1984 (9) TMI 63 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of "gudaku" or "guraku" under the Bengal Finance (Sales Tax) Act, 1941.
2. Taxability of "gudaku" or "guraku" under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972.
3. Whether "gudaku" qualifies as "tobacco" and is thus exempt from tax.
4. Maintainability of the writ petition under Article 226 of the Constitution of India.

Summary of Judgment:

1. Taxability under the Bengal Finance (Sales Tax) Act, 1941:
The petitioners argued that "gudaku" or "guraku," being a tobacco product, should not be subject to tax under the Bengal Finance (Sales Tax) Act, 1941. They cited Item 18 of Schedule I to the Sales Tax Act and Rule 3(28)(b) of the Bengal Sales Tax Rules, 1941, which exempt tobacco products from tax. The court agreed, stating, "The expression 'tobacco' as defined in Item 19 of the First Schedule to the Central Excises and Salt Act, 1944 has been incorporated in the definition of 'tobacco' as provided under Rule 3(28)(b) of the Bengal Sales Tax Rules."

2. Taxability under the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972:
The petitioners contended that "gudaku" should not be taxed under the Entry Tax Act as it is a tobacco product. The court held that "gudaku," not being a toothpaste or tooth-powder, is not subject to the levy of tax under the said Entry Tax Act. The court stated, "Tooth-paste or tooth-powder cannot have any other use except for cleansing teeth. In my opinion gudaku is not such a commodity. It may have different uses."

3. Qualification as "Tobacco":
The petitioners argued that "gudaku" is essentially a tobacco product and should be exempt from tax. The court agreed, citing the Orissa High Court's decision in State of Orissa v. Samsuddin Akbar Khan & Co., and the Gujarat High Court's decision in B. Dar Laboratories v. State of Gujarat. The court stated, "I am of the view that gudaku is manufactured out of tobacco and is covered by the expression 'tobacco' as defined in Rule 3(28)(b) of the Bengal Sales Tax Rules read with Item 19 of the Central Excises and Salt Act, 1944."

4. Maintainability of the Writ Petition:
The respondents argued that the petitioners should have availed themselves of the remedies provided in the statute. The court held that the writ petition is maintainable, stating, "Whether a jurisdictional fact has been rightly decided or not is a question that is open for examination by the court in its writ jurisdiction."

Conclusion:
The court concluded that "tax cannot be levied on gudaku as this is covered by the expression 'tobacco'." The petitioners' claim for exemption under Rule 3(28)(b) of the Bengal Sales Tax Rules was allowed, and the rule was made absolute.