9911796707
TMI Blog2007 (9) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... diary of M/s. Sony Corporation of Japan and is engaged in the manufacture and sale of colour television sets, audio products and other consumer electronic products. It inter alia imports and sells LCD projectors, handy cameras, projection televisions, some models of car stereos and high-end audio systems. It imports the above goods from abroad at New Delhi and Mumbai and the imported goods are packed in accordance with the Weights and Measures Rules affixing MRP stickers, etc., and are despatched to a network of branch offices/warehouses located in various parts of India. 3. M/s.. Nokia India Private Limited, Chennai is the petitioner in W.P. Nos. 16825 & 16826 of 2003. It is a registered dealer under the provisions of the TNGST Act and is an assessee on the file of the Commercial Tax Officer, Anna Salai-III Assessment Circle, Chennai. According to the petitioner, it is engaged in the business of importing and selling handsets of cellular phones from abroad at New Delhi and from New Delhi, the handsets are despatched to a network of branch offices/warehouses located in various parts of India. The handsets imported at Delhi are also stock transferred to the branch/warehouse of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns ultra vires of the Constitution. 6. M/s. Trans Car India Private Limited, Chennai is the petitioner in W.P. No. 22414 of 2003. It is a registered dealer under the provisions of the TNGST Act and also under the Central Sales Tax Act, 1956 (for short, 'CST Act') and is an assessee on the file of the Commercial Tax Officer, Nungambakkam Assessment Circle, Chennai. According to the petitioner, it is carrying on the business as authorised dealers for sale of Mercedes Benz cars within the State of Tamil Nadu. It is effecting inter-State purchase of Benz cars and spare parts from M/s. DAIMLERCHRYSLER India P. Ltd., Pune and has paid 4% CST and also issued 'C' declaration form to avail the concessional rate of tax. As the petitioner had effected first sale of Benz cars and the spares within the State, it has paid 12% tax and 5% surcharge. In addition to the above, it also paid 13% entry tax under the provisions of the Tamil Nadu Tax on Entry of Motor Vehicles into Local Areas Act, 1990 (for short, 'Entry Tax Act'). In terms of Entry 9 of the Eleventh Schedule of the TNGST Act for levy of 20% sales tax on the sale of imported motorcars, the business premises of the petitioner was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By the introduction of Tamil Nadu Act 22 of 2002, the petitioner is made liable to pay 20% sales tax on the cars sold by it in Tamil Nadu. Questioning the said levy, the petitioner approached the Tamil Nadu Taxation Special Tribunal by filing O.P. Nos. 813 & 814 of 2002 praying to declare the provisions contained in Entry 14(vi) of Part-D of the First Schedule to the TNGST Act as classifiable under Entry 8 of Part-G of the First Schedule to the said Act during the period from 27-3-2002 to 30-6-2002, introduced by Tamil Nadu Act No. 18 of 2002, and as classifiable under Entry 9 of Eleventh Schedule of the said Act with effect from 1-7-2002, introduced by Tamil Nadu Act No. 22 of 2002, prescribing 20% rate of sales tax on the sale of cars in Chennai are ultra vires of Articles 14, 265, 286 and Part XIII of the Constitution of India. By order dated 30-4-2003, the Taxation Tribunal upheld the provisions of levy of higher rates of sales tax at 20%. Challenging the said order, the above writ petitions have been filed seeking to set aside the order of the Taxation Tribunal and for a consequential declaration to declare the impugned provisions ultra vires of the Constitution. 8. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Tamil Nadu for sale. According to the learned senior counsel, for the purpose of levy of sales tax, the goods should suffer tax as classified under Entry 14(vi) and (viii) of Part-D of First Schedule of the TNGST Act at the rate of 12% only. Only such of those imported goods falling under Part-D of the First Schedule classified under Entry 9 of Eleventh Schedule are liable to tax at the rate of 20% on the first sales inside the State of Tamil Nadu. He would further submit that inasmuch as the goods are stock transferred from Delhi to Tamil Nadu, they are goods lying in India and are not goods in the course of import into India. It is his further contention that inasmuch as Entry 9 of Eleventh Schedule does not spell out clearly the connotation of the term of 'imported goods' by a clarification dated 21-7-2002 issued under Section 28-A of the TNGST Act by the Special Commissioner and Commissioner of Commercial Taxes, the goods imported by the petitioner cannot be taxed at the rate of 20%, as those goods should suffer 12% sales tax as per Entry 14(vi) and (viii) of Part-D of the First Schedule. 11. Mr. K.J. Chandran, learned counsel appearing for the petitioner in W.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale or purchase of goods in the State. 