1950 (8) TMI 17 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the State Government can levy sales tax on tobacco despite excise duty by the Central Government.
2. Whether "tobacco leaf" sold as "hooka tobacco" is exempt from sales tax under the Assam Sales Tax Act.

Detailed Analysis:

Issue 1:
The petitioner was assessed a sales tax on tobacco by the Superintendent of Taxes, which led to an appeal contending that since tobacco is already taxed by the Central Excise, it should not be taxed again. The Assistant Commissioner dismissed the appeal, stating that "tobacco leaf" is a distinct article and taxable under the Assam Sales Tax Act. The petitioner then sought a reference to the High Court on whether the State Government can levy sales tax on tobacco despite excise duty by the Central Government. The Commissioner rejected the application, stating that the issue raised was not a question of law. The High Court agreed, emphasizing that excise duty and sales tax serve different purposes, with the former levied on production and the latter on sale. The Court held that the State Government is empowered to levy sales tax on tobacco, and it is not barred by any legal provisions.

Issue 2:
The second point raised was whether "tobacco leaf" sold as "hooka tobacco" is exempt from sales tax under the Assam Sales Tax Act. The High Court clarified that the sales tax applies to the transaction of sale by the vendor, regardless of the intended use by the purchaser. The Court ruled that "tobacco leaf" sold is subject to sales tax, while the exemption under Schedule 3 of the Act applies to "hooka tobacco" specifically, not to all forms of tobacco. Therefore, the Court declined to order a reference to the Commissioner, dismissing the petition with costs.

In conclusion, the High Court dismissed the petition, affirming the State Government's authority to levy sales tax on tobacco and clarifying that sales tax applies to the sale transaction itself, not the eventual use of the product by the purchaser. The Court upheld that "tobacco leaf" sold is subject to taxation, while the exemption under the Act pertains to "hooka tobacco" specifically.