TaxTMI 
TaxTMI 
1998 (11) TMI 633
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....TC Limited. W.P. No. 16913 of 1996 is filed by M/s. VSR Industries Limited, W.P. No. 16914 of 1996 is filed by M/s. Godfrey Philips India Limited and others and W.P. Nos. 1560 of 1997 and 25071 of 1996 are filed by M/s. Purandas Ranchoddas and Sons and others. The 1st respondent is the State of Andhra Pradesh and the 2nd respondent is the Union of India, the 3rd respondent is the Chairman, Central Board of Excise and Customs and the 4th respondent is the Commissioner of Commercial Taxes. By W.P. No. 16909 of 1996, the petitioner is challenging the levy of luxury tax on cigarettes and tobacco products at a rate of 5 per cent on manufacturers and importers of all forms of manufactured tobacco including cigarettes. Originally an ordinance was promulgated on August 1, 1996 amending the AR Tax on Luxuries Act, 1987 (State Act 24 of 1987). The said Ordinance later on became an Act (Act No. 28 of 1966). The petitioners in other writ petitions also challenged the validity of the Act No. 9 of 1997. 2.. The facts in brief are as follows: The was a meeting of the National Development Council in December, 1956 and in the said meeting, it was unanimously decided that sales tax levied, int....
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....rest. Section 29 read with section 3A indicates that at the intention of the Legislature under the Act is to levy tax on sales of tobacco; that there is no distinction between the supply of luxury and sale of luxury as the supply of tobacco and sale of tobacco include transfer of goods, i.e., property in goods is transferred for consideration. In other words, there is transfer of ownership in goods for a consideration. Therefore, the incidence of tax is on; sale of tobacco products. If it is not a tax on sale of tobacco, there is no need to exempt a tobacconist whose turnover receipts are less than Rs. 2 lakhs under the 1st proviso and the tobacconist who sells tobacco products in small bunks and the consignment of sale and inter-State transactions under the 3rdproviso. The very fact that inter-State transaction of supply is exempted from the levy of tax is a pointer to indicate that, in pith and substance, the levy is on the sale of tobacco. Article 286 of the Constitution provides restriction as to imposition of tax on the sale or purchase of goods. It imposes a prohibition prohibiting the State from imposing a tax on the sale or purchase of the goods. Under sub-article (3) of ar....
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....dgment of the Supreme Court in I.T.C. Ltd. v. State of Karnataka (1985) Supp SCC 476 wherein it was held that State of Karnataka is not competent to levy market fee in respect of tobacco under the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966, because that directly clash with the Tobacco Board Act of 1975, and contended that since the Tobacco Board Act of 1975 has occupied the field, the State Government is not competent to levy luxury tax on tobacco as it would amount to encroaching upon the field occupied by the Parliament. 6.. While the learned Advocate-General contended that the impugned enactment is within the legislative competence of the State Legislature under entry 62 of the Constitution. It is not a tax on sale of tobacco, but it is a tax on supply of luxury, viz., tobacco. The Concise Oxford Dictionary meaning of supply is to provide or furnish and, therefore, it is a tax on supply of luxuries, viz., tobacco. The essential character of levy is a tax on supply of luxury, viz., tobacco. It is, only, as a matter of convenience that sale is adopted as a yardstick or measure for assessing the tax. The fact that the incidentally it takes the sale as a m....
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....he Advocate-General also relied on the following observations of the Chief Justice Marshall in McCullock v. Maryland (1879) 4 Wheat 316 at p. 428 which were referred by the learned Judges in Atiabari's case AIR 1961 SC 232: "The power of taxing the people and their property is essential to the very existence of the Government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the Government itself." The learned Advocate-General also relied on the following observations: "Therefore the true position appears to be that, though the power of levying tax is essential for the very existence of the Government, its exercise must inevitably be controlled by the constitutional provisions made in that behalf. It cannot be said that the power of taxation per se is outside the purview of any constitutional limitations." and contended that since the power of taxation is essential and a sovereign Government without it cannot function, it stands on a different footing from that of a regulation. Therefore, the fact that....
