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TMI Blog2001 (5) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of rate until prescribed under section 15 of the Central Sales Tax Act in aggregate, therefore, it can be subjected to tax at a rate in excess of the limit prescribed under section 15 of the Central Sales Tax Act, 1956. 2.. In this connection, the learned counsel appearing for the petitioners placed reliance on clause (3) of article 286 of the Constitution of India which leaves it for the Parliament alone to prescribe maximum rate of tax at which sale or purchase of goods declared to be of special importance in the course of inter-State trade and commerce. 3.. The second contention raised in connection with the levy of "turnover tax" is that while under section 3 of the Rajasthan Sales Tax Act, 1994, a dealer is not liable to be registered who is exclusively dealer in tax-paid goods unless "turnover" exceeds Rs. 16 lacs, yet it makes a dealer liable to registration because of section 13-A on having a "turnover" of Rs. 3 lacs only notwithstanding that the entire "turnover" is of tax-paid goods which is otherwise not subjected to tax in the hands of the dealer who purchases such goods on payment of tax and thereafter enters into further transactions of sale of goods as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is any incongruity between section 3 of the Act of 1994 and section 13-A of that Act nor does it violates any provisions of the Central Sales Tax Act, 1956. 7.. We should take notice of article 286 of the Constitution of India, which reads as under: "Article 286(1).-No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29-A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Parliament in regard to (i) system of levy; (ii) the rate and (iii) other incidents of taxes as the Parliament may by law specify; that is to say that the mandate of clause (3) of article 286 of the Constitution conveys that the plenary power of the State to levy tax on sale or purchase of goods other than the sale or purchase that has taken place in the course of inter-State trade or commerce or the sale or purchase which has taken place outside the State or the sale or purchase which has taken place in the course of import of goods into or export of goods outside the territory of India is inhibited as per the provisions of article 286, apart from other constitutional restraints, with which we are not presently concerned. Article 286 also provides that the principles for determining when a sale or purchase of goods can be said to take place outside the State or in the course of import of goods into or export of goods outside the territory of India and also when such transaction is said to have taken place in the course of interState trade or commerce is to be prescribed by the Parliament and not by the State legislation. However, when any goods are declared to be of spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entry 92-A of List I and entry 54 of List II appended to the Seventh Schedule and the provisions of article 286 of the Constitution of India and the Central Sales Tax Act that though power of the State to impose tax on sale and purchase of goods is plenary and unrestricted, subject only to any restrictions imposed by the Constitution, sections 14 and 15 of the Central Sales Tax Act read with clause (3) of article 286 of the Constitution of India constitute restrictions upon the plenary power of the State Legislature to levy tax on sale or purchase of goods which have been declared to be of special importance for the interState trade or commerce. While section 14 only enumerates the declared goods and it does not lay down any rate of tax, section 15 of the Act puts in two restrictions: firstly by prescribing the maximum rate at which tax may be imposed on sale or purchase of declared goods; and secondly it requires that such taxes shall not be levied at more than one point. The object of the two restrictions is to ensure that inter-State trade or commerce in such goods is not hampered by heavy taxation within the State occasioned by an excessive rate of tax or by multiple points o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he levy will be fatal to its validity. 12.. From the above, it is clear that with these restrictions, it is imperative that where any State enacts two or more enactments levying tax on sale or enacts more than one provision in the same enactment for levying tax on sale by more than one mode or by providing levy of surcharge in addition to the sales tax generally imposed, the aggregate of all multiple rates under all provisions/ enactments operating in the same field ultimately on any one transaction of sale or purchase of declared goods within the State must not transgress the ceiling of rate of tax on declared goods under section 15(a) of the Central Sales Tax Act as it would result in transgressing the limits of rates which have been prescribed by the Parliament in exercise of its authority under article 286(3) of the Constitution of India on the transactions relating to declared goods and would defeat the very object of that provision. 