Sales tax on silk fabric upheld where commodity was no longer a declared good and excise scheme did not bar levy

Section 15(1) of the Central Sales Tax Act, 1956 did not bar sales tax on silk fabric because silk fabric had been deleted from Section 14 with effect from 11 May 1968 and was not a declared good during the relevant period, so the 4% ceiling was inapplicable. Inclusion of silk sarees in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 also did not prohibit a State sales tax levy, because the statutory scheme merely regulated distribution of additional duty proceeds and the duty shown was nil. The impugned sales tax levy was therefore legally sustainable.

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Issues: (i) Whether the levy of sales tax at 12% on silk fabric for the relevant period was barred by Section 15(1) of the Central Sales Tax Act, 1956. (ii) Whether the inclusion of silk sarees in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 disentitled the Government of NCT of Delhi from levying sales tax on the goods.

Issue (i): Whether the levy of sales tax at 12% on silk fabric for the relevant period was barred by Section 15(1) of the Central Sales Tax Act, 1956.

Analysis: The restriction in Section 15(1) operated only in respect of goods continuing to be declared goods under Section 14 of the Central Sales Tax Act, 1956. Silk fabric had been deleted from Section 14 with effect from 11 May 1968. During the relevant period, therefore, silk fabric was not a declared good, and the statutory ceiling of 4% was not attracted.

Conclusion: The levy of sales tax at 12% was not barred under Section 15(1) of the Central Sales Tax Act, 1956.

Issue (ii): Whether the inclusion of silk sarees in the Additional Duties of Excise (Goods of Special Importance) Act, 1957 disentitled the Government of NCT of Delhi from levying sales tax on the goods.

Analysis: Although silk sarees were included in the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the duty shown against the item was nil. The Second Schedule did not create a prohibition on the States levying sales tax; rather, it provided that where a State levied such tax, no sum would be payable to that State out of the additional duties. The statutory scheme therefore did not bar the State from imposing sales tax on silk fabric.

Conclusion: The Additional Duties of Excise (Goods of Special Importance) Act, 1957 did not bar the sales tax levy.

Final Conclusion: The impugned levy was legally sustainable, and the challenge to the assessment failed.

Ratio Decidendi: The ceiling under Section 15(1) of the Central Sales Tax Act, 1956 applies only so long as the commodity remains a declared good under Section 14, and inclusion in the additional excise scheme does not itself prohibit a State sales tax levy where the relevant duty is nil and the statute merely regulates distribution of proceeds.

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