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2022 (9) TMI 895 - SC - VAT and Sales TaxBinding Judgement of Lager Bench / Majority decision - strength of the Bench - Levy of sales tax - Classification of goods - Pan Masala, which contains tobacco and gutka - covered by an Entry in the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act 1957, or not - taxability by the State under the Delhi Sales Tax Act 1975 and/or the Uttar Pradesh Trade Tax Act 1948 and/or the Tamil Nadu General Sales Tax Act, 1959? As per INDIRA BANERJEE J. HELD THAT - It is well settled that once goods are chargeable under the ADE Act, the State cannot levy sales tax on the same goods under a State enactment. In KOTHARI PRODUCTS LTD. VERSUS GOVERNMENT OF ANDHRA PRADESH 2000 (1) TMI 823 - SUPREME COURT , the question was, tobacco being specified in the First Schedule to the ADE Act, and exempted from Sales Tax under Section 8 of the Andhra Pradesh General Sales Tax Act 1957, whether gutka could be taxed by the State of Andhra Pradesh. The Court found that gutka being tobacco, covered by an Entry in the First Schedule to the ADE Act and liable to be taxed under the ADE Act, it was covered by the exemption in Section 8 of the Andhra Pradesh General Sales Tax Act . The State Act could not have been amended to tax gutka . In COMMISSIONER OF SALES TAX, UP. VERSUS AGRA BELTING WORKS, AGRA 1987 (4) TMI 82 - SUPREME COURT , the majority of the threeJudge Bench of this Court, by ratio of 2 1, inter alia, held When power for both the operations vests in the State and the intention to levy the tax is clear we see no justification for not giving effect to the second notification. We would like to point out that the exemption was in regard to a class of goods and while the exemption continues, a specific item has now been notified under Section 3A of the Act. There is no conflict between the Kothari Products line of cases and the Agra Belting line of cases. The Kothari Products line of cases was on the question of whether tobacco or other goods specified in the First Schedule to the ADE Act and hence exempted from Sales Tax under State sales tax enactments, can be made exigible to tax under the State enactments by amending the Schedule thereto. On the other hand, Agra Belting Works line of cases was on the question of interplay between general exemption of specified goods from sales tax under Section 4 of the U.P. Sales Tax Act and specification of rates of sales tax under Section 3A of the said Act. This Court held that goods exempted from sales tax under Section 4 would be exigible to tax by virtue of subsequent notification under Section 3A specifying the rate of sales tax for any specific item of the class of goods earlier exempted under Section 4. There being no conflict, the reference to Constitution Bench is incompetent. The cases may be placed for decision before the regular Bench. In view of Article 145(5) of the Constitution of India concurrence of a majority of the judges at the hearing will be considered as a judgment or opinion of the Court. It is settled that the majority decision of a Bench of larger strength would prevail over the decision of a Bench of lesser strength, irrespective of the number of Judges constituting the majority. The conclusion is that a decision delivered by a Bench of largest strength is binding on any subsequent Bench of lesser or coequal strength. It is the strength of the Bench and not number of Judges who have taken a particular view which is said to be relevant. As per HEMANT GUPTA, J. A reference was made to insertion of Article 144A in the Constitution by the 42nd Amendment with effect from 01.02.1977 - The said amendment was undone by 43rd Amendment when Article 144-A was omitted with effect on and from 01.02.1977. Though the said insertion of Article 144-A stands repealed, but it shows that the legislature also considered majority of not less than 2/3rd of Judges should determine the question as to the constitutional validity of law. Therefore, even such amendment contemplated dissent and a minority view. The conclusion makes it absolutely clear that a Bench of lesser quorum cannot disagree or dissent from the view of law taken by a Bench of larger quorum. Quorum means the bench strength which was hearing the matter. Thus, it has been rightly concluded that the numerical strength of the Judges taking a particular view is not relevant, but the Bench strength is determinative of the binding nature of the Judgment.
Issues Involved:
1. Taxability of 'Pan Masala' containing tobacco and gutka under State Sales Tax Acts. 2. Conflict between judgments on taxability of goods covered under the ADE Act. 3. Guidelines for overruling an earlier decision of the Supreme Court. Issue-wise Detailed Analysis: 1. Taxability of 'Pan Masala' containing tobacco and gutka under State Sales Tax Acts: The primary issue was whether 'Pan Masala' containing tobacco and gutka, covered by an Entry in the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act 1957 (ADE Act), could be taxed by the State under the Delhi Sales Tax Act 1975, Uttar Pradesh Trade Tax Act 1948, and Tamil Nadu General Sales Tax Act 1959. The ADE Act imposes additional duties of excise on certain goods, replacing sales taxes levied by the Union and States on these goods. The Supreme Court has consistently held that once goods are chargeable under the ADE Act, the State cannot levy sales tax on the same goods under a State enactment. This principle was reaffirmed in cases like *Godfrey Phillips India Ltd. v. State of U.P.* (2005) and *Kothari Products Ltd. v. State of A.P.* (2000). 2. Conflict between judgments on taxability of goods covered under the ADE Act: The Court examined the conflict between the judgments in *Kothari Products Ltd. v. State of A.P.* and *Central Sales Tax v. Agra Belting Works*. The *Kothari Products* line of cases held that items covered by the expression 'tobacco' and other items included in the First Schedule to the ADE Act are not taxable by the State. In contrast, the *Agra Belting Works* line of cases dealt with the interplay between general exemptions of specified goods from sales tax under Section 4 of the U.P. Sales Tax Act and specification of rates of sales tax under Section 3A of the same Act. The Court concluded that there is no conflict between these lines of cases as they address different legal questions. The *Kothari Products* line pertains to the taxability of goods under the ADE Act, while the *Agra Belting Works* line pertains to the interplay of exemptions and tax rates under the U.P. Sales Tax Act. 3. Guidelines for overruling an earlier decision of the Supreme Court: The Court referred to the Constitution Bench judgment in *Dr. Jaishri Laxmanrao Patil v. The Chief Minister and Others* (2021), which clarified that a majority decision of a Bench of larger strength prevails over a decision of a Bench of lesser strength, irrespective of the number of Judges constituting the majority. This principle ensures stability and certainty in the law. The Court also cited the judgment in *Central Board of Dawoodi Bohra Community and Anr. v. State of Maharashtra and Anr.* (2005), which emphasized that a Bench of lesser quorum cannot disagree with the view of a Bench of larger quorum. The numerical strength of Judges taking a particular view is irrelevant; instead, the Bench strength is determinative of the binding nature of the judgment. Conclusion: The Supreme Court concluded that there is no conflict between the *Kothari Products* and *Agra Belting Works* lines of cases. The reference to the Constitution Bench was deemed incompetent, and the cases were to be placed for decision before the regular Bench. The second question regarding the guidelines for overruling an earlier decision was answered by the judgment in *Dr. Jaishri Laxmanrao Patil*, affirming that the majority decision of a larger Bench prevails over that of a lesser Bench.
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