1964 (12) TMI 27 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Rules 20 and 25 of the Punjab General Sales Tax Rules, 1949
2. Compliance with quarterly returns and tax deposit requirements
3. Reconciliation of rules with Section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948
4. Refund of excess tax paid under Section 12 of the Act

Detailed Analysis:

1. Validity of Rules 20 and 25 of the Punjab General Sales Tax Rules, 1949:
The petitioners challenged the validity of Rules 20 and 25, arguing that these rules had become unworkable in the matter of purchase tax due to the provisions of Section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948. Rule 20 mandates that every registered dealer must furnish quarterly returns in specified forms within thirty days from the expiry of each quarter. Rule 25 requires that these returns be signed by the registered dealer or his agent and be accompanied by proof of tax payment. The petitioners contended that compliance with these rules would nullify the benefit of deductions allowed under Section 5(2)(a)(vi).

2. Compliance with Quarterly Returns and Tax Deposit Requirements:
The petitioners argued that the deductions under Section 5(2)(a)(vi), which allow for the exclusion of the purchase of goods sold within six months after the close of the year, made it impractical to file quarterly returns and deposit the tax before the expiry of the six-month period. They claimed that strict compliance with these rules would negate the benefit of the deductions temporarily.

3. Reconciliation of Rules with Section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948:
The court held that there was no inherent conflict between the rules and the provisions of the Act that could not be reconciled. The rules were found to be within the scope of Section 10 of the Act, which provides for the manner and intervals of tax payment, and Section 27, which grants the State Government the power to make rules for carrying out the purposes of the Act. The court reasoned that the figure of taxable turnover mentioned in the quarterly returns could be provisional and that any subsequent sales within six months could be accounted for during the assessment under Section 11, allowing for necessary deductions.

4. Refund of Excess Tax Paid Under Section 12 of the Act:
The court emphasized that Section 12 of the Act provides for the refund of any excess tax paid, including in situations covered by Section 5(2)(a)(vi). The court stated that the rules could not be struck down merely because they might lead to the temporary deposit of tax that would later be refunded. The court noted that modern taxation laws often include provisions for the initial deposit of tax, which may later be refunded if found to be excessive.

Conclusion:
The court concluded that there was no repugnancy between Rules 20 and 25 and the provisions of the Act. The rules were in consonance with the Act and did not detract from its provisions. Consequently, Civil Writ Petitions Nos. 909 and 1500 of 1964 were dismissed, with parties bearing their own costs. Civil Writ Petition No. 613 of 1964 was sent back to the single Judge for determining another question arising from the facts of that case.