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TMI Blog2007 (8) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... tory and therefore not violative of article 304(a) of the Constitution, except the discrimination as held above in respect of the principal Act as it stood prior to its amendment. The finding of the learned single judge in that regard is, therefore, upheld. Admittedly before enactment of the principal Act the Presidential sanction was obtained. The State, however, has not even attempted by making necessary pleadings to prove that such discriminatory tax is reasonable and in public interest. On the contrary, the stand of the State is that once the Presidential sanction is obtained in case of a discriminatory tax the requirements of article 304(b), i.e., its reasonableness and in public interest, need not be proved. The contention of the learned AAG that tax is always imposed in public interest cannot also be accepted unless it is proved by the State that the tax impugned was in fact levied in public interest. Hence the levy by the principal Act, are unconstitutional being violative of article 301 of the Constitution. Thus the learned single judge has rightly decided the aforesaid question against the State. In view of the working test laid down by the apex court in Jindal Stai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the event of such approach being made by the payers of the tax, the authority shall within 4 (four) months, thereafter, pass necessary order relating to refund, keeping in view the decision of the apex court in Mafatlal Industries case [1996 (12) TMI 50 - SUPREME COURT OF INDIA] as well as the contention of the learned counsel for the assessees that the entry tax imposed cannot at all be passed on to the consumer in view of the different statutory provisions and also fixation of uniform selling price by the Government of India, in respect of certain specified goods. - W.A. Nos. 462, 465, 466,467 of 2006 & Others - - - Dated:- 30-8-2007 - BISWAS D. AND KATAKEY B.P. , JJ. The judgment of the court was delivered by B.P. KATAKEY J. The State Legislature of Assam, on obtaining previous Presidential sanction under proviso to article 304(b) of the Constitution, enacted the Assam Entry Tax Act, 2001 (Assam Act 4 of 2001) (in short, the principal Act ) with a view to levy tax on entry of goods, into any local area of Assam for consumption, use or sale therein, which came into force on October 1, 2001, on publication of a notification dated September 28, 2001 in the Assam Gaz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst amended by the Assam Entry Tax (Amendment) Act, 2001 (in short, the First Amendment Act ), which was published in the Assam Gazette (Extraordinary) on October 19, 2001 and came into effect on that date. By the said First Amendment Act, the definition of entry of goods into a local area under section 2(1)(b) and importer under section 2(1)(d) have been amended by inserting the words that local area including a place outside , in both the clauses. Further, another proviso has been added to section 3(2) of the Act. The said Act was further amended by the Assam Entry Tax (Amendment) Act, 2002, which came into effect from May 9, 2002, amending the definition of motor vehicle under section 2(1)(f), purchase value under section 2(1)(h), inserting sub-section (5) in section 3, empowering State Government to exempt an importer from payment of tax in public interest and also inserting sub-section (5A) in section 5, providing for deduction of tax. The said Act was again amended by the Assam Entry Tax (Amendment) Ordinance Act, 2005, which came into effect on May 12, 2005, on publication in the official gazette, which, however, was replaced by the Assam Entry Tax (Second A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8A of the Act has been framed. The State Government in exercise of the powers vested in it by subsection (4) of section 3 published various notifications in the official gazette subjecting biscuits, all varieties of textiles namely, cotton, woollen, silken including rayon, artificial silk, nylon textile, crude oil, tobacco including cigarettes, cigar, biri, khaini, sada, smoking mixture, marble tiles, marble, decorative slabs, etc., to tax under the impugned Act by adding those goods as specified goods in the schedule of the said Act. It is an admitted position of fact that except the principal Act, there is no Presidential sanction/assent to the amendments made. A number of petitions, by various writ petitioners, came to be filed challenging the legality and validity of various notifications issued by the Government of Assam, Finance (Taxation) Department, in exercise of powers conferred