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2004 DIGILAW 274 (PNJ)

Kharkhoda Service Station v. State Of Haryana

2004-03-09

HEMANT GUPTA, N.K.SUD

body2004
Judgment Hemant Gupta, J. 1. The petitioner has sought a writ in the nature of certiorari for quashing notification dated 19.10.2000 (Annexure P2) whereby Rule 24A in the Haryana General Sales Tax Act, 1975 has been omitted. 2. The petitioner is a registered dealer under the Haryana General Sales Tax Act (hereinafter referred to Local Act) and Central Sales Act, 1956 (hereinafter referred to the Central Act). Petitioner is now registered under the Haryana Value Added Tax Act, 2003 after repeal of Haryana General Sales Tax Act, 1973 . Petitioner has alleged that he is dealing in purchase and sale of petroleum products which were notified to be taxable at the first stage of sales during the currency of Local Act. Petitioner has made purchases of the goods during the year 2000-2001 after paying tax. The amount of tax has been deposited in Treasury. Petitioner has sought set off under Rule 24A of the Haryana General Sales Tax Act, 1973 in respect of the tax payable by the petitioner on the sale of goods purchased by him or from the amount of tax payable on goods sold in the course of inter State trade or commerce. 3. Petitioner has further pleaded that the assessing authority has not granted relief of set off of tax paid by the petitioner under Local Act while framing assessment under the Central Act. Such set off was declined on the premise that Rule 24A has been deleted vide notification dated 19.10.2000. 4. Petitioner has challenged the notification dated 19.10.2000 on two grounds. Firstly that the previous publication of the amendment in the rules was not that of omission of Rule 24A of the Local Act that is the final notification. Thus final notification is at variance with draft notification, therefore, it cannot be sustained. Petitioner has relied upon the judgment of the Honble Supreme Court in The Municipal Board, Hapur v. Raghuvendra Kripal and Ors., A.I.R. 1966 S.C. 693, Raza Buland Sugar Co. Ltd. Rampur v. The Municipal Board, Rampur, A.I.R. 1965 S.C. 896 and the Municipal Corporation Bhopal and Anr. v. Misbahul Hasan and Ors. etc., A.I.R. 1972 S.C. 892. The second argument that the draft notification for amendment of Rule 24A was published on 3.7.1997 whereas the final notification has been published omitting, Rule 24A on 19.10.2000 i.e. after more than three years. v. Misbahul Hasan and Ors. etc., A.I.R. 1972 S.C. 892. The second argument that the draft notification for amendment of Rule 24A was published on 3.7.1997 whereas the final notification has been published omitting, Rule 24A on 19.10.2000 i.e. after more than three years. The publication of notification is beyond the reasonable period by which the final notification could be published and thus the omission of Rule 24A of the Local Act is not sustainable. 5. We have heard learned counsel for the petitioner and are unable to agree with arguments raised by the learned counsel for the petitioner. 6. The notification inviting objection of suggestions in respect of amendment in Rule 24A was published in exercise of the powers conferred on the State Government under Section 64 of the Local Act, Rule 24A of the Local Act as it existed on 3.7,1997 reads, as under:- "[Deduction or refund of tax paid on goods at the first stage of sale in certain cases] [Sections 27, 43 and 64] (1) A registered dealer may reduce the amount of tax paid under the Act at the first stage of sale of goods purchased by him, from the amount of tax payable by him on such goods or goods manufactured or processed therefrom when sold within the State or in the course of inter-State trade or commerce or in the course of export outside the territory of India; and (i) When no tax is payable on sale of such goods other than those specified in Schedule B, the full amount of tax paid at the first stage. (ii) When the tax paid at the first stage exceeds the tax payable, the amount of excess tax; and (iii) When the tax paid goods are sold to Government or to an organisation, sales to which are either exempt from payment of tax or are leviable to tax at a lower rate, the full amount of tax paid at the first stage if the sale is exempt from tax, or the difference between the amount of tax at the first stage and the tax calculated on sales to Government or to such organisation; shall be refundable to the dealer on appending with return, in form ST 9 and wherever applicable in form 1 under the Central Sales Tax Act, 1956; an application in form ST 33 on furnishing a certificate in form ST 14 in proof of payment of tax by the selling registered dealer at the first stage. Provided that no deduction or refund shall be admissible in respect of the same goods under this rule where deduction [under the Act or any other Rule] from turnover or refund of tax under the provisions of Section 15(a) of the Central Sales Tax Act, 1956, availed of." By virtue of the notification dated 3.7.1997, the following amendments were pro-posed:- "2. In the Haryana General Sales Tax Rules, 1975 in Rule 24A, in Sub-rule (1) (a) the words such goods or shall be omitted. (b) in Clause (i) after the sign "." the word "and" shall be added; (c) in Clause (ii) for the sign and word "and" the sign "." shall be substituted. (d) Clause (iii) shall be omitted; (e) proviso to Sub-rule (1) shall be omitted." 