TaxTMI 
TaxTMI 
2005 (1) TMI 391
X X X X Extracts X X X X
X X X X Extracts X X X X
....naranjan Das, Swetaketu Mishra, Ms. Moushumi Gahlot, K.K. Saha, Manoj Saxena, Mohan Prasad Meharia, Siddharth Aggarwal, Rajshekar Rao, Satyakam, Raghunath Basanth, Asheesh Jain, Arunabh Patnaik, Karan Bharihoke, S.K. Mitra, Khem Chand, Bharat Singh, Ms. Kavita Wadia and Shrish Kumar Misra. for the Other Advocates. Senior Advocates: Harish N. Salve, S. Ganesh, Navroz Seervai, Sunil Gupta (Addl. Advocate-General for U.P.), K.K. Venugopal, M.N. Rao, B.B. Ahuja, B. Sen, Rakesh Dwivedi, Gopal Subramanium and R.F. Nariman. for the Senior Advocates. Additional Solicitor-General of India: Mohan Parasaran. for the Additional Solicitor-General of India. Mrs. RUMA PAL J. 1. The assessees/appellants are either manufacturers, dealers or sellers of tobacco and tobacco products. They have challenged the imposition and levy of a luxury tax on tobacco and tobacco products by treating them as "luxuries" within the meaning of the word in entry 62 of List II. 2. Entry 62 of List II of the Seventh Schedule to the Constitution relates to the exclusive power of State Legislatures to make laws with respect to "Taxes on luxuries, including taxes on entertainments, amusements, betting and gam....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of tax if he furnishes, in the manner prescribed, proof of payment of tax on such tobacco." (emphasis supplied) The words "receipt" and "tobacconist" which have been emphasized in the section by us have been respectively defined in section 2(e) and 2(h) as follows: "2. (e) 'receipt' means- (i) in respect of supply of tobacco by a tobacconist made by way of sale, the amount or valuable consideration received or receivable by him for such sale including any sum charged for anything done by him in respect of the tobacco so sold at the time of or before the delivery thereof and the price if charged separately, of any primary or secondary packing, other than the cost of freight or delivery or the amount realized as luxury tax when such cost or amount is separately charged; and (ii) in respect of supply of tobacco by a tobacconist made other- wise than by way of sale, the normal price at which the tobacco is sold, and the term 'normal price' shall have the same meaning as assigned to it in section 4 of the Central Excises and Salt Act, 1944; 2. (h) 'tobacconist' means: (i) a manufacturer whose turnover of receipts....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 245, 286, 301 and 304 of the Constitution. At the same time writ petitions under article 32 of the Constitution were filed in this Court for a declaration that the U.P. Ordinance No. 8 of 1994 was ultra vires the Constitution, basically on the ground that the levy was in substance, a tax on sales. 8. During the pendency of the proceedings, the U.P. Ordinance No. 8 of 1994 was amended by the U.P. Ordinance No. 22 of 1994 which was published in the Official Gazette on September 28, 1994. The preamble and the definition of tobacconists were altered. As far as the preamble was concerned, the phrase tax on supply of tobacco was changed to read "luxury tax on tobacco". But despite the change in the preamble there was no corresponding change in the taxable event in the body of the statute which continued to remain a tax on supply. The Explanation to the definition of "tobacconist" was also substituted after deleting the earlier Explanation. The substitution is not material. 9. On November 2, 1994, the High Court allowed the writ petitions impugning the levy of luxury tax. The High Court held that the levy was intra vires the Constitution and was legislatively competent. Following ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the assessment made on the basis of the returns so filed. 11. On May 14, 1995, the U.P. Ordinance No. 22 of 1994 was repealed and replaced by the Uttar Pradesh Luxury Tax Act, 1995, which came into force on the said date. The Act reproduced Ordinance No. 22 of 1994 without any material changes. The pleadings before this Court were suitably amended. 12. On September 17, 1995, the U.P. Tax on Luxuries Act, 1995, was repealed by the U.P. Ordinance No. 39 of 1995. Therefore, there has been no luxury tax in the State of U.P. since 1995 and as far as the State of U.P is concerned, the issue is of relevance for the period May 14, 1994, to September 17, 1995. The Andhra Pradesh Tax on Luxuries Act, 1987: 13. The Act is broadly similar to the U.P. Act both as to the scope and operation with regard to the levy of luxury tax on the sale and supply of commodities and in particular tobacco. The Act initially provided for the levy of luxury tax on "luxuries provided in a hotel and in a corporate hospital". In 1996 the Act was amended by the A.P. Act No. 28 of 1996 by which luxury tax was sought to be levied on specified commodities "for enjoyment over and above the necessities of l....