecution's case and ultimately benefiting the accused.
Ultimately, the judgment concluded that the flagrant violation of the law by not complying with the requirement of independent and respectable witnesses rendered the prosecution case doubtful and unreliable. The failure to call upon such witnesses despite their availability in the locality raised suspicions, leading to the setting aside of the order of conviction against the accused and the discharge of their bail bonds. The judgment underscored the importance of strict adherence to legal provisions to maintain the integrity of criminal proceedings.
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1986 (7) TMI 396
The High Court of Allahabad allowed the revision against the Sales Tax Tribunal's order related to the assessment year 1978-79. The Court held that no notice is required for closure or start of a brick-kiln based on previous judgments. The Tribunal's decision was not justified, and the order was set aside for a fresh appeal without costs. The Tribunal was directed to follow the Court's proposition and observations.
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1986 (7) TMI 395
Issues involved: Interpretation of gratuity provision with prospective effect and its application to pensioners who retired before the specified date.
Summary:
The Supreme Court addressed the issue of whether the provision for payment of increased gratuity with prospective effect from a specified date violates Article 14 of the Constitution of India. The petitioners, former government employees who retired before April 1, 1978, argued that they were entitled to the benefits of a government order dated March 26, 1980, which increased retirement gratuity. The High Court of Andhra Pradesh held that the gratuity revision should not apply retrospectively to pensioners who retired before the specified date. The petitioners contended that gratuity is integral to pensionary benefits and should be revised for all retirees, citing relevant case law. However, the Court, following the principle in D.S. Nakara v. Union of India, held that arrears need not be paid for gratuity benefits accrued under the revised scheme, as it is prospective and not retrospective.
The Court agreed with the High Court's decision, emphasizing that the upward revision of gratuity is effective from the specified date with prospective operation. It explained that retrospective application would require rewriting the notification, which the Court cannot do. The Court highlighted that gratuity, once paid based on existing rules, cannot be retrospectively revised unless expressly provided. The Court rejected the petitioners' argument that all retirees should receive the revised gratuity, stating that such revisions are prospective and do not violate Article 14. The Court also noted that other High Court decisions did not consider the principle of prospective operation and upheld the High Court's decision to dismiss the Special Leave Petition in July 1986.
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1986 (7) TMI 394
Issues:
1. Interpretation of residency status under Foreign Exchange Regulation Act, 1973.
2. Validity of statements made by the appellant and another individual.
3. Legal implications of being a carrier in contravention of the Act.
4. Admissibility of hearsay evidence in the case.
Analysis:
Issue 1: Interpretation of residency status under Foreign Exchange Regulation Act, 1973
The case involved a dispute regarding the residency status of an individual, Muthayee Ammal, in relation to the Foreign Exchange Regulation Act, 1973. The court considered evidence presented by Veerappan, a close relation of Muthayee Ammal, who claimed she was a non-resident based on her association with a money lending firm in India. The appellant failed to provide evidence to rebut this claim, leading the court to conclude that Muthayee Ammal could be treated as a non-resident under the Act.
Issue 2: Validity of statements made by the appellant and another individual
The court addressed the contention that the statements made by the appellant and Veerappan were not voluntary and contained discrepancies. Despite the appellant's retraction of his statement the next day, the court found that the statements corroborated on material particulars and were voluntarily made. The court emphasized that the lack of immediate evidence to support the appellant's claims undermined his argument of coercion or threat in obtaining the statements.
Issue 3: Legal implications of being a carrier in contravention of the Act
The appellant argued that he was merely a carrier and not responsible for the contravention alleged. However, the court held that by knowingly carrying a compensatory payment in an unauthorized manner, the appellant had contravened Sections 5(1)(c) and 23(1B) of the Act, even if done at the behest of his employer. The appellant's actions were deemed to result in a violation of the Act.
Issue 4: Admissibility of hearsay evidence in the case
The court considered the admissibility of hearsay evidence regarding a phone conversation between Veerappan and the appellant's employer, which led to the appellant carrying a significant amount of currency. The court found that the appellant's claim of overhearing the conversation was substantiated by subsequent events, such as the seizure of the money at the designated location. The court ruled that this did not constitute hearsay evidence as defined in relevant case law, thus rejecting the appellant's argument on this point.
In conclusion, the court dismissed the appeal, stating that none of the points raised involved substantial errors of law. The appellant's failure to provide adequate evidence, coupled with the corroborating statements and circumstances, led to the dismissal of the appeal with costs.
