Unconstitutional levy proceedings cannot continue without a stay, even if further challenge is pending

Proceedings to levy and recover social security cess under the Punjab Social Security Act, 2000 could not continue where the Act had already been declared unconstitutional and no stay of that declaration had been granted. Mere pendency of a special leave petition against the earlier judgment did not validate action under a statute found to be beyond the State's legislative competence. In the absence of any stay, continuation of assessment proceedings was unwarranted, and the assessment order was quashed.

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Issues: Whether proceedings for levy and recovery of social security cess under the Punjab Social Security Act, 2000 could continue when the Act had already been declared unconstitutional and no stay of that declaration had been granted.

Analysis: The petitioner challenged the assessment order on the ground that the levy was based on a statute already held to be beyond the legislative competence of the State. The only defence was that a special leave petition against the earlier judgment was pending. Pendency of further proceedings, by itself, does not validate action under a statute declared unconstitutional. In the absence of any stay of the earlier judgment, continuation of proceedings under the Act was unwarranted.

Conclusion: The assessment order was quashed and the writ petition was allowed.

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