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., and it was not a tax on sale as had been contended by the writ petitioners. It was held that the incidence of sale was adopted as a measure for the purpose of assessment and did not alter the essential character of the levy. It was held that the State had not encroached upon the field occupied by Parliament under entry 52 of the List by the Tobacco Board Act, 1975, and that there was no violation of article 301 because under the Act inter-State transactions were exempted from the levy of luxury tax. The challenge to the tax on the ground of article 14 was also negatived. 15. Leave was granted in several special leave petitions which were filed from the decision of the A.P. High Court on April 1, 1999, and an interim order was granted in the same terms as had been granted in matters arising out of the decision of the Allahabad High Court. The West Bengal Luxury Tax Act, 1994: 16. Section 2(c) of the Act, defines luxuries as meaning "The commodities, as specified in the Schedule, for enjoyment over and above the necessaries of life". Initially, the scheduled items related to tobacco and tobacco products as well as pan masala. The Schedule has been amended from time to time....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on that part of his turnover of stock of luxuries during any prescribed period which remains after deducting therefrom his such turnover during that period representing- (a) the value of such stock of luxuries as shown to the satisfac- tion of the prescribed authority to have been dispatched to places outside West Bengal; (b) the value of stock of luxuries of such class or classes or description as may be prescribed." 19. "Value of stock of luxuries" has been defined in section 2(m) as follows: 'value of stock of luxuries' means,- (i) in respect of any stockist, being a manufacturer of any of the luxuries, the value of such luxuries calculated at the ex-factory price at the time of receipt or entry thereof in his stock, and; (ii) in respect of any stockist, being an importer of any of the luxuries, the value of such luxuries calculated at the price thereof as per consignor's bill, invoice or consignment note or other document of like nature. And shall include- (A) excise duty and Central sales tax, if any, paid or payable on such luxuries by the manufacturer or importer thereof, as the case may be, and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....List II and duties on import and export of goods were referable to entry 83 of List I. In each of these cases higher rates of tax were charged or duty levied when the commodities in question were of higher value. According to Mr. Salve if the word "luxuries" in entry 62 were construed to include goods, then it would allow the State to legislate on all these several facets merely by describing the goods as luxuries. Similarly, if the word "luxuries" was to be understood as descriptive of goods it would mean that the entry would give the State overriding power to levy tax on all goods and would disturb the scheme of distribution of power on taxation and collection of revenue envisaged under the Constitution. It is submitted that there is no overlapping in the fields of taxation. There may be an overlapping on the subject-matter of the taxation but the taxable event must be different, it is contended that a luxury tax on items of luxury would fail this test unless the taxable event was the intangible act of providing luxury. Therefore, Mr. Salve contends, the word "luxuries" as used in entry 62 of List II has been used in the sense of an activity or service, namely, the providing of l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ods. The mere fact that there is a provision for refund in respect of inter- State sales did not, according to Mr. Venugopal, change the character of the impost. 