1972 (9) TMI 112 - HC - VAT and Sales Tax

Court sets aside tax link in permit form issuance, directs respondent to allow application, no costs awarded.

The court partially allowed the writ application, setting aside the portion of respondent No. 3's order that linked form issuance to unpaid taxes. ... - Issues:Constitutional validity of rule 31-C and order of respondent No. 3, Application of rule 31 and section 42 of the Act to inter-State trade, Jurisdiction of respondent No. 3 to inquire into correctness of returnAnalysis:1. Constitutional Validity of Rule 31-C and Respondent No. 3's Order:The petitioner challenged the constitutional validity of rule 31-C, arguing that it unreasonably restricts the fundamental right under Article 19(1)(g) by requiring the filing of returns and payment of taxes before issuing permit forms. The court examined the impugned rule, which mandates withholding forms if the applicant defaults in filing returns or paying taxes. The court found this requirement reasonable, as it ensures compliance with tax obligations without imposing new restrictions. Regarding respondent No. 3's order to file a return for April 1972, the court held it was beyond his power as per a previous court decision. The court ruled that respondent No. 3 had no jurisdiction to reject the return based on his opinion of unpaid taxes, as rule 31-C did not authorize such inquiries.2. Application of Rule 31 and Section 42 to Inter-State Trade:The petitioner contended that Check Post Officers were enforcing rule 31 and section 42 on inter-State trade movements, causing unjust restrictions. The court clarified that rule 31 and section 42 do not impose restrictions on inter-State sales, as confirmed in a previous Supreme Court ruling. The court advised the petitioner to seek orders from higher authorities or provide specific instances of restrictions at check posts for further examination.3. Jurisdiction of Respondent No. 3 to Inquire into Correctness of Return:The petitioner argued that respondent No. 3 exceeded his jurisdiction by questioning the correctness of the filed return and withholding forms based on unpaid taxes. The court agreed with this submission, stating that rule 31-C did not permit such investigations at the form application stage. The court deemed the latter part of respondent No. 3's order as unwarranted and incorrect.In conclusion, the court partially allowed the writ application, setting aside the portion of respondent No. 3's order that linked form issuance to unpaid taxes. As all other legal requirements of rule 31-C were met, respondent No. 3 was directed to allow the petitioner's application for permit forms. No costs were awarded in this matter.