Tax evasion detention provisions upheld as within legislative competence and consistent with the sales tax scheme.

The amended sub-sections (7) and (8) of section 14-B of the Punjab General Sales Tax Act, 1948 were upheld as within the State Legislature's competence. The provision was treated as a measure to prevent tax evasion, operating only where there was a recorded finding of an attempt to evade tax and the goods were meant for trade without proper and genuine documents. Such detention and penalty were held to be incidental and ancillary to the power to levy sales tax under entry 54 of List II, and not repugnant to the scheme of the Act, because they did not require recovery of tax before the taxable event. The vires challenge therefore failed.

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Issues: Whether sub-sections (7) and (8) of section 14-B of the Punjab General Sales Tax Act, 1948, as amended, were beyond the legislative competence of the State Legislature and whether the provision for detention and penalty was repugnant to the scheme of the Act.

Analysis: The amended provision no longer rested on the earlier assumption that all goods in transit were taxable sales within the State. Its operation was conditioned on a recorded finding that there had been an attempt to evade tax due under the Act, and the goods liable to detention were identified as goods meant for trade and not covered by proper and genuine documents. Prevention of evasion of sales tax is incidental or ancillary to the power to levy sales tax and falls within entry 54 of List II of Schedule VII of the Constitution of India. The provision also did not offend the general scheme of the Act, because it did not direct recovery of tax before the taxable event; it authorised penalty upon proof of an attempt to evade tax, calculated with reference to the value of the goods.

Conclusion: The amended sub-sections (7) and (8) were held to be within legislative competence and not repugnant to the Act; the challenge to their vires failed.

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