25. Mr. R. Nariman also representing the assessees, submitted that the State Acts are violative of article 301 of the Constitution. It is submitted by Mr. Nariman, that the only exception to the right to free trade, commerce and intercourse throughout the territory of India provided for under article 301 related to articles which were res extra commercium. This exception did not apply to tobacco. The decision in State of Punjab v. Devans Modern Breweries Ltd. [2004] 2 RC 122. [2003] 10 Scale 202, which held that liquor was res extra commercium was sought to be distinguished on the ground that tobacco, unlike liquor, was not the subject-matter of any privilege, but was the subject- matter of ordinary trade or commerce. It is submitted that it was recognized by Parliament that the trade in tobacco was of national importance, and had been declared to be of national importance in inter-State trade and commerce under article 286(3) read with section 14 of the Central Sales Tax Act, 1956. Reliance was placed on the recent dec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....51 (SC). (1989) 3 SCC 677. It is said that luxury tax is an indirect tax and is ultimately collected from and its burden directly or indirectly falls on the consumers who enjoy the luxury. Responding to the argument regarding the use of the word "including" in entry 62 of List II, it is submitted, that tax on luxury has been recognized for a long time as a separate and distinct kind of tax and the principle of noscitur a sociis would not apply. As far as the U.P. Act is concerned, it is submitted that it was limited to tobacco and other such products. It is said that tobacco was inherently luxurious in the sense that it could not be said to be necessary to a person's health. On the other hand, it was recognized as having a harmful effect on health. It is said that it is not a tax on sale but on the article, tobacco, and articles made out of tobacco both of which give rise to luxuries in the sense that they are taken for pleasure and enjoyment and are wholly unnecessary for human health and sustenance. It is said that the luxury "aspect" or "component" which inheres in and arises on account of the article tobacco, and the activity of supply of tobacco is by itself a "matter" und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ules, 1920, and in particular to entry 6 which related to luxury tax and was the subject-matter of a report of the Tariff Commission of 1924-25. The question of imposition of tax on tobacco had been considered in connection with this entry. All these entries were clubbed together under the Government of India Act, 1935, in entry 52 of List II of that Act. It is said that this Court had repeatedly construed the word "luxury". In 1959, in the decision in Western India Theatres Ltd. v. Cantonment Board AIR 1959 SC 582, 585 this Court had said that the ordinary meaning was to be given to the word "luxury". The decision in Abdul Kadir [1976] 2 SCR 690 in 1976 also proceeded on the basis that the word "luxury" in entry 62, List II referred to goods. Finally, in 1989 Express Hotels P. Ltd. [1989] 74 STC 157 (SC); [1989] 178 ITR 151 (SC). had construed the entry to hold that the word "luxuries" covered goods both corporeal and incorporeal and services. It is submitted that there was no reason why this Court should deviate from a well-established series of precedents which had held the field for over five decades. It is also submitted that the word "including" in the entry indicated an expa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s indicated that the entry was not limited to the "consumption" aspect of luxuries, entertainment, etc. It is said that entry 62 can be read harmoniously with entry 54 and entry 54 is the aggregate entry and that entry 62 relates to an element/component of such aggregation. The substance of entry 62, according to Mr. Subramanium, is luxury, the form of the luxury either as goods or services is immaterial. It is finally submitted that tobacco squarely falls under entry 62. It is further submitted that the actual presence of a consumer is inessential to the concept of luxury tax. It is also submitted that the Constitution provides for legislation in respect of taxation of different taxable events in respect of the same subject and for taxation in respect of different aspects of the subject itself. It is said that unless the aspect was common for two entries, there was no question of harmonious construction nor of federal supremacy. The expression, "luxuries" refers to goods and services which foster "luxury", a sense of abundance, enjoyment and gratification. There are two aspects of luxury, the first being objects and services which are intrinsically capable of fostering a sense of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ord luxury may possibly be susceptible of all three meanings. According to the Oxford English Dictionary (2nd edition vol. IX) "luxury" could among other meanings be defined as: (1) abundance, sumptuous enjoyment, (2) the habitual use of, or indulgence in what is choice or costly, (3) refined and intense enjoyment; means of luxurious enjoyment; (4) in a particularized sense, some- thing which conduces to enjoyment or comfort in addition to what are accounted the necessaries. Hence, in recent use, something which is desirable but not indispensable and (5) as an attribute as luxury coach, cruise duty, edition, flat, liner, shop, tax, trade. 