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TMI Blog2000 (8) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ninth Schedule to the Tamil Nadu General Sales Tax Act, 1959 contain the relevant provision. It may be significant to note that with effect from June 17, 1999 the said provision has been recast by Tamil Nadu Act No. 28 of 1999. The significant changes are that under Tamil Nadu Act No. 39 of 1997 the tax is payable on the total turnover and no option is given to the assessee, whereas under the Tamil Nadu Act No. 28 of 1999 the tax is on the taxable turnover and option is given to make payment under the new scheme. Under both the provisions a dealer is prevented from collecting any tax on the sale of food and drinks. The grievance of the petitioner is the issue of a proceeding TNGST/1460553/1998-99/dated March 15, 2000, which is an order of assessment for the year 1998-99. The order of assessment shows that the turnover reported and the turnover determined are one and the same being Rs. 63,37,23,255 as total turnover and Rs. 63,36,28,255 as taxable turnover. Under the said order of assessment a levy is imposed under section 2(1)(aa) of the Tamil Nadu Additional Sales Tax Act, 1970, at the rate of 2 per cent, holding that the tax levied under section 3-D of the Tamil Nadu Genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tarajan, buttresses his argument by citing certain decisions, to which we will make a reference at a later stage. The respondents have filed a counteraffidavit disputing the arguments of the petitioner. It is pointed out that, the words "taxable turnover" under section 2(p) would mean: (1) the turnover on which the dealer shall be liable to pay tax as determined; (2) after making such deductions from the total turnover in such manner as may be prescribed. 4.. It is further pointed out that in the instant case the turnover that was determined in respect of the petitioners liable to tax was the total turnover as per section 3-D of the Tamil Nadu General Sales Tax Act, 1959. Therefore, the total turnover is indeed the taxable turnover for the purpose of levying tax under section 2 of the Additional Sales Tax Act. Reference is then made to rule 6 of the Tamil Nadu General Sales Tax Rules, 1959 which provides for deductions to be made from the total turnover for arriving at the taxable turnover. It is then pointed out that rule 6 will apply only to an assessment under section 3(2) or 3(4) of the Tamil Nadu General Sales Tax Act and not to an assessment under section 3-D of the Tam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n between dealers in jewellery and other dealers. In the case of the petitioner it is pointed out that for the year 1998-99 the total turnover was Rs. 21,40,273. Out of the said turnover sales of silver metti, silver chain, silver arnacoir (waist cord) which are eligible for exemption amounted to Rs. 17,79,510. Further local purchases of old and beaten silver articles amounted to Rs. 3,60,763. In the notice dated October 15, 1999, the third respondent is proposing to assess the petitioner on the turnover of Rs. 17,79,510 under section 3-E of the Tamil Nadu General Sales Tax Act, 1959 and on the turnover of Rs. 3,60,763 representing local purchases of gold and beaten silver articles at 4 per cent. The affidavit filed in support of the writ petition does not explain as to how the revisions abovementioned are violative of articles 14, 19(1)(g) and 265 of the Constitution of India. It only shows that at the slightest provocation parties are prepared to challenge the validity of a provision of law with the sole idea of stalling the assessment proceedings. However, the petitioners seek an alternative remedy by directing the authorities to read down the expressions "total turnover" and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e power to impose tax on selected articles or commodities and also fix the measure of tax for the sake of convenience. Equally the State has got the right to prescribe the machinery for recovery of tax. It is well-settled that the Legislature has got power to pick and choose articles and commodities for the purpose of levying tax at a particular rate or adopt a particular measure of tax. The question whether the goods have already suffered tax or not, would be relevant only when the tax is levied at a particular point. It has no relevance when section 3-E charges the total turnover to be adopted as the measure for imposing tax. 7.. O.P. Nos. 114 of 2000 and 356 of 2000 have been argued by Mrs. S. Millika. Both the writ petitions have been filed by the same petitioner, namely, Hotel Ranjith, one for declaring section 3-D and Part A of Ninth Schedule to the Tamil Nadu General Sales Tax Act, 1959 as ultra vires the Constitution of India and the other to quash the order of assessment dated January 20, 2000 as being illegal. The petition filed in support of the writ petitions says that in respect of the assessment year 1998-99 the turnover derived from the restaurants and the bar amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court of India in K.M. Mohamed Abdul Khader Firm v. State of Tamil Nadu reported in [1985] 58 STC 12. Arguments have been advanced by Mr. C. Natarajan, C. Venkataraman and Mrs. Mallika more or less on the same lines as indicated in the affidavits filed in support of the original petitions, but citing certain decisions in support of the arguments. Similarly, Mr. Venkateswaran, the learned Senior Standing Counsel for the respondent has adopted the arguments in the counter-affidavit and relied on the judgment cited in the counter-affidavit. 