13.. In this connection, it may be noticed that the restrictions are not only envisaged on the power of the State to levy tax on the transaction of sale or purchase of the declared goods in accordance with the conditions laid by law made by Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her deduction shall be made from the gross turnover of a dealer for the purpose of this section. (3) For the purposes of assessment, collection and refund of tax levied under this section, the provisions pertaining to assessment, collection and refund under other provisions of this Act and the rules made thereunder shall mutatis mutandis apply". 16.. A perusal of the aforesaid provisions of section 13-A of the Act ultimately goes to show that in computing taxable turnover for the purpose of imposing turnover tax under section 13-A, the "turnover" relating to sale or purchase of declared goods as per section 14 of the Central Sales Tax Act, 1956 has not been excluded nor any declaration has been made that rate in respect of that part of "total turnover" which is attributable to sale or purchase of any declared goods shall not exceed the maximum rate prescribed under section 15 of the Central Sales Tax Act, 1956. 17.. The petitioners have come with a specific case that their gross total turnover includes the "turnover" of declared goods which has already suffered tax at the maximum rate (4 per cent at the relevant time) prescribed under section 15, and imposition of any additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 with reference to total sales tax imposed on the dealer which was challenged before the Supreme Court as ultra vires. The court said: "That the additional tax levied under the Act is really a tax on the sale of goods and not on the income of a dealer. The fact that the quantum of the additional tax is determined with reference to the sales tax imposed would not alter its character. The additional tax is an enhancement in the rate of sales tax when the turnover of a dealer exceeds Rs. 10 lakhs a year and it is a tax on the aggregate of the sales effected by the dealer during the year." The ratio of the aforesaid decision is that such additional tax imposed on the entire turnover of a dealer is in the character of an additional tax on sale, that would not transgress the legislative field governing under the entry No. 54 for that reason alone because tax is not levied with reference to separate transaction in specific commodity but has been levied with reference to total tax payable by the assessee in respect of its entire turnover, when such turnover exceeds Rs. 10 lacs. The court made it clear that additional tax is merely an enhancement in the rate of sales tax. 21.. In P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islative competence of the State Legislature and valid. This position clearly negatives the second contention of the petitioners that because the provisions of section 13-A provides for a lesser limit of gross "turnover" for obligating a dealer to get himself registered and results in levy of additional tax in addition to a tax already suffered levy of tax on commodity which has already suffered resulting in multiple point tax. It may be noticed that levy of additional tax on the same "turnover " is not levied under multiple point tax but because of additional tax and levying on tax on sales tax paid goods purchased by the dealer on subsequent sale by him results in multiple point tax. However, in other cases, as noticed by us above, when the Orissa Sales Tax Act had given effect to restrictions spelt out under section 15 of the Central Sales Tax Act, 1956 by excluding the turnover of declared goods from the purview of additional tax imposed thereunder, it did not give rise to the question whether it is in violation of section 15 of the Act. However, as in the present case, we have seen that no such express or implied provision has been made for restricting the liability to addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, Allahabad High Court in Katyar and Co. v. Sales Tax Officer [1963] 14 STC 133, has held that entire charging section is not to be uneffective and so much of it is in conformity of section 15(a) rates shall be effective and excessive rate shall not be given effect to. 25.. The question has been set at rest by the Supreme Court in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax [1965] 16 STC 310. The constitutional bench of the Supreme Court speaking through Hidayatullah, J., said: "The meaning or the intention of clause (3) of article 286 is not to destroy all charging sections in the Sales Tax Acts of the States which are discrepant with section 15(a) of the Central Sales Tax Act, but to modify them in accordance therewith. The law of the State is declared to be subject to the restrictions and conditions contained in the law made by Parliament and the rate in the State Act would pro tanto stand modified. The effect of article 286(3) is now brought out by the second proviso to section 5(1). But this proviso is enacted out of abundant caution and even without it the result was the same." Thus, in view of the aforesaid discussion, as we have come to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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