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TMI Blog1986 (4) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of octroi by the locol authorities in the State. On the incessant demand of trade, industry and economists, the State of Karnataka, probably the very first State to undertake the reform, abolished the levy of octroi with effect from 1st April, 1979. In order to compensate the local bodies for the loss of octroi, which was one of their main sources of revenue, the State by virtue of the legislative powers derived from article 246 of the Constitution read with entry No. 52 of List II of the State List of the Seventh Schedule to the Constitution, enacted a progressive legislation called the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979 (Karnataka Act 27 of 1979) ("the Act"). The Act which came into force from 1st June, 1979, provided for levy of tax on three goods, namely, (i) All varieties of textiles, namely, cotton, woollen, silk or artificial silk including rayon or nylon whether manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths; (ii) Tobacco and all its products and (iii) Sugar other than sugarcandy, confectionary and the like. 3.. But, the trade and industry that welcomed the abolition of octroi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived the assent of the President on 28th September, 1984, and came into force from 1st April 1983, [vide section 1(2) of the said Act]. Section 6(3) of this Act substituting the earlier entries incorporated by the 1982 Act from 1st April, 1982, or validating what was sought to be achieved by the 1982 Act which is material reads thus: "6. Amendment of Schedule.-In the Schedule to the principal Act,- .............................................................................. (3) for items 4 to 16 and entries relating thereto, the following items and entries shall be and shall be deemed to have been substituted on the first day of April, 1982, namely: '4. Iron and steel, that is to say (i) pig iron and cast iron including ingot moulds, bottom plates, iron scrap, cast iron scrap, runner scrap, and iron skull scrap; (ii) steel semis (ingots, slabs, blooms and billets of all qualities, shapes and sizes); (iii) skelp bars, tin bars, sheet bars, hoe-bars and sleeper bars; (iv) steel bars (rounds, rods, squares, flats, octagons and hexagons, plain and ribbed or twisted, in coil form as well as straight lengths); (v) steel structurals (angles, joints, channels, tees, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms shall be inserted, namely: '17. All industrial packaging materials; and 18.. All raw materials, component parts and any other inputs (e.g. processing or any other chemical solvents used in the solvent extraction or process, catalysts of and the like), which go into or may be used in the manufacture of an intermediate or finished product, when brought into local areas by an industrial unit or any other dealer. Explanation I.-The expressions "industrial unit" means a manufacturing unit, which falls within the definition of a "factory" under the Factories Act, 1948 (Central Act LXIII of 1948), but excludes (i) Handicrafts Manufacturing Units, (ii) Handloom Weaving Units and (iii) any other group or class of industries, which, may with reference to their nature, competitiveness, employment potential or such other factors, be notified by the State Government. II. "Raw materials, component parts and any other inputs" do not include sugarcane, cereals, oil seeds, pulses, timber or wood of any species, silk cocoons raw, thrown or twisted silk, or such other inputs as may be notified by the State Government for purposes of exemption from tax under entry 18 from time to time; but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is shown; (b) Issue a writ of mandamus in each of these cases to the respondents directing them to forbear from enforcing the provisions of section 7(1)(a) and section 7(15) of the amending Act 13 of 1982, as long as non-compliance with the proviso to article 304(b) or with article 255(c) of the Constitution continues; (c) Quash that part of the Notification bearing No. FD 14 CET 82, dated 2nd April, 1982, which purports to bring to tax items 4 to 16 in the Schedule to the principal Act." This order was challenged by some of the petitioners and the State in Shah Hirachand Babulal and Company v. State of Karnataka (Civil Appeal No. 11455 of 1983 and connected cases) before the Supreme Court. On 28th November, 1984 the Supreme Court on taking note of the President's assent to the 1984 Act disposed all of them in these words: "During the pendency of these appeals the Karnataka Legislature adopted the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein (Amendment) Act, 1983 amending the Karnataka Tax on Entry of Goods into Local Areas for Consumption, Use or Sale Therein Act, 1979, in relation to the definition of local area and addition of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Bill that ultimately became the 1981 Act introduced without the previous sanction of the President or had not received the assent of the President in conformity with the requirements of articles 255 and 304(b) of the Constitution impeding the freedom of trade, commerce and intercourse throughout India, was at any rate unenforceable and the three notifications issued thereunder were illegal and unenforceable. 15.. In a common return, the respondents without disputing the factual position asserted by the petitioners on the Bill being introduced without the previous sanction of the President or that Act not being assented by the President, have however, sought to sustain them on more than one ground. First the respondents have urged that the validity of the 1981 Act having been upheld by this Court in the two Jyothi's cases [1987] 64 STC 254 (App); 1984 (1) Kar LJ 394 and [1987] 64 STC 208 the ground oil which the present challenge is founded was unavailable to them and in any event cannot be examined by this Court. Second, the respondents have urged that this Court should not examine the belated challenge of the petitioners. Lastly, the respondents have urged that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith that situation, it was urged for the appellant-Somawanti that an argument on the point had not been addressed in the earlier case and, therefore, the same does not operate as a binding precedent. In repelling the same Mudholkar, J., speaking for the majority, expressed thus: "The binding effect of a decision does not depend upon whether a particular argument was considered therein or not, provided that the point with reference to which an argument was subsequently advanced was actually decided." The terms "an argument" and "a point" are not one and the same. Both are separate, distinct and different. We are of the view that an argument on a point or a ground is different from the point or ground and one cannot be confused with the other. The point decided in a case is different from an argument addressed on that point. What was done by this Court in 2nd Jyothi's case [1987] 64 STC 208 is also to the same effect. We are of the view that the principle enunciated in Somawanti's case AIR 1963 SC 151 does not support the preliminary objection urged for the respondents. 