1997 (1) TMI 484 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Authority to Levy Import Fee
2. Violation of Articles 301 and 304 of the Constitution
3. Discrimination Between Imported and Locally Manufactured Goods
4. Validity of Existing Laws and Notifications

Detailed Analysis:

1. Authority to Levy Import Fee
The petitioner challenged the imposition of an import fee on beer under the Punjab Excise Fiscal Orders, 1932, arguing it lacked legal authority. The court examined sections 31, 32, and 58 of the Punjab Excise Act, 1914, which govern the imposition of excise duty and countervailing duty but do not mention any import fee. Section 16 of the Act prohibits the import, export, and transport of intoxicants without payment of duty, but again, does not mention any import fee. The court concluded that the notification dated March 27, 1996, which levied the import fee, was issued without authority of law, as none of the cited sections empowered the State Government to levy such a fee.

2. Violation of Articles 301 and 304 of the Constitution
The petitioner argued that the import fee was violative of Articles 301 and 304 of the Constitution, which ensure freedom of trade, commerce, and intercourse throughout the territory of India. Article 304(a) allows a State Legislature to impose taxes on goods imported from other States, provided similar goods manufactured in the State are subjected to the same taxes. The court found that the import fee discriminated against imported goods as compared to locally manufactured goods, thus violating Article 304(a).

3. Discrimination Between Imported and Locally Manufactured Goods
The court noted that the petitioner was subjected to both countervailing duty and import fee, totaling Rs. 76,848 per truckload of beer, while a local manufacturer only paid Rs. 48,048. This disparity constituted discrimination against imported goods in favor of locally manufactured goods, violating Article 304(a) of the Constitution. The court cited previous judgments, including Kalyani Stores v. State of Orissa and Weston Electroniks v. State of Gujarat, to support its conclusion that such discriminatory taxation is unconstitutional.

4. Validity of Existing Laws and Notifications
The respondents argued that the Punjab Excise Fiscal Orders, 1932, were existing laws protected by Article 372 of the Constitution. However, the court clarified that amendments made to these orders, such as the increase in import fee, could not be considered existing laws and were not protected under Article 372. The court also referenced the Supreme Court's decision in Kalyani Stores, which held that post-Constitution amendments to pre-existing laws must comply with constitutional provisions, including Articles 301 to 305.

Conclusion
The court held that the notification dated March 27, 1996, imposing the import fee, was unauthorized by law and violated Articles 301 and 304(a) of the Constitution. The notification was quashed, and the writ petition was allowed. The court restricted the challenge to the notification of March 27, 1996, as the petitioner had not contested earlier notifications and had paid the import fee without objection in previous years.