2002 (9) TMI 823 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of rules 43(3), 43(6)(c), and 43(7)(j)(iii) of the Assam General Sales Tax Rules, 1993.
2. Requirement of obtaining a despatch note in form 35 for transportation of goods outside Assam.
3. Whether the rules are ultra vires the Assam General Sales Tax Act, 1993 and Article 246 of the Constitution.
4. Whether the rules violate Article 301 read with Article 304 of the Constitution.

Issue-wise Detailed Analysis:

1. Validity of rules 43(3), 43(6)(c), and 43(7)(j)(iii) of the Assam General Sales Tax Rules, 1993:
The petitioners challenged the validity of these rules, introduced by the amendment notification dated 11th September 2000, which required dealers to obtain a despatch note in form 35 for transporting goods outside Assam. The petitioners argued that these rules were beyond the rule-making power and thus ultra vires the Assam General Sales Tax Act, 1993 and Article 246 of the Constitution.

2. Requirement of obtaining a despatch note in form 35 for transportation of goods outside Assam:
The petitioners contended that section 46(1) of the Assam Act imposed an embargo on the transportation of goods exceeding specified quantities to ensure no tax evasion. The requirement of obtaining a despatch note in form 35 was argued to be beyond the powers conferred by section 46 and section 72 of the Act, which pertained to intra-State transactions only. The petitioners relied on the Supreme Court's decision in Hansraj Bagrecha v. State of Bihar, which held that similar provisions under the Bihar Sales Tax Act were limited to intra-State transactions and did not extend to inter-State transactions.

3. Whether the rules are ultra vires the Assam General Sales Tax Act, 1993 and Article 246 of the Constitution:
The court found that the power to make provisions for the levy and collection of tax under the Assam Act is confined to intra-State transactions, as per entry 54 of List II of the Seventh Schedule to the Constitution. The impugned rules, by requiring a despatch note in form 35 for inter-State transactions, were beyond the State authority's powers. The court held that these rules were ultra vires the Assam Act and the constitutional scheme under Article 246.

4. Whether the rules violate Article 301 read with Article 304 of the Constitution:
The petitioners argued that the requirement of obtaining a despatch note impeded the free flow of trade and commerce, violating Article 301 of the Constitution. The court, however, did not find it necessary to address this issue, as it had already declared the rules ultra vires based on the first ground.

Conclusion:
The court concluded that rules 43(3), 43(6)(c), and 43(7)(j)(iii) of the Assam General Sales Tax Rules, 1993, which required obtaining a despatch note in form 35 for transporting goods outside Assam, were beyond the powers of the State authority. The rules were declared ultra vires the Assam General Sales Tax Act, 1993, and the Constitution. Consequently, the writ petitions were allowed.

← Previous Next →