1994 (4) TMI 312 - SC - VAT and Sales Tax

Whether section 9(1)(b) of the Haryana General Sales Tax Act 1973 ultra vires the powers of the State Legislature insofar as it imposed a tax on the despatch of goods outside the territory of the State? Held that - These appeals are allowed and it is declared that section 13AA as substituted by the Bombay Sales Tax (Amendment) Act 2 of 1990 (which replaced Maharashtra Ordinance 9 of 1989) is perfectly valid and competent piece of legislation. Indeed the result of our judgment would be that the decision in Goodyear 1996 (12) TMI 349 - PUNJAB & HARYANA HIGH COURT insofar as it declared the original section 13AA as invalid must be deemed to be not correct in law.

Issues Involved:
1. Validity of Section 9(1)(b) of the Haryana General Sales Tax Act, 1973.
2. Validity of Section 13AA of the Bombay Sales Tax Act, 1959.
3. Validity of Section 15-B of the Gujarat Sales Tax Act.
4. Validity of Section 3-AAAA of the U.P. Sales Tax Act.
5. Validity of Section 6-A of the Andhra Pradesh General Sales Tax Act.
6. Validity of Section 4-B of the Punjab General Sales Tax Act, 1948.
7. Validity of Section 5-A of the Kerala General Sales Tax Act, 1963.
8. Validity of Section 7-A of the Tamil Nadu General Sales Tax Act, 1959.
9. Validity of Sections 4(6)(ii) and 4(2)(i) of the West Bengal Sales Tax Acts, 1941 and 1954.

Detailed Analysis:

1. Validity of Section 9(1)(b) of the Haryana General Sales Tax Act, 1973:
In Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71, the Supreme Court declared Section 9(1)(b) of the Haryana General Sales Tax Act, 1973, ultra vires as it imposed a tax on the despatch of goods outside the state, which was considered to be in the course of inter-State trade or commerce, amounting to a consignment tax. This decision was later reconsidered in Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98, where the Court held that the provisions in Haryana and Bombay Acts were valid and within the legislative competence of the State Legislatures.

2. Validity of Section 13AA of the Bombay Sales Tax Act, 1959:
Section 13AA of the Bombay Sales Tax Act, 1959, was initially declared beyond the legislative competence of the Maharashtra Legislature in Goodyear [1990] 76 STC 71 (SC). However, this decision was overturned in Hotel Balaji [1993] 88 STC 98 (SC), where it was held that the provision was valid. Following this, the Bombay Sales Tax (Amendment) Act, 1990, substituted Section 13AA with retrospective effect from July 1982. The Supreme Court upheld the validity of the amended Section 13AA in this judgment.

3. Validity of Section 15-B of the Gujarat Sales Tax Act:
Section 15-B of the Gujarat Sales Tax Act was one of the provisions considered in Hotel Balaji [1993] 88 STC 98 (SC). The Court upheld its validity, stating that the provision was within the legislative competence of the State Legislature.

4. Validity of Section 3-AAAA of the U.P. Sales Tax Act:
Similarly, Section 3-AAAA of the U.P. Sales Tax Act was also upheld in Hotel Balaji [1993] 88 STC 98 (SC), with the Court affirming that the provision was valid and within the legislative competence of the State Legislature.

5. Validity of Section 6-A of the Andhra Pradesh General Sales Tax Act:
Section 6-A of the Andhra Pradesh General Sales Tax Act was upheld in Hotel Balaji [1993] 88 STC 98 (SC), with the Court finding that the provision was valid and within the legislative competence of the State Legislature.

6. Validity of Section 4-B of the Punjab General Sales Tax Act, 1948:
Section 4-B of the Punjab General Sales Tax Act, 1948, was challenged based on the reasoning in Goodyear [1990] 76 STC 71 (SC). However, the Supreme Court upheld its validity, stating that it was within the legislative competence of the State Legislature.

7. Validity of Section 5-A of the Kerala General Sales Tax Act, 1963:
Section 5-A of the Kerala General Sales Tax Act, 1963, was found to be similar to Section 6-A of the Andhra Pradesh General Sales Tax Act. The Supreme Court upheld its validity, stating that it was within the legislative competence of the State Legislature.

8. Validity of Section 7-A of the Tamil Nadu General Sales Tax Act, 1959:
Section 7-A of the Tamil Nadu General Sales Tax Act, 1959, was also found to be similar to Section 6-A of the Andhra Pradesh General Sales Tax Act. The Supreme Court upheld its validity, stating that it was within the legislative competence of the State Legislature.

9. Validity of Sections 4(6)(ii) and 4(2)(i) of the West Bengal Sales Tax Acts, 1941 and 1954:
Sections 4(6)(ii) and 4(2)(i) of the West Bengal Sales Tax Acts, 1941 and 1954, were initially declared ultra vires by the Tribunal following the reasoning in Goodyear [1990] 76 STC 71 (SC). However, the Supreme Court, in this judgment, upheld the validity of these provisions, stating that they were within the legislative competence of the State Legislature.

Conclusion:
The Supreme Court upheld the validity of the contested provisions in the Punjab, Tamil Nadu, Kerala, West Bengal, and Maharashtra Sales Tax Acts, aligning with the reasoning in Hotel Balaji [1993] 88 STC 98 (SC) and rejecting the reasoning in Goodyear [1990] 76 STC 71 (SC). The appeals filed by the States were allowed, and the writ petitions and appeals filed by the dealers were dismissed.

← Previous Next →