State sales tax on imported fabrics upheld as a separate levy despite customs and excise duties

Sales tax on imported fabrics was treated as a distinct State levy under Entry 54 of List II, operating separately from customs duty and additional duties of excise. The court held that the additional duty under Section 3 of the Customs Tariff Act is only a charging measure linked to excise duty on like goods manufactured in India, and does not become excise duty itself. The Additional Duties of Excise (Goods of Special Importance) Act, 1957 did not displace State taxing competence, and the classification between imported and indigenous fabrics was constitutionally permissible. The challenge under Articles 14, 19(1)(g), 286(3) and 304 failed, and the levy was upheld.

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Issues: Whether sales tax could validly be levied on imported fabrics in addition to customs duty and the additional duties of excise, and whether such levy was unconstitutional under Articles 14, 19(1)(g), 286(3) and 304 of the Constitution of India.

Analysis: The levy of sales tax on imported fabrics was held to be a separate State levy within Entry 54 of List II, while the customs duty and additional duties of excise operated in different fields under Union taxing powers. The additional duty of customs under Section 3 of the Customs Tariff Act, 1975 is only a measure linked to excise duty on like goods manufactured in India and does not become excise duty itself. The Additional Duties of Excise (Goods of Special Importance) Act, 1957 does not curtail the State's legislative competence to levy sales tax on the same goods, though it may affect the State's share in the proceeds of additional duties. The Statement of Objects and Reasons could not control the clear statutory language, and the classification between imported and indigenous fabrics was treated as constitutionally permissible. The challenge under Articles 14 and 19(1)(g) also failed, as taxation statutes are not invalid merely because they tax some goods and not others within a rational classification.

Conclusion: The levy of sales tax on imported fabrics was upheld and the constitutional challenge was rejected.

Final Conclusion: The petitions failed, as the impugned levy was found to be legally sustainable notwithstanding the customs and excise regime.

Ratio Decidendi: A State may levy sales tax on imported goods even where those goods attract customs-related additional duty and the additional duties of excise regime applies, because such levies operate in distinct constitutional fields and the State's taxing competence is not displaced by the Union levy.

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