TaxTMI 
TaxTMI 
1983 (4) TMI 234
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....as, tandoorwallas, lohwallas, and tea-stall holders. Entry No. 34 was added to Schedule I to the basic SRO No. 157 relating to taxable goods which read as under: "34. Sales made by dhabawallas, tandoorwallas, lohwallas, tea-stall holders and halwais. 2 per cent." Alongside, entry No. 68 of Schedule II was suitably amended, which after its amendment, read as under: "(iii) Articles of food and drink sold in boarding houses conducted for the exclusive use of students or canteens run exclusively for the use of employees of factories or armed forces." In its last para, the first two provisos were also substituted by the following: "Provided that in relation to dealers who run hotel, restaurant, cafe and other similar establishments wherein food preparations including coffee and tea (but excluding liquor and beer) are served, the maximum turnover not liable to tax shall be Rs. 25,000: Provided further that in relation to dhabawallas, tandoorwallas, lohwallas, tea-stall holders and halwais, maximum turnover not liable to tax shall be Rs. 40,000." The obvious effect of this SRO being the withdrawal of exemption from payment of sales tax on the goods sold by dhabawallas, tandoorwallas,....
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.... concerned as unconstitutional, as in its opinion, since halwais and bakerywallas did the same type of business and were thus similarly situated, charging sales tax from halwais alone, would clearly expose them to hostile descrimination, infringing the right of equality guaranteed under article 14 of the Constitution. The Full Bench, accordingly, concluded its judgment with these observations: "For the reasons given above, we hold that while section 4 of the Act is intra vires and constitutional, item 34 and the second proviso of the notification passed under section 5 of the Act, namely, No. SRO 729 dated 11th October, 1972, which run thus: '34. Sales made by dhabawallas, tandoorwallas, lohwallas, tea-stall holders and halwais. 2 per cent. Provided further that in relation to dhabawallas, tandoorwallas, lohwallas, tea-stall holders, and halwais, maximum turnover not liable to tax shall be Rs. 40,000.' are discriminatory and violative of article 14 of the Constitution of India. As these are the only offending parts of the notification which are severable from the rest of the notification, we strike down and quash the aforesaid parts." None of the parties challenged this judgmen....
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....asic SRO No. 157. This SRO too, for the sake of ready reference, is reproduced as below: "SRO 194.-In exercise of the powers conferred by section 5 of the Jammu and Kashmir General Sales Tax Act, 1962 (XX of 1962), the Government hereby rescind Notification SRO No. 81 dated 6th February, 1978: Further the Government in exercise of the powers conferred by section 5 of the said Act hereby direct that entry 94 of Schedule II of Notification SRO No. 157 dated 15th May, 1965, shall be deemed to have been deleted with effect from 1st day of April, 1977. By order of the Government of Jammu & Kashmir." Through the medium of these writ petitions, the petitioners seek to challenge the constitutional validity of section 4(1) of the Act and SRO Nos. 121 and 187 dated 8th March, 1976, and 31st March, 1978 respectively, besides the notices issued to them to submit their accounts for determining the extent of their liability to pay sales tax for the accounting year mentioned therein. The challenge is based upon the following grounds: (1) Section 4(1) of the Act is ultra vires of the Constitution, as it suffers from the vice of excessive delegation and the Full Bench decision in Sain Dass's ca....
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.... 34 STC 426 (FB); 1974 J & K LR 531 (FB) did not require reconsideration. We now proceed to deal with each ground separately. Ground No. (1).-The Full Bench, on the authority of various decisions given by the Supreme Court and other High Courts in India, had upheld the constitutional validity of section 4(1) in Sain Dass's case [1974] 34 STC 426 (SC); 1974 J & K LR 531 (FB). We are in respectful agreement with this view taken by it and do not feel persuaded at all to make a reference to a still larger Bench for its reconsideration, much less, when except raising a feeble argument, nothing substantial has been brought to our notice by the learned counsel for the petitioners, that may raise even the slightest doubt in our mind in regard to its correctness. This ground, accordingly, fails. Ground No. (2).-This ground is in fact the sheet anchor of the petitioners' case. The Full Bench in Sain Dass's case [1974] 34 STC 426 (SC); 1974 J & K LR 531 (FB) had held SRO No. 729 as violative of article 14, as in its opinion, halwais and bakerywallas who prepared and sold identical articles of food like nans, puris, kulchas, mathies, etc., stood similarly situated, with the result, that kee....
