Madras HC in the case of K.Devamani Versus Union of India

Case Covered:

K.Devamani

Versus

Union of India

Facts of the Case:

Writ Petition filed under Article 226 of the Constitution of India praying Writ of Certiorari to call for the records pertaining to the G.O.Ms.No.24 dated 27.05.2020 issued by the second respondent invoking Section 31 of the Puducherry Value Added Tax Act 2007 in so far it relates to increase of the rate of tax payable in respect of Petrol and Diesel in the regions of Union territory of Puducherry and quash the same as ultra vires, void-ab-initio, and non-est in the eyes of law.

The petitioner is a resident of Karaikal, Puducherry and seeks a Writ of Certiorari calling for and quashing G.O.Ms.No.24 dated 27.05.2020 issued by the Secretary to Government (Finance), Government of Puducherry/R2 invoking Section 31 of the Puducherry Value Added Tax Act, 2007 (in short ‘PVAT Act’) increasing the rate of tax payable in respect of Petrol and Diesel and fixing the same at 28% and 21.8% respectively.

Observations of the Court:

The rates of tax on petrol and diesel have been altered across the board and ostensibly, ‘in the public interest’. The notification does not refer to or address a specific class of assesses/transactions and no conditions are imposed upon satisfaction of which the amended rate would apply. A general and omnibus alteration to the rate of tax of this nature would have to be effected only by way of amendment to the Schedule itself under Section 75 and not by the issuance of a notification under Section 31 of the PVAT Act.

Though the 2017 amendment to the rate of petrol and diesel from 21.5% and 17.15% to 22.15% and 18.15% respectively were also only by way of Notification under Section 31 and was in force till the present impugned amendment, this does not per se invalidate a subsequent illegitimate and unauthorized levy. A Constitutional Bench of the Hon’ble Supreme Court in the case of Amalgamated Coalfields Ltd V. Janapada Sabha Chhindwara (AIR 1961 SC 964), at paragraph 8 of the judgment, settles the proposition that acquiescence in an illegal tax, for however long a period, is not a ground for denying an assessee relief, where it is established that the levy was invalid or illegitimate in the first place.

The decision of the Court:

Except for some differences in detail, the amendment of schedules in the VAT enactments extracted above, uniformly requires that the notification for amendment once made, be placed before the House within the timeframes stipulated therein for deliberation and ratification. It was thus incumbent upon the respondents to have followed the proper procedure for amendment of schedules set out under Section 75 of the PVAT Act and the invocation of Section 31 in the above circumstances is contrary to law.

In the light of the discussion as above, this Writ Petition is allowed and the impugned Notification quashed. Connected Miscellaneous Petition is closed. No costs.

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