9911796707
TMI Blog2000 (1) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... Nadu Additional Sales Tax (Amendment) Act, 1999 (Tamil Nadu Act 37 of 1999) (hereinafter called the Act 37 of 1999 ) are ultra vires articles 14, 19(1)(g) and Part XIII of the Constitution of India. (c) In O.P. Nos. 1061 of 1999 to 1063 of 1999, 1066 of 1999 to 1068 of 1999, 1071 of 1999 to 1073 of 1999, 1076 of 1999, 1183 of 1999 to 1185 of 1999, 1193 of 1999 and 1387 of 1999 to 1389 of 1999 the prayer is to quash the notice issued demanding the differential tax/additional sales tax calculated in terms of Act 27 of 1999 and Act 37 of 1999 for the assessment years 1997-98, 1998-99 and 1999-2000 (for the period up to May, 2000 or June, 2000) or asking to file revised returns by working out the tax due on last purchase value in terms of Act 27 of 1999 within the period specified in the notice. 3.. The facts leading to the present cases are as follows: In the meeting held on November 5, 1997 by the honourable Minister for Agriculture, Tamil Nadu with the private sugar mills executives of Tamil Nadu to consider fixation of State advised price for the year 1997-98, among other things, the following are relevant: (a) The payment of State advised price of Rs. 599 per tonne calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that every year it may be calculated on the basis of 8 per cent on the average of State advised price recommended by Government. For 1997-98 crushing season, the Government have recommended the State advised price at Rs. 660 per metric tonne for 8.5 per cent recovery, State average sugar recovery is 9.4 per cent. Therefore, the average State advised price will come to Rs. 730 per metric tonne and the purchase tax at 8 per cent comes to Rs. 58.40. 10.. The Government have therefore decided to fix the purchase tax for sugarcane for 1997-98 at the flat rate of Rs. 60 per metric tonne. Necessary orders in this respect will be issued separately by Government in Commercial Tax Religious Endowment Department. Following this order, Government of Tamil Nadu enacted Act No. 27 of 1999 with retrospective effect from April 1, 1997 and this was published in Government Gazette on June 17, 1999. The Act No. 27 of 1999 reads as follows: An Act further to amend the Tamil Nadu General Sales Tax Act, 1959. Be it enacted by the Legislative Assembly of the State of Tamil Nadu in the Fiftieth Year of the Republic of India as follows: 1.. Short title and commencement.-(1) This Act may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.. Short title and commencement.-(1) This Act may be called the Tamil Nadu Additional Sales Tax (Amendment) Act, 1999. (2) Sub-clause (c) of clause (2) of section 2 shall be deemed to have come into force on the 1st day of April, 1997. 2. Amendment of section 2.-In section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 (Tamil Nadu Act 14 of 1970), in sub-section (1),- (1) clause (a) shall be omitted; (2) in clause (aa), (a) for the expression commencing with the words The tax payable under the said Act and ending with the words outside the State , the following expression shall be substituted, namely: The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (hereinafter in this section referred to as the said Act), shall, in the case of a dealer including the principal selling or buying goods through agents ; (b) the Explanation shall be renumbered as Explanation I and in Explanation I as so renumbered, the expression in this State , shall be omitted; (c) after Explanation I, the following Explanation shall be inserted, namely: Explanation II.-Notwithstanding anything contained in the said Act, for the purpose of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from February 28, 1944). Rules 9 and 49 of the Central Excise Rules to recover duty on manufacture and consumption. It was categorically stated that if the intention of the Legislature was to nullify the effect of section 11-A, in that case, the Legislature would have specifically provided for the same. Section 51 does not contain any non obstante clause nor does it refer to the provision of section 11-A. In the circumstances, it is difficult to hold that section 51 overrides the provision of section 11-A . This principle equally applies to the present cases. 7.. The impugned levy is violative of article 14 of the Constitution of India because it is- (i) irrational in imposing taxes at higher rate on less economical/viable units with recovery and profitability. (ii) Different rates on the 5-A price which up to 1999 was the measure of levy. (iii) It is a flat rate operating harshly on unequals. 