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....preparing the same kind of articles of food. Unfortunately the petitioners have been treated by the Government with draconic severity by following the policy of ruthless discrimination so far as the petitioners are concerned. There does not appear to be any reasonable basis for classifying the petitioners in a separate category for the purpose of taxation and leaving out the bakerywallas, who are equally placed and similarly circumstanced with the petitioners........" By making these observations, the learned judges clearly meant that halwais were also entitled to claim exemption, so long as the same was enjoyed by bakerywallas. If that be so, as in fact it is, then the inevitable consequence of the aforesaid observations was the revival of entry No. 68 of Schedule II in the same form in which it existed prior to 16th October, 1972, i.e., the date on which SRO No. 729 had come into force, so far as halwais were concerned. Consequently, they could not have been validly taxed even thereafter, so long as the vice of discrimination existed, or in other words, so long as bakerywallas who were similarly situated with them, continued to enjoy exemption under entry No. 4 of Schedule II. ....
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....ven a word about them, nor did it find any similarity between them and bakerywallas to attract the violation of article 14, as it had found it in the case of halwais. Obviously, therefore, the Full Bench could not have struck down entry No. 68 from SRO No. 729, as by doing so, it would have conferred the benefit of exemption even upon dhabawallas, lohwallas, tandoorwallas and tea-stall holders, for which it had obviously found no justification. The ratio of the judgment clearly indicates that the Full Bench had found justification for upholding the exemption in favour of halwais alone, and in favour of none else. It is true that in the operative part of its judgment it struck down the whole of entry No. 34 and the second proviso of SRO No. 729, but this part of its judgment has to be understood and interpreted in the backdrop of the facts found and the reasoning adopted by it. As held by their Lordships in B. Shama Rao v. Union of India [1967] 20 STC 215 (SC); AIR 1967 SC 1480: "It is trite to say that a decision is binding not because of its conclusion but in regard to its ratio and the principle laid down therein." Viewed thus, we are clearly of the opinion that the Full Bench i....
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.... issued, even bakerywallas ceased to enjoy the exemption, which they had till then enjoyed under entry No. 4 of Schedule II. By virtue of SRO No. 121 not only bakery and confectionary goods were specifically taxed at the rate of 4 per cent by adding entry No. 45 to Schedule I, but a corresponding amendment was also made in Schedule II to give effect to this intention, and entry No. 4 of the said schedule was omitted under which bakerywallas used to claim exemption till then. This SRO was amended by SRO No. 162 and bakery goods, the cost whereof was less than Rs. 10 per kg. alone were exempted from payment of sales tax, by adding to that effect entry No. 94 to Schedule II. Entry No. 45 of Schedule I was no doubt rescinded by virtue of SRO No. 80, but the only effect which this SRO produced was that whereas bakery goods not selling at the rate of Rs. 10 per kilogram, which were being previously taxed at the rate of 4 per cent, were made liable to be taxed at the rate of 7 per cent under the residuary entry No. 35 of Schedule I. Things, however, did not stop here. By virtue of SRO No. 194, even entry No. 94 of Schedule II was rescinded, with the result, that bakerywallas ceased to enj....
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....IR 1970 SC 385, wherein it has been held: "........... The courts will not, therefore, ascribe retrospectivity to new laws affecting rights unless by express words or necessary implication it appears that such was the intention of the legislature. The Parliament can delegate its legislative power within the recognised limits. Where any rule or regulation is made by any person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect..." It, therefore, follows that SRO No. 187 took effect not on 1st April, 1977, but only on 31st March, 1978, i.e., the date on which it was actually issued. This ground consequently succeeds. Ground No. (6).-Inviting....