22.. On the foregoing discussion, we hold that there is no merit in this preliminary objection urged for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise its power retrospectively. Every sound rule of construction of statutes militates against the construction suggested by Sri Babu. 28.. In Hansa Corporation's case AIR 1981 SC 463 the Supreme Court construed the unamended section 3 of the Act in these words: "..................Even if, therefore, a literal grammatical construction were to be adopted, on a proper reading of the section power is conferred on the State Government by section 3 not only to specify different rates for different areas but also to specify local areas entry into which of scheduled goods would provide the taxing event. There is thus a power to choose and specify local areas as well as choose and specify rate of taxation subject to maximum prescribed in the section." Section 3 as originally enacted did not empower the Government to issue notifications from a date anterior to the date of publication of the notification or to give them retrospectivity. On the other hand, section 3 of the 1981 Act by amending section 3 of the original Act expressly conferred power on Government to issue notifications either prospectively or retrospectively. The amendment made was a deliberate one and was made to take po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n experiment (vide: J 1 ILI 320 to 399) and M.P. Singh's article on "Freedom of Trade and Commerce v. Power of Taxation" (Vol. 17 J. ILI. pages 366-397) do not deal with the precise question. But, fortunately for us the true scope and ambit of Part XIII and in particular article 304 has been explained by the Supreme Court in a large number of cases, though their correctness is doubted by some jurists (see Singh's aforesaid article). Hence, our task is only one of applying the law declared by the Supreme Court stearing clear of the controversies raised by jurists and others over the same. 32.. The 1984 Act, which is a later Act, had received the assent of the President is not in dispute. Before giving his assent to a later amending Act, as the 1984 Act, we must assume that the President had examined the whole Act, all the earlier amendments made before and their Constitutional effect also and on being fully satisfied with the requirements of the Constitution would have given his assent to the same. Without being satisfied with the earlier amendments, it is even inconceivable to hold that the President would give his assent to a later amendment. If this is the true position, then i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Gujarat, AIR 1980 SC 1707 at page 1708. 35.. We are of the view that what had been enunciated in Venkatrao's case AIR 1970 SC 126, notwithstanding the observations relied on by Sri Srinivasan is a firm legal principle enunciated on the very question that arises before us and, therefore, the same must be treated as the law declared by the Supreme Court and binding on us under article 141 of the Constitution. We are of the view that Rajpur Ruda Meha's case AIR 1980 SC 1707 relied on by Sri Srinivasan does not lay down a different proposition and assist him. 36.. In Kerala State Electricity Board v. Indian Aluminium Company Limited AIR 1976 SC 1031 a Constitution Bench of the Supreme Court was examining the validity of the Kerala Essential Articles Control (Temporary Powers) Act, 1961 and an order made thereunder called the Kerala State Electricity Supply (Kerala State Electricity Board and Licensees Areas) Surcharge Order, 1968. In that case one of the questions that arose for decision was the effect of assent given by the President to a later amendment made to the Kerala Act in 1967. On that question, the majority speaking through Alagiriswami, J., expressed thus: "We agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AIR 1970 SC 126 and Indian Aluminium Company's case AIR 1976 SC 1031. Lastly in Jawaharmal's case AIR 1966 SC 764 the Court gave relief for the second period on which Sri Ullal laid great emphasis on the construction of the Acts passed by the State of Rajasthan from time to time and not on the ground that is urged before us. For all these reasons we find no merit in the contention of Sri Ullal and we reject the same. 40.. On the application of the ratio in Venkatrao's case AIR 1970 SC 126 and Indian Aluminium Company's case AIR 1976 SC 1031 we hold that the President by giving his assent to the 1984 Act, had in law given his assent to the 1981 Act. On this conclusion, it also follows that the objection that the 1981 Act was unenforceable for want of previous sanction of the President to the Bill or the assent of the President to that Act necessarily falls to the ground. 41.. With this we now pass on to examine the challenge to the three notifications issued by the Government. 42.. In 2nd Jyothi's case [1987] 64 STC 208 (Kar) the Division Bench rejecting the challenges to the impugned notifications on various other grounds, on their scope and ambit, expressed thus: "34. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and enforceable, it follows from the same that the three notifications that do not suffer from any other Constitutional and legal infirmity must necessarily be held to be valid. We may incidentally notice that in the 2nd Jothi's case [1987] 64 STC 208 (Kar) noticing some of the rulings relied on by Sri Srinivasan, the Division Bench had upheld them. We are of the view that every one of the rulings of the Supreme Court relied on by Sri Srinivasan do not really bear on the validity of the notifications. 46.. We have earlier set out section 6(3) of the 1984 Amendment Act in full (vide para 7 supra). This section incorporates new items 4 to 17 from 1st April, 1982. While the I notification regulates the period from 1st April, 1982 to 31st March, 1983, the II regulates the period from 1st April, 1983 to 24th October, 1984. The last regulates the taxes from 24th October, 1984, and onwards. We are of the view that on the very terms of section 6(3) of the 1984 Act and the Act, as originally enacted, the three notifications are authorised, legal and valid. 47.. As all the contentions urged for the petitioners fail, these writ petitions are liable to be dismissed. We, therefore, dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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