8.. Historically the tax has been levied on the price of sugarcane and the value of sugarcane is measured by the sucrose content that is recovered. The minimum sugar price fixed by Government of India, the additional price under clause 5-A of the control order and State Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 7 8 1 Ponni sugars 484.40 37.18 521.58 41.73 9.60 11.50 2 EID-Nellikuppam 457.40 33.18 490.58 39.25 9.10 12.23 3 EID-Pugalur 500.60 33.90 534.50 42.76 9.90 11.23 4 Cauvery Sugars 479.00 40.13 519.13 41.53 9.50 11.56 5 MAC Agro 446.60 29.15 475.75 38.06 8.90 12.61 6 Aruna Sugars 516.80 36.35 553.15 44.25 10.20 10.85 7 Sakthi Unit I 495.20 31.72 526.92 42.15 9.80 11.39 8 Sakthi Unit II 489.80 39.73 529.53 42.36 9.70 11.33 9 Kothari Sugars 500.60 38.22 538.82 43.11 10.00 11.14 10 Thiru Arooran-I 495.20 21.59 516.79 41.34 9.80 11.61 11 Thiru Arooran-II 506.00 15.26 521.26 41.70 10.00 11.51 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 527.00 40.00 567.00 45.36 8.30 10.58 16 Rajashree sugars 595.20 40.00 635.20 50.82 9.60 9.45 17 Average10. The recovery details for the sugar seasons 1995-96, 1996-97 and 565.75 40.00 605.75 48.46 8.90 9.94 1997-98 are as given below: Sl. No Name of factory Recovery (1 per cent) for sugar season 1995- 96 Recovery (1 per cent) for sugar season 1996-97 Recovery (1 per Cent) for sugar season 1997-98 1 2 3 4 5 1 Ponni Sugars 8.35 9.57 9.18 2 EID-Nellikuppam 8.02 8.33 8.44 3 EID-Pugalur 8.81 9.09 9.06 4 Cauvery Sugars 8.24 9.38 8.82 5 MAC Agro 8.96 9.12 7.61 6 Aruna sugars 9.02 9.38 8.70 7 Sakthi Unit I 9.20 9.75 9.56 8 Sakthi Unit II 8.35 8.44 8.67 9 Kothari Sugars 8.42 8.45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax. The Karnataka Sales Tax Act provides for levy under two grades of recovery as indicated below: (a) Rs. 65.00 per tonne when purchased by a manufacturer of sugar (including khandasari sugar) whose rate of recovery of sugar exceeds 10.5 per cent; (b) Rs. 50.00 per tonne, when purchased by a manufacturer of sugar (including khandasari sugar) whose rate of recovery of sugar does not exceed 10.5 per cent. This kind of classification has been upheld in [1995] 96 STC 130 (SC) (Venkateshwara Theatre v. State of Andhra Pradesh) at page 148 and the following observations are relevant: In the instant case, we find that the Legislature has prescribed different rates of tax by classifying theatres into different classes, namely, airconditioned, air-cooled, ordinary (other than air-conditioned and air-cooled), permanent and semi-permanent and touring and temporary. The theatres have further been categorised on the basis of the type of the local area in which they are situate. It cannot, therefore, be said that there has been no attempt on the part of the Legislature to classify the cinema theatres taking into consideration the differentiating circumstances for the purpose of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight instead of price casts arbitrary or vagarious burden on different mills, especially in mills having lesser recovery of sugar. (e) In Uttar Pradesh tax by weight was a historical practice. Further, in Uttar Pradesh it was found that the industry did not have varying recovery but only negligible difference of recovery. But in Tamil Nadu, the position varies from mill to mill and region to region. 11.. The South India Sugar Mills Association requested the Government to adopt purchase tax on weight as adopted in Karnataka and Maharashtra as the present levy of 8 per cent purchase tax and additional tax at 2.5 per cent was found to be oppressive considering the sickness of the industry. As the industry was disabled from securing recoupment of the purchase tax in the determination of levy sugar price since the Government of India took into account only the statutory price, and purchase tax at specific rate will enable determination for levy sugar reckoning on the incidence of the entire purchase tax, the association suggested tax at specific rate as in neighbouring States and certainly the rate at Rs. 60 per M.T. was not opted. Therefore, the rights of the petitioners cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue Circular dated June 28, 1965. (ii) Court ruling upsetting the arrangements regarding consistent levy and collection of taxes or duties where assessees had already paid the duty or tax from time to time having gathered from the consumers and legislative steps taken to prevent windfall by way of refund arising out of the court ruling. (a) [1987] 64 STC 42 (SC) (Empire Industries Limited v. Union of India) (b) [1989] 74 STC 401 (SC) (Ujagar Prints v. Union of India) at page 430. (iii) Situation where court declares the law invalid