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Issues: (i) whether rule 8(4)(c)(ii) of the Delhi Sales Tax Rules, 1975 was ultra vires the Delhi Sales Tax Act, 1975 and beyond the delegated rule-making power; and (ii) whether the rule imposed an unreasonable restriction on the right to carry on trade under Article 19(1)(g) of the Constitution of India.
Issue (i): whether rule 8(4)(c)(ii) of the Delhi Sales Tax Rules, 1975 was ultra vires the Delhi Sales Tax Act, 1975 and beyond the delegated rule-making power.
Analysis: The rule was examined in the light of the amended Section 71(2)(b) of the Delhi Sales Tax Act, 1975, which expressly empowered the authority to prescribe the particulars, form, source, manner and conditions for obtaining declaration forms and the manner and time for furnishing them. In that statutory setting, the earlier defect noted in the prior challenge was treated as cured. The refusal to issue declaration forms to a dealer in tax default was held to be within the delegated framework and consistent with the scheme of the Act, whose object is collection of tax and regulated availability of declaration forms.
Conclusion: The rule was held to be intra vires and valid.
Issue (ii): whether the rule imposed an unreasonable restriction on the right to carry on trade under Article 19(1)(g) of the Constitution of India.
Analysis: The denial of declaration forms to a dealer in arrears was not treated as a prohibition on trade, but as a condition linked to tax compliance. The availability of the tax benefit depended on contemporaneous compliance with the statutory requirements, and the Court held that a dealer remained free to transact with compliant registered dealers. The condition was therefore viewed as a permissible regulatory measure advancing the object of the taxing statute rather than as an unconstitutional restriction on trade.
Conclusion: The challenge under Article 19(1)(g) was rejected.
Final Conclusion: The writ petitions failed because the impugned rule was upheld as a valid exercise of delegated power and as a permissible tax-compliance condition, and the interim relief granted earlier was recalled.
Ratio Decidendi: Where the parent taxing statute expressly authorises prescribing the conditions for obtaining declaration forms, a rule denying such forms to a dealer in tax default is valid and does not amount to an unconstitutional restriction on trade if it operates as a regulatory condition serving the collection of tax.
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