TaxTMI 
TaxTMI 
TaxTMI 
1994 (9) TMI 325
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....sub-sections (1) and (2) of the said section, by any dealer having his place of business in the State, in respect of the sale by him, from any such place of business in the course of inter-State trade or commerce, of cement, to any Central or State Government undertaking or corporation or an autonomous body under the Government, shall be calculated at the rate of 7 per cent. [Published in Rajasthan Gazette, Extraordinary, Part 4(C)(II) dated January 9, 1990.]" Notification dated June 27, 1990, reads as follows: "Notification No. F. 4(72)FD/Gr. IV/82-34 Jaipur dated June 27, 1990. S.O. 113.-In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), and in supersession of this Department Notification No. F. 4(72)FD/Gr. IV/82-77, dated January 8, 1990, the State Government being satisfied that it is necessary so to do, in the public interest, hereby, with immediate effect, directs that the tax payable under sub-sections (1) and (2) of the said section, by any dealer having his place of business in the State in respect of the sale by him from any such place of business in the course of inter-State trade or com....
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.... sale to be issued by him; (ii) that the burden to prove that the transaction was in the nature of inter- State sale, shall be on the dealer; and (iii) that the dealer making inter-State sales under this notification shall not be eligible to claim benefit provided for by the Notification No. F. 4(72) FD/Gr. IV/81-8, dated May 16, 1986, as amended from time to time. This notification shall come into force from April 1, 1994 and shall remain in force up to March 31, 1995. [No. F. 4(8)FD/Gr. IV/94.701 By order of the Governor, Sd./-N.C. Goel, Deputy Secreatry to Government. [Published in Rajasthan Gazette, Extraordinary, Part 4(C), dated March 7, 1994.]" 4. Writ Petitions Nos. 656 of 1994, 788 of 1994 and 803 of 1994 were filed in February, 1994, i.e., prior to issue of Notification dated March 7, 1994. By these writ petitions, they challenged the legality and validity of the first two notifications. Consequent to the issuance of the third Notification dated March 7, 1994, they were appropriately amended to include a challenge to Notification dated March 7, 1994. 5.. It appears that some of the writ petitioners initially filed a writ petition under article 32 of the Constit....
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....d enshrine a principle of paramount importance, viz., taxation is not to be resorted so as to give preference to goods manufactured in one State over goods manufactured or produced in other States. 8.. Their case further is that section 8 of the Central Sales Tax Act deals with rates of tax on sales in the course of inter-State trade or commerce. The object of the law as contained in this section is that the rate of Central sales tax shall in no event be less than the rate of local sales tax for goods in question though it may exceed the local rate in case that rate be less than 10 per cent. It is pleaded that variation in the rate of inter-State sales tax affects free-flow of trade and commerce and creates a local preference which is contrary to the scheme of Part XIII of the Constitution of India. It is pleaded that the impugned notifications, purport to have been issued in exercise of powers conferred by sub- section (5) of section 8 of the Central Sales Tax Act, 1956. By Notification dated January 8, 1990, it was directed that the tax payable under sub-sections (1) and (2) of section 8 of the aforesaid Act by any dealer having his place of business in the State in respect of ....
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....ercourse throughout the territory of India and is hit under relevant articles 301, 302, 303 and 304 of Part XIII of the Constitution of India. 11. How this trade has been affected adversely to the prejudice of cement manufacturers in Gujarat has been stated in the latest writ petition, viz., D.B. Civil Writ Petition No. 2645 of 1994 (Saurashtra Cement) in para 13(a), (b), (c), (d), (e) and (f), which pleas are illustrative of the pleas in all the writ petitions. We may reproduce the averments made in aforesaid para 13 and its sub-paras (a) to (f) for facility of reference: "13(a). The average monthly despatches from outside the State of Gujarat has increased tremendously on account of the impugned notification under section 8(5) of the Central Sales Tax Act, 1956, as could be seen hereunder: Year Average Mfg. Despatches from outside Gujarat Percentage increase 1991-92 47,000 M.T. ... 1992-93 59,000 M.T. 125% over 1991-92 1993-94 70,732(till July) 119% over 1992-93 Overall 150% over 1991-92 (only in 4 months) (b) The implication to the detriment of Gujarat manufacturers could be seen inasmuch as almost all the neighbouring States have increased the despatches to th....