15. Refuting the above submissions, Mr. P.S. Raman, learned Additional Advocate General appearing for the State has submitted that the right of the State to levy sales tax on the sale or purchase of goods within the State of Tamil Nadu is covered by Entry 54 of List II of the Seventh Schedule read with Articles 245 and 246 of the Constitution of India and such power includes a power to levy tax on the goods based on 'intelligible differentia and reasonable classification'. He would also submit that so far as the contentions as to the infringement of Articles 301 to 304 of Part XIII of the Constitution of India are concerned, those Articles are intended to ensure that no State Government would discriminate so as to impede goods of other States a free movement to any other State and they are not intended as protection for free movement of foreign goods. So far as the submission as to the India's Trade obligation under GATT is concerned, he would submit that those obligations should be only taken note of as India's obligation under the treaty and if no conflicts with any municipal law, the latter law alone will prevail. 16. On co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance by customs authorities'. The High Court was basically considering the expression 'crossing the customs frontiers of India' employed in Section 5(2) read with 2(ab) of the CST Act. When the assessee in that case claimed that it has imported goods from foreign parties and has transferred the bill of lading in favour of the local buyers before the customs clearance of goods is effected, they are sales in the course of import under the second limb of Section 5(2) read with 2(ab) of the CST Act. The said claim was disallowed by the Commercial Tax Officer holding that the crucial date for determining the exemption was the date of arrival of the vessel and even in the cases where date of arrival of the vessel is subsequent to the date of transfer of documents. In that case, the High Court came to the conclusion that irrespective of the fact whether duty is paid or not, when once the bill of entry is filed and the imported duty is assessed, then only the goods can cross the limits of the customs port, therefore, any transfer of documents of title before the clearance of the goods by the customs authorities on making the assessment of goods would amount to a sale in the course of impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Overseas & Properties P. Ltd. v. C.L. Mahar, Asst. C.C, Bombay, 2004 (163) E.L.T. 304 (Bom.). The Bombay High Court was considering the scope of sub-sections (2) & (3) of Section 143 of the Customs Act relating to the power of the Assistant Collector of Customs to grant home clearance on execution of bond. While referring to sub-section (25) of Section 2 of the Customs Act, the Bombay High Court found that 'the goods lose its character of imported goods on being granted clearance for home consumption'. Again the said judgment is only for the purpose of levy of customs duty and has nothing to do with the levy of sales tax. That apart, in the very same judgment, the Bombay High Court observed that 'even if the goods lose its character of imported goods on being granted home consumption, the power vested in the officer to confiscate the goods where the order of clearance is revised and cancelled'. By the power of cancellation it can be validly presumed that the observation that the goods lose its character of imported goods on being granted clearance for home consumption is only for the purpose of levy of customs duty and in the event such levy of customs duty is thereafter revised or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Greater Bombay and others (1972 (1) SCC 70) has observed as follows :- "14. The question of validity of taxing statutes has arisen before this Court in a number of cases. The principle emerging from them is that in order that a tax may be valid, it is firstly, within the competence of the Legislature imposing it, secondly, that it is for a public purpose, and thirdly, that it does not violate the fundamental rights guaranteed by Part III of the Constitution. The taxing statute is as much subject to Article 14 as any other statute. [K.T. Moopil Nair v. Kerala (AIR 1961 SC 552), Raja Jagannath v. U.P., (AIR 1962 SC 1563), East India Tobacco Co. v. Andhra Pradesh (AIR 1962 SC 1733), Khandige Sham Bhatt v. Agricultural Income Tax Officer (AIR 1963 SC 59) and Andhra Pradesh v. Nalla Raja Reddy (AIR 1967 SC 1458)]. But in view of the inherent complexity of fiscal adjustment of diverse elements a larger discretion has to be permitted to the Legislature for classification so long as there is no transgression of the fundamental principles underlying the doctrine of classification. (Cf. Khandige Sham Bhatt v. Agricultural Income Tax Officer (supra). These principles are that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leared from the port on payment of customs duty, they lose the character of imported goods as they mingle with the domestic goods. The payment of customs duty is by virtue of the provisions of the Customs Act as, without such payment, the imported goods cannot be allowed to be cleared for local consumption. The power to levy customs duty, which vests with Central Government, cannot in any way curtail the power of the State Government to levy sales tax. Of course, it is not the argument of the respective learned counsel that