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1986 (7) TMI 393
Issues Involved:
1. Levy of interest u/s 139(8) and u/s 215 of the Income-tax Act, 1961.
2. Appealability of orders levying interest under s. 139(8) and s. 215.
3. Jurisdiction of the Commissioner of Income-tax to revise orders under s. 264.
Summary:
1. Levy of Interest u/s 139(8) and u/s 215:
The appellant, a sterling company exporting manganese, was assessed to income-tax for the assessment year 1967-68. Interest amounting to Rs. 56,391 u/s 139(8) and Rs. 9,42,336 (later reduced to Rs. 5,07,880) u/s 215 was levied against the appellant. The appellant contended that there was ample justification for the delay in furnishing the return and for the payment of advance tax at a figure less than 75% of the assessed tax. The relevant provisions and rules, including Rule 117A and Rule 40, were discussed, which allow for the reduction or waiver of interest under specified circumstances.
2. Appealability of Orders Levied under s. 139(8) and s. 215:
The court examined whether orders levying interest under s. 139(8) and s. 215 are appealable under s. 246 of the Income-tax Act. It was held that the levy of interest is part of the process of assessment and not a penalty. The court referred to the Karnataka High Court's decision in National Products v. Commissioner of Income-tax, Mysore, which clarified that while the levy of interest is not appealable, it is open to the assessee to dispute the levy in an appeal against the regular assessment order if he denies his liability to pay such interest.
3. Jurisdiction of the Commissioner of Income-tax to Revise Orders under s. 264:
The appellant filed revision petitions before the Commissioner of Income-tax under s. 264, objecting to the levy of interest. The Commissioner dismissed the petitions, stating that he could not revise any order pending on an appeal before the Appellate Assistant Commissioner unless the entire appeal was withdrawn. The court held that the question of waiver or reduction of interest cannot be the subject of an appeal under clause (c) of s. 246 and should be dealt with by the Commissioner in his revisional jurisdiction. However, the assessee must first demonstrate before the Income-tax Officer that there is a case for waiving or reducing the levy of interest.
Conclusion:
The Supreme Court affirmed the orders of the Commissioner of Income-tax rejecting the revision petitions but allowed the appellant to apply to the Income-tax Officer for waiver or reduction of interest within six weeks. The appeals were dismissed with no order as to costs.
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1986 (7) TMI 391
Issues:
- Interpretation of exemption from sales tax under Andhra Pradesh General Sales Tax Act, 1957 for a company established in a scheduled area.
- Validity of exemption granted to the company for five years from the commencement of production.
Analysis:
The judgment by the High Court of Andhra Pradesh pertains to a writ petition filed by a company, Someswara Cement and Chemicals Limited, challenging the liability to pay sales tax for five years from the date of commencement of production, which was March 17, 1983. The company had set up a cement factory in a tribal village in a scheduled area and invested Rs. 5.9 crores for the same. The State Government initially granted exemptions through notifications under section 9 of the Andhra Pradesh General Sales Tax Act, 1957, for units set up in scheduled areas after December 17, 1976, exempting them from sales tax for five years. However, the State later amended the exemption criteria through G.O. Ms. No. 302 on March 2, 1982, limiting it to industrial units with a total capital investment not exceeding one crore rupees.
The State Government argued that the exemption granted earlier was no longer applicable to the company after the amendment in G.O. Ms. No. 302. They relied on legal precedents to support their stance. The court, however, analyzed the situation and concluded that the company had an accrued right to the exemption under the original notification, which was not affected by the subsequent amendment. Since the company had commenced production on March 17, 1983, they were entitled to the exemption from sales tax under G.O. 606 dated April 9, 1981. The court found no merit in the State's arguments and allowed the writ petition in favor of the company, granting them the exemption from sales tax for the specified period.
The judgment emphasizes the importance of upholding accrued rights under legal notifications and highlights the significance of specific exemption criteria set by the government for industries in scheduled areas. It clarifies that subsequent amendments should not affect accrued rights unless explicitly stated. The court's decision in this case reaffirms the company's entitlement to the exemption as per the original notification, safeguarding their legitimate expectations based on the government's industrial promotion schemes in scheduled areas.
