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Report No. 61

6.22. Doubt as in provisions in State laws as to overcharging.-

No doubt, an objection could be raised that the sections in the State Laws are themselves invalid, because, if tax is not legally chargeable, a provision imposing a penalty for illegal charging falls outside the purview of the States' legislative power. There is some justification for entertaining such a doubt, in view of the Supreme Court decisions1, already cited. Most of them deal with the civil aspect, but one relates to the penal aspect. That was a case from Bombay2 and a provision in the Bombay Sales Tax Act imposing a "forfeiture" of the amount illegally collected as tax was held to be void, as violating Article 19(1)(f) of the Constitution.

The Court said that it "assumed" that the Legislature had legislative competence to enact the provision. But, earlier, it stated that a Gujarat decision holding that such a provision is incidental to the power to tax sale "cannot be sustained," We may, however, point out that the provision in the Penal Code3 would apply4, in any case. Hence the second question posed above5 does not arise, and it is not necessary to introduce any amendment in the penal law on this point.

1. See paras. 6.1 to 6.13, supra.

2. Kantilal Babulal v. H.C. Patti, AIR 1968 SC 445.

3. Section 415, Penal Code.

4. Para. 6.20, supra.

5. Para. 6.16, supra.

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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