7. However, final notification was published on 19.10.2000 whereby Rule 24A itself has been omitted. The judgments referred to by the learned counsel for the petitioner are clearly distinguishable. The said cases arise out of the non compliance of the statutory provisions by the delegated legislative authorities. There is no violation of any of the provisions of the Act. Consequently, petitioner cannot draw any support from the judgments referred to above. 8. The argument raised by the learned counsel for the petitioner that the final notification is at variance with the draft notification and thus, not sustainable is not tenable. Firstly, the effect of the draft notification and the final notification as far as the petitioner is concerned is the same. 8. The argument raised by the learned counsel for the petitioner that the final notification is at variance with the draft notification and thus, not sustainable is not tenable. Firstly, the effect of the draft notification and the final notification as far as the petitioner is concerned is the same. The petitioner is neither a manufacturer nor processing the goods and, therefore, it is not open to the petitioner to challenge notification dated 19.10.2000 on the ground that the same is at variance with that of the draft notification. Secondly the State Government has invited objections and suggestions after publication of the draft notification. If on consideration of objections or suggestions, the State Government has decided to make alteration then what was proposed, the same is perfectly justified. The validity of the final notification cannot be challenged simply on the ground that it varies with the first argument raised by the learned counsel for the petitioner. 9. The other argument that the final notification has been issued after expiry of three years i.e., after unreasonable delay, therefore, cannot be given effect to is not tenable. There is no time limit prescribed for the publication of the final notification in exercise of powers vested with the State Government to frame rules. Rules have been framed in exercise of powers conferred on the State Government by Legislature. No time limit can be fixed for the exercise of legislative powers. The State Government has published the draft notification in terms of Section 64 of the Local Act and the same has been finalised after considering objections or suggestions. Neither there is any time limit prescribed nor such time limit can be inferred to restrict the exercise of legislative powers for the State Government. 10. It is well settled that the delegatee when exercising the powers to frame rules exercises the legislative powers. Reference may be made to the judgment of Honble Supreme Court in Narinder Chand Hem Raj and Ors. v. Lt. Governor, Administrator, Union Territory, H.P. and Ors., A.I.R. 1971 S.C. 2399 wherein it was held to the following effects;- "The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate that power to some other authority. v. Lt. Governor, Administrator, Union Territory, H.P. and Ors., A.I.R. 1971 S.C. 2399 wherein it was held to the following effects;- "The power to impose a tax is undoubtedly a legislative power. That power can be exercised by the legislature directly or subject to certain conditions, the legislature may delegate that power to some other authority. But the exercise of that power, whether by the legislature or by its delegate is an exercise of a legislative power. The fact that the power was delegated to the executive does not convert that power into an executive or administrative power. No court can issue a mandate to a legislative body to enact a particular law. Similarly, no court can direct a subordinate legislative body to enact or not to enact a law which it may be competent to enact." 11. In Khoday Distilleries Ltd. and Ors. v. State of Karnataka and Ors., (1996)10 Supreme Court Cases 304, it has been held that the delegated legislation can be struck down if such legislation is manifestly arbitrary after observing that the powers exercised is not an executive action. Para 13 of the judgment reads as under:- "It is next submitted before us that the amended Rules are arbitrary, unreasonable and cause undue hardship and therefore, violate Article 14 of the Constitution. Although the protection of Article 19(1)(g) may not be available to the appellants, the rules must, undoubtedly satisfy the test of Article 14, which is a guarantee against arbitrary action. However, one must bear in mind that what is being challenged here under Article 14 is not executive action but delegated legislation. The tests of arbitrary action which apply to executive actions do not necessarily apply to delegated legislation. In order that delegated legislation can be struck down, such legislation must be manifestly arbitrary; a law which could not be reasonably expected to emanate from an authority delegated with the law-making power. In the case of Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India, (S.C.R. at p.243) this court said that a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. A subordinate legislation may be questioned under Article 14 on the ground that it is unreasonable; "unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary." 12. A subordinate legislation may be questioned under Article 14 on the ground that it is unreasonable; "unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary." 12. In view of the above, it is apparent that while publishing notification in exercise of powers conferred under Section 64 of the Local Act, the State Government exercises legislative powers and thus, such legislative powers cannot be said to be unreasonable only on account of lapse of time from the date of publication of the draft notification. Consequently, we do not find any merit in the writ petition and the same is dismissed with no order as to costs.