TaxTMI 
TaxTMI 
2000 (1) TMI 956
X X X X Extracts X X X X
X X X X Extracts X X X X
....999 and 1239 of 1999, the prayer is to declare that the provisions of Explanation II as enacted by section 2 of the Tamil Nadu Additional Sales Tax (Amendment) Act, 1999 (Tamil Nadu Act 37 of 1999) (hereinafter called "the Act 37 of 1999") are ultra vires articles 14, 19(1)(g) and Part XIII of the Constitution of India. (c) In O.P. Nos. 1061 of 1999 to 1063 of 1999, 1066 of 1999 to 1068 of 1999, 1071 of 1999 to 1073 of 1999, 1076 of 1999, 1183 of 1999 to 1185 of 1999, 1193 of 1999 and 1387 of 1999 to 1389 of 1999 the prayer is to quash the notice issued demanding the differential tax/additional sales tax calculated in terms of Act 27 of 1999 and Act 37 of 1999 for the assessment years 1997-98, 1998-99 and 1999-2000 (for the period up to May, 2000 or June, 2000) or asking to file revised returns by working out the tax due on last purchase value in terms of Act 27 of 1999 within the period specified in the notice. 3.. The facts leading to the present cases are as follows: In the meeting held on November 5, 1997 by the honourable Minister for Agriculture, Tamil Nadu with the private sugar mills executives of Tamil Nadu to consider fixation of State advised price for the year ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9.. The Government have examined the representation and consider that the purchase tax for sugarcane may be levied on flat rate basis and that every year it may be calculated on the basis of 8 per cent on the average of State advised price recommended by Government. For 1997-98 crushing season, the Government have recommended the State advised price at Rs. 660 per metric tonne for 8.5 per cent recovery, State average sugar recovery is 9.4 per cent. Therefore, the average State advised price will come to Rs. 730 per metric tonne and the purchase tax at 8 per cent comes to Rs. 58.40. 10.. The Government have therefore decided to fix the purchase tax for sugarcane for 1997-98 at the flat rate of Rs. 60 per metric tonne. Necessary orders in this respect will be issued separately by Government in Commercial Tax Religious Endowment Department." Following this order, Government of Tamil Nadu enacted Act No. 27 of 1999 with retrospective effect from April 1, 1997 and this was published in Government Gazette on June 17, 1999. The Act No. 27 of 1999 reads as follows: "An Act further to amend the Tamil Nadu General Sales Tax Act, 1959. Be it enacted by the Legislative Assemb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itional Sales Tax Act, 1970. Be it enacted by the Legislative Assembly of the State of Tamil Nadu in the Fiftieth Year of the Republic of India as follows: 1.. Short title and commencement.-(1) This Act may be called the Tamil Nadu Additional Sales Tax (Amendment) Act, 1999. (2) Sub-clause (c) of clause (2) of section 2 shall be deemed to have come into force on the 1st day of April, 1997. 2. Amendment of section 2.-In section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act 14 of 1970), in sub-section (1),- (1) clause (a) shall be omitted; (2) in clause (aa), (a) for the expression commencing with the words 'The tax payable under the said Act' and ending with the words 'outside the State', the following expression shall be substituted, namely: 'The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (hereinafter in this section referred to as the said Act), shall, in the case of a dealer including the principal selling or buying goods through agents'; (b) the Explanation shall be renumbered as Explanation I and in Explanation I as so renumbered, the expression 'in this State', shall be omitt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isions of section 11-A for assessment and recovery operated for demands accruing within six months, in spite of the fact that the Finance Act by section 51 retrospectively amended (with effect from February 28, 1944). Rules 9 and 49 of the Central Excise Rules to recover duty on manufacture and consumption. It was categorically stated that "if the intention of the Legislature was to nullify the effect of section 11-A, in that case, the Legislature would have specifically provided for the same. Section 51 does not contain any non obstante clause nor does it refer to the provision of section 11-A. In the circumstances, it is difficult to hold that section 51 overrides the provision of section 11-A". This principle equally applies to the present cases. 7.. The impugned levy is violative of article 14 of the Constitution of India because it is- "(i) irrational in imposing taxes at higher rate on less economical/viable units with recovery and profitability. (ii) Different rates on the 5-A price which up to 1999 was the measure of levy. (iii) It is a flat rate operating harshly on unequals." 