the State has no such power, as the question is only the levy of higher rate of sales tax. Even though the imported goods once cleared from customs they get mingled with other goods, it is common knowledge that such goods cleared from customs do not lose their identity as foreign goods. Imported goods shall form a distinct and separate class by themselves. The principles of doctrine of classification are well accepted by the Courts in our country. Article 14 of the Constitution of India though forbids class legislation, but it does not forbid reasonable classification for the purpose of legislation. However, such reasonable or permissible classification must ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he guidance of the exercise of discretion by the Government in the matter of the selection or classification. After such scrutiny the Court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself." By a majority, the above law was accepted by the Supreme Court in the subsequent judgment in Kunnathat Thathunni Moopil Nair v. State of Kerala (AIR 1961 SC 552). The legislature has obviously thought to levy higher rate of sales tax keeping the classification which is reasonable and based on 'intelligible differentia' and such classification cannot be held to offend Article 14 of the Constitution of India. 26. That apart, when the discrimination on the ground of hostile unequal treatment is pleaded, the burden of proving such discrimination is always heavy and heavier still when a taxing statute i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation and others v. State of Bihar and another (1988) Vol. 71 STC 298 (SC); (v) Shree Mahavir Oil Mills and another v. State of Jammu and Kashmir and others (1997) Vol. 104 STC 148 (SC); and (vi) B.R. Enterprises v. State of U.P. and others (2000) Vol. 120 STC 302 (SC). 29. In all these cases, the Supreme Court had considered the validity of some of the provisions with reference to the challenge based on the right to freedom of trade, commerce and intercourse as enunciated in Part XIII of the Constitution of India. The object of Part XIII of the Constitution is stated in Atiabari's case and followed in all the subsequent judgments as follows :- "In drafting the relevant Articles of Part XIII the makers of the Constitution were fully conscious that economic unity was absolutely essential for the stability and progress of the federal polity which had been adopted by the Constitution for the governance of the country. Political freedom which had been won, and political unity which had been accomplished by the Constitution, had to be sustained and strengthened by the bond of economic unity. It was realised that in course of time different p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Tax Officer and others, (2002) Vol. 127 STC 339 to contend that there cannot be any distinction between imported and indigenous goods. That was a case where this Court had dealt with the imported sugar. The Division Bench considered the word "imported" found in item (viii) of Section 14 of the Central Sales Tax Act does not result in the declaration with regard to sugar being confined only to sugar which is produced domestically. The Court had taken note of the fact that sugar falling within the scope of the sub-headings of the Central Excise Tariff Act and referred to in item (viii) of Section 14 of the Central Sales Tax Act would be declared goods, irrespective of the place of their manufacture. The question before the Division Bench was when once the goods are treated as declared goods, whether there could be a further distinction as to the indigenous or imported goods for the purpose of levy of tax. The criteria of distinction for levying higher rate of tax is whether the goods imported from the other country lose its identity as foreign goods or not. In the given case, the goods are television sets, audio systems, handy cameras, handsets of cellular phones, cars, medium de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted and this can only be if all the three branches of Government to wit the Legislature, the Executive and the Judiciary, or any of them, possess the power to implement it. If there is any deficiency in the constitutional system it has to be removed and the State must equip itself with the necessary power. In some jurisdictions the treaty or the compromise read with the award acquires full effect automatically in the Municipal Law, the other body of Municipal Law notwithstanding. Such treaties and awards are 'self-executing'. Legislation may nevertheless be passed in aid of implementation but is usually not necessary." The Supreme Court in Gramophone Company of India Ltd. v. Birendra Bahadur Pandey and others (AIR 1984 SC 667) has held as follows :- "5. There can be no question that nations must march with the international community and the Municipal law must respect rules of International law even as nations respect international opinion. The comity of Nations requires that Rules of International law may be accommodated in the Municipal law even without express legislative sanction provided they do not run into conflict with Acts of Parliament. But when they do run into s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