where the ground of invalidity is removed and re-enacted. (a) [1989] 74 STC 401 (SC) (Ujagar Prints v. Union of India) at page 430. (b) AIR 1963 SC 1667 (Rai Ramkrishna v. State of Bihar) at page 1675paragraphs 10, 11 and 13 (page 1674). However, in the present impugned Act No. 27 of 1999, it is not alleged that the law is retrospectively introduced for any of the reasons indicated as- (a) to carry out the objects of the earlier principal Act-defect in phraseology; (b) to frustrate a windfall to the assessee arising of a court ruling; (c) as arising out of a declaration of invalidity of the earlier principal Act. No material has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sely or favourably. If the scheme which Part XIII guarantees has to be preserved in national interest, it is necessary that the provisions in the article must be strictly complied with. One has to recall the far-sighted observations of Gajendragadkar, J., in Atiabari Tea Co. s case [1961] 1 SCR 809 and the observations then made obviously apply to cases of the type which is now before us. The following observations in Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232 at page 241 are also relevant: That conclusion leads to a discussion of the other extreme position that taxation is wholly out of the purview of article 301. That extreme position is equally untenable in view of the fact that article 304 contains, and article 306, before it was repealed in 1956, contained reference to taxation for certain purposes mentioned in those articles. But article 306, which now stands repealed, contained references to tax or duty on the import of goods into one State from another or on the export of goods from one State to another. Such imposts were really in the nature of impediments to the free-flow of goods and commodities on account of customs barriers, which it was the intentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishna Murthy v. State of Orissa [1964] 15 STC 461 (SC); [1964] 7 SCR 185; AIR 1964 SC 1581, the Constitution Bench of this Court repelled the argument that a legislation should be held to be invalid because its retrospective operation might operate harshly in some cases. As a result of the above, we would hold that the impugned provisions are protected by article 304(b) of the Constitution. 19.. [1988] 71 STC 444 (Madras) (Thiru Arooran Sugars Ltd. v. Deputy Commercial Tax Officer) and [1996] 101 STC 197 (SC) (State of Tamil Nadu v. Kothari Sugars Chemicals Ltd.) while construing the scheme of tax on consideration or price, held that the respondent-State and its authorities can only tax the price fixation under clause 3 and the additional tax under clause 5-A of the Sugarcane (Control) Order, 1966. 20.. Even if payment is made pursuant to State advice, as advance , that payment would not constitute price. The amount higher than under clause 5-A of the Sugarcane (Control) Order price cannot be taxed. 21.. The judgment of the Supreme Court has been applied and followed by the assessees and tax authorities in the submission of return under rule 18 and the matter of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court remained untouched and unviolated. But the Supreme Court invalidated the levy as violative and observed as follows: (a) The State instead of seeking to test the correctness and effect of the judgment and order of the High Court thought it fit to have the judgment and order nullified by introducing the impugned amendment. The amendment does not proceed to cure the defect or the lacuna by bringing in an amendment providing for exigibility of sales tax on excise duty, health cess and education cess. The impugned amending Act may not, therefore, be considered to be a validating Act. (b) The retrospective operation of a validating Act properly passed curing the defects and lacuna which might have led to the invalidity of any act done may be upheld, if considered reasonable and legitimate. (c) In the instant case, the State instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6 per cent to 45 per cent with retrospective effect from the 1st of April, 1966, to avoid the liability of refunding the excess amount collected. (d) It may or may not have been competent for the State Legislature to validly remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for petitioners in O.P. Nos. 1239 of 1999 and 1241 of 1999 adopted the arguments of Mr. C. Natarajan, Senior Counsel. 