8.. Historically the tax has been levied on the price of sugarcane and the value o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er cent Rs/t Peak recovery of 94-95 season Specificrate of purchase tax at Rs. 60/t expressed as % of cane price. 1 2 3 4 5 6 7 8 1 Ponni sugars 484.40 37.18 521.58 41.73 9.60 11.50 2 EID-Nellikuppam 457.40 33.18 490.58 39.25 9.10 12.23 3 EID-Pugalur 500.60 33.90 534.50 42.76 9.90 11.23 4 Cauvery Sugars 479.00 40.13 519.13 41.53 9.50 11.56 5 MAC Agro 446.60 29.15 475.75 38.06 8.90 12.61 6 Aruna Sugars 516.80 36.35 553.15 44.25 10.20 10.85 7 Sakthi Unit I 495.20 31.72 526.92 42.15 9.80 11.39 8 Sakthi Unit II 489.80 39.73 529.53 42.36 9.70 11.33 9 Kothari Sugars 500.60 38.22 538.82 43.11 10.00 11.14 10 Thiru Arooran-I 495.20 21.59 516.79 41.34 9.80 11.61 11 Thiru Arooran-II 506.00 15.26 521.26 41.70 10.00 11.51 12 Bannari Amman 446.60 45.78 492.38 39.39 8.90 12.19 13 Dharani Unit-I 489.80 49.94 539.74 43.18 9.70 11.12 14 Rajashree Sugars 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....una sugars 9.02 9.38 8.70 7 Sakthi Unit I 9.20 9.75 9.56 8 Sakthi Unit II 8.35 8.44 8.67 9 Kothari Sugars 8.42 8.45 8.37 10 Thiru Arooran-I 8.23 8.56 6.66 11 Thiru Arooran-II 7.59 7.71 7.49 12 Bannari Amman 8.56 10.09 10.40 13 Dharani Unit-I 8.77 8.83 8.16 14 Dharani Unit-II 4.72 7.83 8.25 15 Rajashree Sugars 10.09 9.96 9.53 16 S.V. Sugars 8.46 9.25 8.09 17. State average 8.32 8.94 8.43 On that basis, in O.P. No. 1181 of 1999, the total tax liability under clause 5-A at 8 per cent for the period from April 1, 1997 to June 31, 1999 comes to Rs. 751.87 lakhs as against Rs. 1,014.5 lakhs at Rs. 60 per M.T. Thus, as against 8 per cent liability operating against the clause 5-A price during April 1, 1997 to June 30, 1999, the rate presently works out to 10.78 per cent with additional liability of Rs. 262.88 lakhs. A constitutional court may frown upon a scheme which substitutes retrospectively from April 1, 1997 as against the existing ad valorem levy when such a scheme imposes different rates on different....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he purpose of imposition of tax. The grievance of the appellants is that the classification is not perfect. What they want is that there should have been further classification amongst the theatres falling in the same class on the basis of the location of the theatre in each local area. We do not think that such a contention is well-founded." Thus, Act 27 of 1999 has violated article 14 of the Constitution of India. The case of the petitioners is distinguishable from the decision of the Supreme Court in the case of Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh reported in [1980] 45 STC 36 (SC) for the following reasons: (a) There was no retrospective levy at specific rate as in Tamil Nadu Act 27 of 1999. (b) The High Court in that case observed that purchase tax by weight ensures more stable revenue, whereas tax by value rises and falls. The Supreme Court found that this statement was not upset by the fact. In Tamil Nadu year after year, over the last decade, the price under clause 3 as well as clause 5-A has been progressively related to prices, provided tax related to value which was progressive and remunerative to the exchequer. (c) In Ganga Sugar Corporatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts of the petitioners cannot be considered as waived, as the rights arise directly out of infringement caused by the impugned provisions and the observations of the Supreme Court in AIR 1955 SC 123 (Behram Khurshid Pesikaka v. State of Bombay) at paragraph 52 and AIR 1986 SC 180 (Olga Tellis v. Bombay Municipal Corporation) at paragraphs 28 and 29 are relevant. 12.. The Act 27 of 1999 violates article 19(1)(g) of the Constitution of India as there is no opportunity to recoup the tax since levy sugar prices were announced long back and the sugar was disposed for public distribution at depressed value which took into account only the purchase tax under clause 3 of the Control Order. The burden is on the respondents to justify retrospective legislation in so far as violation of article 19(1)(g) of the Constitution is concerned. 13.. In the following cases, retrospective legislation was struck down as violative of Part XIII of the Constitution of India: (i) [1973] 32 STC 368 (Cal) (Shew Bhagwan Goenka v. Commercial Tax Officer). (ii) [1987] 65 STC 191 (Bom) (Olympic Oil Industries Ltd. v. State of Maharashtra). (iii) [1991] 83 STC 59 (Ker) (Mega Traders v. State of Keral....