Special sales tax levy on Fifth Schedule goods upheld where registered dealers are taxed irrespective of turnover.

The second proviso to section 5(1)(v) of the Kerala General Sales Tax Act was upheld as a valid special levy on Fifth Schedule goods, making a registered dealer liable on the last sale irrespective of turnover. The court held that registered and unregistered dealers are not similarly placed for tax purposes because registration carries distinct rights and obligations, including tax collection and statutory forms. It also found that the Legislature may prescribe a special point and rate of taxation for specified goods as a matter of fiscal policy. The constitutional challenge failed, and the revised assessments and appellate order were sustained.

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Issues: Whether the second proviso to section 5(1)(v) of the Kerala General Sales Tax Act, 1963, which makes a registered dealer liable to pay tax on Fifth Schedule goods irrespective of turnover, is invalid as discriminatory and inconsistent with the general turnover threshold under section 5(1).

Analysis: Section 5(1) is the general charging provision, but the statutory scheme for Fifth Schedule goods is a special one under section 5(1)(v). The second proviso expressly subjects a registered dealer effecting the last sale of such goods to tax at the prescribed rate irrespective of turnover. Registered dealers and unregistered dealers do not form the same class for the purposes of the Act, because the Act attaches different privileges and obligations to registration, including the right to collect tax and obtain statutory forms. The grouping of goods in the Fifth Schedule and the fixation of a special point and rate of levy fall within legislative policy in taxation, and the court will not substitute its own view merely because the burden differs from that applicable to other goods or to unregistered dealers.

Conclusion: The challenge to the second proviso to section 5(1)(v) failed, and the revised assessments and appellate order were upheld in favour of the Revenue.

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