30.. Mr. R. Mahadevan, the learned Government Advocate contended as follows: Prior to the amending Act No. 27 of 1999, for price fixation of sugarcane, clauses 3 and 5-A prices linked to recovery of sugar and subsidies were considered. Based on the specific request made by the sugar mills in the meeting held on November 5, 1997 to fix a flat specific rate as is being done in neighbouring States and to obtain enhanced levy sugar price, the Government fixed a flat rate of Rs. 60 per M.T. with effect from April 1, 1997. In such circumstances, the legislation cannot be construed as a retrospective enactment at all. In [1988] 68 STC 407 (SC) in the case of Gupta Sugar Works v. State of U.P. it was held that fixation of price of levy sugar was not an unreasonable restriction on the fundamental rights guaranteed under articles 14 and 19(1)(g) of the Constitution. In [1968] 21 STC 212 (SC) in the case of Andhra Sugars Ltd. v. State of Andhra Pradesh it was held that the State Legislature was competent to levy the tax with reference to the weight of the goods purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... har [1984] 55 STC 1 (SC); (1983) 4 SCC 45, where A.P. Sen, J., speaking for the court observed that on questions of economic regulation and related matters, the court must defer to the legislative judgment, and that the equality clause of article 14, did not prevent the State from classifying a class of persons who must bear a burden, heavier than the rest. The court affirmed the view expressed in Kodar s case [1974] 34 STC 73 (SC); AIR 1974 SC 2272 that the capacity to pay tax increased with an increase in receipts. The legal position was pithily summed up in the following para from the decision: On questions of economic regulations and related matters, the court must defer to the legislative judgment. When the power to tax exists, the extent of the burden is a matter for the discretion of the law-makers. It is not the function of the court to consider the propriety or justness of the tax, or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirement is satisfied. The equality clause in article 14 does not take from the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle 14, 301 or 304 may not be relevant for a compensatory character of a tax. 34.. We have considered carefully the rival submissions and perused the connected records. The tax on sugarcane is not a fresh tax. Prior to Act No. 27 of 1999, tax on sugarcane excluding sugarcane setts was levied on the last purchase point at 8 per cent ad valorem under entry 44 of Part C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959. The change in method of tax by Act No. 27 of 1999 with retrospective effect from April 1, 1997 on weight basis at Rs. 60 per M.T. was the result of a specific request mooted out by the representatives of sugar mills at the meeting on November 5, 1997 convened by the Government to consider the State advised price for 1997-98. The power of the State Legislature to levy tax prospectively or retrospectively is not controverted. It is a fact that purchase tax on sugar on weight basis is in vogue in the State of Karnataka, Uttar Pradesh, Maharashtra and Gujarat. In Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh [1980] 45 STC 36, the Supreme Court has held that the levy of tax under the U.P. Sugarcane (Purchase Tax) Act, 1961, on the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, without any contractual or statutory basis fixing the sale price of sugarcane at an amount higher than the minimum cane price fixed under clause 3 and the additional cane price fixed under clause 5-A, any sum paid by the purchaser to the grower as advance prior to fixation of the additional cane price under clause 5-A cannot form part of the price of cane sugar. In these matters there is admittedly no statutory basis since the State advice to the purchasers to pay a certain amount in addition to the minimum cane price fixed under clause 3, in anticipation of fixation of the additional cane price under clause 5-A, does not have any statutory basis. The amount paid as advance under the State advice also does not have any contractual basis since this was not paid as a result of an agreement between the grower and the purchaser. The amount of advance was paid in anticipation of fixation of the additional cane price under clause 5-A which means that in case the fixation under clause 5-A was at a higher amount than the amount paid as advance then the purchaser would have to pay the deficit amount. Similarly, when the amount of advance was in excess, the purchaser would be entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tia payment or towards advance. In that situation the entire amount paid was treated as the price. In our opinion, the nature of contract in that case being such, the entire amount paid had to be treated as price of the