Khushi Gupta
Published on: May 27, 2022 at 13:08 IST
The Madras High Court recently upheld the constitutional validity of Section 6 of the Tamil Nadu Value Added Tax Act, 2006 challenged by works contractors for being violative of Articles 14, 19 (1) (g), 20, 301 and 304 (a) of the Constitution.
A Bench of Justices R Mahadevan and Mohammed Shafiq said that the economic wisdom of a tax is within the exclusive province of the legislature.
“It is not the function of the court to consider the propriety or justness of the tax or enter upon the realm of legislative policy,” the Court said.
The issue involved the validity of certain conditions to a composition scheme by which dealers engaged in works contract could discharge taxes.
However, only those works contractors who did not have inter-state purchases, receive goods from outside the state or imports/goods from outside the country, were made eligible to opt for the composition scheme. This condition was stated to be arbitrary, discriminatory and violative of Article 14.
“According to us, “works contractor” does not constitute a homogeneous class, but comprises different species. Works contractor can only be considered as a genus with different facets or species,” the Court said.
The Bench underlined that it was not the function of the court to consider the justness of the tax.
With this, it was held that there was a rationale behind the classification under Section 6 and since the enactment did not offend any constitutional right, the petitions challenging the vires of Section 6 were rejected.