Constitutionality of Section
Constitutionality of Section
Constitutionality of Section
CONSTITUTIONALITY OF SECTION - 8 OF UP
VAT ACT, 2008
By Abhai Chandra Retd. Dy.
Com.
Art.246(3) empowers the Legislature of any State to make
laws for such State or any part thereof with respect to any of the
matters enumerated in List II (State List) of Seventh Schedule.
Entry no. 54 of List II ,i.e., State List, gives a State the power to
make laws with respect to taxes on the sale or purchase of
goods other than newspaper subject to the provisions of entry 92A of List I. Art. 265 reads as Taxes not to be imposed save
by authority of lawNo tax shall be levied or collected except
by authority of law. Thus it is clear that under entry 54 a State
can, by authority of law, levy and collect tax only if there is sale
or purchase of goods . However, the words with respect to in
Art.246 also vest the legislature with the power to make laws on
incidental issues which would make the law enforceable. A tax
statute legislating for levy and collection of tax
may also
make the machinery provisions which would be necessary for the
implementation of such statute. Besides, provisions for levy and
collection, penal provisions against wrongdoers; compensatory
provisions for loss of revenue; recovery provisions against the
defaulters etc. are also within the permissible limits of the
Constitution, provided that such ancillary or auxiliary machinery
provisions do not fail the Constitutional ordeal. Therefore, it
necessitates to peruse the nature of liability such ancillary
legislation tends to create.
Section 8 of UP VAT Act, 2008 creates, notwithstanding
any contrary provision of the Act and without interfering the
provisions of section 54 , liability on fraudulent issuance and
procurement of tax invoice or sale invoice without making
actual sale of goods shown in such invoice. According to this
Court held Action taken under section 3-B is not penal action. It
is compensatory in nature.
In Commissioner Trade Tax Vs. Zerox Ltd. Rampur
(2006) 3 VL J 425 Honble Allahabad High Court held Orders
passed under this section is not an order of assessment and
therefore, no time limit is applicable to the action to be taken
under this section.
Thus it is amply clear that liability engraved in section 3-B
was neither penal nor that of tax and it ran without prejudice
to(penal) provisions of section 14 and 15-A of UPTT Act. Section
3-B made the person issuing false certificates or declaration
prescribed under the Act or Rules ( did not cover invoices, bills
etc. or other certificates not prescribed under the Act or Rules)
compensate the actual loss of amount which was payable as tax
(not more) and which the State suffered in tax by reason of such
issuance.
W.e.f. 26-05-2014, section 3-B of UPTT Act has reincarnated
as a new Section 8-A in UP VAT Act with exactly the same
language. Sub-section (2) of section 8-A, which was not in
erstwhile Act, bars the claim of credit of input tax against the
amount deposited under section 8-A, perhaps for the reason that
section 8-A does not create any tax liability.
Coming back on to section 8 forces me to think over the
nature of liability
created under S/8. Liability created under
S/8 is without prejudice to the provisions of section 54. Relevant
part of section 54(1)11.(ii)&(iv) can be summed up as below:
The assessing authority, if he is satisfied that any dealer
or other person, as the case may be, issues a tax invoice or
sale invoice without actual sale of goods; or receives a tax
invoice or sale invoice without actual purchase of goods, it
may, direct that such dealer or person shall, in addition to tax,
pay by way of penalty a sum (equal to) 50% of value of goods.
(ii)
may
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