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TMI Blog1969 (4) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned notices proposing to redetermine the taxable turnover of the petitioners for the assessment years in question. Opportunity was given to the petitioners to submit their objections. But the petitioners, without filing any objection thereto, have filed these writ petitions praying for the issue of writs of prohibition prohibiting the respondent from reassessing in pursuance of his notice dated 29th November, 1966, proposing (1) to reassess the turnover relating to foreign liquor Withdrawing the exemption and proposing to reassess at the general rate under section 3 of the Madras General Sales Tax Act, and (2) proposing to include in the taxable turnover gallonage fee and 50 per cent. tax collected under the Madras Prohibition Act, 1937. According to the petitioners, the impugned notices purporting to reassess the taxable turnover already determined so as to include sale of foreign liquor which has escaped assessment, collections of 50 per cent. tax under the Madras Prohibition Act and gallonage fee, are illegal and without jurisdiction. The petitioners' contention is that the proposed tax on foreign liquor is violative of the principles contained in Article 301 and Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act at 2 per cent. on the turnover relating to the sale of foreign liquor. This was objected to by the petitioner. He claimed also exemption under the Third Schedule to the Madras General Sales Tax Act. But the respondent overruled his objections and assessed the petitioner accordingly. As against the order of assessment by the assessing authority, appeals were preferred but the petitioner was not successful Stating that no purpose would be served by filing further appeals to the Sales Tax Appellate Tribunal, since the Tribunal has already expressed the view that such tax was exigible, the petitioner has come up to this Court and is seeking a rule under Article 226 of the Constitution. According to the petitioner, the order of the respondent is vitiated in that he has been called upon to pay sales tax of 2 per cent. under the Madras General Sales Tax Act even though he has already suffered a tax of 50 per cent. duty under section 21-A of the Madras Prohibition Act. He would state that section 21-A of the Madras Prohibition Act and section 3(1) of the Madras General Sales Tax Act are mutually exclusive. His further contention is that where a special levy of sales tax under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner confirmed the assessment for the year 1959-60. In respect of the assessment year 1960-61 relief was granted on a sum of Rs. 3,646.93 being the deduction towards filling of sulphuric acid in containers disallowed by the assessing authority and confirmed the assessments in other respects. As against this the petitioners preferred further appeals to the Madras Sales Tax Appellate Tribunal, questioning the levy of tax at the rate of 3 per cent. on the turnover relating to the sales of sprayers amounting to Rs. 3,64,692.94 for the assessment year 1959-60. For the assessment year 1960-61 the petitioners questioned the levy of tax (i) at the rate of 3 per cent. on a turnover of Rs. 6,68,478.95 representing sales of sprayers and (ii) at 2 per cent. on a turnover of Rs. 1,74,397.92 representing the sales of foreign liquor. The Tribunal in and by an order dated 16th September, 1966, confirmed the levy of tax on foreign liquor and also the tax at 3 per cent. on the sales of sprayers on the ground that the saving clause in item 23 of the First Schedule to the Madras General Sales Tax Act referred only to articles used for agricultural purposes made of iron and steel and not to brass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade within the geographical limits of our country and it is intended to avoid any barriers in the free flow of such trade. The article which is general in scope, states the nature of the freedom of trade and commerce in the territory of India. The articles following it prescribe the limitation to this freedom. We shall consider such of those as are necessary for the case. Article 302 contemplates the imposition of restriction by Parliament in any part of the country in the public interest. Article 303 is indeed a proviso to Article 302; it provides that such restrictive laws ought to be non-discriminatory in character. Article 304 gives to the States a certain amount of discretion to regulate inter-State trade or commerce, under exceptional circumstances. No doubt this is subject to Central control. A State Legislature may impose on goods imported from other States any tax, if similar goods produced in that State also are taxed in a like manner. A State Legislature is also authorised to impose reasonable restrictions on the freedom of trade and commerce with or within that State as may be required in the public interest. This is Article 304. The only question in the instant case