TaxTMI 
TaxTMI 
1994 (2) TMI 261
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....4 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 has held to the contrary. We may briefly indicate how th....
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....ation 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 prescribe the form of certificate of registration of the registered dealer p....
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.... 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 registration contemplated by section 8(3)(b)] were issuing forms "C" [declarations contemplated ....
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....y 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 Constitution as well as the basic importance and relevance of the freedom of press. Article 19(1....
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....ature 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 State is judged today by the extent of freedom the press enjoys in that State. According to Douglas, J....
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....ed, 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 Newspaper (Price and Page) Act, 1956, empowering the Central Government to regulate the price of newspapers in re....
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....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 Central sales tax. The amendment was not intended to create a burden which was not there but to remove the burden, if any ....