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TMI Blog2004 (9) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents by virtue of the provision of section 9(2) of the CST Act, all the provisions of the KGST Act in regard to assessment and recovery of penal interest, etc., will automatically apply. In this case, the petitioner has challenged exhibits P2, P4 and P5 assessment proceedings under the CST Act to the extent of the interest levied therein by invoking the provision of section 23(3) of the KGST Act. The petitioner has also sought for a declaration that section 9(2), 9(2A) and 9(2B) of the CST Act and the validation clause enacted by the Union Finance Act, 2000 as unconstitutional and invalid. There is a further prayer for a declaration that the validation clause introduced by the Union Finance Act, 2000 is valid only prospectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union Parliament has delegated the essential powers to the State Government which is not valid in law. Counsel submits that the Constitution Bench in the said decision had observed that conferment of such an uncontrolled power upon the State Legislatures could, if it was really intended, be said to travel beyond the province of permissible delegated legislation on the principles laid down long ago by the Supreme Court itself in In Re Delhi Laws Act, 1912 case [1951] SCR 747; AIR 1951 SC 332, etc. Counsel on the basis of the said decision submits that, an abdication of an essential legislative powers to the State Government in the matter of levy of interest on delayed payment of CST was beyond its legislative competence. Counsel also submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no application. I have considered the rival submissions. So far as the legislative competence and the validity of the provision of section 9(2), 9(2A) and 9(2B) of the CST Act are concerned the very question is concluded by the decision of the Supreme Court in Shiv Dutt Rai Fateh Chand [1983] 53 STC 289; [1983] 3 SCC 529, where the Supreme Court after due consideration of the relevant matters including the decision of the Constitution Bench of the Supreme Court in Khemka's case [1975] 35 STC 571 upheld the validity of the aforesaid provision and even the validation Act has been upheld. In the said case the following contentions were raised. 1.. that the introduction of sub-section (2A) in section 9 of the Act does not have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently the judgment delivered in that case could not stand in the way of realisation of penalties in accordance with validating provisions of section 9(2) of the Amending Act. It was held that subsection (2A) of section 9 of the Act and section 9 of the Amending Act are adequate enough to assess and realise penalty with effect from January 5, 1957 as contemplated therein. The second contention was rejected by holding that sub-section (2A) of section 9 of the Act does not suffer from the vice of excessive delegation merely because the provisions relating to penalty in the general sales tax laws of the states are adopted for purpose of the Act. The third contention was considered in para 24(2) and the same was rejected. It was observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h decision in Khemka's case [1975] 35 STC 571 (SC) it was noted that section 9(2A) as amended makes no reference to interest. It was held that there is no substantive provision in the Central Act regarding payment of interest on CST and hence in view of the decision in Khemka's case [1975] 35 STC 571 (SC) the demand of interest at 24 per cent per annum on delayed payment of CST under the provisions of the State Act must be held to be bad in law. This decision was rendered on July 16, 1997. Section 9(2) and 9(2A) were amended and a new section 9(2B) was added by the Finance Act, 2000 (Act 10 of 2000). Section 9(2A) amended with effect from September 7, 1976 and the other provision with effect from April 1, 2000. In section 9(2) en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent interest under section 23(3) of the Act in respect of arrears of sales tax due as per the KGST Act it cannot be said that demand of penal interest at the same rate in respect of arrears of CST itself is arbitrary. Each state is entitled to fix the rate of interest and levy of interest by one State cannot be considered to be arbitrary with reference to the rate of interest provided in another State enactment. On the whole there is no merits in this writ petition, it is, accordingly, dismissed. However, if the petitioner has got any case regarding the calculation of interest made by the assessing authority, certainly the petitioner is entitled to point out the same before the authority and the concerned authority will consider the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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