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1986 (7) TMI 390
Issues:
1. Whether writ petitions challenging assessment orders should be entertained when statutory remedies are available?
2. Whether the definition of "raw material" in the Rajasthan Sales Tax Act is constitutionally valid?
Analysis:
Issue 1:
The judgment by A.K. Mathur, J., emphasized that under taxing statutes, extraordinary jurisdiction should only be invoked in exceptional circumstances when statutory remedies are ill-suited. The petitioners, involved in dyeing and printing businesses, had challenged assessment orders by the Commercial Taxes Officer. The learned counsel for the Revenue argued that the petitioners should have first appealed the assessment orders and then approached the Sales Tax Tribunal. Citing cases like Titaghur Paper Mills Co. Ltd. v. State of Orissa and Dunlop India Ltd., it was highlighted that article 226 should not be used to bypass statutory procedures, especially in revenue matters. The judgment stressed that statutory remedies should be exhausted before approaching the High Court directly. The petitioners' arguments challenging the assessment orders were dismissed, and it was held that statutory alternative remedies should have been pursued before resorting to writ petitions.
Issue 2:
Regarding the validity of the definition of "raw material" in section 2(mm) of the Rajasthan Sales Tax Act, the petitioners contended that it was unconstitutional. However, the judgment explained that the definition encompassed articles used as ingredients in manufactured goods, including fuel and lubricants. The Court found the definition to be in line with the Act and not violative of article 14 or any other provisions. The petitioners relied on the case of Air India v. Nergesh Meerza to argue about discrimination and unreasonableness, but the Court rejected this argument, stating that no arbitrariness or unreasonableness was found in the definition. The Court upheld the constitutionality of section 2(mm) and dismissed the petitioners' challenge against it.
Special Appeals:
The special appeals were filed against the decision of A.K. Mathur, J., which dismissed the writ petitions challenging assessment orders. The appeals argued that the available statutory remedies were futile due to a previous decision by the Board of Revenue. However, the Division Bench found no merit in the appeals, stating that the appellants could rely on previous judgments before the appellate authority. The Board of Revenue's decision was deemed inapplicable to the appellants' case, leading to the dismissal of the special appeals.
In conclusion, the High Court upheld the importance of exhausting statutory remedies before seeking extraordinary jurisdiction under article 226, and affirmed the constitutionality of the definition of "raw material" in the Rajasthan Sales Tax Act. The appeals challenging the dismissal of writ petitions were also dismissed by the Division Bench.
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1986 (7) TMI 389
The petitioner, a businessman from Kerala, was transporting raw cashewnuts purchased in Andhra without paying purchase tax. The goods were seized by tax authorities in Nellore. The petitioner applied to pay the tax but authorities refused, citing provisions of the Act for confiscation. The petitioner filed a writ petition challenging the constitutionality of the Act. The High Court dismissed the petition, upholding the Act's validity and directing authorities to proceed with confiscation and penalty proceedings promptly. The judgment emphasized the importance of tax compliance and deterrence of tax evasion. (Case: Choudary v. State of Andhra Pradesh)
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1986 (7) TMI 388
The petitioner challenged a show cause notice to cancel an eligibility certificate for violating tax rules. The court ruled the petition is not maintainable as the petitioner can show cause before the authority. The assessment proceedings will determine the eligibility. The court did not quash the notice but allowed the petitioner to raise issues before the tax authority. The writ petition was dismissed without costs.
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1986 (7) TMI 387
Issues Involved:
1. Whether the purchases of soapstone lumps by the assessee from local dealers were in the course of export and thus exempt from purchase tax.
2. Whether the Board of Revenue was justified in holding that no purchase tax is leviable on Rs. 4,47,235.25 despite no privity of contract between local sellers and foreign buyers.
Issue-wise Detailed Analysis:
1. Purchases in the Course of Export:
The core issue was whether the purchases of soapstone lumps by the assessee from local dealers were in the course of export and thus exempt from purchase tax under section 5 of the Central Sales Tax Act and article 286(1)(b) of the Constitution of India. The Commercial Taxes Officer had determined that these purchases were not made in the course of export but were only intended for export. The goods were purchased much before they entered the export stream, and the exports were not a direct result of the purchase. The Board of Revenue, however, set aside this view, holding that the purchases were directly connected with the export trade and exempt from tax.
The High Court examined the legal precedents, including the Supreme Court's rulings in *State of Travancore-Cochin v. Bombay Company Ltd.*, *Ben Gorm Nilgiri Plantations Company v. Sales Tax Officer*, *Coffee Board v. Joint Commercial Tax Officer*, and *Mod. Serajuddin v. State of Orissa*. These cases clarified that for a sale to be in the course of export, the sale and export must be integrally connected, with the sale occasioning the export.
