Advocate Rajnish R. Singla

The Article 265 of The Constitution of India is as follows-

Article 265. Taxes not to be imposed save by authority of law – No tax shell be levied or collected except by authority of law.

Article 265 requires that-

-there must be a law,

-the law must authorize the tax, and

-the tax must be levied and collected according to law.

“Article 265 provides that not only levy but also the collection of a tax must be under the authority of some law. Where an executive authority has beer empowered to collect a tax by an invalid law or rules made there under, the Court is entitled to interfere”. Chhotabhai Jethabhai Patel V/s Union of India, AIR 1952 Nag.139(144)

“The word ‘Levy’ occurring in Art.265 would mean the assessment or charging or imposing tax”.

Somaiyas Organics India) Ltd. V/s State of U. P., (2001) 5 SCC 519, para 29

“Levy cover imposition and assessment of the tax, but it does not include collection”. Delta Paper Mills V/s Collector, 1995 (77) ELT 544 (AP).

“In a taxing statutes one has to look merely at what is clearly said. There is no room for any intendment.. There is no equity about a tax. There is no presumption about a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.” Baidyanath Ayurved Bhawan (Pvt.) Ltd., Jhansi V/S The Excise Commissioner, U.P., AIR 1971 SC 378.

“It is trite that what can be done directly cannot be done indirectly”. Sangram Singh P Gaekwad V/ S Santadevi P Gaekwad(2005) 57 SCL. 476 (SC) ,

A Legal maxim of natural justice is- Dura lex sed led which means “the law is hard but it is the law”.

Now coming to the Preamble of The VAT Act of Uttarakhand which is as follows-

UTTARAKHAND: – An act to provide for and consolidate the law relating to levy of value added tax on sale or purchase of goods in the state of Uttarakhand.

From the perusal of the preamble of the above Act it is evident that the Uttarakhand state enacted his VAT Act with a clear thought, clear intention, and clear vision to levy VAT on sale or purchase of goods in his state.

Famous Latin maxim of natural justice is-absolute sententia expositore non indigent: plain language does not need an interpreter.

As per Section 22 of Uttarakhand VAT Act, 2005. VAT cannot be collected from the dealers/ consumers without being registered. This is mandatory provision violation of this provision attract penalty under section 58 of the Uttarakhand VAT Act, 2005.

  1. It is clear that works contract tax collection under section 35, Rule 14 is not in conformity with Preamble of the Act.
  2. Similarly Tax on the transfer of right to use goods is not in conformity with Preamble of the Act.
  3. Not a single dealer in Uttarakhand is in possession of a valid Certificate of Registration Under The Uttarakhand VAT Act, which took effect from 01-10-2005. Hence, all the dealers are unregistered dealers (URD) and have no authority to collect VAT from consumers.
  4. The Commercial Tax Department has done invalid all previous certificates without authority of law.
  5. Certificate of Registration issued is not valid certificate on the following grounds-

Certificate Means; A certificate is a written confirmation of the accuracy of the facts stated there in and does not involve any estimate or opinion.

a. The Certificated of registration (Form II) issued up to 31-12-2010 do not have Taxpayer’s Identification Number (TIN).

b. Thereafter from 01-01-2011 certificate of registration (From- II Amended) to be issued do not contain particulars as required by law

c. Effective Date of registration of all the dealers of Uttarakhand which existed before the VAT act changed to 01-10-2005 without authority of Law. In effect credibility of long standing dealers has been diminished by the commercial Tax Department e.g. 20 Years old dealer becomes 10 year old. Effective date of registration is the date of start of the birth of the business. The department has no power to change that.

d. Under section 17 (3) Assessing Authority issuing the certificate of registration which is not in the prescribed form (Form II Amended)

e. As per section 60 (2) (a) the Sales invoice issued by the selling registered dealer shall contain Taxpayer’s Identification Number (TIN) of the sealing dealer but such TIN number is not being allotted till today.

f. Certificate of Registration being, issued is not been in conformity with the Rule 9 (4) of the Uttarakhand VAT Rules, 2005.

g. Input tax credit (ITC) under section 6 (3) shall be allowed for the goods purchased with the state of Uttarakhand from a registered dealer holding a valid certificate of registration but not a single valid certificate of registration has been issued till today.

Therefore, Commercial Tax Department has illegally authorized the dealers to collect VAT from the consumers without issuing prescribed certificate of registration (Form – II Amended)

Illegal VAT collection from consumers is being done with effect from 01-10-2005 by violating the above discussed mandatory provisions of the Uttarakhand VAT Act, 2005.

Illegality is still continuing and will continue till proper amendments are made.

From the above discussion it is crystal clear that collection of VAT (Value added tax) is unconstitutional and illegal.

Illegal VAT collection from 1 crore consumers since 01-10-2005 to till date is approximately Rs. 30, 000 crores.

As per Section 40 of the Uttarakhand VAT Act, Commercial Tax Department must refund this amount to all the consumers who have paid VAT separately in the sales invoices. If the sales invoices are in their names.

We Advocates have great respect for the of Uttarakhand Government as well as Uttarakhand Commercial Tax Department.

Our job is to point out the illegalities and suggest solutions.

Towards this end, I Have made an honest attempt in the interest of 1 Crore consumers as well as the Uttarakhand Government and Commercial Tax Department.

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February 2023