under sub-section (4) of section 3 of the impugned Act by way of addition to schedule to the Act, certain goods as specified goods including cigarette, churat, khaini, gudka, smoking mixture, etc., on the ground of having direct impediment on freedom of movement of goods guaranteed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notifications as well as the 2005 Ordinance, and the Second Amendment Act, 2005 as ultra vires, unconstitutional and null and void, to the extent the same impose entry tax on the specified goods, which formed subject-matter of the writ petitions, by upholding contention that the provisions of sub-section (4) of section 3 of the 2001 Act having suffered from the vice of excessive delegation, same having empowered the State Government to add by issuing notification, new items in the schedule for the purpose of levying entry tax on such items, is wholly impermissible in law and cannot survive, and also by holding that the imposition of entry tax on the goods which forms subjectmatter of the writ petition is violative of article 301 read with article 304(b) of the Constitution of India, as it amounts to restriction, directly and ultimately on the movement of trade or commerce, having not saved the same as required under article 304(b) of the Constitution by obtaining Presidential sanction. The learned single judge, on the basis of pleadings as well as arguments put forward by the learned counsel for the parties formulated the following four points for determination: (i) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on behalf of the appellants as well as on behalf of the respondents in the subsequent writ petitions and Mr. S. Ganesh, Dr. A.K. Saraf, Mr. N. Dutta, Mr. G.K. Joshi, Mr. D.K. Mishra and Mr. G.N. Sahewalla, learned Senior Counsel and other learned counsel appearing for the respective parties in the appeals as well as in the subsequent writ petitions. The learned counsel for the parties advanced their arguments on the following issues: (i) Whether impugned levy is discriminatory and violative of article 304(a) of the Constitution? (ii) Whether entry tax on the goods imposes restriction on its movement and hence violative of article 301 and whether requirements of article 304(b) have, therefore, to be complied with? (iii) Whether impugned levy is compensatory in nature? (iv) Whether subsequent amendments to the principal Act require Presidential sanction under article 304(b), although the Presidential sanction was granted prior to enactment of the principal Act? (v) Whether section 3(4) of the impugned Act, as it stood till May 12, 2005, suffers from vice of excessive delegation of legislative functions? (vi) Whether omission of section 3(4) in the impugned Act, by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the apex court in Widia (India) Ltd. v. State of Karnataka [2003] 132 STC 360; [2003] 8 SCC 22, the learned Senior Counsel has further submitted that the so long levy of tax on goods imported from other States and such levy remains same for the goods which are manufactured or produced in the State, the levy cannot be termed as discriminatory. It is argued that even if the impugned enactment is discriminatory in nature, prior Presidential sanction having been obtained as required under article 304(b) of the Constitution, the impugned levy cannot be held to be violative of either article 301 or article 303 of the Constitution, as the Presidential assent saves such enactment. The learned AAG in support of his contention has also placed reliance on the decision of the apex court in Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 STC 212; AIR 1968 SC 599 and in Shree Digvijay Cement Co. Ltd. v. State of Rajasthan [2000] 117 STC 395; [2001] 1 SCC 688. Challenging the finding recorded by the learned single judge that the impugned levy is non-discriminatory and, therefore, is not violative of article 304(a) of the Constitution, Mr. Ganesh has submitted that the discriminati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned Act and hence it is discriminatory in nature. Mr. Dutta, the learned Senior Counsel appearing for the petitioner in W.P. (C) No. 4685 of 2006 (Bharati Airtel Ltd. v. State of Assam) has submitted that on the face of the provision contained in the principal Act as it stood prior to its amendments, the same is discriminatory and hence violative of article 304(a) of the Constitution. Referring to the definition of entry of goods into a local area , entry tax as well as importer as defined in section 2(1)(b), (c) and (d), respectively, as well as in section 3 of the principal Act, it has been submitted that as no similar goods manufactured or produced in the State has been subjected to tax, imposition