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Madras HC upholds the constitutionality of Section 6 of Tamil Nadu Value Added Tax Act

Sonal Bhargava | Edited by Prabhat Bandhulya

In M/s LG Electronics India v The State of Tamil Nadu, the Madras HC 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.

"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.

As a result, the Court maintained the provision declaring that while determining the constitutionality of a taxing act, the hardship caused to an individual or a group of people is irrelevant.

The Court, on the other hand, disagreed with the petitioners, noting that works contractors were just a genus with various features or species. Despite being works contractors, it was determined that dealers who acquired products locally and those who purchased items via interstate purchase or import were not on an equal footing.

The division bench considered the scope of judicial interference in fiscal concerns and concluded that the legislature had sole authority over the economic sense of a tax. The bench emphasised that it was not the Court's role to examine the tax's fairness.

The Court concluded that the classification under Section 6 had a purpose, and that the law did not violate any constitutional rights. Hence the petitions challenging Section 6's vires were dismissed.

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