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....st of such unregistered dealers/consumers is given hereunder: 1. Videocone Narmada Electronics. 2. Zaveri Polymers (P) Ltd., Palej. 3. Gujarat Inject Hospital Ltd., Baroda. 4. Steel Co. Gujarat Ltd., Palej. 5. Gujarat Spinners Ltd., Amletha. 6. Saraf Foods Ltd., Waghodia. 7. Rishabh Inds. Ltd., Waghodia. 8. Jayshree Insulators Ltd., Halol. 9. Rubamin Inds., Halol. 10. Khatau Junkar Ltd., Ankleshwar 11. Ashok Organics Ltd. 12. Lactose India Ltd., Poicha. 13. Appolo Tyres. 14. Deepak Nitrite Ltd., Nandesari. 15. Gujarat Godrej, Valia. 16. Gokak Vadodara Spinning Mill, Baroda. 17. Indu Nisan, Bajuwa. 18. Inox India Ltd., Halol. 19. Kanoria Chemical Inds., Ankleshwar. 20. Varun Seacon Ltd., Nadiad.. 21. Transpek Inds. Ltd., Kalali. 22. Synergy Polymers Ltd., Baroda. 23. Baroda Alloys Casting Ltd., Baroda. 24. Bentol Chemicals Ltd., Panoli. 25. Ravi Hi-tech Ltd., Baroda. 26. Clarisis Organics Ltd., Mokshi. 27. Simalin Chemicals Inds. (P) Ltd., Baroda. 28. Chemox Chemicals Inds. (P) Ltd., Panoli. 29. Panchmahal Steel Ltd. 30. Torrent Gujarat Biotech Ltd. 31. Pesticides India Ltd., Panoli. 32. United Phosphorous, Ankleshwar." 12. It has been pleaded that b....
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.... denied that impugned notifications) create any preference in favour of the cement manufacturers in Rajasthan or are violative in any manner of the provisions of the Constitution or adversely affect inter-State trade of cement in any way. 17.. Since all the writ petitions involve substantially same questions of facts and law, they have been heard together by consent of all concerned and are being disposed of by a common order. 18.. At the outset we may state that Notifications dated January 8, 1990 and June 27, 1990, have admittedly been superseded by the Notification dated March 7, 1994 and since the aforesaid two notifications are no longer operative, the writ petitions have become infructuous to that extent and the challenge to these notifications does not survive and we may confine ourselves to the examination of the legality and validity of the latest Notification dated March 7, 1994. This very plea has also been taken by respondents Nos. 1 and 2 in the following words: "It is submitted that the Notification dated January 8, 1990 (annexure B) was superseded by the Notification dated June 27, 1990. The Notification dated June 27, 1990, has been further superseded by the Noti....
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.... in law. Petitioners have mainly placed reliance upon the decision in Indian Cement Ltd. v. State of Andhra Pradesh [1988] 69 STC 305 (SC); AIR 1988 SC 567. It has been submitted that the said judgment is not in consonance with the earlier and later judgments of the apex Court and the notification was lawfully issued and did not violate any of the constitutional provisions or provisions of the Central Sales Tax Act. Hence, the writ petitions were devoid of merit and deserved to be dismissed. 22. We have heard the learned counsel for the parties at great length and we are of the view that these writ petitions, being devoid of merit, deserve to be dismissed. Firstly, on facts, we do not find that reduction of inter-State sales tax by the impugned notification was calculated to impede the free-flow of trade in cement in any way. We have the ipse dixit of the petitioners qua their pleas in para 13(a) to 13(f) already reproduced above. It was for the petitioners to have placed cogent, credible and trustworthy material on record to establish that their averments are correct and true. Admissions made on these points by State of Gujarat do not in any way advance the case of the petitioner....
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....992 on Nigam's file of even number. Sd/-B.S. Rami Deputy Manager (N) S.S.N.N.L. Encl: Six tender in original." A bare look at the document would go to show that the rate at which cement from J.K. Cement had been accepted by Sardar Sarovar Nigam Ltd. was substantially the same as negotiated with the manufacturers from Gujarat. Not only this, the document shows that the order placed with J.K. Cement is of much lesser quantity than the orders placed with other manufacturers in Gujarat. Hence, the allegation that the lowered rates of inter-State sales tax prejudicially affected the sale of cement by manufacturers in Gujarat, is not well-founded and has not been satisfactorily established. No document has been placed on record to show that after issue of impugned Notification dated March 7, 1994, the prices at which Rajasthan cement was being sold in Gujarat were substantially lower than the prices of cement manufactured in Gujarat. Hence, when the contesting respondents challenge the assertion of the petitioners on this score, the ipse dixit of the petitioners, without any proper supporting material cannot be accepted. 23.. That cement from Rajasthan was being sold in Gujarat on a l....
