State tax machinery can validly support central sales tax penalty and collection under incorporated provisions.

A central taxing statute may use State sales tax machinery for assessment, collection, enforcement, and penalty when the State law expressly authorises those powers. On that basis, penalty for delayed return and default in payment could be imposed on a registered dealer under the Central Sales Tax Act through the Bengal sales tax law. The incorporation of State provisions by reference was also upheld as a valid legislative technique, and section 9 was held within Parliament's competence under the relevant Union entries. The constitutional challenge therefore failed, and the levy and collection mechanism under the Central Sales Tax Act was sustained.

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Issues: (i) Whether penalty could be imposed on a registered dealer for delayed filing of return and default in payment under the Central Sales Tax Act by applying the State sales tax law; (ii) whether section 9 of the Central Sales Tax Act was ultra vires the legislative entries in the Seventh Schedule to the Constitution of India.

Issue (i): Whether penalty could be imposed on a registered dealer for delayed filing of return and default in payment under the Central Sales Tax Act by applying the State sales tax law.

Analysis: Section 9, read with section 9(3) and section 10A of the Central Sales Tax Act, 1956, was treated as making provision for assessment, reassessment, collection, and enforcement of payment of tax, including penalty, by authorising the sales tax authorities in the State to exercise powers under the general sales tax law of that State. The West Bengal sales tax law expressly empowered the authorities to impose penalty for non-submission or late submission of return and for default in payment of assessed tax. On that basis, the State machinery could be used for levy of penalty under the Central Act.

Conclusion: Penalty could validly be imposed on the registered dealer under section 9 of the Central Sales Tax Act, 1956, read with the Bengal Finance (Sales Tax) Act.

Issue (ii): Whether section 9 of the Central Sales Tax Act was ultra vires the legislative entries in the Seventh Schedule to the Constitution of India.

Analysis: The Central Sales Tax Act was held to fall within Parliament's competence under Entry 92A of List I, with offences covered by Entry 93 of List I. The incorporation of State sales tax provisions by reference was treated as a recognised legislative technique, by which the relevant State provisions became part of the Central Act for the limited purposes of assessment and collection. This did not amount to Parliament legislating on a State subject merely because the machinery of the State law was adopted.

Conclusion: Section 9 of the Central Sales Tax Act, 1956 was not ultra vires the Constitution.

Final Conclusion: The challenge to the notice and proposed penalty failed, and the statutory mechanism for levy and collection under the Central Sales Tax Act, 1956 was upheld.

Ratio Decidendi: When a central taxing statute incorporates State law machinery by reference for assessment, collection, and penalty, the incorporated provisions operate as part of the Central Act and do not by that reason become unconstitutional or beyond parliamentary competence.

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