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....Court in Abdul Khadir v. State of Kerala AIR 1976 SC 182 observed as follows: "The word 'luxury' has not been used in the sense of something pertaining to the exclusive preserve of the rich. The fact that the use of an article is popular among the poor sections of the population would not detract from its description or nature of being an article of luxury. The connotation of the word 'luxury' is something which conduces enjoyment over and above the necessaries of life. A it denotes something which is superfluous and not indispensable and to which we take with a view to enjoy, amuse or entertain ourselves. An expenditure on something which is in excess of what is required for economic and personal wellbeing would be expenditure on luxury although the expenditure may be of a nature which is incurred by a large number of people, including those not economically B well off. The use of tobacco has been found to have deleterious, effect upon health and a tax on tobacco has been recognized as a tax in the nature of a luxury tax. A number of factors may have to be taken into account in adjudging a commodity as an article of luxury. Any difficulty which may arise in borderline case w....
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....entral Legislature. Under section 100(1) of the Constitution Act, the Federal Legislature and the Provincial Legislature have no powers to make laws with respect to any of the matters enumerated in the Federal Legislative List, i.e., List I in Seventh Schedule to the Act. Entry (45) in the List is as follows: "Duties of excise on tobacco and other goods manufactured or produced in India". The Government of India said that the tax imposed by section 3(1) of the impugned Act, in so far as it may fall on motor spirit and lubricants of Indian origin, is a duty of excise within entry (45) and therefore an intrusion upon a field of taxation reserved by the Act exclusively for the Federal Legislature". Repelling the said contention, Gwyer, C.J., held as follows: "The power to make laws with respect to duties of excise given by the Constitution Act to the Federal Legislature is to be construed as a power to impose duties of excise upon the manufacturer or producer of the excisable articles, or at least at the stage of, or in connection with, manufacture or production, and it extends no further. Thus the Central Legislature will have the power to impose duties on excisable articles be....
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....of the tax is the annual value of the property and since the same basis is used in the Incometax Act for determining income from property, and generally speaking the annual value is the fairest standard for measuring income and, in many cases, is indistinguishable from it, the tax levied by the impugned Act is in substance a tax on income and, therefore, beyond the legislative competence of the Provincial Legislature. 18.. The Federal Court referred to the following observations of the Lord Atkin in Gallahagher v. Lynn 1937 A.C. 863 at page 870, while construing the scope of the Punjab Act: 11, It is well-established that you are to took at the true nature and character of the legislation' Russell v. The Queen, the pith and substance of the legislation. If on the view of the statute as a whole, you find that the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorised field. The legislation must not under the guise of dealing with one matter in ct encroach upon the forbidden field." It was also observed that: "It is the essential character of the particular tax charged that is ....
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.... remains in force until the framing of rules under the Act of 1961. The appellant challenged the said Rule on the ground that the State Legislature cannot over-reach its taxing power by making an artificial definition of words and expressions used in the legislative entries. Just as it cannot, by an artificial definition of "sale of goods", exercise a power to legislate in respect of a subjectmatter outside its sphere, it cannot exercise the power to levy a tax on circumstances by an artificial and colourable understanding of that expression so as to acquire the power to impose a tax on income. Repelling the above arguments, it was held as follows: "16. It may be, and is often so, that the tax on circumstances and property is levied on the basis of income which the assessee receives from his profession trade, calling or property. That is, however, not conclusive on the nature of the tax. It is only as a matter of convenience that income is adopted as a yardstick or measure for assessing the tax. As pointed out In re A Reference under Government of Ireland Act 1936 AC 352 the measure of the tax is not a true test of the nature of the tax. Therefore, while determining the nature o....
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....d as luxury in the said charging section and as such the State, Legislature was not competent to enact the Act. 22.. Repelling the said contention, the Supreme Court held that the levy of tax contemplated by the provisions of section 3 of the Act has nothing to do with the manufacture or production of tobacco and, as such, cannot be deemed to be in the nature of excise duty. The argument that the tax on the vending and stocking of tobacco cannot be considered to be luxury tax as contemplated by entry 62 of List II of the Seventh Schedule to the Constitution was also repelled. While upholding the levy, the 'Learned Judges referred to the following observations made by the Supreme Court in State of Madras v. N.K. Nataraja Mudaliar [1968] 22 STC 376; [1968] 3 SCR 829; AIR 1969 SC 147 "Not much argument is needed to show that the power to tax is essential for the maintenance of any governmental system. Taxes are levied usually for the obvious purpose of raising revenue. Taxation is also resorted to as a form of regulation. In the words of Justice Stone, 'every tax is in some measure regulatory' [Sonzinsky v. United States (1937) 300 US 506]. According to Roy Blough, the taxing power....
