TaxTMI 
TaxTMI 
1984 (10) TMI 202
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.... 1976). By the said Act, section 2 of the Tamil Nadu Additional Sales Tax Act, 1970, was amended by substituting a new provision in the place of what existed before, section 3 was omitted and section 3A was newly introduced to the Act. As the points raised in all these writ petitions are identical, they were heard together and are disposed of by this common judgment. Before we proceed to set out the provisions of the impugned Act, it is necessary to narrate in brief the legislative history that preceded its enactment. The basic statute providing for the levy of sales tax in the State of Tamil Nadu is the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act of 1959"). In the year 1970, the State Legislature enacted the Tamil Nadu Additional Sales Tax Act, 1970 (Act 14 of 1970) (hereinafter called "the 1970 Act"), which was brought into force with effect from May 28, 1970. The said Act provides for the levy of an additional tax on the sale or purchase of goods. Section 2 of the Act which is the charging section was in the following terms: "2. Levy of additional tax in the case of certain dealers.-(1) The tax payable under the Tamil Nadu General Sale....
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....by substituting the following provision in replacement of the original section: "2. Levy of additional tax in the case of certain dealers.-(1)(a) The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (hereinafter in this section referred to as the said Act), shall, in the case of a dealer whose taxable turnover for a year exceeds three lakhs of rupees, be increased by an additional tax calculated at the following rates, namely: Rate of tax (i) where the taxable turnover exceeds three lakhs 0.4 per cent of the of rupees but does not exceed five lakhs of rupees taxable turnover. (ii) where the taxable turnover exceeds five lakhs 0.5 per cent of the of rupees but does not exceed seven lakhs of taxable turnover. rupees (iii) where the taxable turnover exceeds seven lakhs 0.6 per cent of the of rupees but does not exceed ten lakhs of taxable turnover. rupees (iv) where the taxable turnover exceeds ten lakhs of 0.7 per cent of the rupees taxable turnover: Provided that where in respect of declared goods as defined in clause (h) of section 2 of the said Act, the tax payable by such dealer under the said Act, together with the addi....
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....onal sales tax. On this basis it is contended that the provisions of the impugned Act, 1976, are ultra vires and devoid of legislative competence. We see no substance in this contention. The impugned enactment has merely amended the 1970 Act. It has not introduced a new tax; what it has done is only to amend the 1970 Act by providing for a different method of computation of the additional tax leviable under that Act. The validity of the 1970 Act has been upheld by a Constitution Bench of this Court in the case of Kodar v. State of Kerala [1974] 34 STC 73 (SC); [1975] 1 SCR 121. Hence there is no longer any scope for the petitioners to contend that the State Legislature had no competence to provide for the levy of additional sales tax. The nature and identity of the additional sales tax imposed by the 1970 Act have not been in any way altered by the impugned Act. As already pointed out what has been done by the impugned Act is only to provide for a different mode of computation of the additional sales tax by linking the rate of the levy to the taxable turnover instead of to the amount of tax assessed under the Act of 1959. The constitutional validity of the levy of additional tax....
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....come of the dealers was rejected by the Constitution Bench which observed thus: "As regards the contention that the State Legislature has no power to pass the measure, we are of the view that the additional tax is really a tax on the sale of goods. The object of the Act, as is clear from its provisions, is to increase the tax on the sale or purchase of goods imposed by the Tamil Nadu General Sales Tax Act, 1959, and the fact that the quantum of the additional tax is determined with reference to the sales tax imposed would not alter its character. It may be noted that the additional tax is to be imposed only if the turnover of a dealer exceeds Rs. 10 lakhs. It is in reality a tax on the aggregate of sales effected by a dealer during a year. The additional tax, therefore, is an enhancement in the rate of the sales tax when the turnover of a dealer exceeds Rs. 10 lakhs a year and it is a tax on the aggregate of the sales effected by the dealer during the year. The decision in Ernakulam Radio Company v. State of Kerala [1966] 18 STC 445 at 449 which was affirmed by a Division Bench of the Kerala High Court in Kilikar v. Sales Tax Officer [1968] 21 STC 252 took that view. The same....
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.... according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation, it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. In Konduri Buchirajalingam v. State of Hyderabad [1958] 9 STC 397 (SC) this Court said: 'It is then said that the sales tax is essentially an indirect tax and therefore it cannot be demanded of the appellant without allowing him to recoup himself by collecting the amount of the tax from the persons with whom he deals. This Court has already decided in the case of Tata Iron and Steel Co. Limited v. The State of Bihar [1958] 9 STC 267 (SC) that in law a sales tax need not be an indirect tax and that a tax can be a sales tax though the primary liability for it is put upon a person without giving him any power to recoup the amount of the tax payable, from any other party.' As we said, the additi....
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....nality in the belief of the legislature that capacity to pay the tax increases, by and large, with an increase of receipts. 'Certain it is that merchants have faith in such a correspondence and act upon that faith. ..........If experience did not teach that economic advantage goes along with larger sales, there would be an end to the hot pursuit for wide and wider markets.......... In brief, there is a relation of correspondence between capacity to pay and the amount of business done. Exceptions, of course, there are. The law builds upon the probables, and shapes the measure of the tax accordingly.......... At the very least, an increase of gross sales carries with it an increase of opportunity for profit, which supplies a rational basis for division into classes, at all events when coupled with evidence of a high degree of probability that the opportunity will be fruitful.' Stewart Dry Goods Company v. Lewis 294 US 550 (see the dissenting judgment of Cardozo, J., Brandeis, J., and Stone, J.). The reasoning of the minority in that case appeals to us as more in consonance with social justice in an egalitarian State than that of the majority. As we said, a large dealer occup....