Sales tax on tobacco can coexist with central excise, and hooka tobacco exemption does not cover tobacco leaf sales.

Sales tax on tobacco was held to be distinct from central excise, because excise is a levy on production while sales tax attaches to the sale transaction; the State was therefore competent to levy sales tax notwithstanding central excise duty. Tobacco leaf sold as such was not exempt under the schedule entry for hooka tobacco, because the exemption applied to manufactured or processed hooka tobacco and the purchaser's intended use did not change the taxable character of the sale. The request for reference failed and the petition was dismissed with costs for want of a referable question of law.

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Issues: (i) Whether the State Government could levy sales tax on tobacco notwithstanding the levy of excise duty by the Central Government. (ii) Whether tobacco leaf sold as hooka tobacco was exempt under the relevant schedule entry of the Assam Sales Tax Act, 1947.

Issue (i): Whether the State Government could levy sales tax on tobacco notwithstanding the levy of excise duty by the Central Government.

Analysis: Excise duty is a levy on production, whereas sales tax is imposed on the sale transaction. The existence of central excise on tobacco does not bar a State levy of sales tax on the same commodity. The question whether tobacco leaf has been manufactured into hooka tobacco was treated as one of fact, and hooka tobacco was regarded as a form of manufactured or processed tobacco.

Conclusion: The State Government was competent to levy sales tax on tobacco notwithstanding central excise duty.

Issue (ii): Whether tobacco leaf sold as hooka tobacco was exempt under the relevant schedule entry of the Assam Sales Tax Act, 1947.

Analysis: The taxable commodity was tobacco leaf as sold by the petitioner, not the intended use to which the purchaser might put it. The exemption covered hooka tobacco, which was understood as manufactured tobacco, and not tobacco leaf sold as such. The purchaser's intended use did not alter the taxable character of the sale.

Conclusion: Tobacco leaf sold as tobacco leaf was not exempt under the schedule entry for hooka tobacco and was liable to sales tax.

Final Conclusion: The request for reference failed, and the petition was dismissed with costs because no referable question of law was made out.

Ratio Decidendi: A State may levy sales tax on the sale of tobacco even where central excise duty is also imposed, and an exemption for manufactured hooka tobacco does not extend to sales of tobacco leaf merely because the buyer intends to use it for that purpose.

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