The High Court concluded that the transactions between the local dealers and the assessee were independent of the export transactions. The property in the goods passed to the assessee when the goods were loaded onto railway wagons in Rajasthan, and there was no binding agreement necessitating the export of these goods. The sale to the foreign buyer was a separate transaction, and the local purchases could have been diverted or sold within India. Therefore, these purchases were not in the course of export but were for export, making them liable to purchase tax under section 5A of the Rajasthan Sales Tax Act.
2. Privity of Contract:
The second issue was whether the Board of Revenue was justified in holding that no purchase tax is leviable on Rs. 4,47,235.25 despite no privity of contract between the local sellers and the foreign buyers. The High Court noted that the absence of privity of contract between the local sellers and the foreign buyers indicated that the local purchases were not directly linked to the export transactions. The Court referred to the Supreme Court's interpretation in *Mod. Serajuddin v. State of Orissa*, which emphasized the necessity of a direct and immediate cause for the export to be considered in the course of export.
The High Court found that the local purchases and the export sales were two distinct transactions. The local dealers were not involved in the export process, and the goods could have been sold or diverted within India. The amendment to section 5 of the Central Sales Tax Act, which deemed the last sale before export as part of the export, was not applicable retroactively to transactions before April 1, 1976.
Conclusion:
The High Court held that the Board of Revenue was not justified in exempting the purchases from purchase tax. The purchases by the assessee from local dealers were not in the course of export but were for export, making them subject to purchase tax. The order of the Board of Revenue was set aside, and the orders of the Commercial Taxes Officer and the Deputy Commissioner (Commercial Taxes) were restored. The petition was allowed with no order as to costs.
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1986 (7) TMI 386
The High Court of Madhya Pradesh held that hair belting is covered under entry No. 6 of Schedule I of the M.P. General Sales Tax Act, 1958. The Tribunal determined that hair belting is a woven fabric and meets the definition of "cloth" as per the Act. The Court's answer to the question referred was affirmative, ruling in favor of the assessee.
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1986 (7) TMI 385
Issues Involved:
1. Whether coal briquettes fall within the definition of "coal" as given in section 14(ia) of the Central Sales Tax Act.
2. Legality of the imposition of tax at the rate of 8% on coal briquettes instead of 4%.
Issue-Wise Detailed Analysis:
1. Definition of "Coal" under Section 14(ia) of the Central Sales Tax Act:
The primary issue was whether coal briquettes, manufactured from coal-dust mixed with molasses and clay, fall within the definition of "coal" as given in section 14(ia) of the Central Sales Tax Act. The court examined the definition, which includes "coal including coke in all its forms, but excluding charcoal."
The petitioner argued that coal briquettes are used similarly to coal and coke, particularly for domestic kitchen consumption. The court noted that the raw material for briquettes is coal-dust, which possesses the properties of coal and coke. The court emphasized that the briquettes are merely a transformation of coal-dust into a usable form, retaining the essential properties of coal.
Supporting this view, the court referred to the judgment in Khanna Coke Industries, which held that "mere change in shape by mechanical pressing does not change the commodity. It remains the same." The court also cited the Madras High Court's decision in Deputy Commissioner of Commercial Taxes, Madras Division v. B.R. Kuppuswami Chetty, which classified lignite briquettes as coal, reinforcing the argument that coal briquettes should be considered a form of coal.
The court concluded that coal briquettes, being a preparation from coal-dust, are covered by the definition of "coal" under section 14(ia) of the Central Sales Tax Act.
2. Legality of Imposition of Tax at 8%:
The petitioner challenged the imposition of tax at the rate of 8% on coal briquettes, arguing that it should be taxed at the rate of 4% as previously done. The court examined the instructions issued by the respondent, which led to the higher tax rate. The respondents contended that coal briquettes are a different commodity, made from coal-dust, molasses, and clay, and should be taxed separately.
However, the court found that the coal briquettes are used in the same manner as coal or coke and have the same properties. The court reiterated that the change in form does not create a new commodity. As such, coal briquettes should be taxed as coal, which falls under the special category of goods of importance in inter-State trade or commerce, subject to a lower tax rate.
The court held that the imposition of tax at the rate of 8% on coal briquettes was illegal and quashed the assessment order dated 27th June 1985. Consequently, the writ petition was allowed, and the enhanced tax demand was declared invalid.
