TaxTMI 
TaxTMI 
1974 (10) TMI 70
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.... Vineet Kumar, Advocates, for the applicants in C.A. Nos. 514 and 2078 of 1970. K.M. K. Nair, Advocate, for the respondent in C.A. No. 514 of 1970. H.B. Datar, Senior Advocate (M. Veerappa, Advocate, with him), for respondent Nos. 1 and 2 in C.A. No. 166 of 1973. JUDGMENT ALAGIRISWAMI, J. 1. These appeals arise out of the judgment of the High Court of Mysore dismissing a batch of writ petitions filed by a number of dealers in the State of Mysore (now Karnataka) questioning the levy of sales tax under the Central Sales Tax Act on certain inter-State sales. The goods dealt with were all declared goods and under the Mysore Sales Tax Act they were taxable at the point of purchase at a single point. The assessment periods are prior to November 10, 1964. The importance of this date will become clear when we proceed to deal with the matter subsequently. The assessing authorities assessed all these transactions of inter-State sales to tax. This court delivered its judgment in what is known as Yaddalam's case [1965] 16 S.T.C. 231 (S.C.)., holding that where a certain transaction was not liable to sales tax if it were an intra-State sale under the sales tax law of the appr....
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....sales tax. The Act prescribes a low rate of tax of 3 per cent in the case of inter-State sales only if the goods are sold to the Government or to a registered dealer other than the Government. In the case of such a registered dealer, it is essential that the goods should be of the description mentioned in sub-section (3) of section 8 of the Act. In order, however, to avail of the benefit of such a low rate of tax under section 8(1) of the Act, it is also essential that the dealer selling the goods should furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer, to whom the goods are sold, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, or if the goods are sold to the Government not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. In cases not falling under sub-section (1), the tax payable by any dealer in respect of inter-State sale of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate State: vide section 8(2)(a) of the Act. As regar....
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.... section 8(2)(b) because the rate of local sales tax varies from State to State. The rate of local sales tax can also be changed by the State Legislatures from time to time. It is not within the competence of the Parliament to fix the maximum rate of local sales tax. The fixation of the rate of local sales tax is essentially a matter for the State Legislatures and the Parliament does not have any control in the matter. The Parliament has therefore necessarily, if it wants to prevent evasion of payment of Central sales tax, to tack the rate of such tax with that of local sales tax, in case the rate of such local sales tax exceeds a particular limit............. The adoption of the rate of local sales tax for the purpose of the Central sales tax as applicable in a particular State does not show that the Parliament has in any way abdicated its legislative function. Where a law of Parliament provides that the rate of Central sales tax should be 10 per cent or that of the local sales tax, whichever be higher, a definite legislative policy can be discerned in such a law, the policy being that the rate of Central sales tax should in no event be less than the rate of local sales t....
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....e as regards the procedure for levy and collection of the tax as also for imposition of penalties." It is only necessary to add that the legislative policy laid down by Parliament in section 8(2)(a) is that inter-State trade should not be discriminated against. If the argument of the appellants is accepted there will have to be unending series of amendments to this section every time one State or other alters its rate of tax. 4. It is next contended that as section 8(2)(a) states that the tax payable shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State, it is the rate that was prevalent when section 8(2)(a) was enacted that would be applicable and not any subsequent variations in this rate of tax. If this argument is accepted no question of unconstitutional delegation of the Parliament's legislative powers in favour of the State Legislatures would arise at all. It would be remembered that the ground for attacking the constitutionality of section 8(2)(a) is that Parliament if it is deemed to have permitted the application of rate of sales tax enacted by a State Legislature in respect of intra-State sales to inter-Sta....
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....the convenience of the parties so that they will not have to deal with two sets of officers and two sets of laws in addition to avoiding discrimination between intra-State and inter-State sales. The very purpose of the Act and its scheme would be defeated or at least considerably impeded if the rates of tax applicable in any State in respect of intra-State sales were not applicable to inter-State sales where that State is the appropriate State. We are satisfied that the rate applicable is the rate applicable at the relevant point of time. Only that interpretation is consistent with the legislative policy that inter-State trade should not be discriminated against. 5. It was also urged that sub-section (1A) of section 6 violates article 14 in view of section 10 of the Central Sales Tax (Amendment) Act, 1969, which by section 3 inserted sub-section (1A) in section 6. Section 10 reads as follows: "10. Exemption from liability to pay tax in certain cases.-(1) Where any sale of goods in the course of inter-State trade or commerce has been effected during the period between the 10th day of November, 1964, and the 9th day of June, 1969, and the dealer effecting such sale has no....
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....d may not have been given a similar concession. It would not be proper to strike down the provision of law giving concession to the former on the ground that the latter are not given such concession. Nor is it possible for this court to direct that the latter set should be given a similar concession. That would mean legislation by this court and this court has no legislative powers. 6. We are not able to appreciate the suggestion on behalf of the appellants that section 6(1A) read with section 10 of the Amendment Act should be declared unconstitutional in so far as it relates to the period between January 23, 1962, and November 10, 1964, or how that is permissible. That means that the tax leviable under section 6(1A) cannot be levied during that period. That means even those who have collected the tax would escape. Secondly, in respect of that period also the dealers concerned might very often be the same set of persons and there can therefore be no question of discrimination. 7. The next submission on behalf of the appellants was that sub- section (2A) of section 8, which was amended at the same time as sub-section (1A) was inserted in section 6, has the effect of impliedly ....
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....e Mysore High Court that the object of sub-section (2A) of section 8 is to exempt transaction of sale of any goods if they are wholly exempt from the tax under the sales tax law of the appropriate State and make the said sale chargeable at lower rates where under the Sales Tax Act of the State the sale transactions are chargeable to tax at a lower rate and it is not correct to say that where goods are taxable at the point of purchase or sale the transaction is exempt from tax generally. A sales tax has necessarily to be levied on a sale or purchase and this argument implies that all sales are exempt from tax. The plain meaning of the said sub-section is that if under the sales tax law of the appropriate State no tax is levied either at the point of sale or at the point of purchase at any stage the tax under the Act shall be nil. Reading section 6(1A) and section 8(2A) together along with the explanation the conclusion deducible would be this: Where the intra-State sales of certain goods are liable to tax, even though only at one point, whether of purchase or of sale, a subsequent inter-State sale of the same commodity is liable to tax, but where that commodity is not liable to tax ....