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TMI Blog2001 (6) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... O.P. Nos. 5278 and 5716 of 1994 were filed by M/s. I.T.C. Limited and M/s. Hallmark Tobacco Co. Ltd. respectively challenging the above provisions on various grounds. It was contended by the petitioners that the impugned legislation is bad for legislative incompetency and that the provisions are violative of articles 301, 304, 269, 286, 265, 245, 246, etc. It was also contended that the amended provisions are violative of articles 19(1)(g) and 14 of the Constitution. The learned single Judge held that the impugned provisions are violative of articles 301 and 304 of the Constitution and declared the same as unconstitutional, ultra vires and void. All other contentions raised by the petitioners were rejected. The learned single Judge found that the impugned Act is not void for want of legislative competence of the State. 4.. Writ Appeals Nos. 1510 and 1511 of 1997 are filed by the State challenging the finding of the learned single Judge that the provisions of the impugned Act are violative of articles 301 and 304 of the Constitution. Writ Appeals 2303 of 1997 and 1088 of 1998 are at the instance of the petitioners and the challenge therein is to the extent of rejection of their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of business, manufactures, produces, brings, or causes to be brought in the State a commodity included in the Schedule or to whom it is dispatched from any place outside the State for supply within the State or who supplies such commodity within the State, whether by way of sale or otherwise, would come within the definition of "stockist" under clause (k) of section 2. Luxury tax is to be collected by such a stockist at the point of first supply in the State whether by way of sale or otherwise. 7.. On the question of legislative competence, the learned single Judge has taken the view that the impugned Act would come under entry 62, List II of the Seventh Schedule to the Constitution and therefore the Legislature has competence to enact the same. We will first consider the attack made by writ petitioners in their appeals on this view of the learned single Judge. It is their contention that the impugned Act is ultra vires article 286 of the Constitution of India read with article 366(29A)(f) read with section 15 of the Central Sales Tax Act, 1956 ("CST Act 1956"). According to these appellants, the learned single Judge having held that on a true interpretation of the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco that is declared as goods, we are of the view that it will not in any manner affect the legislative competence of the State Legislature. If the impugned statute is found in substance coming under entry 62 and it incidentally trenches upon a topic coming under entry 54 it will not make it any the less a legislation coming under entry 62. This principle has been established by the apex Court as early as in A.S. Krishna v. State of Madras AIR 1957 SC 297. Apart from the above, the pleadings in the case would clearly show that the contentions put forward by the party-appellants is based on sub-clause (f) of clause (29A) of article 366 of the Constitution, referring to a deemed sale. As mentioned earlier, article 286(3)(b) does not take in sub-clause (f) of clause (29A) of article 366. We, therefore, find no merit in the contention of the party-appellants regarding legislative competence. 8.. Now, we will come to the contention raised by the State in its appeals challenging the findings of the learned single Judge that the impugned provisions are violative of articles 301 and 304 of the Constitution. According to the petitioners, the impugned Act would impede the freedom of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a person who supplies cigarettes within the State whether by way of sale or otherwise. The above would clearly show that the levy of tax has a direct and immediate impact on the free movement of goods in the course of inter-State trade and commerce. 11.. We will now refer to some of the landmark decisions of the apex Court on the principles to be followed while examining the issue as to whether an impugned legislation is violative of article 301 of the Constitution. In Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232, the majority took the view that when article 301 provided that trade, commerce and intercourse shall be free within the Territory of India, it was the movement or transport part of the trade that must be free. It was further held that it would be reasonable and proper to hold that restrictions and freedom from which it is guaranteed under article 301 would be such restrictions as directly and immediately restrict or impede the free-flow or movement of trade. It is only such tax as directly and immediately restricts trade that would fall within the purview of article 301. The argument that article 301 should govern all taxes whether or not their impact o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct restriction on the freeflow of trade and since in doing so, it has not complied with the provisions of article 304(b), it must be declared as void. In Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406 there was a further consideration of this principle by a Constitutional Bench. While agreeing with the majority view in Atiabari Tea Company's case AIR 1961 SC 232, it was clarified that regulatory measures or measures imposing compensatory tax for the use of trading facilities do not come within the purview of restrictions contemplated by article 301 and such measures need not comply with the requirement of proviso to article 304(b) of the Constitution. On the facts of the above case, it was held that the taxes imposed under the Rajasthan Motor Vehicles Taxation Act, are compensatory taxes which do not hinder the freedom of trade, commerce and intercourse assured by article 301 and hence, the Act does not violate the provisions of that article. 12.. In A.B. Abdul Kadir's case AIR 1976 SC 182, the question whether the provisions of the Luxury Tax on Tobacco (Validation) Act (9 of 1964) would violate article 301 of the Constitution of India was considere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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