1967 (2) TMI 86 - HC - VAT and Sales Tax

Court affirms legality of composition fee under Sales Tax Act, rejects discrimination claim. Interpretative flexibility established.

KN. Krishnaswamy Versus Commercial Tax Officer, Chikmagalur and Another

KN. Krishnaswamy Versus Commercial Tax Officer, Chikmagalur and Another - [1967] 20 STC 239 (Mys) Issues:1. Impugning the levy of a composition fee under the Mysore Sales Tax Act as illegal and invalid.2. Interpretation of sections 27 and 31 of the Act regarding the imposition of fines for contraventions.3. Allegation of unconstitutional discrimination under Article 14 of the Constitution due to the obligation to issue bills based on turnover limits.Analysis:The petitioner, a registered dealer under the Mysore Sales Tax Act, challenged the imposition of a composition fee of Rs. 500 by the Commercial Tax Officer for failing to issue bills or cash memoranda as required by section 27 of the Act. The Court noted that the levy was a result of discussion and consent between the petitioner and the officer, falling under the purview of section 31 of the Act. The petitioner contended that since no punishment was possible under section 27(2), composition under section 31 was not feasible. However, the Court reasoned that the contravention of section 27(1) could include a failure to issue a bill, making it possible to calculate the fine based on what should have been included in the bill if issued, thereby upholding the validity of the composition fee.The Court addressed the argument that section 27 might lead to unconstitutional discrimination under Article 14 by imposing the obligation to issue bills only on dealers with turnovers exceeding Rs. 20,000. It clarified that the purpose of section 27 was not solely to prevent tax evasion but also to aid in the computation of tax liability, justifying the differentiation based on turnover limits. The Court held that this distinction did not amount to unconstitutional discrimination and dismissed the writ petition, imposing costs on the petitioner.In conclusion, the Court upheld the legality of the composition fee imposed on the petitioner under the Mysore Sales Tax Act, emphasizing the interpretative flexibility of the relevant sections and rejecting the claim of unconstitutional discrimination. The judgment serves as a precedent for understanding the application of fines for contraventions under tax laws and the constitutionality of differential obligations based on turnover limits.