of entry tax on the goods brought from outside the State is ex-facie discriminatory and hence illegal. Mr. Dutta has further submitted that even assuming that the levy under the impugned Act, after amendment is non-discriminatory, there being no similar goods produced or manufactured in the State of Assam as has been imported by the petitioners, there cannot be any imposition of tax in respect of goods involved in the writ petition. According to the learned Senior Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within that State. According to the learned AAG, the decision in Kalyani Stores case AIR 1966 SC 1686 having been held to be the law limited to the facts of that case and having no universal application, in State of Kerala v. A.B. Abdul Kadir reported in AIR 1970 SC 1912 and in State of Karnataka v. Hansa Corporation (in short, Hansa Corporation ), reported in [1980] 4 SCC 697 the said decision in Kalyani Stores AIR 1966 SC 1686 cannot be pressed into service in support of the contention of Mr. Dutta. (ii) Whether entry tax on the goods imposes restriction on its movement and hence, violative of article 301 and whether requirements of article 304(b) have, therefore, to be complied with? Referring to the provisions in Part XIII of the Constitution it has been submitted by the learned AAG that the freedom envisaged by article 301 is not an absolute freedom from the incidence of taxation in respect of trade, commerce and intercourse permitted by the Legislative Lists, more particularly entry 52 of the Seventh Schedule. The opening words of article 301 subject to the provisions of this Part , according to the learned AAG, require that all articles of Part XIII have to be read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... States provided only that no discretion is made in favour of similar goods of local origin, although such taxation is undoubtedly calculated to fetter trade, commerce and intercourse. It has further been submitted that though the decision in United Motors [1953] 4 STC 133 (SC); AIR 1953 SC 252 was subsequently overruled in Bengal Immunity Company Limited v. State of Bihar [1955] 6 STC 446 (SC); AIR 1955 SC 661, but the conclusion with regard to the interpretation of article 301 vis-a-vis article 304(a) has not been overruled. According to the learned AAG, the decision in Atiabari ea Co. Ltd. v. State of Assam AIR 1961 SC 232, having not been preceded by any discussion as to what would constitute restriction within the meaning of article 304, the observation made by the apex court in the said judgment cannot be applied in the present case to hold that any impediment or restriction in movement of goods is a restriction within the meaning of article 304. It has further been submitted that in fact the decision in Atiabari Tea Company AIR 1961 SC 232 has virtually been overruled by a seven-judge Constitution Bench of the apex court in Automobile Transport (Rajasthan) Ltd. v. State of Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guruviah Naidu [1976] 38 STC 565 (SC); [1977] 1 SCC 234, Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 and Jindal Stainless [2006] 145 STC 544 (SC); [2006] 7 SCC 241. According to the learned AAG, the apex court in Rattanlal and Co. [1970] 25 STC 136; AIR 1970 SC 1742 has also held that when the taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured and produced in the State, article 304 has no application. Referring to the decision in Video Electronics Pvt. Ltd. v. State of Punjab [1990] 77 STC 82 (SC); [1990] 3 SCC 87, it has further been contended that article 304 is an exception to article 301 of the Constitution and the need of taking resort to exception will arise only if the impugned tax is hit by article 301 and article 303 of the Constitution, i.e., if the impugned tax is a discriminatory tax. Referring to the decision in Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 it has been submitted that where the general sales tax is applicable to the goods locally made and those imported from other States as the same, nothing more normally and generally is to be shown by the State to dispel the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent in the writ appeals that despite nondiscriminatory nature of the levy, the imposition of entry tax in the present case is bad for not complying with the proviso to article 304(b) and that there is distinction between the sales tax and entry tax for the purpose of appreciating whether it imposes any restriction in the movement of goods, is wholly misconceived because the expression used in article 304(a) is any tax . It is further contended that the observation in Andhra Sugars Ltd. [1968] 21 STC 212 (SC); AIR 1968 SC 599 to the