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y of the earlier principal Act. No material has been placed to show that the restriction caused by retrospective levy is reasonable or unavoidable or did not call for an alternative measure and the burden in this regard is on the respondent and the observations of the Supreme Court in AIR 1983 SC 1155 in the case of (Deena v. Union of India), paragraphs 17 and 18 at page 1167 and AIR 1954 SC 728 in the case of (Saghir Ahmad v. State of U.P.) at page 738 are relevant. As observed in AIR 1983 SC 1155 (Deena v. Union of India) at paragraph 19, the petitioner has to merely show the fact of deprivation and nothing more. 15.. The impact of the flat rate levy being discriminatory, Act No. 27 of 1999 violates article 301 of the Constitution. Unlike article 14, there need not be hostile discrimination for article 301. The burden of showing its reasonableness is on the State. Even a reasonable restriction cannot be saved without Presidential assent under article 304 which is lacking, freedom of trade, commerce and intercourse is not only in respect of inter-State trade, but also intra-State and the observations of the Supreme Court in AIR 1961 SC 232 (Atiabari Tea Co. Ltd. v. State of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....odities on account of customs barriers, which it was the intention of article 301 to abolish." "......but it is equally clear that legislation should not have the effect of putting impediments in the way of free flow of trade and commerce." The passage quoted below is from Indian Cement Ltd. v. State of Andhra Pradesh [1988] 69 STC 305 at 315.-Ed. 17.. Discriminatory tax violates article 301 as considered in Atiabari Tea Co. v. State of Assam AIR 1961 SC 232 at pages 241 and 242. 18.. The data as provided in paragraph 10 of O.P. No. 1181 of 1999 and similar such data for each sugar mill indicate that the flat rate of Rs. 60 per M.T. reflected as a percentage of the clause 5-A price shows the difference in the rate impact from mill to mill between about 10 per cent and 12 per cent. As narrated already, there is lack of classification and equal treatment of the mills which has resulted in hostile discrimination thereby violating article 14. The restriction to the trade or commerce has been established by indicating a discriminatory levy which violates article 301. A discriminatory impact for the purpose of article 301 may yet be saved as a reasonable restriction by articl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... authorities in the submission of return under rule 18 and the matter of assessments, whether provisional or otherwise. 22.. The provisions of Act No. 27 of 1999 claims to bring into force section 3-F on April 1, 1997 and validates the levy or collection in the past. 23.. Section 4 of the amending Act seeks to overturn any judgment, decree, order of any court, Tribunal or other authority. 24.. Validation can take place where the levy or collection under the principal Act is sought to be upheld and brought in accordance with law by an amending Act which repairs the flaw in the original law. In other words, the levy and assessment which is otherwise invalid becomes valid by the operation of the amending Act. In the present case, there is nothing invalid about "the tax levied or collected in the past". There was nothing "purporting to have been levied or collected" in the past. The validation proceeds on an untenable premise that in the past the State law as well as the things done in accordance with that law were either invalid or purportedly done. Section 4 is not validation, but only a purported validation without the force in law. 25.. Thus the impugned Act being a ret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt collected. (d) It may or may not have been competent for the State Legislature to validly remove the lacuna and remedy the defect in the earlier levy by seeking to impose sales tax through any amendment on excise duty, education cess and health cess; but, in any event, the State Government has not purported to do so through the amending Act. (e) In our opinion, the enhancement of the rate of duty from 6½ per cent to 45 per cent with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable. (f) In our opinion, this is not a proper ground for imposing the levy at the higher rate with retrospective effect. It may be open to the Legislature to impose the levy at the higher rate with prospective operation but levy of taxation at higher rate which really amounts to imposition of tax with retrospective operation has to be justified on proper and cogent grounds." 