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2024 (9) TMI 1489
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....st and Mr. Udit Khatri, Mr. Anand Dadariya, Advocate, Mr. Rahul Pandey through VC, Mr. Ashish Surana, Mr. Raja Sharma, Advocate, Mr. Krishna Sharma, Ms. Gitanjali N. Sharma, Mr. Ghanshyam Patel, Advocate and Mr. Neelabh Dubey, Advocates. For the Respondent/State : Mr. R. S. Marhas, Additional Advocate General CAV ORDER PER SACHIN SINGH RAJPUT, J. 1. Common question of law involved in these batch of cases is to declare the Chhattisgarh Sthaniya Kshetra me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for short Act of 1976) as illegal, ultra vires to the Constitution of India. Challenge in this petition is also to the notification dated 04/03/2014 issued by the respondent / State in purported exercise of the powers conferred by Sub-Section (1) of Section 4-A of the Act of 1976. The relief claimed in WPT No.75 of 2017 is quoted herein below:- "10.1 That this Hon'ble High Court may be pleased to call for the entire records from the Respondents No. 1 & 2 relating to the case of the petitioner, for its kind perusal. 10.2 That the Hon'ble High Court may be pleased to issue an appropriate writ/writs and/or, order/orders declaring that the Chhattisgarh Sthani....
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.... way of purchase, is ultra vires the Constitution being violative of Article 245 read with Article 246 of the Constitution of India. The said imposition of tax I outside the legislative competence of the State as the aid transactions would be covered within the Entry 92B of list I of the 7th Schedule of the Constitution of India for which the Union Government alone has the power to impose taxes on such movements which are in the nature of consignment in the course of inter-State trade or commerce". 2. Constitutional validity of Act of 1976 came for consideration before the Hon'ble High Court of Madhya Pradesh in case of Sanjay Trading Co. Vs. Commissioner of Sales Tax and others reported in 1994 SCC OnLine MP 315 = (1994) 93 STC 589. The Hon'ble High Court of Madhya Pradesh upheld the validity of Act of 1976. The same was unsuccessfully challenged in case of Bhagatram Rajeevkumar Vs. CST reported in 1995 (1) Supp 637. The challenge to the Act of 1976 was again made in the case of M/s Geo Millers Co. Pvt. Ltd. Vs. State of MP reported in (2004) 5 SCC 209. In case of Jindal Stripes Ltd. and others Vs. State of Haryana and others reported in (2003) 8 SCC 60 in which it has been obs....
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....icle 266 and there is nothing express or explicit in Entry 52 List II, Schedule VII which would compel the State to spend the tax collected within the local area in which it was collected? (4) Will the principles of quid pro quo relevant to a fee apply in the matter of taxes imposed under Part XIII? (5) Whether the entry tax may be levied at all where the goods meant for being sold, used or consumed come to rest (standstill) after the movement of the goods ceases in the "local area"? (6) Whether the entry tax can be termed a tax on the movement of goods when there is no bar to the entry of goods at the State border or when it passes through a local area within which they are not sold, used or consumed? (7) Whether interpretation of Articles 301 to 304 in the context of tax on vehicles (commonly known as "transport") cases in Atiabari case and Automobile Transport case apply to entry tax cases and if so, to what extent? (8) Whether the non-discriminatory indirect State tax which is capable of being passed on and has been passed on by traders to the consumers infringes Article 301 of the Constitution? (9) Whether a tax on goods wi....
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.... 1159.6. The decisions of this Court in Atiabari, Automobile Transport and Jindals cases and all other judgments that follow these pronouncements are to the extent of such reliance overruled. 1159.7. A tax on entry of goods into a local area for use, sale or consumption therein is permissible although similar goods are not produced within the taxing State. 1159.8. Article 304 (a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation. Therefore, incentives, set-offs, etc. granted to a specified class of dealers for a limited period of time in a non-hostile fashion with a view to developing economically backward areas would not violate Article 304 (a). The question whether the levies in the present case indeed satisfy this test is left to be determined by the regular Benches hearing the matters." 5. Further observations were made in paragraphs 1160 and 1161 which are quoted as under: "1160. States are well within their right to design their fiscal legislations to ensure that the tax burden on goods imported from other States and goods produced within the State fall equally. Such measures if taken....
