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1991 Supreme(Ker) 320
Judges : PADMANABHAN
Dunlop - Appellant
Versus
State of Kerala - Respondent
Case No : O.P.Nos. 8438,8467 etc. of 1989
Decided On : 10/14/1991
Advocates Appeared :
M. Pathrose Mathai, Mariam Mathai, Joseph Vellapally, Joseph Markos, G. Sivarajan, S. Siri Jagan, P.A. Mohammed (T), Johnson P. John, S.A. Nagendran, Premjit Nagendran, Siby Mathew, K.C. Balagangadharan, G. Krishnakumari, Boby George, M.V. Thamban, Arikkat Vijayan Menon, P. Balachandran, K.P. Balasubramanian, Govind Bharathan, M. Vijayakumar, P.J. Joseph, K.N. Sivasankaran, Jose Joseph, V.V. Asokan, K.I. Mayankutty Methar, M.P. Abraham, K.K. Vijayaraghavan, S.K. Devi, C. Sankunny, S.V. Rajan, T. Devassia, K.B. Subhagamani, T.R. Raman Filial, T.M. Abdul Latiff, C.J. Xavier, C.S. Rajan, V. Vyasan Poti & A.P. Subbash For Petitioners Government Pleader (C.S. Vijayan Nair) For Respondents
The main legal point established in the judgment is the limitation of S.29A(2B) in enforcing past tax arrears and the necessity for appropriate steps to prevent misuse, while also emphasizing the legislative competence of the State in enacting such provisions.
Headnote:
S.29A(2B) - Kerala General Sales Tax Act - S.5, S.7(2), S.16, S.17, S.23, Rule 10, Rule 11, Rule 21, Rule 33(17), Rule 18 - The court discussed the provisions of S.29A(2B) of the Kerala General Sales Tax Act and its relation to other sections and rules of the Act. It also considered the validity of Ext.P2 circular issued by the Board of Revenue in light of the constitutional provisions. The court highlighted the key legal provisions and their interpretations, emphasizing the limitations of S.29A(2B) in enforcing past tax arrears and the necessity for appropriate steps to prevent misuse.
Fact of the Case:
The original petitions were filed under Article 226 of the Constitution of India to challenge the validity of S.29A(2B) of the Kerala General Sales Tax Act and Ext.P2 circular issued by the Board of Revenue. The petitioners argued that these provisions were unconstitutional and ultra vires, violating Articles 14, 19(1)(g), 265, and 301 to 304 of the Constitution.
Finding of the Court:
The court found that while S.29A(2B) was within the legislative competence of the State, it could be challenged for infringing Articles 14, 19(1)(g), and 301 of the Constitution due to its enforcement of past tax arrears. The court dismissed the original petitions, except for striking down the portion of S.29A(2B) authorizing detention of goods for past tax defaults, and directed the State and Board of Revenue to prevent misuse of the provisions.
Issues: The issues revolved around the constitutionality of S.29A(2B) and Ext.P2 circular under Articles 14, 19(1)(g), 265, and 301 to 304 of the Constitution, and the compatibility of these provisions with the other sections and rules of the Kerala General Sales Tax Act.
Ratio Decidendi: The court held that while S.29A(2B) was within the legislative competence of the State, its enforcement of past tax arrears could infringe constitutional provisions. The court emphasized the need for preventing misuse of the provisions and directed appropriate steps to avoid harassment.
Final Decision: The court dismissed the original petitions, except for striking down the portion of S.29A(2B) authorizing detention of goods for past tax defaults. The State and Board of Revenue were directed to take necessary steps to prevent misuse of the provisions.
Common prayer in all these original petitions filed under Article 226 of the Constitution of India is to declare S.29A(2B) of the Kerala General Sales Tax Act and Ext.P2 circular issued by Board of Revenue, ultra vires, unconstitutional, inoperative and invalid. In some of the original petitions, S.29A(2A) is also under challenge.
2. S.29A provides for the procedure for inspection of goods in transit through notified areas or any other place found necessary. Sub-S.(2) authorises the checking officer to detain the goods and permit it to be transported only on furnishing security, provided that he has reason to suspect (i) that the goods under transport are not covered by proper and genuine documents in cases where such documents are necessary. or (ii) that there was attempt to evade tax. Proviso permits him, in appropriate cases, to release the goods on execution of bonds, in cases covered by Sub-s.(2) if it is found that there is collusion for the purpose of evading tax. Sub-s(2A) authorises detention of vehicle also. Sub-s.(2B) contemplates three contingencies. They are concerning reasonable belief on the facts, (i) that tax payable for the sale or purchase of goods under transport is not paid. or (ii) that the dealer, whose goods are transported, has not paid any tax in accordance with the procedure prescribed. or (iii) that he has, at any time, defaulted payment of tax for any period. In such cases, officer can prevent the goods and he need allow the goods to be transported only after realising the tax due on the turnover of the goods transported. In case of refusal, goods shall be detained and dealt with as if it was an attempt to evade tax. Relevant portions of Ext.P2 contain executive directions to effectuate the above said provisions.
3. S.5 of the Kerala General Sales Tax Act (the Act for brevity ) contains the charging provision, which provides for levy of tax on sale or purchase of goods. S.7(2) contains provision for permission on application to pay tax in advance on monthly or other prescribed instalments and for that purpose to submit returns also. There are also other provisions like Rules 10,11 and 21 for submission of returns and payment of tax. Under rule 33(17), every wholesale dealer, while delivering goods to a retail dealer in
pursuance of a sale, where no sale bill is issued, or every person who consigns goods by any vehicle or vessel or any other means in pursuance of a sale, where a sale bill is not issued, or consigns goods through the said means from one godown to another or from one of his shops to another for the purpose of storage or sale, shall issue a delivery note in Form No.26. Ss.16 and 17 provide for final assessment and S.23 provide for payment and recovery of tax. Rule 18 prescribes for annual return and final assessment. These are said to be the only modes of assessment and collection contemplated under the Statute.
4. Argument was that S.29A(2A) and (2B) of the Act are diametrically opposite to these provisions and Ext.P2 circular is beyond the competence of the Board of Revenue, whose authorisation could be traced only under S3. S.29A(2A) and (2B) are contended to be Violative of Articles 14,19(1) (g), 265 and 301 to 304 of the Constitution of India. Ext.P2 is challenged on the following grounds, viz.
a) a statutory provision or rule cannot be amended or nullified by an executive order.
b) Statutory provisions could be enforced only in the manner provided and not otherwise.
c) there is absence of statutory provision for collection of advance tax. and
d) it is violative of Article 30 of the Constitution.
5. Decision in Commissioner of Income Tax v. Punalur Paper Mills Limited (1987 (2) K.L.T. 194), which considered the force of the circulars issued under S.119 of the Indian Income Tax Act, was brought to my notice in order to contend that similar provisions are not there in the Act authorising Board of Revenue to issue circulars like Ext.P2. But, under S.3 of the Act, Board of Revenue
