Sales tax competence and non-confiscatory levy upheld despite bar on passing tax to purchasers.

The Orissa Additional Sales Tax Act, 1975 was upheld as a valid enhancement of tax on the sale of goods within the State Legislature's competence under Entry 54 of List II. The restriction preventing dealers from passing the tax on to purchasers did not change the character of the levy into a tax on income, and no material showed it to be confiscatory. A sales tax does not become unconstitutional merely because its incidence cannot be shifted, and the rate of tax was treated as a matter of legislative judgment. The challenge under Articles 14, 19(1)(f) and 19(1)(g) failed.

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Issues: Whether the Orissa Additional Sales Tax Act, 1975 was unconstitutional on the grounds that the levy was beyond legislative competence, confiscatory in nature, and imposed an unreasonable restriction by prohibiting the dealer from passing on the tax to the customer.

Analysis: The additional tax was treated as an enhancement of the tax on the sale of goods and therefore as a levy within the State Legislature's power under Entry 54 of List II of the Seventh Schedule. The bar on collection from purchasers did not alter the character of the levy or make it a tax on the dealer's income. The Court also found no material to show that the levy was confiscatory. A tax on sales does not become unconstitutional merely because the dealer cannot shift its incidence to the purchaser, and the reasonableness of the rate of tax is ordinarily a matter for legislative judgment unless the levy is shown to be confiscatory.

Conclusion: The challenge to the validity of the Act failed. The levy was held to be constitutionally valid and not violative of Articles 14, 19(1)(f), or 19(1)(g) of the Constitution of India.

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