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.... India v. Bombay Tyre International Limited AIR 1984 SC 420 [1986] 56 Comp Cas 460 (SC), wherein the Supreme Court while considering the scope of the Central Excises and Salt Act (1 of 1944) observed as follows: "....... when excise was levied on a manufacturer at the point of the first sale by him 'that may be because the taxation authority imposing a duty of excise finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale. But the method of collecting the tax is an accident of administration; it is not of the essence of the duty of excise, which is attracted by the manufacture itself.It was further observed that: "................Therefore, subject always to the legislative competence of the taxing authority, the sail tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on the manufacture or production, is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience." It was also held that: "While the levy is on the manuf....
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....wise include to fix the rate and prescribe the machinery for the recovery of tax. The Legislature has wide discretion in the matter of taxing the people. When a challenge to the validity of al enactment is made on the ground that it is a colourable piece of legislation, what has to be proved to the satisfaction of the court is that though the Act is ostensibly is within the legislative competence of the Legislature in question, in substance and reality it covers field which is outside the legislative competence. 25.. Therefore, the proper approach is to look at the true nature and character of the legislation, the pith and substance of the legislation. If on the view of the statute as a whole, the substance of the legislation is within the express powers, then it is not invalidated if incidentally it affects matters which are outside the authorised field. The same standard may be employed as a measure for levy of different taxes. It is the essential character of the particular tax charged that is to be regarded and the nature of the machinery by which the tax is to be assessed is not of assistance except in so far as it may throw light on the general character of the tax. 26.....
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....ne the provisions of the Act. Section 3A is the charging section. It reads as follows: "3A. Tax on tobacconist.--(1) Subject to the provisions of this Act, there shall be levied and collected a tax on the turnover of receipts of a tobacconist relating to the supply of luxuries, namely, tobacco products, specified in the Schedule by way of sale or otherwise, at the rate of tax and at the point of levy specified in the Schedule; Provided that a tobacconist whose turnover of receipts in a year is less than rupees two lakhs shall be exempt from tax; Provided further that a tobacconist who sells tobacco products in a small bunk shall be exempt from payment of tax on his turnover of receipts irrespective of the quantum of the turnover of receipts in a year; Provided also that no tax under this sub-section shall be payable on that part of the turnover of receipts which relates to: (i) the tobacco products which are supplied by way of consignment to another State, whether the consignment is to himself or to any other person and in support of such claim, the proprietor produces, on demand a certificate as may be prescribed; and (ii) the tobacco products which are supplied ....
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....ess of supply of luxuries, viz., tobacco. Section 5 provides for mode of collection of tax. Section 6 provides for returns. Section 7 deals with assessment and collection of tax while section 7A provides for provisional assessment. Section 8 provides for assessment of escaped or under-assessed tax. Section 9 deals with imposition of penalty in certain cases. Section 10 provides for payment of tax, penalty and other dues payable under the Act in instalments while section 10A provides for attachment of property and section 10B deals with the Rowers of the Deputy Commissioner. Section 11 provides for appeal. Section, 12 provides for revision and section 12A provides for appeal and revision. Section 13 provides for court fee on appeal and application for revision while section 14 provides for refund of tax. Section 15 deals with offences while section 16 deals with offences by companies. Section 17 deals with compounding of offences. Sections 18, 19 and 20 deal with maintenance of accounts and powers of inspection. Section 20B provides for inspection of goods while in transit. Section 29 confers power on the State Government to notify exemptions and reductions of tax or interest. Sched....
