2018 (2) TMI 1658 - HC - VAT and Sales Tax

Validity of Notification dated 31.03.2003 (Annexure P/1) read into Haryana Value Added Tax Act, 2003 - jurisdiction acquired by the State - Whether the notification dated 31.03.2003 is legal and valid in the light of the fact that the VAT Act came into force on 1.4.2003 and that was the appointed day as per provisions of Section 1(c) of the VAT Act? Held that - The object of issuing the notification on 31.3.2003 is manifestly clear that the State Government wanted to appoint the authorities and to put the complete mechanism in order so as to effectively enforce the VAT Act w.e.f. 1.4.2003. There cannot be any bar on the State s power to do the ground-work for enforcement of a Statute, especially the tax statute where complete mechanism would be required to give effect to the provisions of the Statute for recovery of tax. The State of Haryana had issued notification on 31.3.2003 for appointment of Deputy Excise & Taxation Commissioner (ST) as Revisional Authority. But at any rate, the revisional authority had not exercised any power before the appointed day . Rather, challenge to the order passed by the revisional authority in the present case is dated 30.8.2011 and that is relating to the assessment year 2005-2006 i.e., much after the appointed day . The impugned notification was issued on 31.3.2003 notifying the appointment of revisional authority after the VAT Act had obtained the assent of Governor of Haryana on 26.3.2003 and it stood notified on 28.3.2003. The State was thus well within its power to issue such notification in respect of appointment of an authority to give effect to the provisions of the VAT Act and in the present case also, the power was actually exercised by the revisional authority on 30.8.2011 i.e., much beyond the appointed day. There is no illegality in issuing such notification so as to create the mechanism for effective enforcement of the tax Statue especially when the revisional authority, i.e., Deputy Excise & Taxation Commissioner (ST) had not assumed or exercised any authority or passed any order before the appointed day - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to notification dated 31.03.2003 under Haryana Value Added Tax Act, 2003 and order of Haryana Tax Tribunal dismissing preliminary issue.

Analysis:
The petitioner challenged the notification dated 31.03.2003 and jurisdiction acquired by the State under the VAT Act, contending that the Act came into operation only from 1.4.2003, making the enforcement of the notification impermissible. The petitioner argued that actions taken by the State prior to the Act's commencement were without jurisdiction. The petitioner emphasized the clarity of definitions in the VAT Act and the significance of the "appointed day" as per Section 2(1)(c) of the Act. The petitioner also highlighted that the Haryana VAT Rules, 2003 were notified after the Act came into force, emphasizing the importance of the appointed day in the statutory scheme.

The respondent-State defended the notification, stating that the appointment of the Revisional Authority was in line with the VAT Act and rules. They argued that the notification issued before the appointed day was valid, citing the General Clauses Act to support the retrospective applicability of the notification from 1.4.2003. The respondent contended that the State's actions were lawful and aimed at ensuring effective enforcement of the VAT Act.

The Court deliberated on the legality of the notification dated 31.03.2003 in light of the Act's commencement on 1.4.2003. The Court noted that the notification was issued before the appointed day but the Revisional Authority only exercised power post the appointed day. The Court emphasized the State's power to prepare for the enforcement of a statute, especially a tax statute, by appointing authorities beforehand. The Court referenced the Punjab General Clauses Act to support the State's actions and concluded that the notification was valid and essential for the effective implementation of the VAT Act.

The Court rejected the petitioner's reliance on judgments dealing with lack of jurisdiction or irregular exercise of authority, distinguishing the present case where the challenge was solely on the timing of the notification vis-a-vis the Act's commencement. The Court found no illegality in issuing the notification to establish the necessary mechanism for enforcing the tax statute, especially since the Revisional Authority had not exercised any power before the appointed day. Consequently, the Court dismissed the writ petition, ruling in favor of the respondent-State.