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....and others) (2017) 9 SCC 1 held that legislation can be struck down if it is manifestly arbitrary and manifest arbitrariness is the ground to negate legislation as well under Article 14 of the Constitution of India. It has been observed by their Lordships as under: - "101. It will be noticed that a Constitution Bench of this Court in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challenge against plenary legislation. This being the case, there is no rational distinction between the two types of legislation when it comes to this ground of challenge under Article 14. The test of manifest arbitrariness, therefore, as laid down in the aforesaid judgments would apply to invalidate legislation as well as subordinate legislation under Article 14. Manifest arbitrariness, therefore, must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary. We are, therefore, of the view that arbitr....
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....ourt must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope. 73. It has consistently been held that there is always a presumption in favour of constitutionality, and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt. It has been held that if the law which is passed is within the scope of the power conferred on a legislature and violates no restrictions on that power, the law must be upheld whatever a court may think of it. 74. It could thus be seen that the challenge to the legislative Act would be sustainable only if it is established that the legislature concerned had no legislative competence to enact on the subject it has enacted. The other ground on which the validity can be challenged is that such an enactment is in contravention of any of the fundamental rights stipulated in Part III of the Constitution or any other provision of the Constitution. Another ground as could be culled out from the recent judgments of this Court is that the validity of the legislative act can be challenged on the ground of manifest ar....
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....of the enactment and the date when the challenge is made. It should also be noted as to whether the grounds of challenge based on the facts pleaded and the implication of the provision really has any nexus apart from the grounds of challenge made. With reference to those relevant provisions, the Court should be conscious of the position as to the extent of public interest involved when the provision operates the field as against the prevention of such operation. The Court should also examine the extent of financial implications by virtue of the operation of the provision vis-a-vis the State and alleged extent of sufferance by the person who seeks to challenge based on the alleged invalidity of the provision with particular reference to the vires made. Even if the writ court is of the view that the challenge raised requires to be considered, then again it will have to be examined, while entertaining the challenge raised for consideration, whether it calls for prevention of the operation of the provision in the larger interest of the public. We have only attempted to set out some of the basic considerations to be borne in mind by the writ court and the same is not exhaustive. In othe....
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....ti v. State of Maharashtra, (1995) 1 SCC 351. 13. Shri Dadariya adopted the arguments advanced by Shri Ashish Shrivastava, Senior Advocate and supplemented by submitting that levy of entry tax under the impugned Act is clearly discriminatory as the cumulative burden of taxes on goods that are imported into the State is higher than the cumulative burden of taxes on goods that are locally produced or manufactured. Therefore, the same amounts to discrimination which is contrary to Article 304 (a). He invited the attention of this Court to the chart prepared in the writ petition indicating therein that in taxation the levy with the legislation is massive and they can classify to a great extent of tax on goods purchased locally and imported from outside. Shri Dadariya, quoting the paragraphs from Jindal's case (9 judges) tried to persuade this Court that the impugned notification is manifestly discriminatory therefore, he submits that impugned act is liable to be struck down. 14. Mr. Neelabh Dubey also made submission in the same line. He submitted that in taxation leeway with legislation is massive and they can classify to a great extent. But they cannot do away with discriminati....
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....ss (2) (supra) overruling Bhagatram Rajeevkumar now stands overruled by the Bench of 9 judges and the same Bench of 9 judges while overruling Jindal Stainless (2) revived Bhagatram Rajeevkumar and therefore, Bhagatram Rajeevkumar is still a good law and Geo Miller and Steel Authority of India following Bhagatram Rajeevkumar are also valid judgments. It is submitted in the return that, in view of the fact that, Bhagatram Rajeevkumar is still a good law the erroneous pleadings and interpretation of the judgment of Supreme Court of 9 judges made by the petitioner is wiped away. It is also submitted in the return that by application of Article 141 of the Constitution of India, Bhagatram Rajeevkumar is still a binding precedent and applies with full force presently over all Courts including this High Court also. It is submitted in the return that, in view of the fact that the constitutional validity of the Madhya Pradesh Sthaniya Kshetra Mein Mal Ke Pravesh Par Kar Adhiniyam, 1976 has already been affirmed twice in the Supreme Court in the judgments of Bhagatram Rajeevkumar and Geo Millers (supra), this present attempt to challenge the constitutional validity of the Adhiniyam, 1976 is n....
