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of <h1>High Court Invalidates Sales Tax Act 1952 for Overreach</h1> The Court declared the Bombay Sales Tax Act, 1952, ultra vires due to its broad definition of 'sale,' encompassing transactions prohibited for State ... - Issues Involved:1. Competence of the Legislature to enact the Bombay Sales Tax Act, 1952.2. Contravention of Article 14 of the Constitution.3. Contravention of Article 19(1)(g) of the Constitution.Detailed Analysis:1. Competence of the Legislature to Enact the Bombay Sales Tax Act, 1952:The petitioners challenged the competence of the Legislature to enact the Bombay Sales Tax Act, 1952, arguing that it contravened the Constitution. The Court examined the legislative powers under Articles 245 and 246 of the Constitution and Entry 54 in List II of the Seventh Schedule, which grants the State Legislature the power to tax the sale or purchase of goods. However, this power is subject to restrictions under Article 286, which prohibits the State Legislature from taxing sales or purchases taking place outside the State, in the course of import/export, or inter-State trade. The Court interpreted the explanation to Article 286(1)(a) to mean that a sale is deemed to have taken place in the State where goods are delivered for consumption, even if the property in the goods passed in another State. This interpretation aims to prevent multiple taxation on consumers. The Court found that the Act's definition of 'sale' was too broad, encompassing sales that the Constitution prohibits the State from taxing. Consequently, the Act was declared ultra vires.2. Contravention of Article 14 of the Constitution:The petitioners argued that the Act violated Article 14 by exempting dealers with turnovers below certain thresholds (Rs. 30,000 for general tax and Rs. 5,000 for special tax), creating unfair competition. The Court noted that administrative reasons might justify setting such thresholds, but it did not express a final opinion on this issue. The petitioners also challenged Sections 5(3) and 10(4), which impose tax liabilities on dealers for years even if their turnover falls below the threshold, and Section 46, which exempts the district of Amreli from certain taxes. The Court did not decide on these contentions, leaving the matter open.3. Contravention of Article 19(1)(g) of the Constitution:The petitioners contended that the Act imposed unreasonable restrictions on their right to carry on business, as guaranteed by Article 19(1)(g). They argued that the requirements for registration, licensing, and compliance with various provisions of the Act were burdensome, especially for those engaged only in import-export business. The Court did not express a final opinion on this issue but acknowledged the argument that such requirements could constitute unreasonable restrictions.Conclusion:The Bombay Sales Tax Act, 1952, was declared ultra vires due to its broad definition of 'sale,' which included transactions that the Constitution prohibits the State Legislature from taxing. The Court did not decide on the issues related to Articles 14 and 19(1)(g) but acknowledged the arguments presented. The petition was allowed, and the respondents were ordered to pay the petitioners' costs.
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