1991 (5) TMI 244 - HC - VAT and Sales Tax

Court affirms constitutionality of tax law, orders reassessment of excessive penalties.

PD. Sudhi Versus Intelligence Officer, Agricultural Income-tax and Sales Tax, Mattancherry and Others

The court upheld the constitutionality of Section 45A of the Kerala General Sales Tax Act, 1963, finding that it does not confer unbridled power and ... - Issues Involved:1. Constitutionality of Section 45A of the Kerala General Sales Tax Act, 1963.2. Alleged arbitrary and mechanical imposition of maximum penalty by authorities.Summary:1. Constitutionality of Section 45A of the Kerala General Sales Tax Act, 1963:The main plea raised is that section 45A of the Act is ultra vires and unconstitutional, as it vests uncanalised and unbridled powers in the officers to impose the penalty, which is violative of article 14 of the Constitution of India. The court examined the language of section 45A and various judicial precedents to determine if the section imposes an absolute liability. It was concluded that the section does not impose an absolute liability and contains an inbuilt element of mens rea or mental element, as indicated by the words 'evasion' or 'sought to be evaded'. The court emphasized that the statutory authority must act bona fide, reasonably, and fairly within the frontiers limited by the statute. The discretion vested in the officer under section 45A is not unexaminable or unfettered. The court found that the section provides adequate safeguards, including the requirement for the authority to be 'satisfied' based on material evidence before initiating proceedings. The court held that section 45A does not confer unbridled or uncanalised power to impose a penalty and is not violative of article 14.2. Alleged arbitrary and mechanical imposition of maximum penalty by authorities:In O.P. Nos. 7361 of 1990 and 6316 of 1990, the petitioners contended that the authorities levied the maximum penalty arbitrarily and mechanically, without independent evaluation and appraisal. The court accepted this plea, referencing a Bench decision in St. Michael's Oil Mills v. State of Kerala, which stated that the quantum of penalty should depend upon the gravity of the offence. The court quashed the penalty orders in these cases on the grounds that the authorities had not exercised the judicial discretion vested in them according to law, and directed the concerned Intelligence Officer to reappraise the matter and pass fresh orders in accordance with law.Conclusion:Writ Appeal No. 108 of 1990 is dismissed. O.P. Nos. 7361 of 1990 and 6316 of 1990 are allowed to the limited extent of directing the authorities to reappraise the penalty imposition.Writ appeal dismissed. Writ petitions partly allowed.