1956 (7) TMI 42 - HC - VAT and Sales Tax

Issues Involved:
1. Ultra vires status of Section 29 of the Assam Sales Tax Act.
2. Liability to be assessed to sales tax before 1st January 1950.
3. Requirement of written requisition for registration under Section 29.
4. Validity of assessment by the Superintendent of Taxes, Gauhati.
5. Ultra vires status of Section 52(2)(i) of the Assam Sales Tax Act and Rule 74.
6. Proper assessment of fee for the revision application under Rule 74.

Detailed Analysis:

1. Ultra Vires Status of Section 29 of the Assam Sales Tax Act:
The primary issue was whether Section 29 of the Assam Sales Tax Act is ultra vires. The court concluded that Section 29 is ultra vires because it discriminates against dealers who sell goods obtained from outside the State by imposing a tax on them, while dealers selling goods manufactured within the State are not subjected to the same tax unless they meet the criteria under Section 3. This discrimination violates Section 297 of the Government of India Act, 1935, and Article 304(a) of the Constitution, which prohibits such discriminatory taxation. Moreover, the section fails to provide equal protection under Article 14 of the Constitution as it grants arbitrary power to the Commissioner to select dealers for registration and taxation without any guiding principles.

2. Liability to be Assessed to Sales Tax Before 1st January 1950:
The court examined whether the petitioners were liable to be assessed for sales tax for the period before 1st January 1950. It was determined that the liability to tax arises only from the year during which the dealer becomes liable to registration. Since the petitioners were registered in January 1950 and followed the calendar year for accounting, they were not liable for sales tax for the period before January 1950.

3. Requirement of Written Requisition for Registration under Section 29:
The court addressed whether a written requisition by the Commissioner or Superintendent of Taxes is necessary for making a dealer liable to registration under Section 29. It was held that a written requisition is indeed necessary. The phrase "when so required by the Commissioner" implies a formal written requisition, ensuring transparency and allowing the dealer to contest the registration and subsequent tax liability. An oral requisition does not meet the legal requirements, and the absence of a written requisition renders the registration and subsequent tax assessments invalid.

4. Validity of Assessment by the Superintendent of Taxes, Gauhati:
The petitioners contested the jurisdiction of the Superintendent of Taxes, Gauhati, to assess them. The court found that the Superintendent of Taxes, Gauhati, had jurisdiction to assess the petitioners, especially since their Dibrugarh office had closed, leaving Gauhati as their only place of business. Rule 78 of the Assam Sales Tax Rules, which directs that a dealer should be assessed by the Superintendent within whose jurisdiction the head office is situated, is directory and not mandatory.

5. Ultra Vires Status of Section 52(2)(i) of the Assam Sales Tax Act and Rule 74:
The court upheld the validity of Section 52(2)(i) and Rule 74, stating that the delegation of power to administrative authorities to fix fees is neither unregulated nor a delegation of essential legislative functions. The Act provides the necessary framework, and the delegation is for auxiliary purposes only.

6. Proper Assessment of Fee for the Revision Application under Rule 74:
The court determined that the revision petition filed before the Commissioner was against an order of remand and not an order of assessment. Therefore, the fee should have been assessed under clause (d) of Rule 74, which pertains to "a petition for revision of any other order," rather than clause (a), which refers to "a petition for revision of an order of assessment." The Board's interpretation was incorrect, and the petitioners were entitled to a refund of the excess fee paid.

Conclusion:
The court answered questions 1, 2, 3, and 6 in favor of the assessees, while questions 4 and 5 were answered against them. The assessment proceedings were held to be unwarranted and unauthorized by law, entitling the petitioners to costs and a refund of the excess fees paid.

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