i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Seventh Schedule of the Constitution meant a duty levied with a view to equalise the burden on alcoholic liquors imported from outside the State and the burden placed by excise duties on alcoholic liquors manufactured or produced in the State. It meant that countervailing duties could only be levied if similar goods were actually produced or manufactured in the State on which excise duties were being levied." The case pivoted on the interpretation of the words "countervailing duties" in their etymological sense as meaning "to counter-balance"; "to avail against something with equal force". These considerations do not arise when dealing with the competency of a State to levy sales tax on goods within the State. Reference to the case popularly known as the Atiabari case (Atiabari Tea Co. Ltd. v. State of Assam A.I.R. 1961 S.C. 232.) is of no avail to the petitioners. In that case the ratio principally was that no interdict on movement of goods freely in the territory of India can be imposed and if the transport or the movement of the goods is taxed solely on the basis that the goods are carried or transported that would directly affect the freedom of trade as contemplated in A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haser and pay over the same to the Government. Such sales tax is on the price of the liquor sold. A dichotomy as it were is reflected in the section itself between the price of the liquor and the sales tax payable on such price as prescribed. Thus therefore, a specific law enables the imposition of sales tax on foreign liquor as defined in that section. Section 6 of the Madras General Sales Tax Act concurrently authorises an additional levy of sales tax under that Act, notwithstanding a similar levy under any other law. This provides a direct answer to the first contention of the petitioners, which has necessarily to fail. The third contention of Mr. K. Srinivasan is however sound. His case is that it is not legal to include in the taxable turnover under the Madras General Sales Tax Act, the amount representing the "sales tax" collected as such under section 21-A of the Madras Prohibition Act. We have analysed the impact of section 21-A of the Madras Prohibition Act earlier. It speaks of a levy of sales tax on the price of the liquor sold. Therefore the distinctive characteristics of tax and price are maintained by the said section. If therefore the amount collected as sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue to bring to tax, even sales tax for purposes of exigibility to tax under the Madras General Sales Tax Act. We therefore uphold the contention of the petitioners that the impugned order inasmuch as it includes the tax paid by the petitioners under the Madras Prohibition Act as if it is assessable turnover under the Madras General Sales Tax Act is fallible and ought to be therefore held as a consequence resulting from the exercise of jurisdiction when there is none and the proposal of the respondent to include the aforesaid amount as if it is assessable to sales tax under the Madras General Sales Tax Act is not sustainable, and if already included and taxed the order to that extent cannot stand. The fourth contention relates to the inclusion of gallonage fee paid by the petitioners in the taxable turnover under the Madras General Sales Tax Act. The petitioners are not disputing in these writ petitions the competency, power and the right of the State to collect such gallonage fee which is expressly provided for and referred to in the Madras Liquor (Licence and Permit) Rules, 1960, made under section 54 of the Madras Prohibition Act, 1937. Clause (XI) of rule 22 noticed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural crops and as such they should be classified as articles used for agricultural purposes coming within the purview of the saving clause in item 23 of the First Schedule to the Madras General Sales Tax Act. The revenue contending contra would say that sprayers fall within the category of "machinery" occurring in the said item and the expression "excluding articles used for agricultural purposes" occurring in item 23 will qualify only the words "iron and steel (other than those mention(d under declared goods) and all articles made therefrom" and not the rest in item 23. The contention of the department was upheld by the Tribunal. Item 23 of the First Schedule to the Madras General Sales Tax Act, 1959, as it originally stood runs as follows: "23. Machinery (other than those At the point of Three falling under item 41), including any first sale in the per cent." article, implement, contrivance, apparaState. tus or part of such machinery made of any metal (not being a typewriter, tabulating machine, calculating machine and duplicating machine and parts thereof), hardware, iron and steel (other than those mentioned under declared goods) and all articles made therefrom (exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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