effect that a nondiscriminatory tax on goods does not offend article 301 unless it directly impedes the free movement of transport is inappropriate, in view of the decision in Jindal Stainless [2006] 145 STC 544 (SC); [2006] 7 SCC 241 in which case it has been held that non-discriminatory tax even though it impedes the movement part of the trade, cannot be construed as violative of article 301. According to the learned AAG, the fetters imposed by articles 301 and 303(1) upon the State Legislature to enact a taxation law or non-taxation law can be lifted (i) by a non-discriminatory tax within the constraints of article 304(a) even though it inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any law of universal application. Relying on the decision in Khyerbari Tea Company Ltd. v. State of Assam AIR 1964 SC 925 it has been submitted by the learned AAG that power conferred on the courts to strike down a taxing statute, if it contravenes the provisions of articles 14, 19 and 310, has to be exercised with circumspection as such power has been conferred on the State to levy taxes for the purpose of governance and to carry out its welfare activities and it is of paramount character. According to the learned AAG, it is only in respect of taxing statute, which is purely confiscatory in character, the power of the court to strike down such a law can be legitimately invoked and exercised. It has further been contended that when a legislation is challenged on the ground of it being in violation of article 301, the burden is on the persons who challenge such legislation and in the present batch of cases, the petitioners as well as the respondents in the appeals failed to discharge such burden. Learned AAG has further contended that the decision in Kaiser-I-Hind (P.) Ltd. v. National Textile Corporation Ltd. [2002] 8 SCC 182 being relating to the question regarding repugnan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se it will be against the legislative intent and the scheme of Chapter XIII of the Constitution. Relying on the single bench judgment in Karnataka High Court in Bharat Earth Movers Ltd. v. State of Karnataka reported in [2007] 8 VST 69, it has further been contended by the learned Senior Counsel that the word and occurring between article 304(a) and 304(b) cannot be read as or . Relating to the restriction put by the impugned levy, Dr. Saraf, has also argued on the same line as argued by Mr. Ganesh and has placed reliance on the decisions of the apex court in Automobile Transport AIR 1962 SC 1406, Laxmi Paper Mart [1997] 105 STC 1; [1997] 2 SCC 697, Hansa Corporation [1980] 4 SCC 697 and Andhra Sugars Ltd. [1968] 21 STC 212; AIR 1968 SC 599. The learned Senior Counsel referring to the decisions of the apex court cited by the learned AAG in Video Electronics [1990] 77 STC 82; [1990] 3 SCC 87, Rattanlal and Co. [1970] 25 STC 136 (SC); AIR 1970 SC 1742, V. Guruviah Naidu [1976] 38 STC 565; [1977] 1 SCC 234, G. K. Krishnan AIR 1975 SC 583; [1975] 1 SCC 375, Widia (India) Ltd. [2003] 132 STC 360; [2003] 8 SCC 22, Shree Mahavir Oil Mills [1997] 104 STC 148; [1996] 11 SCC 39, Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s case AIR 1961 SC 232, it has been contended by the learned Senior Counsel that even when a levy is found to be non-discriminatory it has to satisfy article 304(b) to make the same a valid piece of legislation, which view has also been taken by the apex court in Automobile Transport's case AIR 1962 SC 1406 and has been reiterated in Khyerbari Tea Company case AIR 1964 SC 925, according to the learned Senior Counsel. It has been contended by Mr. Misra, that the proviso to article 304(b) itself provides that such Presidential sanction is necessary in case of the amendment also and the words bill as well as amendment occurring in the said provision is to be read in relation to the words introduced and moved , respectively. It has been contended that the learned single judge in the judgment impugned in the appeal, for the reasons recorded therein, has rightly rejected the contention of the State in that regard. In support of his contention Mr. Misra has placed reliance on the decision of the apex court in Koteswar Vittal Kamath v. K. Rangappa Baliga and Co. reported in AIR 1969 SC 504. Mr. Dutta, referring to the provisions in Part XIII of the Constitution, has submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-discriminatory law can be restriction and therefore, even assuming that the impugned levy is non-discriminatory, imposition of entry tax being a restriction on the free movement of goods amounts to restriction and hence the conditions stipulated in clause (b) of article 304 must be complied with. Mr. Dutta has further submitted