1975 (2) TMI 95 - HC - VAT and Sales Tax

Court upholds Rule 45(3)(b) validity for sales tax, deems notices illegal

Sri Lakshminarayana General Traders Versus Commercial Tax Officer, Tenali

Sri Lakshminarayana General Traders Versus Commercial Tax Officer, Tenali - [1975] 36 STC 402 (AP) Issues Involved:1. Constitutionality and validity of Rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules.2. Jurisdiction and legality of the impugned notices issued by the assessing authority.Issue-Wise Detailed Analysis:1. Constitutionality and Validity of Rule 45(3)(b) of the Andhra Pradesh General Sales Tax Rules:The petitioners argued that Rule 45(3)(b) is unconstitutional and invalid. They contended that the rule is unreasonable, arbitrary, and discriminatory as it applies to all dealers, registered or otherwise, and contravenes Section 25 of the Andhra Pradesh General Sales Tax Act, which requires only registered dealers to maintain accounts. However, the court held that Section 39(2)(g) of the Act empowers the State Government to make rules for the issue of bills or cash memoranda and the particulars to be shown therein. The court found that Rule 45(3)(b) is valid and reasonable, providing one method of proof for the first sale of goods liable to a single point tax. The rule does not contravene Section 25, as it is applicable to all dealers, including unregistered ones, and is not discriminatory.2. Jurisdiction and Legality of the Impugned Notices:The petitioners claimed that the impugned notices issued by the assessing authority were without jurisdiction, illegal, and violative of the principles of natural justice. They argued that the mere non-production of a certificate as required by Rule 45(3)(b) should not ipso facto disentitle them from claiming exemption. The court agreed with the petitioners, stating that the onus is on the petitioners to establish that the disputed transactions are second sales of jaggery within the State. The court emphasized that the assessing authority must afford a fair and reasonable opportunity to the dealers to prove their case by any evidence, oral or documentary. The court concluded that the assessing authority's insistence on the production of bills or cash memoranda containing the certificate required under Rule 45(3)(b) was not the only mode of proof and that other methods of proving the fact that the sales in question are second sales should be considered.The court also addressed the respondent's argument that the writ petitions were premature and that the petitioners could raise their pleas before the assessing authority. The court found this argument devoid of merit, noting that the impugned notices indicated that the assessing authority had already concluded that without the production of the required documents, the turnovers must be taxed. This view was deemed illegal and erroneous.Conclusion:The court quashed the impugned notices as they were illegal and violative of the principles of natural justice. The assessing authority was directed to determine afresh whether the disputed transactions are second sales of jaggery within the State, after affording reasonable opportunity to the petitioner-dealers to establish their plea by any evidence, oral or documentary. The writ petitions were allowed, but no order as to costs was made. Advocate's fee was set at Rs. 75 in each case. Petitions allowed.