1986 (2) TMI 331 - HC - VAT and Sales Tax

State's Entry Tax Upheld; Retrospective Imposition Valid; Uniform Rates Constitutional

The Court upheld the State's power to levy entry tax, finding no conflict with Union powers. Delegation of retrospective notification authority was deemed ... - Issues Involved: 1. Legislative Competence and Constitutional Validity2. Excessive Delegation and Retrospective Notifications3. Supersession of Notifications4. Omission of Items from the Schedule5. Article 14 and Uniform Rates of Tax6. Retrospective Operation of Exemption Notifications7. Presidential Assent and Article 304(b)8. Retrospective Imposition of Tax and Article 19(1)(g)Summary:Legislative Competence and Constitutional Validity:The petitioners argued that the State Legislature lacked competence to levy entry tax on raw materials and products of industries controlled by the Union. The Court held that the State's taxing power under entry 52, List II, was not overborne by the Union power under entry 52, List I. The Court concluded that there were no irreconcilably overlapping areas between the legislative fields of entry 52, List I, and entry 52, List II.Excessive Delegation and Retrospective Notifications:The petitioners contended that section 3(1) of the Act, which allowed the State Government to issue notifications retrospectively, constituted excessive delegation. The Court held that the delegation was within permissible limits and that the power to issue notifications retrospectively did not constitute an abdication of essential legislative functions.Supersession of Notifications:The petitioners argued that the supersession of notifications dated 31st March 1983, and Notifications Nos. I and II dated 13th November 1984, rendered them non-operative. The Court held that the superseded notifications continued to support the tax liability incurred prior to their supersession, applying the principle from the Titaghur Paper Mills case.Omission of Items from the Schedule:The petitioners contended that the omission of items from the schedule by Act 38 of 1984 and Ordinance 15 of 1984 should be treated as a repeal, making section 6 of the General Clauses Act inapplicable. The Court held that the liability to tax incurred prior to the omission could be enforced even after the date of omission, as the process of 'omission' was, in effect, an amendment of the law.Article 14 and Uniform Rates of Tax:The petitioners argued that the notifications imposing uniform rates of tax across different local areas violated Article 14. The Court held that the legislature has wide latitude in taxation matters and that the petitioners failed to establish how the uniform rates resulted in hostile unequal treatment.Retrospective Operation of Exemption Notifications:The petitioners contended that the exemption notifications issued under explanation II of item 18 should be retrospective. The Court held that the notifications were not necessary to effectuate the power and that the principle from S.A.L. Narayan Row's case was inapplicable.Presidential Assent and Article 304(b):The petitioners argued that the amending Act 38 of 1984 was invalid for not being introduced with the prior sanction of the President. The Court held that the subsequent assent of the President cured the initial non-compliance, as per Article 255, and the Act was valid.Retrospective Imposition of Tax and Article 19(1)(g):The petitioners contended that the retrospective imposition of tax on new items by the amending Act 38 of 1984 violated Article 19(1)(g). The Court held that the legislative process was complete with the Presidential assent and that the period between the passing of the legislation and the assent did not constitute retroactivity that would violate Article 19(1)(g).Conclusion:The petitions were dismissed, and the Court upheld the validity of the impugned provisions and notifications, except for certain provisions of the amending Act 13 of 1982, which were held unenforceable for want of compliance with Article 304(b).