that when the petitioner has challenged the validity of the impugned Act on the ground of being violative of article 301 of the Constitution, the burden is on the State to establish, firstly, that such tax is non-discriminatory, secondly, it imposes reasonable restriction, thirdly, in public interest and either the previous or subsequent sanction/assent of the President has been obtained, when the State has asserted that the impugned levy is non-discriminatory and is a reasonable restriction in public interest. According to the learned Senior Counsel there is absolutely no material placed before the court to demonstrate that the impugned levy is reasonable restriction imposed in public interest. (iii) Whether impugned levy is compensatory in nature? Relying on the decision of the apex court in Automobile Transport case AIR 1962 SC 1406, it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 136 (in short, Bihar Chamber of Commerce ), it is further submitted by Mr. Choudhury that in the instant case, local areas contemplated by the Act having been in all parts of the State of Assam, the distinction between the State and the local areas practically disappears and the facilities provided by the State out of the fund collected by such levy amounts to facilities provided in the local areas as well. According to the learned AAG to show the compensatory character of tax, it is not necessary to establish that every rupee collected on account of entry tax is spent or to be spent in providing trade facilities. If, according to the learned Senior Counsel, there is substantial or even some relation between the tax collected and amount spent directly or indirectly, the levy cannot be held to be invalid [Bhagatram Rajeev Kumar v. Commissioner of Sales Tax, Madhya Pradesh reported in [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673]. Mr. Choudhury, therefore, submits that the impugned legislation cannot be termed as violative of article 304(b) of the Constitution. Referring to the decisions cited by the learned counsel for the petitioners, the learned AAG has submitted that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 wherein it has been held by the apex court that if there is substantial or even some connection between the tax and the facilities extended to the dealers, directly or indirectly, the levy cannot be impugned as invalid, the learned Senior Counsel has submitted that such view of the apex court was doubted in Jindal Stripe Ltd. v. State of Haryana [2004] 134 STC 303 (SC); [2003] 8 SCC 60 and hence the matter was referred and accordingly a Constitution Bench of the apex court in Jindal Stainless Ltd. [2006] 145 STC 544; [2006] 7 SCC 241 reiterating the test, as to whether a tax is compensatory or not, laid down in Automobile Transport case AIR 1962 SC 1406 has held that as the compensatory tax is based, on the principles of equivalence , the State in order to show that the impugned levy is not violative of article 301 of the Constitution, being a compensatory tax, must prove that it is imposed to provide special benefits to defray the costs or to meet the outlay incurred for some special advantage, to trade, commerce and intercourse. It has further been contended that the burden is on the State to show by placing mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory tax for the purpose of trading facilities cannot come within the purview of restriction as contemplated by article 301 of the Constitution and therefore, such measures need not comply with requirement of the proviso of article 304(b) of the Constitution. It has further been submitted that in Jindal Stainless case [2006] 145 STC 544 (SC); [2006] 7 SCC 241, it has been held by the apex court that the proper test is as laid down in the Automobile Transport's case AIR 1962 SC 1406 by overruling the decision in Bhagatram Rajeev Kumar case [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673 as well as Bihar Chamber of Commerce case [1996] 103 STC 1; [1996] 9 SCC 136. It has further been submitted by Dr. Saraf that the concept of compensatory nature of tax is based on the principle of pay for the value and the tax collected must be proportionate for extending the benefit to the payers of such tax, i.e., for trading facility and when the Act is ambiguous in that respect the burden heavily lies on the State to prove that the tax collected by way of entry tax, which is more or less in the nature of fee, has been or is to be spent for extending the trading facility only. It has further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also contrary to the law laid down by the apex court in Jindal Stainless case [2006] 145 STC 544; [2006] 7 SCC 241 and also against the compensatory