9911796707
TMI Blog1997 (9) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The appellants are wholesale distributors, stockists and/or manufacturers of drugs and medicines. 2.. For appreciating the grounds taken by Mr. B.P. Gandhi, learned counsel appearing for the appellants, the scheme of taxation envisaged under the Act needs to be set out in brief. 3.. Section 5 of the Act provides for levy of tax on sale or purchase of goods. Sub-section (1) thereof provides a general rate of tax at the point of first sale which, with effect from April 1, 1996, is 12 per cent. Sub-section (3) of the said section carves out an exception to sub-section (1) by providing that in respect of the goods mentioned in the Second Schedule, the rate of tax will be the one provided therein. Drugs and medicines finds place at Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified goods or class of goods, at all points in the series of sales by successive dealers; or (b) by any specified class of persons, in regard to the whole or any part of their turnover. (c) on the sale or purchase of any specified class of goods by any specified class of dealers in regard to the whole or part of their turnover. (2) Any exemption from tax or reduction in the rate of tax, notified under sub-section (1) may be subject to such restrictions and conditions as may be specified in the notification. (2A) The State Government may, by notification, transpose any entry or part thereof from one Schedule to another Schedule and alter the point of levy of sale or purchase, but not so as to enhance the rate of tax in any cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the issuance of the impugned notification is constitutionally invalid because (a) the impugned action of the State Government results in enhancement of rate of tax which is not within the competence of the State Government under section 8-A of the Act, and, (b) the same is contrary to the budget speech made by the Finance Minister on the Floor of the Assembly for the financial year 1996-97. 7A. The aforesaid aspects have been considered in detail by the learned single Judge and he has rightly held the same to be untenable for the reasons that by withdrawal of exemption in terms of section 8-A of the Act the rate of tax is not enhanced. The rate of tax provided under the Act remains the same, but what is granted or withdrawn is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the only difference which has been made by incorporation of the said three clauses is that whereas earlier the rate of turnover tax was uniform in respect of all the dealers having turnover exceeding the minimum being exempt but now staggering rate of tax varying between 1 per cent to 3 per cent has been provided depending upon the quantum of the turnover of the dealers. 10.. In our opinion, it is also now well-settled that it lies within the plenary powers of the Legislature and its delegator to provide for different rate of tax in respect of different classes of dealers provided the classification is clear and well intended and is based on a rational basis. Adjudging from the said point of view, it cannot be said that by providing a h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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