KANAIYALAL PRAGJIBHAI KHAKHKHAR Vs. SALES TAX OFFICER AMRELI

JUDGEMENT

(1.) The petitioner is the proprietor of Chetna Trading Company at Amreli. He is said to be carrying on business as a general merchant and commission agent dealing in groundnuts grains etc. The business of Chetna Trading Company was commenced as a partnership with petitioner and another person as partners from 10.8.1984 and such business was registered under the Gujarat Sales Tax Act 1969 (hereinafter referred to as the Act). It is the petitioners case that the partnership firm ceased its business with effect from 25/10/1984 and the petitioner commenced sole business in the same name from that date. It is also his case that he obtained a lease of an oil mill situated at Udyognagar at Amreli from their owners and from 25/10/1984 when he started business after dissolving the partnership he began manufacture of groundnut oil in the name of Chetna Oil Mill. For the registration of the firm which carried on business from 10.8 the petitioner had furnished a security to the extent of Rs. 20 0 as directed by the Sales Tax Officer. The petitioner is said to have carried on the same business individually after 25.10.84. The complaint is that while there was no reason to assume any evasion of tax on his part the Sales Tax Officer Amreli called upon him to show cause on 17.11.1984 as to why additional security should not be demanded from the petitioner under section 30B of the General Sales Tax Act so as to enhance the security to Rs. 10 0 0 Annex. A/1 is the copy of the notice issued to the petitioner. According to the petitioner he was not well and therefore was not in a position to comply with the notice to appear on 17/11/1984 and therefore he prayed for 10 days time. Evidently the Sales Tax Officer did not consider that the ground shown for adjournment was sufficient and therefore proceeded to pass an order carrying out the proposal demanding Rs. 10 0 0 as security from the petitioner. Annexure A/3 is the copy of the order. According the the petitioner he is a man of no means with no movable or immovable property and he will have to depend upon others to furnish security for him and to find out a solvent person who could furnish a security of Rs. 10 0 0 is not easy with the consequence that the insistence on such security and the sanction of cancellation of registration for non-compliance would amount to his being compelled to close business. On 3/12/1984 about two weeks after the petitioner vas called upon to furnish the additional security the petitioner is said to lave addressed the Sales Tax Officer a letter not to insist on any additional security. To this the Sales Tax Officer sent a reply dated 5.12.1984 reiterating the demand for security for Rs. 10 0 0 and further calling upon the petitioner to remain present in the office on 7.12.1984 with the figures of production. purchase and sales. He also called upon the petitioner to produce on 15.12.1984 a writing from the landlord of his residential house indicating that he was occupying the house and also to produce his ration card and two passport size photographs. It is thereupon that the petitioner has come to this court.

(2.) The challenge in the petition is twofold. The petitioner seeks to declare section 30B of the Gujarat Sales Tax Act 1969 as ultra vires being violative of Article 14 of the Constitution of India and beyond the legislative competence of the State Legislature and also seeks to quash Annexure A/3 order passed by the 1st respondent demanding security of Rs. 10 0 0 as mala fide ultra vires and violative of Articles 14 19 and 300A of the Constitution of India. Though challenge in the petition is seen to be made on the ground that the order Annexure A/3 demanding additional security as violative of Articles 19(1)(g) and 300A no reference was made at the hearing to Article 300A nor did the petitioner have a case that it violates Article 19 evidently because even according to the counsel for the petitioner that question is now covered by decision and there may not be a case on that aspect. In fact similar provisions have been attacked before the Calcutta High Court in Durga Prasad Khaitan v. C.T.O. (8 STC 105) the Madras High Court in Janakiram Mills Limited v. Deputy C.T.O. (29 STC 522) and the Kerala High Court in P. M. Abdulla v. S.T.O. (30 STC 436). Similar provisions have been held to be legislatively competent and not offending the fundamental right to carry on business But what is argued is that in none of these cases was there a challenge to a provision like section 30B on the ground of irrational classification of dealers and want of nexus of such classification with the object of grant of registration. The main contention before us therefore was that section 30B was violative of Article 14 of the Constitution of India of reasons which we will presently indicate. No question of legislative competence arises though referred to in the petition as frankly conceded by the counsel for the petitioner.

(3.) Before we consider the case of constitutional validity of the impugned provision it is necessary to refer to certain facts which furnish the background of enactment of section 30B of the Act. We had the benefit of hearing government counsel taking notice of the case and appearing in the first instance and later when the case was adjourned at the petitioners request hearing the learned Advocate General who appeared to oppose the admission of the petition. In fact we happened to hear the Advocate General for another reason too. Special civil application No. 6279 of 1984 was moved on behalf of the State of Gujarat by the Advocate General in which a question somewhat allied to the question before us arises for decision and we heard the Advocate General in that petition. It was then that reference happened to be made to this petition whereupon the Advocate General presented the case of the State in this petition even before admission