nature of tax as it is evident from the said provision that the tax collected under the Act is not (1)Reported as ITC Limited v. State of Assam [2007] 9 VST 250 (Gauhati). to be spent for the purpose of providing trading facility, because the said provision gives the discretion to the State Government to prescribe such sum of the proceeds for the purpose of development of trading facilities, maintenance of roads and other infrastructure in the local area and that too subject to such condition as may be prescribed. According to Dr. Saraf no rule has been framed till date prescribing the condition as stipulated by section 8A of the Act. Therefore, it has been submitted that the impugned levy cannot be termed as compensatory in nature and hence the requirements of article 304(b) of the Constitution must be fulfilled by the State, otherwise it is to be declared as invalid. Dr. Saraf, in support of his contention, has also placed reliance on the decision of the Madras High Court in ITC Limited v. State of Tamil Nadu reported in [2007] 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said enactment was made to generate revenue and not to compensate or to provide special facilities to the payers to compensate the tax paid by them and to facilitate the trade and commerce. It has further been submitted that there is nothing in the Act expressing any indication of quantifiable and measurable data and no material has been placed by the State even after the pronouncement of the apex court in Jindal Stainless [2006] 145 STC 544; [2006] 7 SCC 241 and Jindal Stainless Ltd. v. State of Haryana [2006] 7 SCC 271 to demonstrate that the amount realised as tax has been spent or is to be spent for providing special benefits to the taxpayers and to facilitate trade and commerce. Mr. Dutta in this respect has also adopted the arguments of Mr. Ganesh and Dr. Saraf learned Senior Counsel. (iv) Whether subsequent amendments to the principal Act require Presidential sanction under article 304(b), although the Presidential sanction was granted prior to enactment of the principal Act? The learned AAG has submitted that as the Principal Act, which imposes entry tax, received the President's previous sanction, subsequent amendments made and the notifications issued in exerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti and all kinds of textile and fabrics, which was made known by the Government of India to the Government of Assam vide communication dated September 1, 2000 and accordingly the Principal Act was enacted for levy of entry tax on the seven specified goods only, at the rate prescribed in the schedule appended thereto. It has been submitted by the learned Senior Counsel that as the goods relating to the Prasar Bharati and all kinds of textiles and fabrics are articles of special importance under section 14 of the Central Sales Tax Act, the President did not give sanction to the proposed levy on those goods and, therefore, the inclusion of tobacco, which is also an article of special importance, in the schedule, by issuing notification under section 3(4) of the Act and subsequently by Second Amendment Act, is violative of article 304(b) of the Constitution, the same having not been sanctioned by the President. Mr. Ganesh has further submitted that by no stretch of imagination it can be argued that once Presidential sanction for imposition of entry tax in respect of certain goods is obtained, for inclusion of other goods by way of amendment of the Act by the State Legislature it does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed Ahmed Aga [1975] 2 SCC 131 and Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 on which the learned AAG has placed reliance in support of his contention in that regard, Dr. Saraf has submitted that those decisions are distinguishable and in fact the principles laid down therein support his contention. Mr. Dutta, relating to the question as to whether the amendments to the principal Act require either previous Presidential sanction or subsequent Presidential assent, adopting the arguments of Mr. Ganesh as well as Dr. Saraf , has further submitted that the question is whether such amendment imposes additional restrictions in public interest or not. According to the learned Senior Counsel since the additional items have been put in the schedule thereby impeding the movements of the goods, it puts an additional restriction and hence the requirements of article 304(b) have to be fulfilled. It has further been submitted that by the amendment of section 2(1)(b), (d) and section 3 additional goods are covered under the Act by widening the tax base and therefore, it amounts to additional restrictions which require Presidential