Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2007 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2007 (3) TMI 687 - HC - VAT and Sales TaxValidity of sub-section (16A) of section 47 of the Kerala Value Added Tax Act, 2003 - Circulars directing to collect sales tax in advance at the border check-posts, at the time of import of certain evasion-prone commodities - entry tax - detention of the goods at the check-post - Another Circular issued for collection of advance tax in respect of twelve evasion-prone commodities at the entry points into the State such as check-posts, ports, airports and railway stations - sustainability of two circulars issued by the Commissioner of Commercial Taxes - violates articles 14 and 19(1)(g) of the Constitution - HELD THAT:- If evasion of tax is to be prevented, the same can be done only by demanding tax in advance before the occurrence of the taxable event. It is true, while interpreting a taxing statute, if there is any doubt, the same should go in favour of the assessee. But, in this case, if the interpretation advanced by the petitioners is accepted, the same will render the provision ineffective to prevent evasion of tax. So, the "golden rule" of interpretation has to be followed. The "golden rule" is dealt with in Principles of Statutory Interpretation. In the light of the above principles, sub-section (16A) has to be read as authorising the Commissioner to direct payment of tax before the taxable event takes place. Otherwise, the purpose of the sub-section, namely, prevention of evasion of tax will be defeated. Therefore, the circulars have to be held intra vires of sub-section (16A). Violates articles 14 and 19(1)(g) of the Constitution - It is well-settled that the Legislature enjoys a greater latitude for classification in the field of taxation (See the decision of the apex court in Steelworth Limited v. State of Assam [1962 (1) TMI 35 - SUPREME COURT]. Demanding tax in advance cannot be said to be an action, infringing the fundamental rights under article 19(1)(g) of the Constitution of India. Demand and collection of tax may cause some inconvenience. But, the same cannot be described as violation of any fundamental right. Same is the case of attack, relying on article 301 and also on the ground of lack of competence of the State to tax on inter-State movement of goods. By demanding tax in advance, the State does not impose or levy any tax, which it is not competent to levy. It is only a measure to prevent evasion of tax, which the State is legitimately entitled to collect. It is not an attempt to tax on inter-State sale. The free-flow of goods is also not prevented by demanding tax in advance. Some inconvenience caused at the check-posts cannot be described as violating the rights under article 301 of the Constitution of India. If such a contention is accepted, all the check-posts should be abolished, so as to provide unhindered movement of goods. Such a right cannot be claimed under article 301. The petitioners submit, if such an interpretation is accepted, it will make sub-section (16A) unconstitutional. They point out that the taxable event is the sale. The Constitution authorises the Legislature to impose tax on sale. Thus, the challenge against the constitutional validity of section 47(16A) of the KVAT Act is repelled. The validity of the impugned circulars are upheld. The timing of the issuance of the circulars, that is immediately after the rendering of the judgment by this court, in the "Entry Tax Cases" cannot be a ground to condemn the circulars, if they are otherwise valid. The individual grievance caused to certain dealers cannot be a ground for declaring the provision or the circulars unconstitutional. A dealer, whose entire sales are in the course of export may not be liable to pay tax. If (1) Here italicised. advance tax is collected from him and he does not make any local sale and therefore, not liable to pay tax, he can claim refund of the same. In that event, the State shall refund the amount paid by him. Such individual inconveniences or grievances can never be pressed into service, to attack a legislation. I have not dealt with in this judgment, some of the decisions cited by both sides, as they were not strictly relevant. In the result, the writ petition fails and it is dismissed.
|