1999 (6) TMI 460 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to levy of sales tax on zarda under Assam General Sales Tax Act, 1993.

Analysis:
The petitioner challenged the levy of sales tax on zarda under the Assam General Sales Tax Act, 1993. The petitioner argued that zarda was exempted from sales tax under the Act, 1947, for over 35 years until June 30, 1993, before being subjected to tax under the new Act. The tax on zarda was withdrawn in May 1997, and exemption was restored by deleting certain words from the schedule. The petitioner contended that the levy of tax on zarda under the new Act lasted only for 3 years and 9 months.

Analysis:
The petitioner's counsel argued that the Parliament had taken over the tobacco industry under entry 52 of List I of the Seventh Schedule, giving it exclusive legislative power over the industry. It was contended that the State of Assam had no jurisdiction to legislate on tobacco products like zarda once the Central Government had passed legislation on the matter. The counsel also highlighted the existence of the Tobacco Board Act, 1975, which controlled the tobacco industry for public interest. The counsel emphasized that the State Legislature had no authority to legislate on a subject already under the jurisdiction of the Central Government.

Analysis:
The Court noted that the State Government of Assam was receiving its share of excise duty from the Central Government under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The petitioner argued that since the State was already receiving a share of excise duty on tobacco products, it was not entitled to levy sales tax on zarda. The distribution of excise duty among states was conditional on not imposing any state-level taxes on the goods. As the State had imposed sales tax on zarda without special permission, it was not entitled to both the sales tax and the share of additional excise duty.

Analysis:
The Court found that the imposition of tax on zarda under the Assam General Sales Tax Act, 1993, was only for a short period from July 1, 1993, to May 1, 1997. It was observed that zarda was later subjected to luxury tax under the Assam Taxation (on Luxuries) Act, 1997. The State Government withdrew the levy on tax from zarda in May 1997, realizing the legal implications and the distribution of excise duties among states. The Court acknowledged the factual and legal positions presented by both parties and allowed the writ petition, setting aside the imposition of sales tax on zarda under the Assam General Sales Tax Act, 1993.

This comprehensive analysis of the legal judgment highlights the key arguments, legal principles, and the final decision of the High Court in the case involving the challenge to the levy of sales tax on zarda in Assam.