sugarcane supplied since the statute does not prohibit an agreement between the grower and the purchaser for payment of a higher price for the sugarcane by the purchaser. In the later decision in Tungabhadra [1994] 93 STC 561 (Kar) also it is noticed that there is no prohibition against the parties agreeing for the payment of a higher price of the sugarcane. In that situation no doubt the entire amount paid has to be treated as the price of the sugarcane. However, as indicated earlier, for treating the entire amount paid by the purchaser as the price of sugarcane supplied, it must be found proved as a fact that the higher price including the excess amount was paid as the price of sugarcane under an agreement between the grower and the purchaser irrespective of a lower amount being fixed as the aggregate of the price fixation under clauses 3 and 5-A of the Control Order. Unless a clear finding to that effect is recorded, the amount paid by the purchaser in excess o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of higher amount to the purchasers was not voluntary but under compulsion. However, as seen from the minutes of the meeting of November 5, 1997 the mills were praised for having made payment of State advised price to the cane growers for the sugarcane purchases effected during the year 1996-97 and the mills appreciated the Government for fixing the State advised price after ascertaining the views of the management of sugar mills and cane growers so as to safeguard the interests of both the sugar mills and cane growers. It is also seen that under agreement or contract with the cane growers price for the sugarcane purchases were made by the sugar mills pending fixing and adjustment of clause 5-A price. Thus, payment under compulsion of higher price than the clauses 3 and 5-A price of control order which was the basis for the decision in [1988] 71 STC 444 (Mad.) (Thiru Arooran Sugars Ltd. v. Deputy Commercial Tax Officer) and [1996] 101 STC 197 (SC) (State of Tamil Nadu v. Kothari Sugars Chemicals Ltd.) was not there in the relevant years from 1997-98 under consideration. Such payments were made voluntarily as a result of meeting with the representatives of sugar mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It appears that the only object of enacting the amended provision is to nullify the effect of the judgment which became conclusive and binding on the parties to enable the State Government to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lacuna but merely raises the rate of duty from 6 per cent to 45 per cent and further proceeds to nullify the judgment and order of the High Court. In our opinion, the enhancement of the rate of duty from 6 per cent to 45 per cent with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable. The defect or lacuna is not even sought to be remedied and the only justification for the steep rise in the rate of duty by the amended provision is to nullify the effect of the binding judgment. The vice of illegal collection in the absence of the removal of the illegality which led to the invalidation of the earlier assessments on the basis of illegal levy, continues to taint the earlier levy. In our opinion, this is not a proper ground for imposing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrospective effect from September 7, 1984, reintroducing payment of entertainment tax on the basis of gross collection capacity of the show. The High Court, on a writ petition, held the retrospective amendment by the Ordinance issued on October 25, 1984, to be unreasonable as the then Government had not offered any explanation for retrospectivity of the law. On appeal to the Supreme Court: Held, reversing the decision of the High Court, that no explanation was required from the State for amending the law with retrospective effect from September 7, 1984. Further, the following observations from the Constitution Bench decision of the Supreme Court in Rai Ramkrishna v. State of Bihar [1963] 50 ITR 171 (SC); [1964] 1 SCR 897 have also been quoted in [1995] 96 STC 338 at page 342 (Entertainment Tax Officer v. Ambae Picture Palace): The power of taxing the people and their property is an essential attribute of the Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Thus, the validation clause in the Act was in the context of change of tax levy on weight basis from April 1, 1997. The power to legislate being plenary for the Legislature, it can legislate in any way to suit different contingencies and this is precisely a contingency to fulfil the request to levy specific tax instead of the tax on ad valorem basis. 