INTERNAL ASSIGNMENT – II
Case Analysis: R.S. Joshi, STO, Gujarat & Ors. Vs. Ajit Mills Ltd & Anr.
Prof-in-charge: Prof Ashutosh Naik
III BBA LLB ‘A’
Roll No. 23
Symbiosis Law School
Name of the case:
R.S. Joshi, STO, Gujarat & Ors. Vs. Ajit Mills Ltd & Anr.
AIR 1977 SC 2279: (1977) 4 SCC 98: 1977 SCC (Tax) 536
7 Judge Bench consisting of the following Justices of the Supreme Court of India: Chief Justice M. Hameedullah Beg., Justice N. L. Untwalia, Justice P. N. Bhagwati, Justice P. S. Kailasam, Justice S. Murtaza Fazal Ali, Justice V. R. Krishna Iyer and Justice Y. V. Chandrachud.
Brief facts of the case:
The case dealt with the constitutionality of a certain pattern of sales tax legislation, calculated to counter consumer victimization by dealers. The provisions Sections 37(1) (a) and 46(2) of the Bombay Sales Tax Act, 1959 was the impugned section which were challenged in the Hon’ble High Court of Gujarat. The main question that was raised before the High Court was whether Sections 37(1) (a) and 46(2) of the Bombay Sales Tax Act, 1959 are beyond the legislative power conferred by Entry 54, List II in Schedule VII of the Constitution. The High Court held that the impugned sections are beyond the power of the State legislature and therefore ultra vires. Aggrieved by the decision, the State has preferred these appeals. Issues raised:
The trinity of points in controversy that were raised in this case were: a) Whether the Legislature has the required competence
b) Whether or not the Legislature has the ancillary or incidental power to make provision for the levy and collection of such tax. c) Whether such provisions are in contravention to Articles 19 and d) Whether such provisions Breach equality as guaranteed under Article 14. Rules and Judgment:
The law we are concerned with is the Bombay Sales Tax Act, 1959 (Bombay Act LI of 1959) (for short, the Act.) applicable during the relevant period to the Gujarat State, although the State of Maharashtra itself has since modified the law. • Section 46:
(1) No person shall collect any sum by way of tax in respect of sale of any goods on which by virtue of Section 5 no tax is payable. (2) No person, who is not a Registered dealer and liable to pay tax in respect of any sale or purchase, shall collect on the sale of any goods any sum by way of tax from any other person and no Registered dealer shall collect any amount by way of tax in excess of the amount of tax payable by him under the provisions of this Act. • Section 63(1)(h)
Whoever contravenes any of the provisions of Section 46, shall on conviction, be punished with simple imprisonment which may extend to six months or with fine not exceeding two thousand rupees, or with both; and when the offence is a continuing one, with a daily fine not exceeding one hundred rupees during the period of continuance of the offence. Section 37(1) relates to imposition of penalty departmentally for contravention of Section 46. It reads: • Section 37(1)(a)
If any person, not being a dealer liable to pay tax under this Act, collects any sum by way of tax in excess of the tax payable by hm, or otherwise collects tax in contravention of the provisions of Section 46, he shall be liable to pay, in addition to any tax for which he may be liable, a penalty as follows: i) where there has been a contravention referred to in Clause (a), a penalty of an amount not exceeding two thousand rupees;.... and, in addition,.... any sum collected by the person by way of tax in contravention of Section 46 shall be forfeited to the State Government. The question was whether forfeiture clause in Sections 37(1) (a) and 46(2) of the Act, were beyond legislative power conferred by Entry 54, List II, Schedule VII of Constitution....