1973 (6) TMI 49 - HC - VAT and Sales Tax

Issues Involved:
1. Vagueness of Section 5A of the Kerala General Sales Tax Act, 1963.
2. Competency of the State Legislature to impose a tax on the use or consumption of goods.
3. Infringement of Article 301 of the Constitution.
4. Applicability of Section 5A to the appellant in Writ Appeal No. 51 of 1972.
5. Taxability of goods exempt under Item 10 of the Third Schedule to the Act.
6. Retrospective effect of Section 5A and its impact on Article 19(1)(g) of the Constitution.

Detailed Analysis:

1. Vagueness of Section 5A of the Kerala General Sales Tax Act, 1963:
The court addressed the contention that Section 5A was vague and did not achieve its intended objective. This issue was resolved by referring to the Supreme Court decision in *Ganesh Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh* [1969] 24 S.T.C. 343 (S.C.), which dealt with a similar provision under the Madhya Pradesh General Sales Tax Act. The court found that the language of Section 5A was clear enough to be treated as a charging section and rejected the argument of vagueness.

2. Competency of the State Legislature to impose a tax on the use or consumption of goods:
The contention that Section 5A imposes a tax on the use or consumption of goods, which the State Legislature is not competent to do, was also rejected. The court referred to the Supreme Court's decision in *M/s. J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh and Another* [1961] 12 S.T.C. 429 (S.C.); A.I.R. 1961 S.C. 1534, which clarified the distinction between an excise duty and a sales tax. The court concluded that Section 5A imposes a tax on the purchase of goods and not on their use or consumption.

3. Infringement of Article 301 of the Constitution:
The argument that Section 5A infringes Article 301 of the Constitution, which guarantees freedom of trade and commerce throughout India, was dismissed. The court noted that only discriminatory taxes that treat goods from different states unequally would violate Article 301. Since Section 5A does not make any distinction between goods inside the state and those from outside, it was held that the provision does not infringe Article 301.

4. Applicability of Section 5A to the appellant in Writ Appeal No. 51 of 1972:
The appellant argued that the conditions under Section 5A(1) were not satisfied in his case as there was no consumption of pineapples in the manufacture of other goods for sale. The court, however, decided not to delve into the specifics of the manufacturing process in the writ appeal and left the matter to be determined by the Sales Tax Officer. The appellant was allowed to present these contentions before the assessing authority.

5. Taxability of goods exempt under Item 10 of the Third Schedule to the Act:
The appellant argued that pineapples should be considered green vegetables and thus exempt under Item 10 of the Third Schedule. The court referred to its earlier decision in *Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Mammootty* [1970] 26 S.T.C. 122, which held that pineapples are neither green fruits nor vegetables. The court found no reason to reconsider this decision and rejected the contention.

6. Retrospective effect of Section 5A and its impact on Article 19(1)(g) of the Constitution:
The appellants argued that the retrospective effect given to Section 5A for the period from 1st April 1970 to 15th May 1970 violated their right to carry on trade or business under Article 19(1)(g) of the Constitution. They contended that the tax imposed was higher than their profit margin and that they had not made provisions for collecting this tax. The court noted that the passing on of tax is not a necessary incidence of sales tax and that a tax does not become invalid merely because it cannot be passed on. The court found no material evidence to suggest that the tax infringed Article 19(1)(g) and dismissed this argument.

Conclusion:
The court dismissed the batch of writ appeals, holding that Section 5A of the Kerala General Sales Tax Act, 1963, was valid and did not suffer from any of the infirmities alleged by the appellants. The petitions were dismissed with costs.

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