27.. Mr. C. Natarajan, the learned Senior Counsel submitted that the impugned Act No. 27 of 1999 does not set about to: (i) amend the provisions of the Act particularly section 2(r) or section 2(q), etc., to enable a levy adopting State advised price as a measu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esh it was held "that the State Legislature was competent to levy the tax with reference to the weight of the goods purchased. It was not necessary to levy the tax with reference to the price of the goods or to the turnover". Apart from the State of Karnataka, State of Maharashtra and State of Gujarat also have levied tax on sugarcane on weight basis. As explained in [1993] 88 STC 259 (SC) in the case of Polaki Motors v. State of Orissa. "By enacting retrospectively a valid and legal taxing provision the law creates a fiction that the assessments made and the tax collected are under the new re-enacted law". As held in Central Wines v. Govt. of A.P. reported in [1993] 90 STC 178 (AP) "the test of the length of time covered by retrospective operation cannot by itself be a decisive test........ Even if a taxation measure has the effect of driving a dealer in liquor out of business, the affected dealer cannot invoke article 19(1)(g)". As held in G.S. Drugs and Pharmaceuticals v. Commercial Tax Officer reported in [1999] 113 STC 398 (AP) "since the power of the Legislature is a constitutional function to legislate and it is its inherent power to legislate either prospectively or retrosp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egree of equality, the constitutional requirement is satisfied. The equality clause in article 14 does not take from the State a power to classify a class of person who must bear the heavier burden of tax. The classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequalities'." 32.. In State of Bihar v. Bihar Chamber of Commerce reported in [1996] 103 STC 1 (SC) levy of entry tax was held to be not violative of article 14, 301 or 304. As observed in [1987] 64 STC 208 (Kar) in the case of Jyothi Home Industries v. State of Karnataka, "a Legislature which could enact a law with retrospective effect could also in express terms confer upon on delegated authority a power to make a rule or frame a bye-law or issue a notification having retrospective effect". As held by the Supreme Court in [1995] 96 STC 338 in the case of Entertainment Tax Officer-I v. Ambae Picture Palace, "no explanation was required from the State for amending the law with retrospective effect". In [1999] 112 STC 506 (AP) in the case of ITC Limited v. State of Andhra Pradesh, levy of luxury ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....[1980] 45 STC 36, the Supreme Court has held that the levy of tax under the U.P. Sugarcane (Purchase Tax) Act, 1961, on the purchase of sugarcane at a rate regulated by weight and not by price was neither unconstitutional nor ultra vires but was within the competence of the U.P. Legislature. Similarly the Supreme Court in [1968] 21 STC 212 in the case of Andhra Sugars Ltd. v. State of Andhra Pradesh has held that the State Legislature was competent to levy tax with reference to the weight of the goods purchased and that it was not necessary to levy the tax with reference to the price of the goods or to the turnover. Therefore, the point for consideration in the present cases is whether the levy of purchase tax retrospectively on weight basis resulted in hostile discrimination among the mills in Tamil Nadu or that the levy was confiscatory or unreasonable in nature thereby offending the constitutional provisions as contended by the learned counsel for the petitioners. Let us first examine the proposition that Act No. 27 of 1999 was introduced to overcome the judicial pronouncements in the cases of Thiru Arooran Sugar Mills [1988] 71 STC 444 (Mad.) and Kothari Sugars & Chemicals L....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the purchaser would have to pay the deficit amount. Similarly, when the amount of advance was in excess, the purchaser would be entitled to refund of the excess amount, irrespective of the fact whether the refund was actually made or not. For the purpose of determining the price of sugarcane for computation of the purchase tax, the only significant amount is the aggregate of the minimum price fixed under clause 3 and the additional cane price fixed under clause 5-A, unless a higher price is paid to the grower by agreement between the purchaser and grower. It was argued by learned counsel for the State that the higher price inclusive of the excess amount included in the advance paid on State advice is deemed to have been paid by an agreement