Conclusion:
The court concluded that coal briquettes fall within the definition of "coal" under section 14(ia) of the Central Sales Tax Act. The imposition of tax at the rate of 8% was deemed illegal, and the assessment order was quashed. The writ petition was allowed, with no order as to costs due to the absence of representation from the respondents.
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1986 (7) TMI 384
Issues:
1. Interpretation of provisions under Kerala Additional Sales Tax Act, 1978 regarding inter-State sales turnover of coconut oil and cake.
2. Applicability of section 8(2A) of the Central Sales Tax Act in relation to additional sales tax under Act 20 of 1978.
3. Examination of the powers of the State Government under section 8(5) of the Central Sales Tax Act.
4. Determination of the correct sales tax law applicable to inter-State sales for the purpose of additional tax levy.
Analysis:
Issue 1: The respondents, registered firms dealing in coconut oil and cakes, contended that their inter-State turnover should be assessed at one percent of the sale price based on a notification by the Kerala Government. The High Court examined the provisions of the Kerala Additional Sales Tax Act, 1978, and the Central Sales Tax Act to determine the tax liability on inter-State sales of specific goods. The Court held that the additional tax under Act 20 of 1978 was not applicable to inter-State sales of coconut oil and cake, as per the specific notification issued by the State Government.
Issue 2: The revenue argued that section 8(2A) of the Central Sales Tax Act should be considered for levying additional sales tax under Act 20 of 1978. However, the Court rejected this argument, emphasizing that the powers conferred on the State Government under section 8(5) of the Central Sales Tax Act were crucial in determining the tax liability on inter-State sales. The Court concluded that the additional tax levy under Act 20 of 1978 was not justified based on the provisions of section 8(2A) of the Central Sales Tax Act.
Issue 3: The Court analyzed the authority of the State Government under section 8(5) of the Central Sales Tax Act, which allows for exemptions or lower tax rates on inter-State sales. It was established that the State Government had validly issued a notification reducing the tax rate on coconut oil and cake sold in inter-State trade. This power of the State Government to alter tax rates independently of other provisions was a significant factor in determining the tax liability in this case.
Issue 4: The Court clarified that the correct sales tax law applicable to inter-State sales for the purpose of additional tax levy was the Central Sales Tax Act. The provisions of the Kerala Additional Sales Tax Act, 1978, were deemed inapplicable to situations where inter-State sales were to be taxed under specific sections of the Central Sales Tax Act. The Court held that Act 20 of 1978 did not levy sales tax on the goods in question for inter-State sales, further reinforcing the inapplicability of the additional tax levy.
In conclusion, the High Court dismissed the writ appeal, affirming the judgment that the levy of additional sales tax under Act 20 of 1978 on inter-State sales taxable under section 8 of the Central Sales Tax Act was unauthorized and illegal. The Court upheld the decision that the provisions of Act 20 of 1978 were not applicable to the tax liability of inter-State sales under the Central Sales Tax Act.
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1986 (7) TMI 383
Issues Involved:
1. Constitutional validity of sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973.
2. Imposition of purchase tax under section 9 of the Haryana General Sales Tax Act.
3. Interpretation of sub-sections (1) and (3) of section 5 of the Central Sales Tax Act.
4. Alleged violation of articles 14, 19(1)(g), 286, and 300-A of the Constitution of India.
5. Repugnancy between sections 9, 24, and 27 of the Haryana Act and section 12 of the same Act and section 5(3) of the Central Act.
Detailed Analysis:
1. Constitutional Validity of Sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973:
The petitioners challenged the constitutional validity of sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973, on the grounds that they violate articles 14, 19(1)(g), 286, and 300-A of the Constitution of India. The court held that:
- The provisions of sections 9, 24, and 27 of the Haryana Act are intra vires and not repugnant to section 5(3) of the Central Sales Tax Act.
- The State Legislature was competent under article 246(3) of the Constitution to legislate regarding taxes on the purchase and sale of goods as enumerated in entry 54 of List II of the Seventh Schedule to the Constitution.
- The provisions do not infringe articles 19(1)(g) and 300-A of the Constitution.
2. Imposition of Purchase Tax Under Section 9 of the Haryana General Sales Tax Act:
The court addressed the issue of whether the purchase tax under section 9 of the Haryana Act is validly imposed on the transactions of purchase made by the petitioners. It was observed:
- Section 9 is a charging section where the taxing event is the purchase of goods by the dealers in the State of Haryana.
- The incidence of tax is on the purchase transactions, not on the sales made by the petitioners to exporters.