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....of business of a dealer of goods specified in Schedule III, 'into each local area for consumption or use of such goods as raw material or incidental goods or as packing material or in the execution of works contracts but not for sale therein; and such tax shall be paid by every dealer liable to tax under the Sales Tax Act who has effected entry of such goods: Provided." III) First proviso to sub-section (1) of Section 3 further provides for contingency, in which no tax under subsection (1) of Section 3 is to be levied. Sub-section (2) of Section 3 reads as under: "(2) (a) There shall be levied an entry tax on the entry into any local area for consumption. Use or sale therein.- (i) of such goods specified in Schedule II or Schedule III, other than motor vehicles, on which entry tax is not leviable under the provisions of sub-section (1); and (ii) by such persons or class of persons, [..............] as may be either case, be notified by the State Government and thereupon such tax shall be paid by such person or class of persons: Provided that entry tax under this subsection shall not be levied on the entry of such goods. if it is prov....
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.... sub-section (1) shall be laid on the table of the Legislative Assembly after it is issued. X) Section 10 empowers the State Govt. that it may, by notification, exempt prospectively or retrospectively, in whole or in part, any class of dealers or persons or any goods from payment of entry tax in respect of all or any of the local areas, for a specified period by issuance of notification. XI) Section 12 provides for rate at which entry tax to be charged on goods under Section 3(2). Sub-section (1) further provides that entry tax payable under Section 3 (2) shall not exceed 20 per cent of the value of the goods. 17. Hon'ble Supreme Court while deciding the reference placed before it in Jindal's case (9 Judges) formulated the questions which fell for determination as under:- 11.1. (i) Can the levy of a non-discriminatory tax per se constitute infraction of Article 301 of the Constitution of India? 11.2. (ii) If answer to Question (i) is in the affirmative, can a tax which is compensatory in nature also fall foul of Article 301 of the Constitution of India? 11.3. (iii) What are the tests for determining whether the tax or levy is compensa....
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....td. v. State of Haryana (2003) 8 SCC 60. A two-Judge Bench of this Court, however, referred the matter to a larger Bench as it noticed an apparent conflict between the pronouncements of this Court in Atiabari (supra) and Automobile Transport (supra) cases on the one hand and Bhagatram (supra) and Bihar Chamber of Commerce (supra) on the other. The Court after noticing the development of law on the subject observed: "25. To sum up: the pre-1995 decisions held that an exaction to reimburse/recompense the State the cost of an existing facility made available to the traders or the cost of a specific facility planned to be provided to the traders is compensatory tax and that it is implicit in such a levy that it must, more or less, be commensurate with the cost of the service or facility. The decisions emphasized that the imposition of tax must be with the definite purpose of meeting the expenses on account of providing or adding to the trading facilities either immediately or in future provided the quantum of tax sought to be generated is based on a reasonable relation to the actual or projected expenditure on the cost of the service or facility. "26. The decisions in....
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....gned law on trade and commerce under Article 301 as propounded in Atiabari Tea Co. Ltd. v. State of Assam and the working test enunciated in Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan for deciding whether a tax is compensatory or not vide para 19 of the Report (AIR), will continue to apply and the test of "some connection" indicated in para 8 (of SCC) of the judgment in Bhagatram Rajeevkumar v. CST and followed in State of Bihar v. Bihar Chamber of Commerce is, in our opinion, not good law. Accordingly, the constitutional validity of various local enactments which are the subject-matters of pending appeals, special leave petitions and writ petitions will now be listed for being disposed of in the light of this judgment." 8. All these judgments and orders of the High Courts, passed after the remand, then, came to be challenged by the States. concerned in the appeals filed against the same. These appeals initially came-up before a two-Judge Bench of this Court comprising Justice Arijit Pasayat and Justice S.H. Kapadia. Their Lordships referred the same to a Constitution Bench for an authoritative pronouncement on as many as ten questions formulated in the re....