between the grower and the purchaser and, therefore, the entire amount would be the price of sugarcane. This is a question of fact in each case. It is true that if in a given case it is found as a fact on the basis of evidence that the purchaser had agreed with the grower to pay the higher price described as 'advance' including the amount in excess of the additional price fixed under clause 5-A then in that case the entire amount would be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder clauses 3 and 5-A of the Control Order. Unless a clear finding to that effect is recorded, the amount paid by the purchaser in excess of the aggregate of the minimum price fixed under clause 3 and the additional price fixed under clause 5-A, as a part of the amount paid as advance prior to fixation of the additional price under clause 5-A, cannot be treated automatically as a part of the total price of sugarcane." 35.. Thus, the apex Court categorically held that unless there is a finding that an enhanced price was paid by the purchaser as the price of sugarcane supplied, under the agreement between the grower and the purchaser, irrespective of the price fixation under clauses 3 and 5-A of the Control Order, the excess amount cannot be treated automatically as a part of the total price of sugarcane. It was further held that the statute does not prohibit an agreement between the grower and the purchaser for payment of a higher price for the sugarcane by the purchaser. However, in the case of Thiru Arooran Sugars Ltd. v. Deputy Commercial Tax Officer, Mannargudi [1988] 71 STC 444 (Mad.) as the excess amount forming part of the advance was paid only under compulsion on the dir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relevant years from 1997-98 under consideration. Such payments were made "voluntarily" as a result of meeting with the representatives of sugar mills and cane growers held separately and orders issued thereafter fixing the "State advised price". Nevertheless, Act No. 27 of 1999 was not enacted so as to levy tax on "State advised price" or to overcome the decision of the Supreme Court in [1996] 101 STC 197 (State of Tamil Nadu v. Kothari Sugars & Chemicals Ltd.). As already pointed out, the impugned Act No. 27 of 1999 was enacted to fulfil the demand of the sugar mills on November 5, 1997 to fix a flat rate on weight basis so as to recoup the tax element in respect of levy sugar sales and to avoid practical difficulties and court cases. Thus, Act No. 27 of 1999 is the result of the policy decision of the Government to fulfil the demand of the sugar mills and in such circumstances the ratio of the decision in D. Cawasji's case reported in [1985] 58 STC 1 (SC) is not relevant. In Cawasji's case [1985] 58 STC 1 (SC) sales tax at 24 per cent was collected on arrack sale price which included excise duty and cesses payable on arrack. The Mysore High Court D. Cawasji & Co. v. State of Myso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the invalidation of the earlier assessments on the basis of illegal levy, continues to taint the earlier levy. In our opinion, this is not a proper ground for imposing the levy at the higher rate with retrospective effect. It may be open to the Legislature to impose the levy at the higher rate with prospective operation but levy of taxation at higher rate which really amounts to imposition of tax with retrospective operation has to be justified on proper and cogent grounds. This aspect of the matter does not appear to have been properly considered by the High Court and the High Court in our view was not right in holding that 'by the enactment of section 2 of the impugned Act the very basis of the complaint made by the petitioners before this Court in the earlier writ petitions as also the basis of the decision of this Court in Cawasji's case (1969) 1 Mys LJ 461 that the State is collecting amounts by way of tax in excess of what was authorised under the Act has been removed'. We, accordingly, set aside the judgment and order of the High Court to the extent it upholds the validity of the impugned amendment with retrospective effect from 1st of April, 1966, and to the extent it seeks....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature." Again the Bench observed: "Where the Legislature can make a valid law, it can provide not only for the prospective operation of the material provisions of the said law, but it can also provide for the retrospective operation of the said provisions." 38.. After explaining the case of D. Cawasji & Co. v. State of Mysore [1985] 58 STC 1 (SC) it was observed that that was a case where the judgment of the court was sought to be circumvented without seeking to rectify or remove the defect or lacuna pointed out in the High Court judgment and that facts of the present case are totally different. 