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2010 Supreme(Cal) 1492
High Court Of Calcutta
K.J. Sengupta, Kanchan Chakraborty, JJ.
Howrah Tax Payers' Association : Appellant
Versus
The Government Of West Bengal : Respondent
Constitutional Writ Jurisdiction [Appellate Side] W.P.T.T. No. 14 of 2009
Decided On : Dec 24,2010
K.P. Ghosh, Subir Krishna Mukherjee, Prasenjit Bosh, Soma Roy Chowdhury
The imposition of a 'late fee' for filing returns beyond the prescribed deadline under Section 32(2) of the West Bengal Value Added Tax Act, 2003, as amended, is constitutional and falls within the state legislature's authority under Entry 66 of List II of the Seventh Schedule of the Constitution of India, as it is a 'fee' rather than a 'tax' and is supported by the element of quid pro quo.
Headnote:
LATE FEE - WEST BENGAL VALUE ADDED TAX ACT - SECTION 32(2) - CONSTITUTIONALITY: The West Bengal Value Added Tax Act's imposition of a 'late fee' for filing returns beyond the prescribed deadline is constitutional and falls within the state legislature's authority under Entry 66 of List II of the Seventh Schedule of the Constitution of India.
Fact of the Case:
The petitioners, representing the Howrah Tax Payers Association, challenged the constitutional validity of the 'late fee' provision in Section 32(2) of the West Bengal Value Added Tax Act, 2003, as amended by the West Bengal Finance Acts of 2007 and 2008. They argued that the fee was beyond the state legislature's power and amounted to 'triple jeopardy.'
Finding of the Court:
The court held that the 'late fee' provision was constitutional and fell within the state legislature's competence under Entry 66 of List II of the Seventh Schedule of the Constitution of India. It distinguished between 'tax' and 'fee,' finding that the fee was a special service provided to dealers who failed to file returns on time and that there was an element of quid pro quo in its imposition.
Issues: 1. Whether the 'late fee' provision in Section 32(2) of the West Bengal Value Added Tax Act, 2003, as amended, is ultra vires the Constitution of India? 2. Whether the imposition of the 'late fee' amounts to 'triple jeopardy'?
Ratio Decidendi: 1. The court held that the 'late fee' provision was not a 'tax' but a 'fee' because it was not compulsory and dealers had the option to choose whether to pay the fee and regularize their filing or face penal consequences under other provisions of the Act. 2. The court found that the fee was a special service provided to dealers who failed to file returns on time, as it allowed them to avoid penal consequences and regularize their filing. 3. The court held that the fee was within the state legislature's competence under Entry 66 of List II of the Seventh Schedule of the Constitution of India, which empowers the state to levy fees in respect of any of the matters enumerated in the State List.
Final Decision: The court dismissed the petition, upholding the constitutional validity of the 'late fee' provision in Section 32(2) of the West Bengal Value Added Tax Act, 2003, as amended.
Kanchan Chakraborty, J.
1. THE Judgment of the Court was delivered by This application is at the instance of Howrah Tax Payers Association and six (6) others and is directed against the judgment dated 30.3.2009 passed by the West Bengal Taxation Tribunal (hereinafter referred to as Tribunal) in R.N. 266 of 2008.
2. IN this application the Writ petitioners have questioned the constitutional validity of the provisions for imposition of 'late fee' for filing of returns as contained in sub-section (2) of section 32 of the West Bengal Value Added Tax Act, 2003. (hereinafter referred to VAT in short)
The facts leading to this application are stated below, in short - The State Legislature by the West Bengal Finance Act, 2007 amended the provisions of section 32(2) of the VAT with effect from April 1, 2007 affording opportunity to the dealers who failed to submit return within the prescribed time to furnish return upon payment of 'penalty' as prescribed. Further amendment was made by the West Bengal Finance Act, 2008 (Act 1 of 2008) to section 32(2) providing payment of 'late fee' in place of 'penalty' with retrospective effect from April 1, 2007, i.e., the date when the first amendment of 2007 came into operation. The writ petitioners filed three (3) applications before the learned Tribunal challenging the consitutional validity of earlier amendment of section 32(2) of the VAT Act. While the matter was pending, the second amendment was introduced as aforesaid. The learned Tribunal disposed of those three (3) petitions in R.N. 406 of 2006 on 4.4.2008 observing that the questions raised before it by the petitioners became academic and were not required to be decided. The petitioners thereafter filed three (3) new applications as stated above on which the impugned judgment was passed. The learned Tribunal did not find any merit in the contentions raised on behalf of the petitioners and accordingly, dismissed those applications. The writ petitioners herein challenged the impugned judgment passed by the learned Tribunal on 30.3.2009 in R.N. 267 of 2008 on the grounds amongst other that the learned Tribunal was not at all justified in dismissing the petitions filed by the petitioners.
3. MR. Ghosh, the learned counsel appearing for the petitioners contended that the amendment in question by the Finance Act 2008 ultra vires. Constitution of India, and is unreasonable and has no legal sanctity because it is beyond the power of the State Legislature, in view of Article 246(3) of the Constitution of India read with list -II of the Vllth schedule. Main thrust of argument of MR. Ghosh is that the learned Tribunal failed to distinguish Tax' and 'Fee'. He contended that section 32(2) is a 'machinery provision' which relates to furnishing of return by a dealer and not a 'charging provision' without which no amount can be collected from a dealer. He further contended that learned Tribunal erred in coming to a conclusion that the amended section 32(2) has conferred a special beneficial right on the dealer to submit return even after the prescribed dates and for providing such special beneficial right, the State Legislature has imposed 'late fee'. In view of MR. Ghosh, imposition of 'late fee' amounts to triple jeopardy in as much as there already exists such a right to file return either on payment of interest or penalty since introduction of the VAT Act, 2003. MR. Ghosh also contended that the learned Tribunal was wrong and not justified in holding that the State Legislature has the legislative competency under Entry-66 of list II to levy the impugned 'late fee' in as much as the said Entry-66 provides imposition of fees in respect of any of the matters in list II but not Tax" in disguise of "fees".
4. MR. Prosenjit Basu, the learned counsel for the respondent contended that by introducing 'late fee' in furnishing return under section 32(2) of the VAT Act beyond the due date, a dealer is practically benefited and/or saved from any penal conse
