Tax Case

3092 words 13 pages


Case Analysis: R.S. Joshi, STO, Gujarat & Ors. Vs. Ajit Mills Ltd & Anr.

Citation: AIR1977SC2279

Prof-in-charge: Prof Ashutosh Naik


Swathi. A.P


Roll No. 23

Symbiosis Law School

Ph: 7798627663

Name of the case:

R.S. Joshi, STO, Gujarat & Ors. Vs. Ajit Mills Ltd & Anr.


AIR 1977 SC 2279: (1977) 4 SCC 98: 1977 SCC (Tax) 536

Decided On:
7 Judge Bench consisting of the following Justices of the Supreme Court of India:
Chief Justice M. Hameedullah Beg., Justice N. L. Untwalia, Justice P. N. Bhagwati, Justice P. S. Kailasam, Justice S. Murtaza Fazal Ali, Justice V. R. Krishna Iyer and Justice Y. V. Chandrachud.

Brief facts
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All real punitive measures, including the dissuasive penalty of confiscating the excess collections, are valid, being within the range of ancillary powers of the legislature competent to exact a sales tax levy. The punitive impost in Section 37 (1) (a) is therefore legitimate and valid. If we accept this test, the appeals must succeed, so far as this point is concerned.
In the present case, the narrow issue is as to whether the forfeiture clause in Section 37(1) is bad because of the besetting sin of colourability. If it is a punitive measure to protect public interest in the enforcement of the fiscal legislation, it falls squarely within the area of implied powers.

The court went into the true character of a forfeiture. The court held that if it is penal, it falls within implied powers. If it is an act of mere transference of money from the dealer to the State, then it falls outside the legislative entry.

Speaking generally and having in mind the object of Section 37 read with Section 46, the court was inclined to the view that forfeiture has a punitive impact. Black's Legal Dictionary states that 'to forfeit' is 'to lose, or lose the right to, by some error, fault, and offence or crime, to incur a penalty.' 'Forfeiture', as judicially annotated, is 'a punishment annexed by law to some illegal act or negligence. . . .'; 'something imposed as a punishment for


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