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....? (4) Will the principles of quid pro quo relevant to a fee apply in the matter of taxes imposed under Part XIII? (5) Whether the entry tax may be levied at all where the goods meant for being sold, used or consumed come to rest (standstill) after the movement of the goods ceases in the "local area"? (6) Whether the entry tax can be termed a tax on the movement of goods when there is no bar to the entry of goods at the State border or when it passes through a local area within which they are not sold, used or consumed? (7) Whether interpretation of Articles 301 to 304 in the context of tax on vehicles (commonly known as "transport") cases in Atiabari case and Automobile Transport case apply to entry tax cases and if so, to what extent? (8) Whether the non-discriminatory indirect State tax which is capable of being passed on and has been passed on by traders to the consumers infringes Article 301 of the Constitution? (9) Whether a tax on goods within the State which directly impedes the trade and thus violates Article 301 of the Constitution can be saved by reference to Article 304 of the Constitution alone or can be saved by any....
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....opounded in Automobile Transport in which compensatory taxes were equated with regulatory taxes. In that case, a working test for deciding whether a tax is compensatory or not was laid down. In that judgment, it was observed that one has to enquire whether the trade as a class is having the use of certain facilities for the better conduct of the trade/business. This working test remains unaltered even today. 50. As stated above, in the post 1995 era, the said working test propounded in Automobile Transport stood disrupted when in Bhagatram case, a Bench of three Judges enunciated the test of "some connection" saying that even if there is some link between the tax and the facilities extended to the trade directly or indirectly, the levy cannot be impugned as invalid. In our view, this test of "some connection" enunciated in Bhagatram case is not only contrary to the working test propounded in Automobile Transport case but it obliterates the very basis of compensatory tax. We may reiterate that when a tax is imposed in the regulation or as a part of regulatory measure the controlling factor of the levy shifts from burden to reimbursement/recompense. The working test propound....
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....ined the concept in the following words: "19. I think that a distinction should be drawn between "discrimination without reason" and "discrimination with reason". The whole doctrine of classification is based on this distinction and on the well-known fact that the circumstances which govern one set of persons or objects may not necessarily be the same as those governing another set of persons or objects, so that the question of unequal treatment does not really arise as between persons governed by different conditions and different sets of circumstances. The main objection to the West Bengal Act was that it permitted discrimination "without reason" or without any rational basis." 136. Any challenge to a fiscal enactment on the touchstone of Article 304 (a) must in our opinion be tested by the same standard as in Kathi's case (AIR 1952 SC 123) (supra). The Court ought to examine whether the differentiation made is intended or inspired by an element of unfavourable bias in favour of the goods produced or manufactured in the State as against those imported from outside. If the answer be in the affirmative, the differentiation would fall foul of Article 304 (a) an....
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....le bias and so long as the differentiation is intended to benefit a distinct class of industries and the life of the benefit is limited in terms of period, the benefit must be held to flow from a legitimate desire to promote industries within its territory. Grant of exemptions and incentives in such cases must be deemed to have been inspired by considerations Page 167 167 which in the larger context help achieve the Constitutional goal of economic unity." "143. In Malwa Bus Service (Private) Ltd. v. State of Punjab and others (1983) 3 SCC 237: (AIR 1983 SC 634) this Court held that a difference in the rate of tax by itself cannot be considered to be discriminatory and offensive to the equality clause: "21. The next submission urged on behalf of the petitioners is based on Article 14 of the Constitution. It is contended by the petitioners that the Act by levying Rs 35,000 as the annual tax on a motor vehicle used as a stage carriage but only Rs 1500 per year on a motor vehicle used as a goods carrier suffers from the vice of hostile discrimination and is, therefore, liable to be struck down. There is no dispute that even a fiscal legislation is subject to Article 1....
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....this Court in G.K. Krishnan case (AIR 1975 SC 583) for upholding the classification made between stage carriages and contract carriages both of which are engaged in carrying passengers are not relevant to the case of a classification made between stage carriages which carry passengers and public carriers which transport goods. The petitioners have not placed before the court sufficient material to hold that the impugned levy suffers from the vice of discrimination on the above ground." 144. Seen in the context of the above, we are inclined to accept the submission made on behalf of the State that so long as the intention behind the grant of exemption/adjustment/credit is to equalize the fall of the fiscal burden on the goods from within the State and those from outside the State such exemption or set off will not amount to hostile discrimination offensive to Article 304 (a). Having said that, we leave open for examination by the regular benches hearing the matters whether the impugned enactment achieve the object of such equalization or lead to a situation that exposes goods from outside the state to suffer any disadvantage vis-a-vis those manufactured in the taxing State.....