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....fore, by virtue of article 286(3) of the Constitution of India, levy should not exceed 4 per cent in view of sections 14 and 15 of the Central Sales Tax Act, 1956. While the argument of the learned Advocate-General is that since it is a levy on supply of luxury, it is not a "tax on sale". Further, the sale in section 3-A of the Act represents the measure for tax and it is open to the Legislature to specify the measure for assessing the levy. The Legislature thought fit that the price charged by the tobacconists on sale by himself should represent the measure. Therefore, the argument of the learned counsel for the petitioners that it is in effect a tax on sale cannot be countenanced. 33.. The relevant entry in List II of the Seventh Schedule of the Constitution reads as follows: "62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." 34.. If thy tax levied under the charging section is on the supply of a luxury, it is within entry 62, of List II. Therefore, it is within the legislative competence of the State Legislature to impose a tax on luxury. The fact that the tobacco is a luxury as pointed out in the earlier paragraphs is j....
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....upon the Legislature, to levy tax, that power must be widely construed ; it must include the power to impose a tax and select the articles or commodities or persons for the exercise of such power ; it must likewise include the power to fix the rate and prescribe the machinery for the recovery of tax. In imposing tax, the Legislature has a wide discretion. Therefore, since the Legislature has wide discretion in selecting the articles or commodities or persons for imposing a tax, in exercise of that power, it has exempted a tobacconist whose turnover-of receipts is less than rupees two lakhs and a tobacconist who sells tobacco products in a small bunk and the interState transactions. It is also well-settled that the power to impose taxes is one' so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restriction whatever, except such as rest in the discretion of the authority which exercises it. Therefore, the fact that the tobacconist whose turnover of receipts is less than Rs. 2 lakhs and the tobacconist who sells the tobacco in a small bunk and the inter-State transactions are exempted from the provisions of the Act, ....
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....legislation whether it is a legislation in respect of sale of tobacco or in respect of supply of a luxury, viz., tobacco, we must take all the relevant provisions of the legislation into account and ascertain the essential substance of it. It is true we have to take all the relevant provisions of the legislation and ascertain the essential substance of it. By doing so, we cannot ignore the meaning and purpose behind other provisions of the Act. As pointed out in the earlier paragraph, it is for the Legislature to select the objects which are to be subjected to the tax and which are not subjected to the tax. If the intention of the Legislature is to exclude certain commodities from the purview of the tax, for valid reasons that does not alter the nature of the tax. 42.. The same reasoning is applicable to section 29 of the impugned legislation. It is true that it empowers the State Government by notification, exemption and reduction of tax or interest payable under the Act on sale or supply of tobacco. It is true that the expression sale is also used in the said section. It is also true that if the essential character of levy is on the supply of a luxury it is not necessary to us....
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....ches of tea. Therefore, neither the legislation is based on entry 49 in List II or List III and consequently the West Bengal State Legislature was not competent to impose the levy. From the above, it is clear that on a consideration of the charging section, the learned Judges were of the view that the essential character of the levy is on despatches of tea and not taxes on lands and buildings which is within its legislative competence. The judgment, therefore, has no application to the present situation. 44.. The next question that arise for consideration is whether the impugned legislation is within the competence of the State Legislature in view of the occupation of the field by the Centre under entry 52 of List I of the Seventh Schedule of the Constitution? Entry 52 of List I of Seventh Schedule reads as follows: "Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest". In exercise of the power conferred under articles 245 and 246 read with entry 52 of List I of Seventh Schedule of the Constitution the Parliament enacted the Tobacco Board Act of 1975. The object of the Tobacco Board Act is to regul....
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.... such yard by the person in possession of such produce. Pursuant to the said Act, the market fee has been fixed by the State of Karnataka at 30 paise per one hundred rupees of the price of such produce sold. Thirty paise has been substituted by Re. 1 by an amendment Act. The fees leviable was enhanced from time to time. The said levy was challenged. The matter went up to the Supreme Court. The argument of the petitioners was that since the field was occupied by the Parliament in enacting the Tobacco Board Act, the State Legislature is incompetent to levy the fee under the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966. Justice Fazal Ali with whom Justice Varadarajan had agreed dissenting with Justice S.S. Mukharji held as follows: "..................When the Parliament took over the tobacco industry without any preconditions or permutations and combinations and established a Tobacco Board for regulating the sale and purchase of tobacco under entry 52 of List I the entire field of tobacco industry was fully occupied and nothing remained for the States to do, and thus neither the doctrine of entrenchment nor that of pith and substance would have any substance." ....
