SC calls HC approach inappropriate

New Delhi, Aug 3 (UNI) The Supreme Court has severely reprimanded Allahabad high court for passing remarks against the judgment of the apex court in Steel Authority of India(SAIL) case and Nathpa Jhakri's case describing the approach of the high court as inappropriate.

The apex court has said "The high court should not have sat in judgment over the correctness of the judgments of this court." The Allahabad high court while commenting upon the judgments of the apex court in SAIL case and Nathpa Jhakri's case had said that several larger benches decisions were not considered by the apex court.

The bench comprising Justices Arijit Pasayat and S H Kapadia yesterday allowed the appeal of M/S Rapti Commission Agency against the high court judgment upholding the constitutional validity of the section 8-E of the Uttar Pradesh Trade Test Act, 1948 which levied tax on agents making sale/purchase in the state from Agriculturists /sellers on behalf of their principal situated outside the state of Uttar Pradesh.

The appellant's consignment carrying Mentha oil was detained by the trade tax officer, Jhansi division on the grounds that the appellant had not deducted tax from agriculturists and had not deposited the same in terms of section 8-E of the Act.

Writ petitions were filed in the high court as similar detentions were also made in case of others.

The high court came to the conclusion that the language of a statutory provision can be narrowed down if that is necessary to sustain the constitutional validity and thus narrowing down the language of the impugned section the high court upheld the validity of the provision. The high court also came to a contradictory conclusion that though agriculturist can not be treated as dealers yet the appellant had the liability to pay the purchase tax.

The apex court while commenting on the conclusions of the high court noted, "Be that as it may, we find that the high court has thoroughly confused the issues. The high court instead of focusing on the factual aspects dealt with the issues not relevant, and that too giving clearly indefensible interpretations. The factual aspects should have been asked to be dealt with by the authorities by directing the authorities to do it after laying down the law." The apex court has directed that the authority concerned will decide whether the transaction is of intra-state or inter-state character. Holding that impugned section 8-E can not be held applicable in case of inter-state transactions the court directed that the apex court rulings in SAIL case and Nathpa Jhakri's case shall apply .

The appellant will have to prove that the transaction in question was inter-state in nature and he has no liability to pay purchase tax.

The court finally concluded, "If a person is not liable for payment of tax at all at any time, the collection of a tax from him, will not make the original levy valid, because if sales or purchase are exempt from taxation altogether, they can never be taken into account, at any stage, for the purpose of calculating or arriving at the taxable turnover and for levying tax. It is no solace to say that such a person can get the refund after the completion of assessment. If the principles indicated in these cases are followed, large number of unnecessary litigations can be avoided." UNI AKS/SC RP BD1932