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.... be limited for a specific period of time. 271. Questions Nos. 2 and 3: Insofar as compensatory taxes are concerned in the light of the conclusions on question No. 1, I hold that the nomenclature of 'compensatory' ascribed to the taxes levied by the State Government under Entry 52, List II pursuant to Automobile is unwarranted. The concept of compensatory tax was evolved fifty years back through judicial pronouncements. It has withstood the test of time and thus, any subsequent judicial pronouncement like the present one should not prejudice the interest of the parties involved. The State Governments should not suffer any loss of revenue solely because of judicial interpretations and innovations in Automobile and the case subsequent to it. Subject to passing the muster of Art. 304 (a), entry tax levied by the States under entry 52, List II even though termed as compensatory tax does not fall foul of. Art. 301. In my view, Jindal Stainless Ltd. (2) v. State of Haryana (2006) 7 SCC 241 is not a correct view in adopting quantifiable data approach; for a tax, there is no requirement of proximate quid pro quo and Jindal Stainless Ltd. (2) is overruled. I agree with the ....
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....not only contrary to the working test propounded in Automobile (AIR 1962 SC 1406) but obliterated the very basis of compensatory tax. It was, therefore, held that the test of "some connection" as propounded in Bhagatram was not a correct view and the judgments in Bhagatram and Bihar Chamber of Commerce were (AIR 1996 SC 2344) overruled. "465. In Bhagatram Rajeevkumar v. Commissioner of Sales Tax, M.P. 1995 Supp (1) SCC 673, it was held that even if there is some link or some connection between the tax and the facilities extended to the trade directly or indirectly the levy cannot be challenged as invalid." "466. The same dictum was followed in State of Bihar v. Bihar Chamber of Commerce (1996) 9 SCC 136, wherein this Court considered the challenge to a legislation in which the State of Bihar levied entry tax on the goods entering into a local area for consumption, use or sale therein. The Act was challenged as violative of Art.301 of the Constitution. After referring to Bhagatram, it was held as under:- "18. In this connection, it is necessary to notice a few decisions brought to our notice. In Bhagatram Rajeev kumar 1995 Supp (1) SCC 673, a three-judge B....
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.... the effect of the operation of such a law is to impede the activity, then the law is a restriction under Article 301. However, if the law enacted is to enforce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. This is the way of reconciling the concept of compensatory tax with the scheme of Articles 301, 302 and 304...." (emphasis supplied) The Bench further held: "45. To sum up, the basis of every levy is the controlling factor. In the case of "a tax", the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of "a fee", the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measure, its basis shifts from the concept of "burden" to the concept of measurable/quantifiable benefit and then it becomes "a compensatory tax" and its payment is then not for revenue but as reimbursement/recompense to the service/facility provider. It is then a tax on recompense. Compensato....
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....mpensatory tax was evolved fifty vears back through judicial pronouncements. It has withstood the test of time and thus, any subsequent judicial pronouncement like the present one should not prejudice the interest of the parties involved. The State Governments should not suffer any loss of revenue solely because of judicial interpretations and innovations in Automobile and the cases subsequent to it. 474.2 Subject to passing the muster of Art. 304 (a), entry tax levied by the States under entry 52, List II even though termed as compensatory tax does not fall foul of Art. 301. It is not necessary that the money realized by the levy should be put into a separate Fund or that the levy should be proportionate to the expenditure. There is no bar to subsumption of the revenue realized from regulatory/compensatory taxes into the Consolidated Fund of the State as they are no different from other taxes of a general nature. Moreover, the quantum of expenditure incurred in achieving the object behind a compensatory levy cannot be inquired into. 474.3 Jindal Stainless Ltd. (2) v. State of Haryana (2006) 7 SCC 241 is not a correct view in adopting quantifiable data approach; f....
