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TMI Blog1964 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was also dismissed. Now the assessee has come before us in revision. Learned counsel appearing for the assessee contended that there was no sufficient justification for the department to hold that the turnover mentioned in the broker's accounts was the turnover of the assessee. Further, it was urged that the assessee had not been given reasonable opportunity to cross-examine the sellers and buyers who were referred to in the accounts of the broker and who were connected with the disputed turnover. It was also urged by the learned counsel that in any event the quantum of turnover fixed even on the basis of the broker's accounts was excessive. Taking up the first point, the broker's accounts refer to the assessee by name as Ayyaswami Nadar or A. Nadar. The broker is now dead and during the earlier stage of the assessment proceedings, he was examined in the presence of the assessee, and he had deposed that Ayyaswami Nadar or A. Nadar mentioned in his accounts referred to the assessee. The broker's accounts showed that the assessee had purchased 2106 bags of sugar from local dealers; he had also sold 400 bags in one transaction and 2930 bags, in several transactions which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in the market by reference to the place of manufacture, for example, Srivilliputtur jaggery. But there is nothing to substantiate the contention that sugar is distinguished for the purpose of quality, by reference to the place of manufacture. There is, therefore, reasonable basis for the view taken by the department that the entries in the broker's accounts like "Nizam" or "Anakapalli" and so on are really indicative of the fact that they relate to sales of imported sugar. The learned counsel for the petitioner also referred to some letters and affidavits of persons whose names are described by initials in the accounts of the broker and who have denied such transactions with the assessee. But it is possible that these dealers might have also suppressed the transactions. Therefore, their affidavits will not serve to discredit the broker's regularly kept accounts. The assessee also contended that some of the entries in the broker's accounts might refer to transactions which had not fructified, and that mere payment of brokerage would not suffice to prove that there was a sale. But it was for the assessee, in such circumstances, to produce his accounts to substantiate his plea, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as by a dealer who is residing in the State of Madras and who is not exempt from taxation under the next succeeding subsection, after the import of the said goods into the State of Madras." The effect of this section is that in the case of locally manufactured sugar, the manufacturer who effects the first sale will be liable to pay the additional tax, but in the case of sugar manufactured outside and imported into the Madras State, the first dealer after import in Madras State, who has a turnover exceeding Rs. 10,000 will pay the additional levy. The argument of the learned counsel is that the imported goods would have already suffered tax in the State of their manufacture, according to the sales tax law in force in that State, that the subsequent levy of sales tax on their sales after import in Madras State will amount to double taxation which the locally manufactured goods are not subject to, and that in this sense, the proviso to section 3(2) of the Act will offend Article 301 of the Constitution as it amounts to an unfair restriction on the freedom of inter-State trade and commerce. Article 301 of our Constitution which is found in Part XIII, guarantees freedom of trade, commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermed to be compensatory taxes or regulatory measures. Sales tax, of the kind under consideration here, cannot be said to be a measure regulating any trade or a compensatory tax levied for the use of trading facilities. Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free flow of trade and it will then offend against Article 301 and will be valid only if it comes within the terms of Article 304(a). Article 304(a) enables the Legislature of a State to make laws affecting trade, commerce and intercourse. It enables the imposition of taxes on goods from other States if similar goods in the State are subjected to similar taxes, so as not to discriminate between the goods manufactured or produced in that State and the goods which are imported from other States. This means that if the effect of the sales tax on tanned hides or skins imported from outside is that the latter becomes subject to a higher tax by the application of the proviso to sub-rule (2) of rule 16 of the Rules, then the tax is discriminatory and unconstitutional and must be struck down." Our attention was also drawn to a recent decision of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me rate. It was argued that a dealer in these goods who was an importer and so sold goods imported by him into Madhya Bharat would also be selling goods not so imported but manufactured and produced in the State. We are prepared to agree that that may well be so. What we are unable to see however is that in respect of sales of such other goods this person would be liable to any tax under the notifications. We are informed that in fact where importers dealt with in goods other than imported goods the sales of such other goods were in fact excluded from tax. The learned Advocate-General of Madhya Pradesh who appeared before us in support of these appeals suggested that that was done by the State Sales Tax Authority on a mistaken interpretation of the law. We do not think so. In our opinion, the only reasonable interpretation of the notification as it stands, viz., that tax on tobacco leaves, manufactured tobacco and tobacco used for bidi manufacturing would be payable at the point of sale by the importer, is that only the sale of goods which the importer had imported would be liable to tax and not sale of any other goods by him. If the intention had been as suggested by the learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flow of trade and in that sense offend Article 301 of the Constitution; such laws can be validated only if they come under the saving provision of Article 304(a) of the Constitution. We are not concerned in this case with Article 304(b) which deals with restrictions on the freedom of inter-State trade, imposed in the public interest. Such a question of public interest does not arise here. To attract the saving provision in Article 304(a) of the Constitution, the history of the goods anterior to their import to the State is irrelevant. Article 304(a) takes up the Since reported at [1964] 15 S.T.C. 719. goods only after their import into the State is over, and after they had become part of the mass of the goods of the State. It provides the safeguard, that such goods for the purpose of taxation shall be dealt with in the same manner, as goods produced in the State itself. Article 304(a) has no concern with the position of a dealer who may have to sell goods which during their passage through several States might have had to pay sales tax successively, and which therefore might have enhanced their price to the particular dealer. Article 304(a) deals with the goods only after they hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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