TaxTMI 
TaxTMI 
1994 (2) TMI 261
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....n C.A. Nos. 1550 of 1985, 2494 of 1993 and 694 of 1994. Soli J. Sorabji, Senior Advocate [Sunil Gupta, Advocate, and S. Sukumaran, Advocate (of J.B. Dadachanji & Co., Advocates) with him], for the appellant in C.A. No. 1550 of 1985. Soli J. Sorabji and R.M. Jaitley, Senior Advocates (Karanjawala & Co., Advocates, with them), for the appellant in C.A. No. 694 of 1994. G. Viswanatha Iyer, Senior Advocate (M.M. George and M.A. Firoz, Advocates, with him), for the appellant in C.A. No. 672 of 1994. -------------------------------------------------- The judgment of the Court was delivered by B.P. JEEVAN REDDY, J.-The question in this batch of appeals is whether the publishers of newspapers are entitled to the benefit of section 8(3)(b) read with section 8(1)(b) of the Central Sales Tax Act, 1956, hereinafter referred to as "the Act". If they are so entitled, they can purchase the raw material required by them at the concessional rate of 4 per cent. If not, they will be liable to pay tax at 10 per cent. The Madras and Kerala High Courts have taken the view that they are entitled to the said benefit while the Karnataka High Court....
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....s of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him; (ii) goods specified in the certificate of registration of the registered dealer purchasing the goods for use by him in the manufacture or processing of goods for sale, subject to any rules made by the Central Government in that behalf; (iii) goods of the class or classes specified in the certificate of registration of registered dealer purchasing goods for use by him in mining or in the generation or distribution of electricity or any other form of power. We are concerned herein with the second category among the said three. Sub-section (4) of section 8 says that provisions of sub- section (1) shall not apply to any sale unless the selling dealer furnishes 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 a prescribed form obtained from the prescribed authority". The Rules framed under the Act prescribe the authority and other particulars contemplated by sub-section (4)(a). The Rules presc....
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....ually subjected to tax on their sale-for they may be exempted either by the Act or by a notification issued thereunder. It is enough that the finished goods are meant for sale. Ordinarily, of course, their sale is taxed. The expression "goods" is defined in clause (d) in section 2. As originally enacted, the definition read: "(d) goods includes all materials, articles, commodities and all other kinds of movable property but does not include actionable claims, stocks, shares and securities". (The Central Sales Tax Act, 1956, came into force on January 5, 1957.) By amending Act 31 of 1958, the word "newspapers" was inserted in the said definition after the words "but does not include" and before the words "actionable claims, stocks, shares and securities". After the amendment, the definition reads as follows: "'goods' includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities." Now the situation is this: before the amendment of the definition of the expression "goods" by the 1958 Amendment Act, the publishers of the newspapers [who held the certificate of registratio....
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....e case of other newspapers as well against which S.L.P. (C) 3439 of 1992 [preferred by Indian Express (Madurai)] and C.A. No. 2494 of 1993 (preferred by M/s. Kasturi & Sons Ltd.) have been preferred. They too are included in this batch. Leave granted in S.L.P. (C) No. 3439 of 1992. If a literal construction is adopted, it is conceded on all hands that the view taken by the Karnataka High Court is the correct one. But what the Madras and Kerala High Courts have done is to take the spirit behind the amendment of the definition of the expression "goods" as well as the scheme underlying entry 54 of List II read with entries 92 and 92-A of List I of the Seventh Schedule to the Constitution and hold on that basis that the expression "goods" occurring in the latter half of clause (b) of section 8(3) does not exclude newspapers from its purview. Accordingly, they held, the publishers of newspapers are entitled to the benefit of section 8(3)(b) read with section 8(1)(b). In this batch of appeals, we are called upon to decide which of the two views is the correct one. For a proper appreciation of the question at issue, it would be appropriate to notice certain provisions of the Constituti....
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....rs from its purview and on that account, they were liable to pay tax on their sale. It is this feature which was sought to be put an end to by the aforesaid repealing Act. Entry 92-A of List I, it is relevant to notice, while empowering the Parliament to levy tax on sale or purchase of goods taking place in the course of inter-State trade or commerce, specifically excluded newspapers from its purview which means that no tax can be imposed upon the inter-State sale or purchase of newspapers. In short, the position is: no tax can be imposed on the inter-State sale of newspapers and no tax is imposed on their intra-State sale. This special treatment of newspapers has a certain philosophy and an historical background behind it which may briefly be noticed. Freedom of press has always been a cherished right in all democratic countries. The newspapers not only purvey news but also ideas, opinions and ideologies besides much else. They are supposed to guard public interest by bringing to fore the misdeeds, failings and lapses of the Government and other bodies exercising governing power. Rightly, therefore, it has been described as the Fourth Estate. The democratic credentials of a Sta....
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....mited without being lost." (In a letter to Dr. J. Currie, 1786). It is evident that "an able, disinterested, public-spirited press, with trained intelligence to know the right and courage to do it, can preserve that public virtue without which popular Government is a sham and a mockery. A cynical, mercenary, demagogic press will produce in time a people as base as itself. The power to mould the future of the Republic will be in the hands of the journalism of future generations", as stated by Joseph Pulitzer. This does not mean that the press is immune either from taxation or from the general laws relating to industrial relations or from the State regulation of the conditions of service of its employees, as has been emphasised by this Court in Express Newspapers (Private) Ltd. v. Union of India AIR 1958 SC 578. Nor is it immune from the general law of the land including civil and criminal liability for libel and defamation. The prohibition is upon the imposition of any restriction directly relatable to the right to publish, to the right to disseminate information and to the circulation of newspapers. In Sakal Papers (P) Ltd. v. Union of India [1962] 3 SCR 842, an Act, the News....
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....tisements. (See para 84). This decision is significant for the reason that it seeks to place freedom of press on a higher footing than other enterprises. E.S. Venkataramiah, J., as he then was, speaking for the Bench, said: "In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax." Now coming back to the amendment of the definition of "goods" in section 2(d) of the Central Sales Tax Act, the said amendment, brought in with a view to bring the said definition in accord with the amendments brought in by the Constitution (Sixth Amendment) Act (referred to hereinbefore) was actuated by the very same concern, viz., to exempt the sale of newspapers from the levy of Centr....
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.... its purview. The context does not permit it. It could never have been included by Parliament. Before the said amendment, the position was: the State could not levy tax on intra-State sale of newspapers; the Parliament could but it did not and entry 92-A of List I bars the Parliament from imposing tax on inter-State sale of newspapers; as a result of the above provisions, while the newspapers were not paying any tax on their sale, they were enjoying the benefit of section 8(3)(b) read with section 8(1)(b) and paying tax only at 4 per cent on non-declared goods which they required for printing and publishing newspapers. Their position could not be worse after the amendment which would be the case if we accept the contention of the Revenue. If the contention of the Revenue is accepted, the newspapers would now become liable to pay tax at 10 per cent on non-declared goods as prescribed in section 8(2). This would be the necessary consequence of the acceptance of Revenue's submission inasmuch as the newspapers would be deprived of the benefit of section 8(3)(b) read with section 8(1)(b). We do not think that such was the intention behind the amendment of definition of the expression....