8.. We will formulate the issue arising out of such arguments, in the order of priority and then proceed to discuss the issues enabling us to come to a conclusion one way or the other. (1) Are the provisions of law, namely, sections 3-D and 3-E(1) in Parts A and B of the Ninth Schedule to the Tamil Nadu General Sales Tax Act, 1959 with effect from April 1, 1997 or the words "total turnover" and "shall" in those sections, violative of articles 14, 19(1)(g) and 265 of the Constitution of India or otherwise invalid and illegal? (2) Is section 2(1)(aa) of the Additional Sales Tax Act, 1970, attracted when the Tamil Nadu General Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een devised which is free of all discriminatory impact. In such a complex arena in which no perfect alternatives exist, the court does well not to impose too rigorous a standard of scrutiny lest all local fiscal schemes become subjects of criticism under the Equal Protection Clauses." 10.. So far as jewellery dealers are concerned, those with a total turnover not exceeding Rs. 50 lakhs are subjected to a particular treatment and no objections can be raised because they form a separate and distinct class by themselves and within the class there is no discrimination exercised. Secondly, the total turnover is adopted because that is taken as a measure for the purpose of levy of tax and this practice has always been approved by courts in India. The fact that the Government gave some concession in the subsequent enactment by Tamil Nadu Act No. 28 of 1999 will not in any way make the earlier provision illegal or ultra vires. One can see with advantage the decision in Venkateshwara Theatre v. State of Andhra Pradesh reported in [1995] 96 STC 130 (SC). The Supreme Court in that case considered the validity of the provision adopting the gross collection capacity in a cinema theatre as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections and as such they are competent to levy tax on the total turnover. The question whether the goods have suffered tax or not would be relevant only when tax is levied at a particular point. This is what is referred to in section 3, sub-section (2) of the Tamil Nadu General Sales Tax Act. Similarly, section 4 says that tax shall be payable by a dealer on the sale or purchase inside the State in respect of declared goods at the rate and only at the point specified against each in the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959. But section 3-D which is an independent charging section authorises levy of tax on the total turnover and therefore the question whether the sale is a second sale or subsequent sale or whether the goods have already suffered tax would not come into play. Individual hardships experienced by some of the dealers would not affect the validity of a provision of law. On the basis of hardship and burden, a law cannot be invalidated so long as the law is within the four corners of the Constitution of India. The restrictions placed by the impugned provisions are absolutely reasonable and in the interest of the public. Therefore, neither artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to pay tax on the total turnover, the provision of law is valid and therefore, the denial of an option does not in any way alter the situation. In Kathyayini Hotels Pvt. Ltd. v. Deputy Commissioner of Commercial Taxes (Assessments) V, Bangalore reported in [1998] 111 STC 89 the Karnataka High Court held that classification based on economic consideration is permissible under article 14 of the Constitution of India. In that case, dealers carrying on hotel or restaurant business having a turnover of less than Rs. 50 lakhs per annum were considered to be of a distinct class from others and the privilege of compounding given to them was upheld. The opening observations of the Karnataka High Court are germane to decide the issues raised in our case. Observed the Karnataka High Court: "In the field of taxation, the Legislature enjoys an extremely wide discretion as regards classification of items and the choice of persons, method and rates for the levy of taxes that it may decide to impose. While fiscal statutes are not totally immune from challenge on the touchstone of article 14 of the Constitution, so long as the Legislature refrains from a clear and hostile discrimination, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter of the law or diluting the words "taxable turnover" in Tamil Nadu Additional Sales Tax Act, 1970. We have already held that the "taxable turnover" under section 3-D or 3-E of the Tamil Nadu General Sales Tax Act, 1959, is only the "total turnover". Therefore, there is no difficulty in adopting the quantum of turnover assessed to tax under section 3-D or 3-E of the Tamil Nadu General Sales Tax Act, 1959, as the "taxable turnover" for the purpose of levying additional sales tax. Similarly, reference is made to State of Maharashtra v. Mishrilal Tarachand Lodha reported in AIR 1964 SC 457 wherein it was held that: "The Act is a taxing statute and its provisions therefore have to be construed strictly, in favour of the subject-litigant. The other provisions are for the purpose of allowing the party feeling aggrieved against the decision of the High Court to take up his case to the next higher court, the Privy Council and therefore the relevant provisions in that regard had to be given a liberal construction." 18.. The above observations were made for holding that the court fee payable on an appeal will not include the interest decreed pendente lite. Our observations made ear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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