41.. The next point for consideration is whether there was hostile discrimination offending article 14 of the Constitution of India because of levying tax by taking the State average of 9.4 per cent recovery of sugar instead of classifying the mills linked to sugar recovery as has been done in Karnataka State. The flat rate fixed in Karnataka is Rs. 50 per tonne where the rate of recovery of sugar does not exceed 10.5 per cent and Rs. 60 per tonne where the rate of recovery of sugar exceeded 10.5 per cent. In Tamil Nadu while fixing flat rate of Rs. 60 per tonne as purchase tax, the Government took into account the amount payable by the purchaser of sugarcane per metric tonne of sugarcane on the basis of State advised price for State average sugar recovery of 9.4 per cent which worked out to Rs. 730 and adopting 8 per cent on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted while considering its validity on the ground of equality under article 14 was considered. The true position has been succinctly summarised by His Lordship Venkatachaliah, J., speaking for the court as under: The problem is indeed, a complex one not free from its own peculiar difficulties. Though other legislative measures dealing with economic regulation are not outside article 14, it is well-recognised that the State enjoys the widest latitude where measures of economic regulation are concerned. These measures for fiscal and economic regulation involve an evaluation of diverse and quite often conflicting economic criteria and adjustment and balancing of various conflicting social and economic values and interests. It is for the State to decide what economic and social policy it should pursue and what discriminations advance those social and economic policies. In view of the inherent complexity of these fiscal adjustments, courts give a larger discretion to the Legislature in the matter of its preferences of economic and social policies and effectuate the chosen system in all possible and reasonable ways. If two or more methods of adjustments of an economic measure are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during lean crushing season like the months of May and June or do not bother about the wear and tear in the machinery, necessarily the percentage of sugar recovery will suffer. It is often the incentives provided by the sugar mills and inter-action among growers and mills in selecting the right type of cane variety and developing the same result in higher sugar recovery thereby benefiting the cane growers and sugar mills purchasers. 47. In this context, it is relevant to look at some statistical details pertaining to sugarcane and sugar production available from Indian Sugar Year Book 1995-96-97 published by Indian Sugar Mills Association, New Delhi, for certain select States for a comparative study. I. Cane yield per hectare, recovery percentage of sugar and production of sugarcane per hectare during the season 1995-96. State Cane yield per hectare (tonnes) Recovry per cent of sugar Production of sugar per hectare (tonnes) 1. Tamil Nadu 110.0 8.33 9.16 2. Karnataka 79.6 9.80 7.80 3. Maharashtra 80.4 10.48 8.43 4. Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other States. The variation in bagasse per cent cane is less in Tamil Nadu than Karnataka and Maharashtra, though molasses percentage recovery is more than in Tamil Nadu than in Karnataka and Maharashtra. 49.. It is seen that while the State average recovery of sugar for 1997-98 season in Tamil Nadu is reported to be 9.4 per cent, it is averred that in Karnataka State it is 10.50 per cent and in Maharashtra State it is 11.13 per cent. 50.. Therefore, it is in the interests of the mill purchasers of sugarcane to co-ordinate and co-operate with the cane growers to develop better varieties and crush the maximum quantity with new machinery during the right season so as to attain higher sugar recovery for the benefit of one and all. 51. As far as the present cases are concerned, the State average of 9.4 per cent was taken as one of the two factors in fixing the rate of purchase tax levy. It is seen that all the sugar mills have been considered as a class. Nothing adverse among the mills was alleged with reference to the economic size of crushing capacity. Thus, treating members of a well defined class cannot be held to be obnoxious. There is bound to be variation in sugar recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal. The court cannot strike down a law because it has not made the classification which commends to the court as proper. Nor can the legislative power be said to have been unconstitutionally exercised because within the class a sub-classification was reasonable but has not