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2011 (3) TMI 1526 - HC - VAT and Sales TaxValidity of clauses 2(d1), 8(4) and 8(5) of the U.P. Sheera Niyantran Adhiniyam as amended by the U.P. Act No. 10 of 2009 challenged Held that:- The State Government in exercise of its legislative powers is free to frame laws in consonance with the basic framework of the Constitution but it cannot travel beyond the power conferred upon it under the Constitution of India. A statutory rule must be made in consonance with the constitutional scheme. A rule must not be arbitrary. It must be reasonable, be it substantive or a subordinate legislation. While defining the word "captive consumption" the State Government cannot assume to itself the power to levy a tax. Taxing entries are specifically mentioned and enumerated in List III. Unless the tax is in respect of a subject, which stands enumerated in the "taxing specific entries", no levy/fees/charges can be imposed in the name of tax by the State Government. In these circumstances, various case laws relied on by the State Counsel are of no avail to them. Needless to say that a taxing statute, must be made in consonance with article 265 of the Constitution. In view of the above, we are of the considered opinion that the provisions of section 2(d1), section 8(4) and 8(5) of the U.P. Sheera Niyantran Adhiniyam amended by U.P. Act No. 10 of 2009, reproduced hereinabove, suffer from callous exercise of power and it can safely be concluded that the State has overstepped its limit of power.Accordingly, all the writ petitions are allowed and the aforesaid provisions are declared invalid.
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