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TMI Blog2001 (1) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutional the words and part of the notification "within the State" as underlined in the provision extracted. Exhibit P5 being notice issued for provisional taxation is also subjected to challenge. 3.. Though interlocutory orders had been passed, it had been submitted that advance tax was being demanded at the check-post, and an early hearing had been prayed for. The State opposed the application for stay, and as agreed by the parties, the matter was heard on merits. 4.. The petitioner has sales tax registration, both under the Kerala General Sales Tax Act, 1963 and Central Sales Tax Act, 1956. He has his registered place of business at Alappuzha, and claims that he is the proprietor of Malar Poultry Farm at Palladom Taluk, State of Tamil Nadu. For the month of October, 2000, he had declared a total turnover of Rs. 21,60,000 and claimed exemption thereof on the ground that the sale was of chicken reared by him in his own poultry farm in the Tamil Nadu. This was not accepted by the department, obviously on the basis of S.R.O. No. 291/2000, as the petitioner did not qualify for exemption. It is in this context that the original petition has been filed. Petitioner submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of taxation, i.e., a higher rate of sales tax vis-a-vis similar goods manufactured/produced within that State and sold within that State. Prohibition is against discriminatory taxation by the States. It matters not how this discrimination is brought about." Reference had also been made by Video Electronics case [1990] 77 STC 82 where the Supreme Court had referred to a limited exception, but however pointed out with reference to a case cited that: "It must be held that by exempting unconditionally the edible oil produced within the State of Jammu and Kashmir altogether from sales tax, even if it is for a period of ten years, while subjecting to the edible oil produced in other States to sales tax at eight per cent, the State of Jammu and Kashmir has brought about discrimination by taxation prohibited by article 304(a) of the Constitution." He had also referred to the relevant paragraphs of the judgment reported in AIR 1962 SC 1406 [Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan] as following: "It is therefore now well-settled that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the plenary powers of legislative heads in List II of the Seventh Schedule to the Constitution. In a federal polity, all the States having powers to grant exemption to specified class for a limited period, such granting of exemption cannot be held to be contrary to the concept of economic unity. The contents of economic unity by the people of India would necessarily include the power to grant exemption or to reduce the rate of tax in special cases for achieving the industrial development or to provide tax incentives to attain economic equality in growth and development. When all the States have such provisions to exempt or reduce rates the question of economic war between the States, inter se or economic disintegration of the country as such does not arise. It is not open to any party to say that this should be done and this should not be done by either one way or the other. It cannot be disputed that it is open to the States to realise tax and thereafter remit the same or pay back to the local manufacturers in the shape of subsidies and that would neither discriminate nor be hit by article 304(a) of the Constitution. In this case and as in all constitutional adjudications the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 SCC 87. Suffice it to say that the limited exception carved out therein cannot be widened or expanded to cover cases of a different kind. It must be held that the total exemption granted in favour of small-scale industries in Jammu and Kashmir producing edible oil (there are no large scale industries in that State producing edible oil) is not sustainable in law." In view of the circumstances that the Full Bench has after reference to the decided cases, struck a different note, after taking notice of the fast economic and social changes, which has all the more relevance in this Millennium, I feel, I am bound to follow the dictum in Video Electronics case [1990] 77 STC 82 (SC). 11.. The Government Pleader had thereafter relied on the Bench decision, reported as Dr. N. Saravanan v. Sales Tax Officer (1999) 7 KTR 237. It was a case where there was challenge posed against S.R.O. No. 495/90. The Kerala Government had made an exemption in respect of tax payable on the sale of goods of "poultry farmers in the State on the sale of chicks and chickens". Though the decision does not throw light as to whether arguments were raised relying on Part XIII of the Constitution, the court had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought before this Court to hold that the exemption granted in favour of the poultry farmers in Kerala by exhibit P4 interferes with the petitioners' rights under Part XIII of the Constitution. Article 304 brings restrictions on taxation of "similar goods" between imported goods and goods manufactured in the State. Though it is the general item of chicken, petitioner has not been able to establish that they are similar goods. Dictionary meaning of "similar" is comparable. It cannot be taken for granted that the two goods are similar, and hence the restrictions of article 304 can have no application or relevance here. Nor is there violation of article 301 established. That they will have liability for payment of tax cannot be ipso facto lead to a presumption that there is restriction. The petitioner has not produced materials regarding the cost factor, or the economics for this Court to assess the situation. There is an overriding presumption of constitutionality for the statutory orders, and I am of the opinion that the petitioner has not been able to discharge his burden for this Court to draw a different conclusion. 14.. In this context, I may also refer to a practical appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay get a boost, as hoped by the State Government. 15.. It might also again be relevant that even if a declaration is made, as requested for, it will not enure to any immediate benefit to the petitioner. In an assessment, it would have to be shown that the entire item of goods brought by a person like the petitioner by inter-State transfer was reared by him in his own farm. An adjudication process can thus never be avoided. As pointed out by the Government Pleader, the notification has been intended to boost inter-State trade, as there is likelihood of a rejuvenation in transport of chicken by the incentive granted, and it does not therefore offend Part III of the Constitution. Article 301 of course is a fetter to legislative power, and legislation brought about can be declared as unconstitutional if it is established that its existence is wholly unsupportable and underlying idea is not holy. The petitioner has not succeeded in his attempt to challenge the notification in suggesting that provisions in the notification not extending to his class a benefit as made available to a specified class is unconstitutional. I feel that the reliefs prayed for are not liable to be granted. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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