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....field is occupied by the Parliament. However, it is pointed out that the Karnataka Agricultural Produce Marketing (Regulation) Act empowered the market committees for the levy and collection of fees from the auctioneers who auction the agricultural produce on the platforms constructed by the committee. In other words, it has empowered the market committee to collect the fees for allowing the traders to auction the agricultural produce on the platforms of the market committees. This provision is exactly in conflict with section 14A of the Tobacco Board Act, 1975. Section 14A of the Tobacco Board Act provides for the levy of fee for the services rendered by the Board in relation to the sale or auction of tobacco on the platforms established by the Board under the Act. In other words, under the Tobacco Board Act, 1975, the tobacco is to be sold on a registered auction platform established by the Board and the Board is competent to levy fees on the auctioneers and the fees is to be collected both from the sellers as well as the purchasers. The market committee under the Karnataka Agricultural Produce Marketing (Regulation) Act is also empowered to collect fees from the sellers and p....
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....with in the Central Acts and the levy and collection of land cess. for which provision is made by sections 78 and 79 of the Act. There is therefore no scope, at all, for the argument that there is anything in common between the Act and the Central Acts of 1948 and 1957 so as to require any detailed examination of these enactments for discovering whether there is any overlapping." It was further held that: "When a question arises as to the precise head of legislative power under which a taxing statute has been passed, the subject for enquiry is what in truth and substance is the nature of the tax. No doubt, in a sense, but in a very remote sense it has relationship to mining as also to the mineral won from the mine under a contract by which royalty is payable on the quantity of mineral extracted. But that, does not stamp it as a tax on either the extraction of the mineral or on the mineral right. It is unnecessary for the purpose of this case to examine the question as to what exactly is a tax on mineral rights seeing that such a tax is not leviable by Parliament but only by the State and the sole limitation on the State's power to levy the tax is that it must not interfer....
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.... Act and to the relevant provisions thereof, under which Special Area Development Authorities are given the power to tax lands and buildings within their jurisdiction. We have set out the objects of the Act at the commencement of this judgment, one of which is to provide for the development and administration of Special Areas through Special Area Development Authorities......... Surely, the functions, powers and duties of municipalities do not become an occupied field by reason of the declaration contained in section 2 of the Mines and Minerals (Development and Regulation) Act, 1957. Though, therefore, on account of that declaration, the legislative field covered by entry 23, List H, may pass on to the Parliament by virtue of entry 54, List I, the competence of the State Government to enact laws for municipal administration will remain unaffected by that declaration." It was further observed that: "The reasonings adopted in this decision shows that it is not correct to say that the property, tax provided for in the Act of 1973 is beyond the legislative competence of the State Legislature; that tax has nothing to do with the development of mines. The power conferred by the Sta....
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....List II of the Constitution an occupied field. Further a distinction is to be drawn between the tax and fee. Fees is distinguishable from taxes, in that, the chief purpose of tax is to raise funds for the support of the Government or for public purposes. While a fee may be charged for the privilege or benefit conferred or service rendered to meet the expenses connected thereof. Thus, fees is nothing but payment for some special privilege granted or service rendered (Municipal Corporation of the City of Baroda v. Babubhai Himatlal AIR 1989 SC 2091). Therefore, the levy of fees stands oft a different footing than the tax. As pointed out in the earlier paragraph, the power to tax is a sovereign power and while dealing with the entry in the legislative List, it was held by the Supreme Court in Express Hotels Private Ltd. v. State of Gujarat [1989] 74 STC 157 (SC) at para 7; AIR 1989 SC 1949, para 6 as follows: "6. We are dealing with an entry in a legislative List. The entries should not be read in a narrow or pedantic sense but must be given their fullest meaning and the widest amplitude and be held to extend to all ancillary and subsidiary matters which can fairly and reasonably b....