32. The High Courts and the West Bengal Taxation Tribunal have accepted the fourth meaning that the tax is on luxury goods or articles on the basis of the decision in Abdul Kadir v. State of Kerala [1976] 2 SCR 690, in which this Court had upheld the constitutional validity of the Kerala Luxury Tax on Tobacco (Validation) Act, 1964. The Act had sought to validate the collection of licence fees by the State under a statutory provision which had been struck down as unconstitutional. The invalidated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of Hotel & Restaurant Association of India v. Union of India [1989] 74 STC 102 (SC); [1989] 178 ITR 97 (SC). (1989) 3 SCC 634. In that case the hotel industry challenged the constitutional validity of the Expenditure Tax Act, 1987 (Central Act 35 of 1987). The Union of India sought to sustain the legislative competence to enact the impugned law under article 248 read with entry 97 of List I of the Seventh Schedule. The hoteliers urged that the legislation was squarely within entry 62 of List II since it imposed a tax on "luxuries". Counsel for the hoteliers argued on the basis that a tax on luxuries was a tax on the price paid for the sale of goods (vide para. 29 of the report). This Court rejected the challenge to the Act and upheld it saying that the subject-matter of the impugned Act was in pith and substance a tax on expenditure and not on luxuries or sale of goods. 35. Another decision on the words "tax on luxuries" in entry 62 is the case of Express Hotels P. Ltd. v. State of Gujarat [1989] 74 STC 157 (SC); [1989] 178 ITR 151 (SC). (1989) 3 SCC 677. In that case legislations of different States, namely, the States of Gujarat, Tamil Nadu, Karnataka and West Bengal whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... we proceed further we would like to clear the ground. Whatever be the similarities between the Constitutions of other countries with similar federal structures as this country such as the United States, Canada or Australia, this Court has, as a general rule held that the opinions expressed by the courts of those countries may not be helpful in construing the allocation of legislative heads in our Constitution: [see: Chhotabhai Jethabhai Patel and Co. v. Union of India [1962] Supp 2 SCR 1, Province of Madras v. Boddu Paidanna & Sons*, State of Bombay v. R.M.D. Chamarbaugwala [1957] SCR 874, Atiabari Tea Co. Ltd. v. State of Assam [1961] 1 SCR 809, Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 SCR 491] although they may be of some relevance in determining the true character of particular legislation [Subrah- manyan Chettiar v. Muttuswami Gounden [1940] FCR 188, Union of India v. Harbhajan Singh Dhillon† (1971) 2 SCC 779, 801-803]. Given the wealth of authority on the question of interpretation of leg- islative heads in this country, we deem it sufficient to restrict our opinion based on the views expressed by this Court. 40. The Indian Constitutio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taxation entry which may lead to overlapping must be eschewed. If the taxing power is within a particular legislative field it would follow that other fields in the legislative Lists must be construed to exclude this field so that there is no possibility of legislative trespass. 43. Classically, a tax is seen as composed of two elements: the person, thing or activity on which the tax is imposed and the incidence of tax. Thus every tax may be levied on an object or an event of taxation. The distinction between the two may not, ultimately, be material in the context of the Indian Constitution as we will find later. But for the time being we may note that both these elements are distinct from the incidence of taxation. For example the tax may be imposed on goods on the event of their manufacture, sales, import, etc. The law imposing the tax may also prescribe the incidence or the manner in which the burden of the tax would fall on any person and would take within itself the amount and measure of tax. The importance of this distinction lies in the fact that in India, the first two have been given a Constitutional status, whereas the incidence of tax would be a matter of statutory....
