1985 (11) TMI 211 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Constitutional validity of entry No. 13a of the Third Schedule to the KST Act.
2. Interpretation of "shrimps, prawns, and lobsters" under entry No. 13a.
3. Applicability of Section 5(3) of the CST Act.
4. Legislative competence of the State Legislature.
5. Classification under Article 14 of the Constitution.
6. Retrospective application of the amendment.
7. Determination of "in the course of export" under the CST Act.
8. Certificate of fitness to appeal to the Supreme Court.

Detailed Analysis:

1. Constitutional Validity of Entry No. 13a of the Third Schedule to the KST Act:
The petitioner challenged the constitutional validity of entry No. 13a, arguing that it violated Article 14 of the Constitution. The court held that the classification between "raw" and "frozen" shrimps, prawns, and lobsters was not arbitrary and did not violate Article 14. The court reasoned that the legislature had deliberately treated these as distinct commodities, and the classification was essential for raising revenue.

2. Interpretation of "Shrimps, Prawns, and Lobsters" Under Entry No. 13a:
The court examined whether "frozen" shrimps, prawns, and lobsters were the same as "raw" ones under entry No. 13a. The court concluded that the legislature had clearly intended to treat "raw" and "frozen" varieties as different commodities. The court emphasized that interpreting them as the same would defeat the legislative mandate and would amount to legislating under the guise of interpretation.

3. Applicability of Section 5(3) of the CST Act:
The petitioner argued that the purchases were in the course of export and thus exempt under Section 5(3) of the CST Act. The court found that the goods purchased (raw shrimps, prawns, and lobsters) were different from the goods exported (frozen shrimps, prawns, and lobsters). Therefore, the purchases did not qualify for exemption under Section 5(3) as the goods had undergone processing and were not the same as those exported.

4. Legislative Competence of the State Legislature:
The court held that entry No. 13a was within the legislative competence of the State Legislature under Article 246 and entry 54 of the State List. The court noted that the State Legislature had the power to classify and reclassify goods for taxation purposes.

5. Classification Under Article 14 of the Constitution:
The court rejected the argument that the classification under entry No. 13a was arbitrary and violated Article 14. The court found that the classification between "raw" and "frozen" varieties was based on substantial grounds and was not arbitrary. The court noted that the classification was necessary for taxation and revenue purposes.

6. Retrospective Application of the Amendment:
The court upheld the retrospective application of the amendment to entry No. 13a. The court noted that the power of the legislature to legislate retrospectively was well-settled and that the petitioners had not proved that the retrospectivity was destructive of their trade and business.

7. Determination of "In the Course of Export" Under the CST Act:
The court applied the principles laid down by the Supreme Court in Coffee Board v. Joint Commercial Tax Officer and Consolidated Coffee Limited v. Coffee Board to determine whether the purchases were in the course of export. The court found that the petitioners had not proved that the purchases were made for complying with a prior agreement to sell to foreign buyers. Therefore, the purchases did not qualify as being in the course of export.

8. Certificate of Fitness to Appeal to the Supreme Court:
After dismissing the writ petitions, the court granted the petitioners' oral applications for a certificate of fitness to appeal to the Supreme Court under Articles 133 and 134A of the Constitution. The court noted that it had dissented from the view expressed by the Kerala High Court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Neroth Oil Mills Company Limited and that the questions raised were substantial questions of law of general importance that needed to be decided by the Supreme Court.

Conclusion:
The court dismissed the writ petitions, upholding the constitutional validity of entry No. 13a, the legislative competence of the State Legislature, and the classification under Article 14. The court found that the purchases did not qualify for exemption under Section 5(3) of the CST Act and upheld the retrospective application of the amendment. The court granted a certificate of fitness to appeal to the Supreme Court.