1998 (12) TMI 601 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the penalty and interest levied under sections 5-A and 5-C of the Himachal Pradesh Motor Spirit (Taxation of Sales) Act, 1968.
2. Applicability and validity of Rule 15 of the Himachal Pradesh Motor Spirit (Taxation of Sales) Rules, 1969, post the 1992 amendment.
3. Requirement of new rules under sections 5-A and 24(2)(aa)(c) and (h) after the 1992 amendment.

Detailed Analysis:

1. Legality of the Penalty and Interest Levied:
The petitioners challenged the penalty and interest imposed under sections 5-A and 5-C of the Act, arguing that these sections could not be invoked without appropriate rules prescribing the manner and intervals for tax payment and return submission. They contended that the absence of specific rules post-amendment rendered the penalty and interest levied as illegal, arbitrary, and without jurisdiction. The court, however, held that the provisions of section 5-A(5) and section 5-C were sufficient to impose penalties and interest for non-compliance with tax payment and return submission requirements. The court also clarified that the penalty under section 5-A(5) is distinct from the general penalty under section 9 of the Act, and the non-compliance with Rule 16 was irrelevant in this context.

2. Applicability and Validity of Rule 15 Post-Amendment:
The petitioners argued that Rule 15, which prescribed the procedure for filing returns and depositing tax, became inapplicable after the deletion of the term "retail dealer" from the Act in 1992. The court rejected this argument, stating that Rule 15 continued to be in force by virtue of section 23 of the Himachal Pradesh General Clauses Act, 1969, which is in pari materia with section 24 of the Central General Clauses Act, 1897. The court held that Rule 15 was not rendered redundant by the amendment and continued to apply to all dealers, not just retail dealers. The court emphasized that the rules already in existence served the purpose of the newly enacted/amended provisions and did not require fresh rules to be made.

3. Requirement of New Rules Under Sections 5-A and 24(2)(aa)(c) and (h):
The petitioners contended that new rules should have been made under sections 5-A and 24(2)(aa)(c) and (h) after the 1992 amendment. The court disagreed, stating that the existing rules were sufficient to enforce the new provisions. The court highlighted that the memorandum regarding delegated legislation appended to the Bill was merely explanatory and did not mandate the creation of new rules. The court concluded that the omission to prescribe new rules did not impede the enforcement of the amended provisions.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the penalties and interest levied under sections 5-A and 5-C of the Act. The court directed the taxing authorities to review and reconsider the quantum of penalty and interest in light of the principles laid down in the judgment and to withhold any recovery of amounts due until revised orders were communicated to the petitioners. The court affirmed that Rule 15 continued to apply post-amendment and that new rules were not necessary for the enforcement of the amended provisions.