Residuary entry tax power upheld for cork; constitutional challenge failed under Articles 14, 19(1)(g), 301 and 304(b).

A residuary entry in the Karnataka Tax on Entry of Goods Act, 1979 was construed to permit notification of cork for entry tax where the goods were not otherwise covered by earlier specific entries. The notification was held to operate within section 3(1) read with the residuary entry, because a narrow construction would defeat the statutory scheme. The constitutional challenge also failed: the levy was treated as compensatory, no hostile discrimination was shown under Article 14, and a tax imposed according to law did not infringe Article 19(1)(g). The challenge based on Articles 301 and 304(b), and on excessive delegation, was rejected.

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Issues: (i) Whether the impugned notification issuing levy of entry tax on cork under the residuary entry in the First Schedule to the Karnataka Tax on Entry of Goods Act, 1979 was within the scope of section 3(1) of the Act. (ii) Whether the notification was invalid for violating Articles 14, 19(1)(g), 301 and 304(b) of the Constitution of India.

Issue (i): Whether the impugned notification issuing levy of entry tax on cork under the residuary entry in the First Schedule to the Karnataka Tax on Entry of Goods Act, 1979 was within the scope of section 3(1) of the Act.

Analysis: Section 3(1) authorises levy of tax on entry of goods specified in the First Schedule into a local area, at rates notified by the State Government within the prescribed ceiling. Entry 103 of the First Schedule is a residuary entry covering goods other than those specified in the earlier entries and excluding goods in the Second Schedule. Cork, not being shown to fall within entry 66, was nevertheless treated as covered by entry 103, and the notification merely effectuated the legislative scheme. The residuary entry could not be read down to mean that only goods specifically added by amendment to the numbered entries could be notified, because such a construction would defeat the purpose of entry 103.

Conclusion: The notification was within the power conferred by section 3(1) read with entry 103 and is valid.

Issue (ii): Whether the notification was invalid for violating Articles 14, 19(1)(g), 301 and 304(b) of the Constitution of India.

Analysis: The levy under the Act was treated as a compensatory levy, and the constitutional restrictions under Articles 301 and 304(b) were held not to invalidate the notification in the present setting. No hostile classification was shown so as to attract Article 14, and a tax imposed in accordance with law does not by itself infringe Article 19(1)(g). The challenge based on excessive delegation also failed because the notification operated within the delegated field created by the statute and the residuary entry.

Conclusion: The notification does not violate Articles 14, 19(1)(g), 301 or 304(b) of the Constitution of India.

Final Conclusion: The impugned notification was upheld, and the consequential challenge to the assessment order and demand notice also failed.

Ratio Decidendi: Where the statute contains a residuary entry covering goods not otherwise specified, the State Government may validly notify such goods for levy under the delegated charging provision, and a tax so imposed, when within the statutory scheme and compensatory in character, is not struck down on the grounds of excessive delegation or violation of Articles 14, 19(1)(g), 301 or 304(b).

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