1962 (7) TMI 30 - HC - VAT and Sales Tax

Validity of Rule 25 under Mysore Sales Tax Act, 1957 upheld, legislative power delegation valid

The court upheld the validity of rule 25 under the Mysore Sales Tax Act, 1957, dismissing the challenges raised against it. The court found that the ... - Issues:Validity of rule 25 of the rules framed under the Mysore Sales Tax Act, 1957 challenged on various grounds, including legislative power delegation, excessive levy, lack of right of appeal, discrimination, and retrospective application.Analysis:The first contention challenges the imposition of tax under rule 25(4) due to legislative power delegation without proper guidance. The court clarified that the levy under section 6, read with rule 25, though labeled as a fee, is essentially a tax. The Legislature has set the maximum tax that can be levied, ensuring no abdication of legislative power. The court cited a previous case to support this interpretation, emphasizing that the delegation is valid as the maximum fee is fixed by the Legislature.The second contention argues that the levy prescribed under rule 25 is excessively high, rendering it invalid. The court ruled that the imposition of tax cannot be deemed invalid solely based on its high incidence. Additionally, the absence of a right of appeal against the tax does not violate any fundamental rights, as the right of appeal must be provided under a statute.The third contention raises concerns about discrimination, stating that dealers paying sales tax can pass on the burden to customers, unlike those paying license fees. The court found this argument lacking merit, highlighting that the two sets of dealers are not identically placed, justifying the differentiation based on classifications.The final contention challenges the retrospective application of rule 25 from 1st November 1957, arguing against its application to turnover from 1st October 1957. The court dismissed this argument, noting that not applying the rule would result in higher sales tax liability for the assessees. The retrospective effect of the rule was upheld for this reason.In conclusion, the court dismissed the petitions, upholding the validity of rule 25 under the Mysore Sales Tax Act, 1957. The court emphasized that the delegation of legislative power was valid, the levy was not invalidated by its high incidence, lack of a right of appeal did not violate rights, differentiation between dealers was justified, and the retrospective application of the rule was deemed appropriate.