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Judgment
Vikramajit Sen, J.—In this bunch of writ petitions a challenge has been laid to Rule 8(4)(c)(ii) of the Delhi Sales Tax Rules ,1975 (hereinafter referred to as the Rules) on the premise that it is ultra virus the provisions of Section 4(2)(a)(v) of the Delhi Sales Tax Act, 1975(hereinafter referred to a the Act) and is beyond the legislative competence of the Rule-making Authority namely ,the Lt. Governor of the NCT of Delhi. the petitioners'' understanding of the Act is that a registered dealer has been conferred with a vested right to buy or sell goods without any liability of tax on the goods specified in his registration Certificate, on the issuance of prescribed declaration Forms. Conversely, it is also contended that a registered dealer selling to another registered dealer can claim deduction from his taxable turnover on production of such forms. We may at once observe that the arguments are enable so long asit is understand and accepted that it is essential and pivotal that the Declaration Forms must be available for each transaction. In conclusion, the contention is that even if a party is in arrears of tax, forms must none the less be issued to him.
We have already pronounced a detailed judgment concerning the virus of Rule 8(4)(c) in CWP7347/99 (also filed by Prince Plastic and Chemical Industries) and a batch of other Petitioners. The present petitioners have approached the Court in these petitions in their capacity as selling dealers. The distinguishing feature is that by virtue of the decision of a Division Bench of this Court in CWP 3304/97 titledShri Krishna Engineering Co. v. Commissioner of Sales Tax , Delhi (1998) 38 DSTCJ 100 the then existing Rule8(4)(c)(ii), which had been inserted by Notification dated 11th February, 1997, was declared ultra vies the authority of the Ltd. Governor of the N.C.T. of Delhi. In order to avoid prolixity we think it appropriate to rely nt he reasoning contained in our judgment in CWP7347/1999. Shri Krishna Engineering''s case (supra)proceeded o the premise that since statutory support of the impugned Rule could not be found in Section 71(2) of the Act, the Ltd. Governor had not been delegated with the powers to promulgate the Rule. In CWP 7347/1999 we had expressed the opinion that this is the frontier to which the Division Bench had travelled in the aforementioned case .
After the passing of the said judgment on30.11.1998 in the Shri Krishna Engineering case (supra),an amendment was carried out to Section 71(2)(b) by the Delhi Sales Tax (Second Amendment) Act 2000 [Delhi Act No. 1 of 2000] which received the assent of President of India on 14.2.2001, and it now reads as follows:
"the particulars to be contained in a declaration under Sub-clause (v),of Clause (a) of Sub-section (2) of Section 4, or u/s 5, as the case may be, the form of such declaration, the authority from whom and the manner and conditions subject to which such forms shall be obtainable and the manner in which and the time within which such declaration is to be furnished."
On this amendment of the Act, the Ltd. Governor of the N.C.T. of Delhi felt sufficiently empowered to re-introduce Rule (8)(4)(c)(ii) by acting on the Powers delegated by the Act. The provisions which we had to scrutinise in CWP 7347/1999 did not contain this Rule and hence the need for filing these four writ petitions appears to have arisen. There introduced Rule which has once again been assailed reads as follows:-
"8. Authority from whom the declaration from may be obtained, and use, custody and maintenance of records of such forms and matters incidental thereto,--
1-3.....
4(a)&(b).....
(c) If the applicant for declaration forms has ,at the time of making application-
(i) .....
(ii) defaulted in making the payment of the amount of tax assessed or penalty imposed by Assessing Authority, in respect of which no orders for Installment/stay have been obtained from the Competent Authority under the provisions of law; or....."
The Division Bench in Shri Krishna Engineering''s case (supra) had formulated three grounds which in their opinion fell for consideration, namely that (a) the amended rule is in excess of rule-making powers of the Lt. Governor or in other words way, is beyond the delegated legislative authority and hence is ultra virus the powers of the rule-making authority;(b) the rule causes an unreasonable restriction on the petitioner''s fundamental right to trade and hence is vocative of Article 19(1)(g) of the Constitution; and(c) the amended rule having not been laid on the floor of Parliament as provided by Section 72 of the Act, has ceased to be enforceable. The Division Bench consider edit necessary to decide the writ petition only on ground(a). It declined to record any opinion on grounds (b)and (c). The Sales Tax Department has contended that since the lacuna detected by the Division Bench in ShriKrishna Engineering''s case (supra) has now been plugged by Delhi Act 1 of 2001, the obstacle to the legal legitimacy of the provisions before the Court have been overcome .
Ground (c) as formulated by the Division Bench in Shri Krishna Engineering''s case (supra), has not been pressed before us. We must, Therefore, assume that the statutory requirements expressed in Section 72 have been duly complied with All that remains, therefore ,is to address the question whether the impugned Rule offends the Petitioners'' fundamental rights under Article 19(1)(g) of the Constitution or any other law including Section 4(2)(a)(v) of the Act.
The factual matrix in these four petitions has been indicated thus - the Petitioners were purchasing raw material from various dealers on the assurance that the forms would be issued to them in due course of tie after obtaining them from the Assessing Authorities .During the course of purchases made from various dealers who had supplied the raw material to the petitioners, the Petitioners had assured them that statutory declaration would be furnished in due course of time and that the said dealers would be able to claim deductions u/s 4(2)(a)(v) of the Act, and incase the Petitioners are not in a position to furnish the statutory forms, they would be liable to pay tax on these purchases. Some of the Petitioners applied for issue of ST 35 Forms. The Department did not furnish the Forms since huge additional demands were then pending against them.
For the reasons spelt out in detail in CWP7347/1999, we find no merit whatsoever in the challenge made by the Petitioners to the legality of the said Rule .The purpose of the Act is to collect the tax. Under the Act taxes can be imposed at ore than one stage although the effort is that Sales Tax should be collected from the consumer and on one occasion only. In order to achieve the latter objective, the issuance of declaration forms had been devised. It is wholly untenable that a dealer retains the right for the issuance of these forms despite the fact that it is in arrears of payment of tax. That would defeat the objective of the Act itself. We are unable to appreciate how payment of tax can conceivably be seen as restrictions on the fundamental right enshrined in Article 19(1)(g) of the Constitution. A dealer can avail of the benefits of not paying sales tax on each transfer of the subject goods only if the requisite declaration form is available. The inherent contradiction in the Petitioner''s contention is at once evident when we find that every dealer has full liberty to transact business with another registered dealer who is not in arrears of payment of tax and hence is in a position to furnish declaration forms. There may have been a possible violation of the rights guaranteed under Article 19(1)(g), if there is a State mandate to the effect that goods have to be purchased only from a particular registered dealer. Persons in the trade would be well advised to enter into transaction only with those persons who have not committed any default in the performance of any of their duties and obligations under the Act. This can be ensured by insistence on simultaneous and contemporaneous supply of the requisite Forms .
The Petitions are dismissed but there shall be no order as to costs.
CM 12586/2001.
The Court had granted temporary relief to the petitioners by permitting them to deposit 50% of the demand raised on them. Since we find no merits in the petitioners, these interim orders have to be recalled.
In view of the judgment in CWP 7340/2001 the application is without merit and is accordingly, dismissed .