- The court affirmed the Full Bench decision in Des Raj Pushap Kumar Gulati v. State of Punjab [1985] 58 STC 393 (P & H), which held that the tax in question is a purchase tax and not a tax on the despatch of goods outside the State.
3. Interpretation of Sub-sections (1) and (3) of Section 5 of the Central Sales Tax Act:
The petitioners contended that the purchases made by them should be deemed to be in the course of export as envisaged by sub-section (1) of section 5 of the Central Sales Tax Act due to sub-section (3) of the same section. The court held:
- Sub-section (3) of section 5 is not an extension or proviso to sub-section (1); they are separate and independent.
- Sub-section (3) was enacted to mitigate the difficulties of small and medium manufacturers and traders who depend on experienced trade houses for exporting goods.
- The purchases made by the petitioners do not fall within the meaning of sub-section (1) of section 5 as used in sections 9 and 24 of the Haryana Act.
4. Alleged Violation of Articles 14, 19(1)(g), 286, and 300-A of the Constitution of India:
The petitioners alleged that the provisions of sections 9, 24, and 27 of the Haryana Act are discriminatory and violate articles 14, 19(1)(g), 286, and 300-A of the Constitution. The court held:
- The provisions do not violate article 14 as there is a reasonable classification between dealers who directly export goods and those who sell through export houses.
- The imposition of reasonable sales or purchase tax does not violate articles 19(1)(g) and 300-A.
- The State Legislature has the discretion to select the subject-matter of tax and the economic wisdom of a tax is within its exclusive province.
5. Repugnancy Between Sections 9, 24, and 27 of the Haryana Act and Section 12 of the Same Act and Section 5(3) of the Central Act:
The petitioners argued that sections 9 and 24 of the Haryana Act are inconsistent with section 12 of the same Act and section 5(3) of the Central Act. The court held:
- There is no conflict, inconsistency, or repugnancy between the provisions of sections 9, 24, and 27 of the Haryana Act and section 12 of the same Act and section 5(3) of the Central Act.
- The incidence of taxation under the two sections is entirely different, and the provisions of the Haryana Act are valid and within the legislative competence of the State Legislature.
Conclusion:
The court dismissed the writ petitions, affirming the ratio in Murli Manohar's case and holding that the provisions of sections 9, 24, and 27 of the Haryana General Sales Tax Act, 1973, are constitutionally valid and do not violate the provisions of the Constitution of India. The imposition of purchase tax under section 9 of the Haryana Act is valid, and the interpretation of sub-sections (1) and (3) of section 5 of the Central Sales Tax Act as separate and independent principles was upheld.
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1986 (7) TMI 382
Issues Involved:
1. Constitutional Validity of the Bombay Sales Tax (Amendment) Act, 1985.
2. Discrimination Against Edible Oil Units.
3. Retrospective Effect of the Legislation.
4. Applicability of Promissory Estoppel.
5. Reasonableness and Arbitrariness of the Legislation.
Issue-wise Detailed Analysis:
1. Constitutional Validity of the Bombay Sales Tax (Amendment) Act, 1985:
The petitioners challenged the constitutional validity of the Bombay Sales Tax (Amendment) Act, 1985, as being ultra vires of Articles 14, 19(1)(g), and 300A of the Constitution of India. The court examined the legislative competence and the validity of the Act, concluding that the legislature has the authority to enact such laws, and the Act does not violate the constitutional provisions.
2. Discrimination Against Edible Oil Units:
The petitioners argued that Section 41A of the Act, which cancels the eligibility certificates and certificates of entitlement granted to edible oil units, is discriminatory and violates Article 14 of the Constitution. The court noted that the classification of edible oil units as a separate class was based on several factors, such as their agro-based nature, easy access to raw materials, and the ability to recoup capital investment quickly. The court held that this classification was reasonable and had a rational nexus with the object sought to be achieved by the Act. Therefore, the legislation was not discriminatory.
3. Retrospective Effect of the Legislation:
The petitioners contended that the retrospective effect of the Act, which came into force from 24th May 1985, was confiscatory and violated Article 14. The court found merit in this argument, noting that the Maharashtra Ordinance No. 5 of 1985 had allowed industrial units to continue enjoying sales tax exemption until they reached 100% of their gross fixed capital investment. The court held that the retrospective withdrawal of this benefit was unreasonable and arbitrary. Consequently, the court declared that the Act would come into force prospectively from 1st August 1985, for edible oil units.
