State sales tax competence upheld for gutka and pan masala despite additional excise scheme and constitutional amendment challenge.

The notification inserting gutka and pan masala into the First Schedule to the Delhi Sales Tax Act, 1975 was upheld. The Court held that the State could withdraw a general exemption by including those goods in the Schedule, and that an earlier decision supporting a similar notification had distinguished the Andhra Pradesh position. It further held that the Additional Duties of Excise (Goods of Special Importance) Act, 1957 did not remove the State's legislative competence to levy sales tax on the same goods, because the additional excise arrangement operated only within the relevant fiscal scheme. The Constitution (Eightieth Amendment) Act, 2000 and its Statement of Objects and Reasons did not curtail that power, so the writ challenge failed.

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Issues: Whether the notification inserting gutka and pan masala in the First Schedule to the Delhi Sales Tax Act, 1975 was constitutionally invalid on the ground that such goods were covered by the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and that the levy offended the Constitution (Eightieth Amendment) Act, 2000.

Analysis: The challenge based on the scheme of the Delhi Sales Tax Act, 1975 did not succeed. The Court held that the earlier decision upholding a similar notification had distinguished the Andhra Pradesh position and had recognised that the State could withdraw a general exemption by bringing goods into the Schedule. The Court further held that the scheme of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 was to distribute additional excise duty in lieu of sales tax only in the relevant fiscal arrangement, but it did not take away the legislative competence of the State to levy sales tax on the same goods. The Constitution (Eightieth Amendment) Act, 2000 and its Statement of Objects and Reasons did not curtail that power.

Conclusion: The notification was upheld and the writ challenge failed.

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