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....t. 301 subject to the levy being non-discriminatory i.e. passing the muster of Art. 304 (a). A levy sustainable under Art. 304 (a), being non-discriminatory would ipso facto be out of the purview of Art. 301. 484. When the entry tax is levied by the Entry Tax Act enacted by the State Legislature, the term 'a local area' contemplated by Entry 52 may cover the 'Whole State' or 'a local area' as notified in the legislation. I agree with the view taken in Bihar Chamber of Commerce that from the point of view of entry tax that the State is a compendium of local areas and where the local areas contemplated by the Act cover the entire State, the difference between the State and 'a local area' practically disappears. 485. Articles 304 (a) and 304(b) are to be read disjunctively; both apply to different subject matters; while Art. 304 (a) deals with tax, Art. 304(b) deals only with non-fiscal matters. 486. Where there is equivalence in terms of tax treatment between the locally produced goods and the ones imported from other States, levy of entry tax on the goods imported from other States when there is no such levy on the locally p....
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.... 492. Jindal Stainless Ltd. (2) v. State of Haryana (2006) 7 SCC 241 is not a correct view in adopting quantifiable data approach; for a tax, there is no requirement of proximate quid pro quo and Jindal Stainless Ltd. (2) is overruled. The view taken in Bhagatram and Bihar Chamber of Commerce is correct as the same is in harmony with the original design of compensatory tax laid down in Automobile. Unjust Enrichment: 493. The concept of unjust enrichment is applicable for considering the question of refund. Unless the assessees establish that they have not passed on the tax burden to the consumers, they cannot make a claim for refund and unjustly enrich themselves." 19. Argument has been advanced by learned counsel for the petitioners that the levying entry tax on various inputs and other goods imported from other States as a rate much higher than that at which entry tax leviable on identical goods moving inside the State, the State has subjected the petitioner to hostile and arbitrary discrimination of violation of Article 14 and 304-A of the Constitution. Similar arguments was advanced before this court in case of Steel Authority of India (Citation) ch....
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....e administrative convenience etc. are required to be considered and these factors may change from time to time. 105: Equal protection clause of the Constitution does not enjoin equal protection of the laws as abstract propositions. Laws are enacted-to solve specific problem or to achieve definite objectives by specific remedies; absolute equality or uniformity of treatment is impossible of achievement. Taxes laws are aimed at dealing with complex problems of infinite variety necessitating adjustment of several disparate elements. A taxing statute is not, therefore, exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions, occupations or objects. 106: Challenges to the constitutional validity of Section 4A on the ground that the same suffers from vice of excessive delegation as it confers unguided and channelized power to the State in imposing entry tax up to an exorbitant rate of 507o of the value of the goods, is to be tested in the light of above principles of law laid down by the Apex Court. The entry Tax has been imposed for the purposes of compensating the loc....
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....fication may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. (Ram Krishna Dalmia v. Justice S. R. Tendolkar AIR 1958 SC 538). 113. The petitioners have also challenged the notifications on the ground that it violates article 301 as well as articles 14 and 19 of the Constitution. However, in the entire petitions, the petitioners have neither alleged nor given any figures to demonstrate and establish that they suffered loss in the business as a result of increase in the rate of entry tax or that the discriminatory levy of entry tax has adversely affected their trade and the same constitutes a direct and immediate impediment for their business. Relying upon the judgment in the matter of V. Venugopala Ravi Verma Rajah AIR 1969 SC 1094, we hold that imposition of different rates of entry tax by the notifications issued by the State, on the goods imported from outside the State and brought into the local areas and the goods brought from within the State, would n....
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....lying this test this court has taken into account the statements in the preamble to the Act, and if the said statements afford a satisfactory basis for holding that the legislative policy and principle has been enunciated with sufficient accuracy and clarity the preamble itself has been held to satisfy the requirements of the relevant tests. In every case it would be necessary to consider the relevant provisions of the Act in relation to the delegation made and the question as to whether the delegation is intra vires or not will have to be decided by the application of the relevant tests." 23. In Corporation of Calcutta AIR 1965 SC 1107 the Constitution Bench held as thus - "The validity of the guidance required to make delegation of power good cannot be judged by o stereo-typed rule. The guidance furnished must be held to be good if it leads to the achievement of the object of the statute which delegated the power. The validity of the power to fix rates of taxes delegated to the Corporation by S. 548 of the Act must be judged by the same standard. All taxes including the one under section 548 can be collected and used by the Corporation only for discharging its functio....
