TaxTMI 
TaxTMI 
1986 (4) TMI 336
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....alore and Hubli, Dharwad and on the appointed dates in other places provided for the continuance of the levy of octroi by the locol authorities in the State. On the incessant demand of trade, industry and economists, the State of Karnataka, probably the very first State to undertake the reform, abolished the levy of octroi with effect from 1st April, 1979. In order to compensate the local bodies for the loss of octroi, which was one of their main sources of revenue, the State by virtue of the legislative powers derived from article 246 of the Constitution read with entry No. 52 of List II of the State List of the Seventh Schedule to the Constitution, enacted a progressive legislation called the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 (Karnataka Act 27 of 1979) ("the Act"). The Act which came into force from 1st June, 1979, provided for levy of tax on three goods, namely, (i) All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths; (ii) Tobacco and all its products and (iii) Sugar other than sugarcand....
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....1983 (Karnataka Act 38 of 1984) ("the 1984 Act") enacted amending several provisions of the Act, however, received the assent of the President on 28th September, 1984, and came into force from 1st April 1983, [vide section 1(2) of the said Act]. Section 6(3) of this Act substituting the earlier entries incorporated by the 1982 Act from 1st April, 1982, or validating what was sought to be achieved by the 1982 Act which is material reads thus: "6. Amendment of Schedule.-In the Schedule to the principal Act,- .............................................................................. (3) for items 4 to 16 and entries relating thereto, the following items and entries shall be and shall be deemed to have been substituted on the first day of April, 1982, namely: '4. Iron and steel, that is to say (i) pig iron and cast iron including ingot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap, and iron skull scrap; (ii) steel semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes); (iii) skelp bars, tin bars, sheet bars, hoe-bars and sleeper bars; (iv) steel bars (rounds, rods, squares, flats, octagons and hexagons, plain an....
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....power tillers. 15.. All kinds of ores. 16.. Jute.'; (4) items 5, 6, 8, 12, 13, 14, 15 and 16 shall be omitted; (5) after item 16, the following items shall be inserted, namely: '17. All industrial packaging materials; and 18.. All raw materials, component parts and any other inputs (e.g. processing or any other chemical solvents used in the solvent extraction or process, catalysts of and the like), which go into or may be used in the manufacture of an intermediate or finished product, when brought into local areas by an industrial unit or any other dealer. Explanation I.-The expressions "industrial unit" means a manufacturing unit, which falls within the definition of a "factory" under the Factories Act, 1948 (Central Act LXIII of 1948), but excludes (i) Handicrafts Manufacturing Units, (ii) Handloom Weaving Units and (iii) any other group or class of industries, which, may with reference to their nature, competitiveness, employment potential or such other factors, be notified by the State Government. II. "Raw materials, component parts and any other inputs" do not include sugarcane, cereals, oil seeds, pulses, timber or wood of any species, silk cocoons raw....
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.... 13 of 1982) are unenforceable by reason of non-compliance with the requirement of the proviso to article 304(b) or article 255 of the Constitution, until such compliance is shown; (b) Issue a writ of mandamus in each of these cases to the respondents directing them to forbear from enforcing the provisions of section 7(1)(a) and section 7(15) of the amending Act 13 of 1982, as long as non-compliance with the proviso to article 304(b) or with article 255(c) of the Constitution continues; (c) Quash that part of the Notification bearing No. FD 14 CET 82, dated 2nd April, 1982, which purports to bring to tax items 4 to 16 in the Schedule to the principal Act." This order was challenged by some of the petitioners and the State in Shah Hirachand Babulal and Company v. State of Karnataka (Civil Appeal No. 11455 of 1983 and connected cases) before the Supreme Court. On 28th November, 1984 the Supreme Court on taking note of the President's assent to the 1984 Act disposed all of them in these words: "During the pendency of these appeals the Karnataka Legislature adopted the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein (Amendment) Act, 198....
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.... of events, it is useful to notice the grounds of challenge before us, the justification pleaded for the same and then deal with the contentions. 14.. The petitioners have urged that the Bill that ultimately became the 1981 Act introduced without the previous sanction of the President or had not received the assent of the President in conformity with the requirements of articles 255 and 304(b) of the Constitution impeding the freedom of trade, commerce and intercourse throughout India, was at any rate unenforceable and the three notifications issued thereunder were illegal and unenforceable. 15.. In a common return, the respondents without disputing the factual position asserted by the petitioners on the Bill being introduced without the previous sanction of the President or that Act not being assented by the President, have however, sought to sustain them on more than one ground. First the respondents have urged that the validity of the 1981 Act having been upheld by this Court in the two Jyothi's cases [1987] 64 STC 254 (App); 1984 (1) Kar LJ 394 and [1987] 64 STC 208 the ground oil which the present challenge is founded was unavailable to them and in any event cannot be ex....
