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of <h1>Court upholds constitutionality of Karnataka Taxation Laws, rejects trade restrictions, allows penalty appeals.</h1> <h3>Supertronix Versus State of Karnataka and another (and other cases)</h3> The court upheld the validity of Section 28-A(2) and 28-A(4) of the Karnataka Taxation Laws (Third Amendment) Act, 1996, dismissing petitions alleging ... - Issues Involved:1. Validity of Section 28-A(2) and 28-A(4) of the Karnataka Taxation Laws (Third Amendment) Act, 1996.2. Alleged violation of Articles 14, 19(1)(g), 301, and 304(b) of the Constitution of India.3. Applicability of Section 28-A(2) to inter-State trade.4. Requirement of Presidential assent under Article 304(b) of the Constitution.5. Reasonableness and constitutionality of the restrictions imposed by Section 28-A.Detailed Analysis:1. Validity of Section 28-A(2) and 28-A(4):The court examined the provisions of Section 28-A(2) and 28-A(4) of the Karnataka Taxation Laws (Third Amendment) Act, 1996. Section 28-A(2) mandates the owner or person-in-charge of a goods vehicle to carry specific documents and produce them at check-posts, while Section 28-A(4) allows for the imposition of penalties for non-compliance. The court upheld these provisions, emphasizing that they are designed to prevent tax evasion and ensure the legitimacy of the transactions.2. Alleged Violation of Constitutional Articles:The petitioners argued that the provisions violated Articles 14, 19(1)(g), 301, and 304(b) of the Constitution. The court found no merit in these arguments. It noted that the provisions do not impose unreasonable restrictions on the freedom of trade and commerce. The requirement to carry and produce documents at check-posts was deemed necessary to prevent tax evasion and ensure compliance with tax laws.3. Applicability to Inter-State Trade:The petitioners contended that Section 28-A(2) should only apply to intra-State sales and not to inter-State trade. The court rejected this argument, citing precedents that upheld the state's power to regulate inter-State trade to prevent tax evasion. It was noted that the provisions are not intended to tax inter-State transactions but to ensure that goods moving through the state are properly documented.4. Presidential Assent Under Article 304(b):The petitioners argued that the amendment required Presidential assent under Article 304(b) of the Constitution. The court disagreed, stating that the provisions are regulatory measures aimed at preventing tax evasion and do not impose any restrictions that would necessitate Presidential assent. The court cited several judgments to support this view, including those from the Supreme Court and other High Courts.5. Reasonableness and Constitutionality of Restrictions:The court addressed the reasonableness of the restrictions imposed by Section 28-A. It held that the requirement to carry and produce documents at check-posts is a reasonable restriction in the public interest. The court emphasized that these measures are necessary to prevent tax evasion and ensure compliance with tax laws. The provisions were found to be ancillary and incidental to the state's power to levy taxes.Conclusion:The court dismissed the petitions, upholding the validity of Section 28-A(2) and 28-A(4) of the Karnataka Taxation Laws (Third Amendment) Act, 1996. It found that the provisions do not violate Articles 14, 19(1)(g), 301, or 304(b) of the Constitution. The court also directed that appeals against the levy of penalties could be filed within three weeks without objections regarding limitation.
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