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Gujarat High Court
Judgename :G.T.NANAVATI, S.D.Shah
ASHAPURA MINERAL COMPANY - Appellant
Versus
STATE - Respondent
S.C.A. 5796 of 1992
Decided On : 01/20/1992
Gujarat Sales Tax Act, 1969 – Section 47 (4a) – Constitution of India Article 14, 19 (1) (8) and 300a – Jammu Kashmir General Sales-tax Act, 1962 – Section 8 – TN General Sales Tax Act, 1959 – Petitions who are assesses under the Gujarat Sales Tax Act, 1969 are challenging the constitutional validity of S. 47 (4a) of the act. In special Civil Application no. 5283/88 the validity of S. 45 (5) is also questioned petitioners are all registered dealers under the act they did not pay the tax due within the prescribed time and / or within the time specified in the notices issued under section 47 (4) of the act. As a result thereof they are called upon to pay interest on the amounts of tax not so paid or on any less amount thereof remaining unpaid was challenged by some petitioners by way of appeals, but the same were dismissed petitioner question the validity of S. 47 (4a) which provides for payment of interest on amount of tax not paid at the rate of 24% per annum and also the assessment orders or orders passed in appeals in so far as they relate to levy of interest. According to the petitioners, the said provision is ultra vires the legislative powers of the state legislature is also challenged on the same grounds the hearing of these petitions, learned advocated appearing for the petitioners did not press their contention that section 47 (4a) is ultra vires articles 19 (1) (8) and 300a. no separate submissions were made to show how section 45 (5) is violative of any provision of the constitution What the court is required to consider and decide is a) whether it was beyond the competence of the state Legislature to enact S. 47 (47a); h whether S. 47 (4a) is ultra vires art. 14 and 6 what is the correct interpretation of S. 47 (4a) as regards the date from which or the period for which interest becomes payable –Held, Petitioners contention is that only that amount of tax which is shown payable under the declarations, or returns, become due and payable at the time of filing of the declarations or returns Under the act tax is payable on the sale or purchase of goods liable to be taxed subject to other conditions specified in the Act. In the case of sales-tax, taxable even is the sale of goods. Therefore, subject to other conditions being fulfilled sales-tax becomes due and payable as soon as the sale takes place. Merely because the stage of payment or collection of tax is postponed, it cannot follow therefrom that the sales-tax becomes due and payable only at that stage. It would only mean that the sales-tax has to be paid at that stage and not before. Section 47 provides for payment of tax which has already become due and payable. Reading of this section alongwith Rule 37a makes it clear that the tax which has become due, has to be paid alongwith the declarations or returns which are required to be filed within the prescribed time. The provision for filing a revised declaration or return is for the benefit of the dealer. Therefore, this provision, which provides for the stage of payment of tax due, cannot be interpreted to mean that the whole amount of tax does not become due at the stage when the sale takes place. In Kedarnath Jute Mfg. Co. Ltd. V. Commissioner of Income-tax (1971) 28 STC 672, the Supreme Court has held that the moment a dealer made either purchases or sales which are subject to sales-tax, the obligation to pay the tax arose. Although that liability could not be enforced till qualification was effected by assessment proceedings, the liability for payment of tax was independent of the assessment. The contention based upon the words of sub-Sec. (2) OF section 47, namely, the whole amount of tax due from him according to such declarations or returns is thus not tenable –Ordered Accordingly.
( 1 ) ). In these petitions, the petitioners, who are assesses under the Gujarat Sales Tax Act, 1969 (hereinafter referred to as the act) are challenging the constitutional validity of S. 47 (4a) of the act. In special Civil Application no. 5283/88 the validity of S. 45 (5) is also questioned.
( 2 ) ). The petitioners are all registered dealers under the act. They did not pay the tax due within the prescribed time and / or within the time specified in the notices issued under section 47 (4) of the act. As a result thereof they are called upon to pay interest on the amounts of tax not so paid or on any less amount thereof remaining unpaid. That was challenged by some petitioners by way of appeals, but the same were dismissed. The petitioner question the validity of S. 47 (4a) which provides for payment of interest on amount of tax not paid at the rate of 24% per annum and also the assessment orders or orders passed in appeals in so far as they relate to levy of interest. According to the petitioners, the said provision is ultra vires the legislative powers of the state legislature and also Art. 14, 19 (1) (8) and 300a of the constitution. Section 45 (5) is also challenged on the same grounds.
( 3 ) ). At the hearing of these petitions, learned advocated appearing for the petitioners did not press their contention that section 47 (4a) is ultra vires articles 19 (1) (8) and 300a. no separate submissions were made to show how section 45 (5) is violative of any provision of the constitution. . . What the court is required to consider and decide is a) whether it was beyond the competence of the state Legislature to enact S. 47 (47a); h whether S. 47 (4a) is ultra vires art. 14 and 6 what is the correct interpretation of S. 47 (4a) as regards the date from which or the period for which interest becomes payable.
( 4 ) ). Section 47 (4a) is challenged on the ground that it has been enacted by the legislature in colourable exercise of its legislative powers the learned advocated appearing for the petitioners stated that they were not challenging the legislative competence of the state legislature to enact this legislation but were challenging the said provision only on the ground that it is really a provision imposing a penalty and the act has not laid down any guidelines for exercise of that power by the sale tax authorities or for holding an inquiry. Competence of the legislature to enact such a provision is not challenged in view of the settled legal position. In Re. Abdul Quador and co. v. Sales Tax officer, AIR 1964 SC 922, the supreme court has held that the heads of legislation in the various lists in the seventh schedule of the constitution should be interpreted widely so as to take in all matter which are of a character incidental to the topics mentioned therein. It has also held that all powers necessary for the levy and collection of the tax concerned and for seeing that the tax is not evaded are comprised within the ambit of the legislative entry as ancillary or incidental. Payment of interest in case of default in payment of tax is a means of compelling an assessee to pay tax due by prescribed date. It is one of the recognized methods for collection of revenue. Therefore, the power to provide for payment of interest for delayed payment of tax has to be regarded as incidental and ancillary to the power to make provision for levy and collection of tax. Therefore, it will have to be held that the state legislature was within its competence in enacting section 47 (4a ).
( 5 ) ). Validity of S. 47 (4a) is challenged on the ground that the state legislature in enacting the same has acted in colourable exercise of its power. The contention raised by the learned advocates for the petitioners is that S. 47 (4a), though purports to be a provision for levy of interest, in reality and substance is a provision-imposing penalty.
( 6 ) ). As we will have an occasion to refer to other parts of section 47 also,
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