39.. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rchaser of sugarcane per metric tonne of sugarcane on the basis of State advised price for State average sugar recovery of 9.4 per cent which worked out to Rs. 730 and adopting 8 per cent on this value arrived at a purchase tax value of Rs. 58.40 and this was rounded off and a flat rate of Rs. 60 per tonne was fixed. While enacting the amending Act No. 27 of 1999 which was published in the Gazette on June 17, 1999, this Rs. 60 per tonne as purchase tax was adopted from April 1, 1997 onwards. The argument is that purchase tax linked to a single recovery rate of sugar favours mills having higher recovery vis-a-vis mills having low recovery and therefore mini-classification ought to have been done as has been done in Karnataka State. Reliance was placed on the ratio of the decision of the apex Court in [1995] 96 STC 130 in the case of Venkateshwara Theatre v. State of Andhra Pradesh wherein the classification based on areas and classes in theatre has been approved. 42.. It is well-settled that in taxing statutes the latitude for classification is much greater. In this connection it is relevant to refer to the following observations of the Supreme Court in East India Tobacco Company....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the matter of its preferences of economic and social policies and effectuate the chosen system in all possible and reasonable ways. If two or more methods of adjustments of an economic measure are available, the legislative preference in favour of one of them cannot be questioned on the ground of lack of legislative wisdom or that the method adopted is not the best or that there were better ways of adjusting the competing interests and claims. The Legislature possesses the greatest freedom in such areas....." "The Legislature has to reckon with practical difficulties of adjustments of conflicting interests. It has to bring to bear a pragmatic approach to the resolution of these conflicts and evolve a fiscal policy it thinks it best suited to the felt needs. The complexity of economic matters and the pragmatic solutions to be found for them defy and go beyond conceptual mental models. Social and economic problems of a policy do not accord with preconceived stereotypes so as to be amenable to pre-determined solutions......." 44.. Further in G.K. Krishnan v. State of Tamil Nadu (1975) 2 SCR 715, the apex Court referred to, with approval the majority view in San Antonio Indepen....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 8.33 9.16 2. Karnataka 79.6 9.80 7.80 3. Maharashtra 80.4 10.48 8.43 4. Gujarat 65.0 10.48 6.81 5. Bihar 45.5 8.81 4.01 In sugar industry the major by-products are (i) molasses; (ii) bagasse and (iii) press mud or press cake. However, molasses is the main product in the manufacture of sugar. II. Statement showing molasses and molasses per cent cane from 1993-94 to 1995-96. State 1993-94 1994-95 1995-96 P M% P M% P M% 1. TamilNadu 523.2 4.32 949.0 4.43 907.0 4.65 2. Karnataka 324.5 4.09 504.3 4.24 581.0 4.50 3. Maharashtra 940.0 3.81 1857.0 4.04 2168.2 4.21 4. Gujarat 331.0 4.45 280.0 4.29 505.2 4.69 5. Bihar III. Statement showing average fibre per cent cane and bagasse per cent cane. 101.1 4.04 207.3 4.79 200.0 4.60 State Average fibre per cent cane Bagasse per cent cane 93-94 94-95 95-96 93-94 94-95 95-96 1. Tamil Nadu 13.79 14.23 14.55 29.75 30.8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....] 3 SCR 383, wherein the Supreme Court considered tax at a uniform rate imposed on plantations. His Lordship Hidayatullah, C.J., speaking for the majority, while upholding the tax, has observed: "...........It may also be conceded that the uniform tax falls more heavily on some plantations than on others because the profits are widely discrepant. But does that involve a discrimination? If the answer be in the affirmative hardly any tax direct or indirect would escape the same censure for taxes touch purses of different lengths and the very uniformity of the tax and its equal treatment would become its undoing. The rich and the poor pay the same taxes irrespective of their incomes in many instances such as the sales tax and the profession tax, etc". (pages 389-390) It was further observed: ".....The burden is on a person complaining of discrimination. The burden is proving not possible 'inequality' but hostile 'unequal' treatment. This is more so when uniform taxes are levied. It is not proved to us how the different