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....with a new argument addressed before it on a point earlier decided by the court in State of Bombay v. Bhanji Munji AIR 1955 SC 41 and its binding effect as a precedent. When confronted with that situation, it was urged for the appellant-Somawanti that an argument on the point had not been addressed in the earlier case and, therefore, the same does not operate as a binding precedent. In repelling the same Mudholkar, J., speaking for the majority, expressed thus: "The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided." The terms "an argument" and "a point" are not one and the same. Both are separate, distinct and different. We are of the view that an argument on a point or a ground is different from the point or ground and one cannot be confused with the other. The point decided in a case is different from an argument addressed on that point. What was done by this Court in 2nd Jyothi's case [1987] 64 STC 208 is also to the same effect. We are of the view that the principle enunciated in Somawanti's case AIR 1963 ....
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....oes not empower the Government to exercise its power retrospectively. In the absence of clear and specific language, we cannot construe the charging section 3 as empowering the Government to exercise its power retrospectively. Every sound rule of construction of statutes militates against the construction suggested by Sri Babu. 28.. In Hansa Corporation's case AIR 1981 SC 463 the Supreme Court construed the unamended section 3 of the Act in these words: "..................Even if, therefore, a literal grammatical construction were to be adopted, on a proper reading of the section power is conferred on the State Government by section 3 not only to specify different rates for different areas but also to specify local areas entry into which of scheduled goods would provide the taxing event. There is thus a power to choose and specify local areas as well as choose and specify rate of taxation subject to maximum prescribed in the section." Section 3 as originally enacted did not empower the Government to issue notifications from a date anterior to the date of publication of the notification or to give them retrospectivity. On the other hand, section 3 of the 1981 Act by amendin....
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....ional Law and Basu's Constitutional Law, the learned articles of M. Ramaswamy on "Indian Constitutional provisions" against barriers to trade and commerce examined in the light of American and Australian experiment (vide: J 1 ILI 320 to 399) and M.P. Singh's article on "Freedom of Trade and Commerce v. Power of Taxation" (Vol. 17 J. ILI. pages 366-397) do not deal with the precise question. But, fortunately for us the true scope and ambit of Part XIII and in particular article 304 has been explained by the Supreme Court in a large number of cases, though their correctness is doubted by some jurists (see Singh's aforesaid article). Hence, our task is only one of applying the law declared by the Supreme Court stearing clear of the controversies raised by jurists and others over the same. 32.. The 1984 Act, which is a later Act, had received the assent of the President is not in dispute. Before giving his assent to a later amending Act, as the 1984 Act, we must assume that the President had examined the whole Act, all the earlier amendments made before and their Constitutional effect also and on being fully satisfied with the requirements of the Constitution would have given his as....
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....e same had not been raised and argued before it, cannot be treated as the ratio or as a binding precedent and cannot, therefore, be followed by this Court as ruled by the Supreme Court in Rajpur Ruda Meha v. State of Gujarat, AIR 1980 SC 1707 at page 1708. 35.. We are of the view that what had been enunciated in Venkatrao's case AIR 1970 SC 126, notwithstanding the observations relied on by Sri Srinivasan is a firm legal principle enunciated on the very question that arises before us and, therefore, the same must be treated as the law declared by the Supreme Court and binding on us under article 141 of the Constitution. We are of the view that Rajpur Ruda Meha's case AIR 1980 SC 1707 relied on by Sri Srinivasan does not lay down a different proposition and assist him. 36.. In Kerala State Electricity Board v. Indian Aluminium Company Limited AIR 1976 SC 1031 a Constitution Bench of the Supreme Court was examining the validity of the Kerala Essential Articles Control (Temporary Powers) Act, 1961 and an order made thereunder called the Kerala State Electricity Supply (Kerala State Electricity Board and Licensees Areas) Surcharge Order, 1968. In that case one of the questions th....
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....n and the ratio in that case does not really bear on the point. We are also of the view that the principles in Jawaharmal's case AIR 1966 SC 764 are not also in conflict with the principles enunciated in Venkatrao's case AIR 1970 SC 126 and Indian Aluminium Company's case AIR 1976 SC 1031. Lastly in Jawaharmal's case AIR 1966 SC 764 the Court gave relief for the second period on which Sri Ullal laid great emphasis on the construction of the Acts passed by the State of Rajasthan from time to time and not on the ground that is urged before us. For all these reasons we find no merit in the contention of Sri Ullal and we reject the same. 40.. On the application of the ratio in Venkatrao's case AIR 1970 SC 126 and Indian Aluminium Company's case AIR 1976 SC 1031 we hold that the President by giving his assent to the 1984 Act, had in law given his assent to the 1981 Act. On this conclusion, it also follows that the objection that the 1981 Act was unenforceable for want of previous sanction of the President to the Bill or the assent of the President to that Act necessarily falls to the ground. 41.. With this we now pass on to examine the challenge to the three notifications issued b....