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TMI Blog1989 (5) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... eating zarda as a different commodity from chewing tobacco, is illegal and hence the Notification dated 5th February, 1968 and the notification of 1976 are illegal and ought to be quashed. 3.. Vide Notification No. 33925-CTA-130/57-F dated 30th December, 1957, tobacco and all its products were exempted from tax. Vide Notification No. 3604-CTA-38/67-F dated 5th February, 1968, a new serial No. 5-A was inserted and as per that serial number chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff were assessed to sales tax at the rate of 3 per cent. Thus, all these commodities were made taxable. 4.. Vide Notification No. 3609-CTA-38/67-F dated 5th February, 1968, there was a further amendment in serial No. 35(2) as follows: "Tobacco and all its products other than chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff." Thus, tobacco and all its products were made tax-free and other commodities including chewing tobacco and zarda were made taxable. Again vide Notification No. 16925-CTA-46168(Pt.)-F dated 14th May, 1968, the words "chewing tobacco" were deleted from serial No. 35(2) and as a result of that chewing tobacco was made tax-free. This position continued till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt period gudakhu came within the definition of "manufactured tobacco" and as such was tax-free. Such a conclusion was arrived at on the basis of the definition of "tobacco" as given in the Central Excises and Salt Act, 1944. The Additional Duties of Excise (Goods of Special Importance) Act, 1957, adopted the definition given in the Central Excises and Salt Act, 1944, which is as follows: "Tobacco means any form of tobacco, whether cured or uncured and whether manufactured or not, and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth." Thus the definition is very wide and comprehensive and it includes any form of tobacco whether cured or uncured and whether manufactured or not. Again the definition of "manufacture" in section 2(f) of the Central Excises and Salt Act, 1944, is as follows: "In this Act, unless there is anything repugnant in the subject or context- (f) 'manufacture' includes any process incidental or ancillary to the completion of a manufactured product; and (i) in relation to tobacco, includes the preparation of cigarettes, cigars, cheroots, biris, cigarette or pipe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification No. 3609-CTA-38/67-F dated 5th February, 1968, there was an amendment of serial No. 35 and in place of the previous entry the following entry was substituted: "Tobacco and all its products other than chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff." Thus, by this amendment tobacco and all its products were made tax-free, whereas chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff were made taxable under serial No. 5-A. Again vide Notification No. 16925-CTA-46/68(Pt.)-F dated 14th May, 1968, Notification No. 33925 dated 30th December, 1957, was further amended and "chewing tobacco" was deleted from serial No. 35 of the Schedule and hence chewing tobacco was made tax-free. 12.. Vide Notification No. 20206-CTA-14176-F as per serial No. 38 tobacco and all its products other than gudakhu, pan masala, gundi, zarda and snuff were made tax-free and vide entry No. 40-A, gudakhu, gundi, zarda, snuff and pan masala with mixture of tobacco were made taxable and the tax is at the rate of 4 per cent. 13.. Thus the definition of "tobacco" in its extended and inclusive meaning as per the provisions of the Central Excises and Salt Act was given up vide Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court struck down the relevant entry and directed that arishtams and asavas should be levied to sales tax as other medicinal preparations. The Supreme Court decision is distinguishable as two medicinal preparations were discriminated as against various other medicinal preparations and levied with excessive sales tax, whereas the sales tax levied for other medicinal preparations was much lower. Such discrimination did not have any rational basis. In any case no medicinal preparation was exempted from payment of tax. In these circumstances the Supreme Court held that all medicinal preparations except two were levied to tax at 7 per cent. There was no rational basis for levying much higher tax for two other medicinal preparations, as there must be a rational basis for discriminating between one commodity and another for the purpose of imposing tax, where the commodities belonged to the same class or category. *Since reported in [1989] 73 STC 346 (SC). In this case tobacco, gudakhu, pan masala, gundi, zarda and snuff have been taken in their ordinary meaning and as understood by the customers. Although gudakhu, pan masala, gundi, zarda and snuff contain tobacco, still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been clearly mentioned "tobacco and all its products other than chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff". Thus chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff are excluded from the exemption and other than these commodities, tobacco and all other products of the same are exempted from sales tax. As per Notification dated 6th February, 1968, serial No. 5-A "chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff" have been taxed and the rate of tax is 3 per cent. In the notification of 1976, the two entries were written in serial Nos. 38 and 40-A and the rate of tax on gudakhu, gundi, zarda, snuff and pan masala with mixture of tobacco has been raised from 3 per cent to 4 per cent. As per section 6 the State Government is empowered to exempt from tax the sale or purchase of any goods. The section reads as follows: "6. Tax-free goods.-The State Government may, by notification, subject to such conditions and exceptions, if any, exempt from tax the sale or purchase of any goods, or class of goods and likewise withdraw any such exemption." The above section clearly gives the discretion to the State Government to exempt any goods or class of g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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