X X X X Extracts X X X X
X X X X Extracts X X X X
....airly and reasonably be said to be comprehended in it. [United Provinces v. Mt. Atiqua Begum AIR 1941 FC 16, Western India Theatres Ltd. v. Cantonment Board [1959] Supp 2 SCR 63, 69 and Elel Hotels and Investments Ltd. v. Union of India [1989] 74 STC 146. (1989) 3 SCC 698.] 47. In Express Hotels Ltd. v. State of Gujarat [1989] 74 STC 157 (SC). (1989) 3 SCC 677, it was noted that the view of the Bombay High Court in State of Bombay v. R.M.D. Chamarbaugwalla AIR 1956 Bom 1 that what was contemplated in entry 62 was "a tax on certain articles or goods constituting luxuries and not legislation controlling an activity which may not be a necessary activity", was overruled by this Court in State of Bombay v. R. M.D. Chamarbaugwala [1957] SCR 874. The view of the Calcutta High Court in Spences Hotel P. Ltd. v. State of West Bengal [1975] Tax LR 1890 to the effect that a tax levied under entry 62 cannot be restricted to certain articles only but may also be extended to things incorporeal was affirmed, it was said: "The concept of a tax on 'luxuries' in entry 62, List II, cannot be limited merely to tax things tangible and corporeal in their aspect as 'luxuries'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubricants Taxation Act† AIR 1939 FC 1, 8, 40]. 49. The argument of the assessees is that the tax leviable under entry 62, List II cannot be a tax on goods as that would not only allow the State to levy sales tax in contravention of article 286 but would permit trespass on to the Union's legislative fields under entries 83 and 84 of List I. Indeed the contention of the assessees is that the States have by the impugned legislations, done just that. Entry 83 demarcates the Union's power to legislate with respect to "Duties of customs including export duties". Entry 84 speaks of "Duties of excise on tobacco and other goods manufactured or produced in India except (a) alcoholic liquors for human consumption, (b) opium, Indian hemp and other narcotic drugs and narcotics but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry". 50. The States have countered this by contending that entry 62, List II envisaged a tax on luxury goods. Whereas duties of excise, customs and sales tax are not directly on the goods but with reference to goods and that the taxes are leviable on the events of manufacture, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble event. The decision in the Sea Customs Act case [1964] 3 SCR 787. which was rendered by this Court in its advisory capacity under article 143 was concerned with the construction of article 289 of the Constitution. The nature and incidence of the taxation entries in the legislative Lists was directly in issue and it was on the determination of this issue that the power of the Union to levy tax on property of the States under article 289 was considered (pages 822- 823 of the report). A tax on property was described as a direct tax and taxes on the taxable events in respect of property as indirect taxes based on the impact on the property. However, even in respect of "direct taxes" (in the sense used by the court in that decision) it was held by Ayyangar, J. in his concurring opinion, that it was ultimately a question of degree of impact. He said (at page 917 of the report) "for in the ultimate analysis the distinction between a direct and an indirect tax is a distinction based upon the difference in impact which is also expressed as a distinction based upon its being one not on property but on a taxable event in relation to property. If the taxable event is merely the ownershi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce." 55. Apart from this limitation on the States' jurisdiction to levy sales tax, are the restrictions placed by article 286. Article 286(1) prohibits the States from imposing or authorizing the imposition of tax on the sale or purchase of goods where such sale or purchase takes place (a) outside the State, or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. In addition article 286(3) provides that: "Any law of a State shall, in so far as it imposes, or authorizes the imposition of,- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29-A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." 56. Thus Parliament has been given the overr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction under which additional excise duties are leviable on specified goods manufactured or lying in stock. Sub-section (1) of section 3 reads: "3. Levy and collection of additional duties.-(1) There shall be levied and collected in respect of the following goods, namely, sugar, tobacco, cotton fabrics, rayon or artificial silk fabrics and woollen fabrics produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto, duties of excise at the rate or rates specified in the First Schedule to this Act." (emphasis added). 60. No State can levy luxury tax on items covered by section 3 of the ADE Act in respect of goods for the same taxable event, i.e., goods stored on manufacture, just by describing the goods as luxury goods. The overlapping of the powers exercised under entry 84 of List I and entry 62 of List II would then be evident. Similarly storage or stocking of imported goods is covered by entry 83 of List I and cannot be made the subject of levy by the States. 61. By the Constitution (Forty-si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw of a State which provides for levy of sales tax thereon will have to comply with the restrictions mentioned in section 15 of the Central Sales Tax Act, 1956. 63. No State can therefore by describing an item as a luxury, seek to levy tax on its supply. It cannot be disputed that as far as U.P. and A.P. are concerned, were it not for their interpretation of entry 62 of List II, the tax would be referable only to entry 54, List II. If entry 62, List II does not allow the taxation of goods, the levy would not be constitutionally sustainable. 