TaxTMI 
TaxTMI 
1968 (5) TMI 48
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...., the new States of Punjab and Haryana came into being by reason of the States Reorganisation Act, have been fully stated in Shri Laxmi Cotton Traders Pvt. Ltd., Hansi v. The State of Haryana and Another(1), which deals with a similar (1) Civil Writ No. 311 of 1968; reported at page 335 supra. controversy regarding the State of Haryana. That order should be read as part, of this order because there are certain contentions which have been dealt with in the Haryana case which do arise in this petition as well. It may be mentioned that the points common to both the Punjab and Haryana petitions deal with the state of affairs prevailing before the 1st of November, 1966. Up to this date, the States of Punjab and Haryana were part of the old State of Punjab. The legislation, after this date, has taken a slighly different turn because each of the States has amended the Act to suit its own requirements. That is why it has been necessary to deal only with the matters that arise after the 1st of November, 1966. This order is, therefore, confined only to these points. And to repeat, the order in the Haryana case has fully covered the ground relating to the period prior to the 1st of November, ....
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.... common ground that section 5(3) applies to the petitioners in the present petition as well as in the other connected petitions because all such petitioners fall in the category of "last purchasers". The contention of the learned counsel for the petitioners is that section 5(3)(a)(ii) violates Article 303 of the Constitution of India because "purchase tax" is levied on the last dealer who consumes the goods. If the goods are exported out of Punjab, no such purchase tax is leviable because vis-a-vis those goods, the person selling would not be a dealer within the definition of the word "dealer". The contention proceeds that in the State of Punjab, discrimination has been made against the residents of Punjab, inasmuch as if the goods are consumed in the State of Punjab, the residents of Punjab pay "purchase tax" whereas if the goods are not consumed in the State of Punjab and are sold in the inter-State trade, etc., there is no purchase tax on them. In this situation, there is discrimination against the person who consumes goods in Punjab, as against a person, who consumes goods outside the State of Punjab. Mr. B.R. Tuli, learned counsel for the State of Punjab, in reply, contends....
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....er the Act from his "taxable turnover". Only those taxes, which directly and immediately restrict trade, fall within the purview of Article 301; and as there is no such result accruing from the impugned provision, even on merits, the petitioners have no case. After examining the respective contentions of the learned counsel for the parties, I am of the view that the contentions advanced by the learned counsel for the petitioners are not sound; whereas those advanced by the learned counsel for the State are well-founded and must prevail. In the first place, Article 303 does not come into play. This article is specifically limited to the entries concerning trade and commerce and does not touch the laws made under other entries. Taxation is treated as a distinct matter for the purposes of legislative competence. Therefore, this article cannot be invoked. Reference in this connection may be made to the decision of the Andhra Pradesh High Court in East India Sandal Oil Distilleries' case[1962] 13 S.T.C. 79; A.I.R. 1962 A.P. 204. and the two decisions of the Supreme Court in M.P.V. Sundararamier & Company[1958] 9 S.T.C. 298; A.I.R. 1958 S.C. 468. and Atiabari Tea Company'sA.I.R. 1961 S.C....
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....ing three transactions. In the case of purchase and sale in the course of inter-State trade, the purchase tax is payable in the State from which the movement of goods commences and, in the instant case, it will be Punjab. In the case of third category of persons, the purchase tax will be leviable in the State of Punjab as the purchase made in the State occasioned the movement of the goods. And so far as the fourth category of persons are concerned, they admittedly fall within the ambit of the purchase tax. Thus it will be seen that the contention, that there is discrimination regarding purchase tax inter se these four categories of dealers, is without foundation. Thus there would be no violation of Article 303 of the Constitution. Even on merits, the petitioners must fail. The petitioners are registered dealers. Every dealer's taxable turnover is determined and thereafter the tax is imposed. Every dealer can claim the deductions admissible under the Act. Moreover, only those restrictions are bad which directly and immediately restrict or impede the free flow and movement of goods in the course of trade. No doubt, taxes can do so. But only those taxes will bring about this result wh....
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....he purchase tax. The purchase tax limit being the maximum as prescribed in the Central Sales Tax Act, the addition of this fee will necessarily lead to the excess in the limit prescribed by section 15 of the Central Act. The learned counsel places his reliance on the decisions in Kasturi Seshagiri Pai and Company v. Deputy Commissioner of South Kanara[1961] 12 S.T.C. 629; A.I.R. 1962 Mys. 1. and Pendakur Virupanna Setty & Sons v. State of Mysore and Others13 L.R. 327 (Mys.). This contention must fail on the short ground that market fee is not a tax; but is only a charge for services rendered. It was conceded that if market fee was held not to be a tax, the contention would necessarily fail. Therefore, the only question that requires determination is, whether market fee is a tax? The matter is not res integra. It was held in Shri Piara Ram v. State of PunjabCivil Writ No. 308 of 1963., decided by Falshaw, C.J., and Harbans Singh, J., on the 5th of November, 1963, that the market fee is not a tax. To the similar effect is the decision of the Supreme Court in Mohammad Hussain Gulam Mohammad and Another v. The State of Bombay and AnotherA.I.R. 1962 S.C. 97., where a similar quest....
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....slature ..... that the levy must be at one stage, as again mentioned in the Central Act, will be of no avail, unless the Act, or the Rules framed under it, make it very clear that there will be no levy or collection of tax, except from the persons who are bound to pay, as per the Central Act. It is here that there is considerable difficulty caused by the absence of any provisions, either in the Act or in the rules or the forms, indicating the stage at which the tax is to be levied. In the case of commodities, like cotton, which come under the category of 'declared goods', tax can be levied only at a single point, as is made clear by section 15(a) of the Central Act, and, in our opinion, there can be no legal liability for payment of tax accruing, until and unless the Act or the Rules framed thereunder prescribe a single point for taxation. For the matter of that, even in the final return to be sent by a dealer under the Act, the dealer will have to show in the taxable turnover all purchases of cotton effected by him during the accounting year..." If these observations are kept in view, it will be easier to understand the observations of their Lordships in this decision on which con....
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....r did not exempt purchase to the extent of Rs. 2,27,250 on the ground that cotton of that value was in stock on the last day of the assessment year with the assessee and was liable to be taxed as last purchase. The Appellate Assistant Commissioner (Commercial Taxes) upheld the order, but the Sales Tax Appellate Tribunal accepted the appeal and remanded the case to the Appellate Assistant Commissioner for disposal afresh in the light of observations made by it. The department filed a revision in the Madras High Court which was dismissed: vide The State of Madras v. T. Narayanaswami Naidu and Another[1965] 16 S.T.C. 29. The learned Judges observed: "The stage of last purchase or last sale in a State will be reached just before the goods are caught up in the stream of export and go outside the State, or just before the goods find their way to a factory when they are manufactured into some other goods." The State of Madras obtained special leave to appeal to the Supreme Court and that appeal was dismissed on April 12, 1967. The judgment is reported in The State of Madras v. T. Narayanaswami Naidu and Another[1968] 21 S.T.C. 1. Their Lordships held that under section 4 of the Act read w....