been made. It is well-established that the modern State, in exercising its sovereign powers of taxation, has to deal with complex factors relating to the objects to be taxed, the quantum to be levied, the conditions subject to which the levy has to be made, the social and economic policies which the tax is designed to subserve, and what not. In the famous words of Holmes, J., in Bain Peanut Co. v. Pinson (1930) 282 US 499: We must remember that the machinery of Government would not work if it were not allowed a little play in its joints. It is well-established that classification is primarily for the Legislature and becomes a judicial issue only when the legislation bears on its bosom obvious condemnation by way of caprice or irrationality . 54.. Thus, in the present cases, the plea that adopting State average recovery of 9.4 per cent as one of the factors for fixing flat rate of purchase tax for al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in fixing the price the Government took into account the market price of sugar, State average sugar recovery of 9.4 per cent and the existing rate of 8 per cent tax in arriving at the purchase tax rate of Rs. 60 per M.T. This method adopted by the State to fix the purchase tax rate is rational and reasonable. In such circumstances, there is no violation of article 301 of the Constitution of India and as the levy is not confiscatory in nature, it did not amount to unreasonable restriction within the meaning of article 19 of the Constitution of India so as to impose any unreasonable restriction upon the petitioner s right to carry on a business or trade. As observed in Rai Ramkrishna [1963] 50 ITR 171 (SC); AIR 1963 SC 1667, only if the retrospective feature of a law is arbitrary and burdensome the statute will not be sustained and the reasonableness of each retrospective statute will depend on the circumstances of each case. Further as observed by the Supreme Court in S. Kodar v. State of Kerala [1974] 34 STC 73, Generally speaking, the amount or rate of a tax is a matter exclusively within the legislative judgment and as long as a tax retains its avowed character and does not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable restriction and therefore assent of the President as contemplated in article 304(b) is required is untenable. Therefore, in the context of the amending Act of this nature, the relevant article is 200 of the Constitution which inter alia provides that where a Bill has been passed by the Legislative Assembly of a State, it shall be presented to the Governor and the Governor shall declare either that he assents to the Bill or that he withholds assent therefrom or that he reserves the Bill for the consideration of the President. In the present case, the amending Act was assented to by the Governor as he did not think it proper to reserve the Bill for consideration of the President. The amending Act was also duly published in the Gazette on June 17, 1999. Thus, it is a valid piece of legislation. 58.. One other point urged was that the petitioners could not recoup the levy price inclusive of the tax element in pursuance of the retrospective legislation. One of the reasons or the principal reason behind the amending Act is to enable the Sugar mills to recoup the purchase tax element in respect of levy sugar. As could be seen from para 24 of O.P. No. 1059 of 1999 the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of specific levy on weight basis by Act No. 27 of 1999 and therefore the explanation which indicates only a turnover which does not necessarily establish a taxable turnover could not be given effect to. It is seen that the amendment Act No. 37 of 1999 clearly retains ad valorem basis for levy of additional sales tax in respect of sugarcane under the Tamil Nadu Additional Sales Tax act, 1970, notwithstanding the specific levy under the Principal Act, Explanation II to section 2 in the amending Act No. 37 of 1999 reads as follows: Explanation II.-Notwithstanding anything contained in the said Act, for the purpose of this clause, turnover in respect of sugarcane excluding sugarcane setts shall be arrived at by multiplying the total metric tonnes of sugarcane excluding sugarcane setts purchased during the year, by the minimum price fixed under clause 3 and the additional price determined under clause 5-A of the Sugarcane (Control) Order, 1966 and such turnover shall be included in the total turnover of the dealer and the taxable turnover shall be arrived at accordingly for the purpose of this clause. Thus, it is clear that the total turnover of sugarcane arrived at on ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
