1990 (6) TMI 198 - HC - VAT and Sales Tax

Summary

Issues:
1. Constitutionality of entry 5(e)(ii) of the Fourth Schedule to the Karnataka Sales Tax Act, 1957.
2. Imposition of tax on sale and purchase of coconuts in the State of Karnataka.
3. Interpretation of entry 5(e) of the Fourth Schedule and its compliance with constitutional provisions.
4. Application of restrictions on the levy of sales tax under section 15 of the Central Sales Tax Act, 1956.
5. Comparison with a relevant Supreme Court decision regarding taxation on goods purchased within and outside the State.

Detailed Analysis:

1. The petitioner challenged the constitutionality of entry 5(e)(ii) of the Fourth Schedule to the Karnataka Sales Tax Act, 1957, as amended by Karnataka Act 23 of 1983, on the grounds of violating articles 14, 286, and 304(a) of the Constitution of India. The petitioner contended that the levy of tax on coconuts under this entry was discriminatory and unconstitutional.

2. The petitioner, a wholesale dealer in coconuts, argued that the imposition of tax on both sale and purchase of coconuts in Karnataka, post the amendment by Karnataka Act 23 of 1983, was impermissible. The petitioner highlighted the difference in tax treatment for coconuts purchased locally within the State and those obtained from outside the State, asserting that the new levy was discriminatory and contrary to constitutional provisions.

3. The interpretation of entry 5(e) of the Fourth Schedule was crucial in determining the constitutionality of the tax levy. The petitioner contended that the language of entry 5(e)(ii) implied a tax on goods purchased or brought into the State through inter-State trade, leading to discriminatory treatment compared to local sales. The argument revolved around the alleged violation of article 304(a) of the Constitution due to this differential treatment.

4. The application of restrictions on the levy of sales tax under section 15 of the Central Sales Tax Act, 1956, was a key point of contention. The petitioner argued that the imposition of additional tax on coconuts brought into Karnataka, which had already borne tax burdens in other states, was unconstitutional under article 304(a). However, the court held that the levy under the Karnataka Sales Tax Act did not exceed the limitations set by section 15 of the CST Act.

5. The court drew parallels with a Supreme Court decision involving taxation on tamarind to support its judgment. The court emphasized that as long as the rate of tax on imported goods was not higher than that on local goods, article 304 did not apply. The comparison with the Supreme Court decision provided a legal precedent for justifying the tax treatment of goods brought into the State.

In conclusion, the court dismissed the writ petitions challenging the tax levy on coconuts in Karnataka, citing compliance with constitutional provisions and legal precedents.