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....l and unfettered and not as per various provisions of the IDR Act". It was also held that "the legislative power of the States under entry 24, List II, is eroded only to the extent control is assumed by the Union pursuant to a declaration made by the Parliament in respect of declared industry as spelt out by legislative enactment and the field occupied by such enactment is the measure of erosion. (Emphasis* supplied by us). Subject to such erosion, on the remainder the State Legislature will have power to legislate in respect of declared industry without in any way 6renching upon the occupied field. State Legislature which is otherwise competent to deal with industry under entry 24, List II, can deal with that industry in exercise of other powers enabling it to legislate under different heads set out in Lists II and III and this power cannot be denied to the State". 55.. In other words when once Parliament occupied the field by enacting a legislation under entry 52 of List I the Legislative power of the State to legislate in respect of entry in List II does not automatically come to an end, it depends on the scope of the legislation and consequent control assumed by the Parliame....
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....without the previous sanction of the President. 60.. Construing the scope of articles 301 to 304, the Supreme Court in Atiabari's case AIR 1961 SC 232, held that "though the power of levying tax is essential for the very existence of the Government, its exercise must inevitably be controlled by the constitutional provisions made in that behalf. It cannot be said that the power of taxation per se is outside the purview of any constitutional limitations". 61.. It was further held that "it seems to us that article 301 read in its proper context and subject to the limitations prescribed by the other relevant articles in Part XIII, must be regarded as imposing a constitutional limitation on the legislative power. of Parliament and the Legislatures of the States. What entries in the legislative Lists will attract the provisions of article 301 is another matter; that will depend upon the content of the freedom guaranteed; but wherever it is held that article 301 applies, the legislative competence of the Legislature in question will have to be judged in the light of the relevant articles of Part XIII; this position appears to us to be inescapable". 62.. It was also held that, "At....
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....e 301. 65.. In Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 i SC 1406, while reiterating the principles laid down in Atiabari's case AIR 1961 SC 232, the Supreme Court held that "regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by article 301 and such measures need not comply with the requirements of the proviso to article 304(b) of the Constitution". It was also held that "for the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. So long as a tax remains compensatory or regulatory it cannot operate as a hindrance". 66.. In State of Madras v. N.K. Nataraja Mudaliar [1968] 22 STC 376 (SC); [1968] 3 SCR 829, the question that arose for consideration was that whether a part of the turnover of assessee's business in matches arose out of intraState sale transactions at the assessee's depot at Ongole (in the State of Andhra Pradesh) to which depot the goods were despatched by him from his place of business in the State of Madras. The Deputy Commercial Tax Officer subjected the ....
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....l for the petitioners could not point out how article 301 is violated on the facts of the present case. Shri N.S. Murthy and Anantha Babu pointed out that by virtue of luxury tax, the tobacco products in Andhra Pradesh would cost more than the tobacco products in other States. That exactly is the situation where the Supreme Court considered in Nataraja Mudaliar's case [1968] 22 STC 376; [1968] 3 SCR 829, and held that the different rates of tax in different States do not ipso facto violate article 301 of the Constitution as the flow of trade does not depend on the rates of sales tax and depends on variety of other factors which were enumerated in the said decision. 69.. Sri N.S. Murthy also contended that it was held in Abdul Khadir's case AIR 1976,SC 182, that the levy of tax on tobacco was to impede free-flow of trade and is violative of article 301, but in view of the sanction obtained from the President, the validity was upheld. It is true that in Abdul Khadir's case AIR 1976 SC 182, it was held that the levy of tax directly impedes the free-flow of trade and as such it is violative of article 301 of the Constitution of India. It is, therefore, necessary at this stage to fin....
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....riving the State of their share in the additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act (58 of 1957) does not arise. Further by enacting the Additional Duties of Excise (Goods of Special Importance) Act, the Parliament aid not prohibit any State from making any law or levying any tax which a State can levy by virtue of entries in List II. Therefore, the arguments of the learned counsel for the petitioners are rejected. 74.. It is also argued by Sri Murthy that the levy of 50 paise in every rupee under Act 9 of 1997 on chewing tobacco preparations commonly known as khara masala, kimam, dokta, zarda, sukha and surti is arbitrary and violative of article 14 of the Constitution. While the learned Advocate-General argued that the object of the Act is not only to raise additional revenues, but is also to prevent the use of the tobacco products mentioned above as they are health hazards. If the price of the product is enhanced, automatically the use of the product will be reduced which results in achieving the object of protecting the public interest. 75.. We agree with the arguments of the learned Advocate-General that the levy of ....