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....9 STC 305; AIR 1988 SC 567. On a careful reading of the said judgment, we find that on facts that case was altogether different. Two notifications issued under section 8(5) of the Central Sales Tax Act, one issued by the Government of Andhra Pradesh and the other issued by the Government of Karnataka were challenged in that case. By both the notifications, which were in identical terms, the Central sales tax was reduced to 2 per cent. 27.. In none of the two notifications impugned in Indian Cement Ltd. v. State of Andhra Pradesh [1988] 69 STC 305 (SC); AIR 1988 SC 567, a condition had been incorporated as we find in the impugned notifications. The averments of the petitioners in the said writ petition were not even contested by the State of Karnataka and hence the averments on facts had been accepted at the face value. Even in the counter of the State of Andhra Pradesh, it had been admitted that since indigenous cement had to be sold within the State, and bulk consumers in the State were finding cement manufactured outside the State cheaper hence the reduction was made. It was in the context of the admitted facts that the apex Court found that the offending notifications were bad.....
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....ories) any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. 30.. The clear import of this article is that it does not deprive a State of power to levy taxes on imported goods if such taxes are also imposed on the goods manufactured in the State. Clause (b) empowers a State to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within the State as may be required in the public interest. Thus there are two limitations: (i) the restrictions must be reasonable, and (ii) they must be required in the public interest. Moreover, a Bill authorising such restrictions must receive the previous sanction of the President. 31.. Here, we may refer to the provisions of section 8(5) of the Central ....
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....ods referred to in clause (b) of sub-section (1)- (a) (omitted); (b) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power; (c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale; (d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause (c). (4) The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner- (a) a decla....
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....sume this statement to be true unless rebutted satisfactorily. 33.. In the writ petitions specific reliance has been placed on paras (11), (12), (14) and (15) of Indian Cement Ltd. v. State of Andhra Pradesh [1988] 69 STC 305 (SC); AIR 1988 SC 567, which were of general nature and as dem- onstrated by us, have no application to the facts of the present cases. These paras/ their gists have been quoted in the writ petition and we need not encumber this judgment by reproducing them, for the reason that on facts they have no applicability. 34.. Learned Advocate-General cited certain rulings of the apex Court in support of his contention that the decision in Indian Cement Ltd. v. State of Andhra Pradesh [1988] 69 STC 305 (SC); AIR 1988 SC 567 had laid down law contrary to its earlier and later dicta in other cases but we need not enter into this aspect because we are of categorical opinion that Indian Cement's case [1988] 69 STC 305 (SC); AIR 1988 SC 567 has no application to the facts of the present cases. 35.. However, we feel inclined to quote the following classic observations made in State of Madras v. N.K. Nataraja Mudaliar [1968] 22 STC 376 (SC); AIR 1969 SC 147 wherein a five ....
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....ticular commodity, the market conditions-internal and external-and the likelihood of consumers not being scared away by the price which includes a high rate of tax. Attention must also be directed to sub-section (5) of section 8 which authorises the State Government, notwithstanding anything contained in section 8, in the public interest to waive tax or impose tax on sales at a lower rate on inter-State trade or commerce. It is clear that the Legislature has contemplated that elasticity of rates consistent with economic forces is clearly intended to be maintained." (at pages 389-390 of STC; from para 16 of AIR) To our mind, these observations support the view, we have taken in these cases that petitioners have failed to show that the impugned notification(s) were in any way intended or calculated to impede free-flow of trade or were intended and calculated to give any undue preference to manufacturers of cement in Rajasthan. 36.. Learned counsel for the petitioners placed great reliance upon the following observations at page 315 of STC; 573 of AIR of Indian Cement's ruling [1988] 69 STC 305 (SC); AIR 1988 SC 567 abstracted from the decision in State of Madras v. N.K. Nataraja Mu....