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....axation in all proper and reasonable ways the legislature may select persons, properties, transactions and objects; and apply different methods and even rates for tax. if the legislature does so reasonably. Protection of the equality clause does not predicate a mathematically precise or logically complete or symmetrical classification: it is not a condition of the guarantee of equal protection that all transactions, properties, objects or persons of the same genus must be affected by it or none at all. If the classification is rational, the legislature is free to choose objects of taxation, impose different rates, exempt classes of property from taxation. subject different classes of property to tax in different ways and adopt different modes of assessment. A taxing statute may contravene Article 14 of the Constitution if it seeks to impose on the same class of property, persons, transactions or occupations similarly situate, incidence of taxation, which leads to obvious inequality. A taxing statute is not, therefore. exposed to attack on the ground of discrimination merely because different rates of taxation are prescribed for different categories of persons, transactions. occupat....
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....dopt a reasonable classification of persons and things in Imposing tax liabilities. A law of taxation cannot be termed as being discriminatory because different rates of taxation are prescribed in respect of different items, provided it is possible to hold that the said items belong to distinct and separate groups and that there is a reasonable nexus between the classification and the object to be achieved by the imposition of different rates of taxation. The mere fact that a tax falls more heavily on certain goods or persons may not result in its invalidity. As observed by this Court in Khandige Sham Bhat v. Agricultural Income Tax Officer in respect of taxation laws, the power of legislature to classily goods, things or persons are necessarily wide and flexible so as to enable it to adjust Its system of taxation in all proper and reasonable ways. The courts lean more readily in favour of upholding the constitutionality of a taxing law in view of the complexities involved in the social and economic life of the community. It is one of the duties of a modem legislature to utilise the measures of taxation introduced by it for the purpose of achieving maximum social good and one has t....
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....y under Article 304 (a) of the Constitution without being subjected to test of Article 304(b) either in terms of existence of public interest or reasonableness of the levy. Therefore, the validity of the impugned legislation and the notification to be tested on the anvil of Article 304 (a). The Court has to see as to whether the impugned legislation and notification are the tested of Article 304 (a) of Constitution of India. 28. The discrimination is required to be proved by positive action. It has to be brought on record that by virtue of any legislation, the party has suffered loss or it is restricted to perform trade and commerce in the given State in which the legislation is enacted. The impugned notification only prescribes the rates on the goods imported from outside and goods inside the State. The notification does not debar the petitioner to trade and commerce inside the State of Chhattisgarh. A submission was made that charging the goods imported from outside the State at higher tax rates than the goods inside the State amounts to positive discrimination. Except a comparative chart with regard to difference of amount of tax paid in lieu of higher tax rate, no substantiv....
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.... matter of constitutional doctrine, there is no restraint on the plenary powers of Parliament as well as the state legislatures which requires the legislative body enacting a statute to legislate only upon one head of legislation falling within its competence. The legislature can distribute or allocate its regulatory or law making requirements (both fiscal and non-fiscal) in a manner which best sub-serves its needs and concerns. Once this be the position, its impact upon the interpretation of Article 304 (a) is that it is open to the state legislature to have due regard to the equality of tax burdens, when it legislates to impose "any tax" so long as it does not breach the notion of non-discrimination as between goods that are imported from other states and goods which are produced or manufactured within. It is legitimately entitled to ensure that the tax burden should not discriminate between locally produced or manufactured goods of that state and goods originating in other states. The substance must prevail over form. Once there is no constitutional necessity that the form in which legislation is enacted in India must cover only one legislative entry, the legislature is entitled....
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....dded Tax Act, 2005 and here in this case the validity of the Act of 1976 has been upheld by this Court in Steel Authority of India (Supra) considering the same argument with regard to violation of Article 304 (a) and 14 of the Constitution of India. With due respect case law of Western Electronic (Supra) was also placed before this Court in Steel Authority of India (Supra) and thereafter considering the ground of challenge did not apply in the facts of the case. Therefore, this Court is unable to accede to arguments advanced by learned counsel for the petitioners that Act of 1976 is violative of Article 304 (a), 14 of Constitution of India. With due respect the case laws as cited by Shri Shrivastava would not come to rescue in the given fact of this cases, looking to the issue involved in this petition. 33. It has been argued that appropriate writ be issued declaring that entire State cannot be a "local area" for the purposes of Entry 52 of List II of the Constitution of India, and that the "local area" can only be declared, as defined in the 'definition' of the Act. In this context observation of Hon'ble R. Bhanumati J in concurring judgment is necessary to be quoted "W....