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TMI Blog1962 (12) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Tax Officer filed two petitions before the First Class Magistrate, Bangalore City, under section 13(3)(b) of the Act praying for recovery of the same as if it were a fine imposed on the assessee. The assessee filed objections contending that Amending Act No. IX of 1958, by which the rate of sales tax was fixed at 1 per cent. on the total turnover of sales of potatoes, was ultra vires as the Amending Bill had been introduced in the State Legislature without the prior sanction of the President. It was also contended that rule 6(1) was invalid as it authorised the levy of tax only on sales and was therefore inconsistent with the provisions contained in section 5(1) of the Act. The learned Magistrate rejected both these contentions on the ground that it was not open to an assessee to question the validity of assessment of any tax or other amounts made under the Act in view of the provisions contained in section 32 of the Mysore Sales Tax Act, 1957, and directed issue of warrants for the recovery of the sums due from the assessee. 3.. The petitioner has reiterated those contentions before this Court. The learned Advocate for the petitioner has contended that the provisions contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature without the previous sanction of the President. 5.. It cannot be disputed that the State Legislature is competent to legislate under Entry No. 54 of the II List of the Seventh Schedule in regard to "taxes on the sale or purchase of goods other than newspapers subject to the provisions of Entry 92A of List I." We are not concerned with Entry 92A of List I which empowers the Parliament to legislate on the subject of "taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce." The learned Advocate for the petitioner contended that the State Legislature was not competent to levy sales tax on potatoes in view of Entry 33(b) of List III. This entry provides for concurrent powers of legislation on "trade and commerce in, and the production, supply and distribution of foodstuffs, including edible oil seeds and oils." It was urged that the sale of potatoes would fall in the category of trade in foodstuffs and that the State Legislature was not competent to levy tax on foodstuffs unless the prior assent of the President was obtained for the introduction of the Bill. This argument has no su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om pages 277 to 278 of the Australian Constitution by Nicholas (2nd Edition): "The restriction of freedom may occur at any stage of the interState journey ..... The section does not refer only to restriction at the frontier, so long as the law relates to a passage across the frontier. It refers to one operating against transference from one State to another at whatever point the burden or restriction is imposed. It may be before or after the actual movement from one State to another." Article 301 of our Constitution is based on section 92 of the Commonwealth of Australia Constitution, 1900, though it is of wider import. The Privy Council had to consider the scope of section 92 in the Commonwealth of Australia v. Bank of New South Wales[1950] A.C. 235. Lord Porter speaking for the judicial Committee of the Privy Council observed: " ..... But the word 'free' does not mean extra legem any more than freedom means anarchy. We boast of being an absolutely free people, but that does not mean that we are not subject to law,' and through all the subsequent cases in which section 92 has been discussed, the problem has been to define the qualification of that which in the Constitution is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 304(b). Their Lordships held that the content of "freedom" provided for by Article 301 was larger than the "freedom" contemplated by section 297 of the Government of India Act of 1935, and that it included the movement of trade which is of the very essence of all trade and is its integral part. In their Lordships' opinion, restrictions, freedom from which is guaranteed by Article 301, would be such restrictions as directly and immediately restrict or impede the free flow or movement of trade. It is only taxes as directly and immediately restrict the trade that would contravene the freedom guaranteed by the Article. "In determining the limits of the width and amplitude of the freedom guaranteed by Article 301, a rational and workable test to apply would be: Does the impugned restriction operate directly or immediately on trade or its movement?" A careful study of the decision in Atiabari Tea Company case(1) discloses that three different views were expressed about the content and amplitude of the provisions contained in Part XIII of the Constitution. One of the views was that taxation simpliciter was not within the terms of Article 301 and that a tax on movement of goods or passeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by Article 301 and such measures need not comply with the requirements of the proviso to Article 304(b) of the Constitution." 8.. In this connection, we may usefully refer to certain portions of the concurring judgment delivered by Mr. justice Subba Rao in the Automobile Transport Limited caseA.I.R. 1962 S.C. 1406. in which his Lordship discussed how every taxing legislation may have some repercussion on the declared freedom and how an indiscriminate insistence on the necessity of prior sanction by the President in all such legislation is like to reduce the Legislature of a State to the position of a handmaid of the Central Executive. In paragraph 36 of the judgment his Lordship observed: "The Constitution confers on the Parliament and the State Legislatures extensive powers to make laws in respect of various matters. A glance at the entries in the Lists of the Seventh Schedule to the Constitution would show that every law so made may have some repercussion on the declared freedom. Property tax, profession tax, sales tax, ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irstly, though a law purporting to impose a tax on a property or a motor-vehicle, as the case may be, may in fact and in reality impose a tax on the movement itself; secondly a law may not be on the movement of trade, but on the property itself, but the burden may be so high that it may indirectly affect the free flow of trade. In the former case, the Court may have to scrutinize the provisions of a particular statute to ascertain whether the tax is on the movement. If the provisions disclose a tax on the movement, it will be a restriction within the meaning of Article 302. In the latter case, if the provisions show that the tax is on property, the reasonableness of the tax may have to be tested against the provisions of Aricle 19 of the Constitution. The question whether a law imposes a restriction or not depends on the question whether the said law imposes directly and immediately a limitation on the freedom of movement of trade. If it does, the extent of the impediment relates to the question of degree rather than to the nature of it. If it is a restriction, it must satisfy the conditions laid down in Article 302 of the Constitution." 9.. Judged in the light of what has been s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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