State sales tax on rectified spirit upheld as valid, with fiscal classification on commercial distinctness sustaining different tax rates.

State sales tax on rectified spirit was upheld as falling within the State's taxing power under Entry 54 of List II, and the Court treated the later Supreme Court ruling on alcohol-related goods as binding under Article 141, rejecting the competence challenge. Different tax rates for rectified spirit and ethyl alcohol were also sustained because the statute separately identified the commodities and fiscal classification based on commercial distinctness is permissible; scientific identity alone is not decisive. Reliance on notifications or price control orders under other enactments was held irrelevant to interpretation of the sales tax entry, so the Article 14 discrimination challenge failed.

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Issues: (i) Whether the State Legislature lacked legislative competence to levy sales tax on rectified spirit under the Karnataka Sales Tax Act, 1957; (ii) whether different rates of tax on rectified spirit and ethyl alcohol were discriminatory and violative of Article 14 of the Constitution of India.

Issue (i): Whether the State Legislature lacked legislative competence to levy sales tax on rectified spirit under the Karnataka Sales Tax Act, 1957.

Analysis: The challenge was founded on the contention that rectified spirit formed part of an industry controlled by the Union under the Industries (Development and Regulation) Act, 1951 and therefore the State was denuded of taxing power. The Court held that the matter was directly governed by the later Supreme Court pronouncement which upheld State sales tax on alcohol-related goods as falling within the State's taxing field under Entry 54 of List II of the Seventh Schedule to the Constitution of India. The Court treated that ruling as binding under Article 141 of the Constitution of India and declined to reopen the question of competence on the basis of the earlier contrary view.

Conclusion: The State Legislature had legislative competence to levy sales tax on rectified spirit, and the challenge on want of competence failed.

Issue (ii): Whether different rates of tax on rectified spirit and ethyl alcohol were discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The Court held that the two commodities were separately identified in the statute and could be treated differently for taxation purposes. It applied the settled principle that classification in fiscal matters is permissible where goods are distinct in commercial parlance, and observed that scientific identity or chemical composition is not decisive for sales tax. The Court further held that reliance on notifications or price control orders under other enactments could not govern the interpretation of the sales tax entry, and that different rates on differently described goods did not amount to unconstitutional discrimination.

Conclusion: The levy of different rates on rectified spirit and ethyl alcohol was not discriminatory and the Article 14 challenge failed.

Final Conclusion: The statutory levy on rectified spirit was upheld, and the distinction in tax treatment between rectified spirit and ethyl alcohol was sustained; the writ petitions therefore did not merit interference.

Ratio Decidendi: Sales tax on goods falling within the State's taxing power under Entry 54 of List II remains valid notwithstanding Union control over the industry, and fiscal classification based on commercial identity is permissible if the goods are separately recognised in the taxing statute.

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