plantations can be said to be 'hostilely or unequally' treated. A uniform wheel tax on cars does not take into account the value of the car, the mileage it runs, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s capricious or unreasonable and therefore it violates articles 19(1)(g) and 301 of the Constitution of India. Even if the levy is considered as a reasonable restriction in the context of free flow of trade, then in the absence of assent by the President of India under article 304(b) of the Constitution of India, the legislative amendment is not valid. It is true that several statements of statistics showing impact of recovery on purchase tax, additional tax burden exclusive of tax on subsidies, additional tax burden inclusive of subsidies, State-wise average recovery of sugar in India, details of State-wise levy price and supplementary affidavits showing the impact of the amending Acts, have been filed. It is worthwhile to notice that in all the statistical statements generated, the position has been worked out on the basis of an estimated clause 5-A price only. However, in fixing the flat rate of Rs. 60 per M.T, the Government took into account the market price paid for sugarcane which is the "State advised price" and sugar recovery rate of 9.4 per cent which is the State average. As the statistical statements were generated on the basis of a price for below the market price and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301. The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld". 56.. In Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 STC 212, the Supreme Court considered the levy of purchase tax on weight basis under section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961. In this case, His Lordship Bachawat, J., speaking for the court, after referring to the observations made by His Lordship Gajendragadker, J., in Atiabari Tea Company case [1961] 1 SCR 809; AIR 1961 SC 232 observed: "This interpretation of article 301 was not dissented from in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 SCR 491. Normally, a tax on sale of goods does not directly impede the free movement or transport of goods. Section 21 is no exception. It does not impede the free movement or transport of goods and is not violative of article 301." Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vy price was settled only for one of the years, the petitioners still can make a request to the authorities to re-open the issue in view of the retrospective levy imposed by Act No. 27 of 1999. Even otherwise, inability to pass on the tax should not be the basis to declare a legislation invalid as rightly contended by the learned Government Advocate and the ratio of the decision of the Supreme Court in S. Kodar v. State of Kerala [1974] 34 STC 73 also is relevant. Similarly the following headnote passage in Krishnamurthi and Co. v. State of Madras [1973] 31 STC 190 (SC) also could be considered: "The fact that a dealer is not in a position to pass on the sales tax to others does not affect the competence of the Legislature to enact a law imposing sales tax retrospectively because that is a matter of legislative policy." 59.. It was also argued that without amending section 2(r) or section 2(q), etc., of the Act to adopt State advised price as a measure of levy, no purchase tax as contemplated in section 3-F of the amending Act No. 27 of 1999 could be levied. It is seen that the definition section 2 of the Act opens with the following words: "In this Act, unless the con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ote that as per section 2(p) of the Act "taxable turnover", means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed. Thus, we find no infirmity in the amending Act No. 37 of 1999 in so far as it levies additional tax on taxable turnover of a dealer by taking into account sugarcane purchase turnover on ad valorem basis as indicated in the amending Act No. 37 of 1999. 61.. As regards demand notices issued raising demands for differential tax/additional tax or advising to file revised returns and pay tax thereon within the period specified, we find that the authorities have not followed the provisions of section 12 or section 13 or the relevant rule which cover the methodology for assessment and recovery of tax as rightly contended by Mr. C. Natarajan, the learned senior counsel. In respect of completed years of assessments, the assessing authority can raise demand in pursuance of the amending Acts only by finalising the assessment for the relevant years under section 12 of the Act. Similarly, for the assessment for the year 1999-2000 the provisional demands could be r....