64. In our opinion to read entry 62, List II as including articles of luxury cannot allow all these constitutional restrictions to be by- passed allowing States to levy tax on the supply of goods by describing them as luxury goods. As has been rightly contended by Mr. Parasaran appearing for the Union of India, the supply of luxury is nothing but the supply of goods since the goods themselves constitute the luxury. 65. So even if tobacco is an article of luxury, a tax on its supply is within the exclusive competence of the State but subject to the constitutional curbs prescribed under article 286 read with sections 14 and 15 of the Cent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le, but may be construed as clarificatory of the whole. 69. It has also been held that the word "includes" may in certain contexts be a word of limitation (South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat (1976) 4 SCC 601. In the context of entry 62 of List II this would not mean that the word "luxuries" would be restricted to entertainments, amusements, betting and gambling but would only emphasise the attribute which is common to the group. If luxuries is understood as meaning something which is purely for enjoyment and beyond the necessities of life, there can be no doubt that entertainments, amusements, betting and gambling would come within such understanding. Additionally, entertainments, amusements, betting and gambling are all activities. "Luxuries" is also capable of meaning an activity and has primarily and traditionally been defined as such. It is only derivatively and recently used to connote an article of luxury. One can assume that the coupling of these taxes under one entry was not fortuitous but because of these common characteristics. 70. Where two or more words are susceptible of analogous meaning are clubbed together, they are under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....trial Disputes Act which read: "Section 2(j) provides that 'industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen." It was found that the words in the definition were of very wide and definite import. It was suggested that these words should be read in a restricted sense having regard to the included items on the principle of "noscitur a sociis". The suggestion was rejected in the following language: "It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful; but, where the object of the Legislature in using wider words is clear and free of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der entry 56, on "vehicles" under entry 57 and on "animals and boats" under entry 58. There is no instance in any of the legislative Lists of a tax being leviable only with reference to an attribute. An attribute as an object of taxation without reference to the object it qualifies would lead to legislative mayhem, blur the careful demarcation between taxation entries and upset the elaborate scheme embodied in the Constitution for the collection and distribution of revenue between the Union and the States. For example would a luxury vehicle be subjected to tax under entry 62 or entry 57 of List II. In the latter case, the levy would be subject to provisions of entry 35 of List III and hence capable of being over-ridden by Parliament. If it is referable to entry 62 there would be no such concurrent power in Parliament. 77. Hence on an application of general principles of interpretation, we would hold that the word "luxuries" in entry 62 of List II means the activity of enjoyment of or indulgence in that which is costly or which is generally recognized as being beyond the necessary requirements of an average member of society and not articles of luxury. 78. Lest we be accused o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gned to the Federation. Entry 45 read "Duties on excise on tobacco and other goods manufactured or produced in India ". List II which was the Provincial Legislative List contained an entry No. 48 "Taxes on the sale of goods" and on advertisements. Entry 50 read: "Taxes on luxuries including tax on entertainment, amusement, betting and gambling". Here too there is no evidence of any tax being imposed by the State under this entry on any goods. On the other hand the imposition of tax on tobacco was brought under entry 45 of List I. 81. Entry 50 of the Provincial List (now entry 62 of List II) was resorted to impose entertainment tax on cinema houses under the Cantonments Act, 1924, by the State of Bombay. The tax was up- held on the ground that the entry contemplated a law which imposed tax on the act of entertaining-Western India Theatres Ltd. v. Cantonment Board [1959] Supp 2 SCR 63, 69. 82. Prior to the framing of the present Constitution the debates in the Constituent Assembly show that the suggestion that entry 62 of List II should read as "taxes on entertainments, amusements, betting and gambling, racing and other such luxuries" was negatived on the ground that it would c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les of luxury. This is also the sense in which States have all along understood the word as indicated in their evidence given in response to the question posed by the Taxation Enquiry Commission with reference to the levy of sales tax in 1953-54 Report of the Taxation Enquiry Commission 1953-54, Volume IV,. The question was "should there be special rates of levy, higher than the ordinary rate for certain articles. If so, for which types of articles.". The response to this question by all the States was in the affirmative. It would suffice for our purposes to note the response of the two States whose statutes are impugned, viz., A.P. and U.P. Andhra Pradesh said: "In this State, special rates of tax at a higher rate are levied on articles mentioned in section 3(2) of the Act, which are luxury goods. It is proposed to increase the number of articles in this list by incorporating certain other items brought to notice by the lists of the other States." Similarly Uttar Pradesh said: "Special rates of levy, higher than the ordinary rates are justified in respect of many luxury goods, needs on which unduly high profits are being made by the producers or dealers and go....