4. Applicability of Promissory Estoppel:
The petitioners argued that the doctrine of promissory estoppel should prevent the State from withdrawing the tax exemptions promised under the 1979 scheme. The court referred to the Supreme Court's decision in Union of India v. Godfrey Philips India Ltd., which stated that there can be no promissory estoppel against the legislature in the exercise of its legislative functions. The court held that the principle of promissory estoppel could not be applied to prevent the legislature from enacting the Amendment Act.
5. Reasonableness and Arbitrariness of the Legislation:
The petitioners claimed that the Act was arbitrary and unreasonable, violating Article 14. The court examined the reasons provided by the State for treating edible oil units as a separate class and found them to be relevant and reasonable. The court emphasized that the legislature has wider latitude in matters of economic regulation and taxation. It concluded that the classification made by the legislature was not arbitrary or unreasonable and had a rational nexus with the object sought to be achieved by the Act.
Conclusion:
The court partially allowed the writ petitions, holding that the retrospective effect of the Maharashtra Act No. 15 of 1985, from 24th May 1985, was invalid for edible oil units. The Act would come into force prospectively from 1st August 1985, for these units. All other challenges raised by the petitioners were rejected, and the rule was made partly absolute. No costs were awarded, and the request for leave to appeal to the Supreme Court was refused.
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1986 (7) TMI 381
Issues:
1. Assessment of sales tax under the M.P. General Sales Tax Act, 1958 for multiple assessment years.
2. Revision petitions filed against the assessment and penalty orders.
3. Allegation of unfair assessment by the petitioner.
4. Contention regarding the petitioner's status as a dealer.
5. Failure to produce relevant documents before the assessing authorities.
6. Ignoring relevant notifications in imposing tax.
7. Delay in filing the petition and lack of grounds for relief.
Analysis:
The petitioner, a contractor and supplier of materials to government departments, was assessed for sales tax under the M.P. General Sales Tax Act for the years 1967-1972. Revision petitions were filed against the assessment and penalty orders. The Deputy Commissioner affirmed the tax amount but reduced the penalty for one year and dismissed the revision petitions for subsequent years due to the petitioner's non-appearance despite adjournments. The petitioner then filed revision petitions before the Commissioner, which were successively rejected. Subsequently, recovery proceedings were initiated against the petitioner, leading to the filing of a petition under Article 226 of the Constitution.
The main contention raised by the petitioner was the alleged unfairness of the assessing authorities in passing the assessment orders. The petitioner argued that they were not a dealer but a works contractor, thus not liable to pay tax under the Act. However, the return submitted by the respondents contended that the petitioner qualified as a dealer as they supplied materials for construction purposes. The petitioner failed to produce crucial certificates supporting their claim of being a labor contractor before the authorities, and the court noted that these documents were not presented during the revision process.
Moreover, the petitioner claimed that the assessing authorities had ignored relevant notifications while imposing tax. Still, it was revealed that no such allegations were made in the petition. The court emphasized that raising new grounds during the hearing without prior mention in the petition or before the authorities was not permissible. The court highlighted the delay in filing the petition, lack of valid grounds for relief, and the petitioner's failure to appear before the Commissioner despite adjournments, leading to the dismissal of the petition with costs.
In conclusion, the court dismissed the petition, vacated interim orders, and emphasized that no relief could be granted due to the lack of substantiated claims and procedural shortcomings in the petitioner's case.
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1986 (7) TMI 380
Issues:
- Whether the Tribunal was correct in holding that the revision application was time-barred?
- Whether there was sufficient cause for the delay in filing the revision application?
Analysis:
Issue 1:
The case involved a revision application filed against an order of the Deputy Commissioner of Commercial Taxes. The Tribunal found that the revision application was prima facie barred by limitation as it was filed after the prescribed period. The applicant argued that the order date was not communicated to them, but the Tribunal held that the responsibility to ascertain the order date lies with the parties. The Tribunal concluded that the applicant had constructive knowledge of the order date and, therefore, the revision application was time-barred.
Issue 2:
The applicant contended that there was sufficient cause for the delay in filing the revision application. However, the Tribunal found no valid explanation for the delay in filing the application within the prescribed period. The applicant's argument that they were not informed of the order date was not accepted by the Tribunal. Consequently, the Tribunal refused to condone the delay and did not admit the application.
The Tribunal's findings were based on established facts, including the presence of both parties during the order date announcement and the immediate passing of the order after the hearing. The Tribunal's decision was upheld by the High Court, affirming that the revision application was indeed time-barred. The Court emphasized that the findings of fact by the Tribunal were binding and ruled in favor of the opposite party.
