2002 (5) TMI 781 - HC - VAT and Sales Tax

Issues Involved:
1. Quashing the Notification dated 31-3-1999 imposing sales tax on imported fabrics.
2. Constitutionality of the Additional Duties of Excise (Goods of Special Importance) Act.
3. Discrimination and unreasonableness of sales tax on imported fabrics.
4. Legislative competence of the State to impose sales tax on goods already subject to additional excise duty.
5. Interpretation of the Statement of Objects and Reasons in legislative intent.

Issue-wise Detailed Analysis:

1. Quashing the Notification dated 31-3-1999:
The petitioners sought to quash the Notification dated 31-3-1999 issued by the Lt. Governor of Delhi, which imposed a 4% sales tax on imported fabrics effective from 1-4-1999. They argued that this levy was discriminatory and placed importers at a disadvantage compared to domestic manufacturers.

2. Constitutionality of the Additional Duties of Excise (Goods of Special Importance) Act:
The petitioners argued that the Additional Duties of Excise Act was enacted to replace sales tax on certain goods and thus, no sales tax should be levied on imported fabrics. They contended that the levy of additional duties of excise was intended to replace sales tax, as evidenced by the Statement of Objects and Reasons and the Finance Minister's speech. However, the court held that the Statement of Objects and Reasons cannot be used to determine the true meaning and effect of substantive provisions. The court cited several precedents, including State of West Bengal v. Union of India and S.S. Bola v. B.D. Sardana, to support this position.

3. Discrimination and Unreasonableness of Sales Tax on Imported Fabrics:
The petitioners claimed that the levy of sales tax on imported fabrics was discriminatory under Article 14 of the Constitution, as it placed imported goods at a disadvantage compared to domestically produced goods. The court rejected this argument, stating that the State has wide discretion in selecting the persons or objects it will tax. The court cited East India Tobacco Company v. The State of Andhra Pradesh and Kerala Hotel & Restaurant Association v. State of Kerala, emphasizing that a statute is not open to attack on the ground that it taxes some objects and not others unless it operates unequally within the range of its selection.

4. Legislative Competence of the State to Impose Sales Tax on Goods Already Subject to Additional Excise Duty:
The court affirmed the legislative competence of the State to impose sales tax on goods subject to additional excise duty. It referenced multiple judgments, including Parekh Prints v. Union of India and Nemichand Paras Mal v. Dy. Commercial Tax Officer, to conclude that the imposition of additional customs duty does not take away the State's power to levy sales tax. The court also noted that the only consequence would be that the State may not get its share of the central excise revenue.

5. Interpretation of the Statement of Objects and Reasons in Legislative Intent:
The court reiterated that the Statement of Objects and Reasons cannot be used to determine the true meaning and effect of substantive provisions of law. It emphasized that the language employed by the legislature is the primary factor in determining legislative intent. The court dismissed the petitioners' reliance on the Statement of Objects and Reasons, citing several Supreme Court judgments, including Aswini Kumar Ghosh v. Arabinda Bose and Tata Engineering & Locomotive Co. Ltd v. The Gram Panchayat, Pimpri Waghere.

Conclusion:
The court dismissed the petitions, holding that the levy of sales tax on imported fabrics was neither discriminatory nor unconstitutional. It affirmed the State's legislative competence to impose sales tax on goods subject to additional excise duty and rejected the petitioners' arguments based on the Statement of Objects and Reasons. The court concluded that the classification between imported and domestically produced fabrics was constitutionally valid and did not violate Articles 14, 19(1)(g), or 304 of the Constitution. All pending applications were also disposed of.

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