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1986 (7) TMI 379
Issues:
1. Validity of best judgment assessment without providing opportunity for cross-examination.
2. Refusal of Tribunal to make a reference under section 44(1) of the Act.
3. Questions of law arising from the Tribunal's order in appeals.
4. Validity of maintaining penalty based on assessment findings without separate penalty proceedings.
Detailed Analysis:
1. The judgment concerns an application under section 44(2) of the M.P. General Sales Tax Act regarding the levy of entry tax for a specific period. The assessing authority conducted a best judgment assessment based on statements alleging benami purchases without allowing the assessee to cross-examine the witnesses. The assessment order included directions for penalty proceedings. The appeals against the assessment and penalty were dismissed by the Deputy Commissioner of Sales Tax and the Tribunal, respectively.
2. The assessee contended that the best judgment assessment was invalid due to the lack of an opportunity for cross-examination. Despite the assessee's request for a reference under section 44(1) of the Act, the Tribunal refused to make a reference. Subsequently, the assessee filed an application under section 44(2) seeking a reference on various questions of law.
3. The High Court identified two key questions of law arising from the Tribunal's order in the appeals. Firstly, whether the assessing authority was obligated to provide the assessee with an opportunity for cross-examination, even if not explicitly requested by the assessee. Secondly, whether the finding on the alleged transactions was legally flawed.
4. In a separate Miscellaneous Civil Case, the issue revolved around the validity of imposing a penalty based solely on the assessment findings without initiating separate penalty proceedings and meeting the burden of proof required by the department. The High Court directed the Tribunal to make a reference on this question as well.
In conclusion, the High Court allowed the applications, directing the Tribunal to make references on the identified questions of law. No costs were awarded in either case.
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1986 (7) TMI 378
Issues:
1. Assessment of tax liability based on best judgment assessment.
2. Rejection of claimed exemptions due to lack of supporting documentation.
3. Dismissal of appeals by the Assistant Commissioner (Judicial), Sales Tax.
4. Dismissal of revisions by the Judge (Revisions), Sales Tax.
5. Barred by time - Filing of revision applications under section 11(1) of the U.P. Sales Tax Act.
6. Calculation of tax rate on turnover of inter-State sale.
Analysis:
1. The revisions under section 11(1) of the U.P. Sales Tax Act were filed by the dealer against the order of the Additional Judge (Revisions), Sales Tax, Lucknow, which dismissed the Revision Applications. The assessing officer resorted to best judgment assessment due to the assessee's failure to produce account books, resulting in an increase in the net purchase of oil-seed and net sale of self-manufactured oil. The Judge (Revisions) upheld the assessment, stating that no interference was warranted in the turnover determined by the sales tax authorities.
2. The assessee claimed exemptions on the inter-State sale of oil based on Kha and C forms, which were not produced during the assessment proceedings. The Judge (Revisions) dismissed the revisions, noting that the forms were submitted after the assessment orders were made, and no explanation was provided for the delay in producing them. The benefit of the forms was not considered in the assessment due to the timing of submission.
3. The Assistant Commissioner (Judicial), Sales Tax, dismissed the appeals filed by the assessee, affirming the best judgment assessment and the quantum fixed by the assessing authority. The appellate authority found no grounds to interfere with the assessment orders, leading to the subsequent filing of revisions by the assessee.
4. The Judge (Revisions), Sales Tax, dismissed the revisions filed by the assessee, citing the absence of produced account books as justification for the best judgment assessment. The Judge upheld the turnover determined by the sales tax authorities, concluding that no interference was necessary.
5. The respondent contended that the revision applications were time-barred, as per the limitation prescribed under the U.P. Sales Tax Act. The assessee explained the delay in filing, stating that the copies of the order were not served promptly. The Court ruled that the limitation period starts from the date of delivery of the order copy, not the date it becomes ready, and found the revision applications timely filed.
6. The tax rate on the turnover of inter-State sale was disputed, with the Sales Tax Officer applying 10% instead of the claimed 1%. The Court accepted the assessee's argument that the turnover should be taxed at 3% instead of 10% as per the relevant time frame, directing the assessing authority to revise the assessment order accordingly.
This judgment highlights the importance of timely submission of supporting documentation, adherence to prescribed limitation periods, and accurate assessment of tax liabilities based on valid grounds and relevant provisions.
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