sanction/assent. Mr. Dutta has further sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision in Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi AIR 1968 SC 1232 (in short, Birla Cotton ) the learned AAG has further submitted that what is prohibited is the abdication of the essential legislative function. It has been submitted that when a piece of legislation is challenged on the ground of excessive delegation, the question which always to be considered is whether the legislative will has been expressed or not and once it is established that the Legislature itself has willed that a particular thing be done and has merely left the execution of it to a chosen instrumentality without parting with its control, there is no question of such piece of legislation suffering from the vice of excessive delegation, as by retaining the control over the delegate the Legislature can undo what the delegate has done. Relying on the decision in Hira Lal Rattan Lal v. Sales Tax Officer, Section III, Kanpur [1973] 31 STC 178 (SC); [1973] 1 SCC 216, it has further been submitted that the Legislature can delegate the power to an authority to select the person on whom the tax is to be levied or the goods or transactions on which tax is to be levied and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal. Mr. Ganesh, placing reliance on the Constitution Bench judgment of the apex court in Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430; AIR 1967 SC 1895, has submitted that similar provision in East Punjab General Sales Tax Act, 1948, as that of the impugned enactment, was declared to be void on the ground of excessive delegation of power. Mr. Ganesh has also placed reliance on another Constitutional Bench decision of the apex court in Corporation of Calcutta v. Liberty Cinema AIR 1965 SC 1107 (in short, Liberty Cinema ). Therefore, according to the learned Senior Counsel the levy of tax prior to May 12, 2005 by issuing notifications under section 3(4) of the Act is illegal being hit by the doctrine of excessive delegation of power. Dr. Saraf has contended that section 3(4) of the 2001 Act suffers from excessive delegation of the legislative function as in the said provision no guideline has been issued to the executive, whom to tax, what to tax and at what rate. According to the learned Senior Counsel even to fix the rate of tax by the executive there must be some guidelines by the Legislature in the Act, which is lacking in the present case, prior to Second A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case in hand. Therefore, according to the learned Senior Counsel, the stand of the State that the action taken under the omitted provision of section 3(4) of the Act is saved by section 6 of the Assam General Clauses Act, 1915 is not tenable in law. Referring to the decision of the apex court in Kolhapur Canesugar Works Ltd. [2000] 2 SCC 536, it has been contended by Mr. Ganesh that the effect of repealing a statute or deleting a provision is to obliterate it from the statute book as completely as if it had never been passed and the statute must be considered as a law that never existed, which, however, is subject to the exception engrafted by the provision of section 6(1) of the General Clauses Act. Referring to the Constitution Bench decision of the apex court in Rayala Corporation (P) Ltd. v. Director of Enforcement [1969] 2 SCC 412, it has been submitted by the learned Senior Counsel that the apex court has held that section 6 of the General Clauses Act cannot be applied in case of omission of the provision, which applies in case of the repeal only. (vii) Whether the judgment passed would have prospective effect? It has further been submitted by the learned AAG that in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to section 8B of the Act, it has further been contended that there being presumption in favour of passing on the burden of tax to the consumers, the importers, who are taxed, have to prove otherwise, so as to get the refund, which they have failed to do. Mr. Choudhury, in support of his contention has placed reliance on the decisions of the apex court in Indian Oil Corporation v. Municipal Corporation, Jullundhar reported in [1993] 1 SCC 333 (in short, Municipal Corporation, Jullundhar ), in Entry Tax Officer, Bangalore v. Chandanmal Champalal Co. reported in [1994] 95 STC 5; [1994] 4 SCC 463, in Mafatlal Industries Ltd. v. Union of India reported in [1998] 111 STC 467; [1997] 5 SCC 536 and in B.P.L. Ltd. v. R. Sudhakar reported in [2004] 7 SCC 219. Referring to the decision in Director of Entry Tax v. Mahindra Mahindra reported in [2003] 11 SCC 749, it has further been contended that the assessees having used, consumed or sold the goods, on which tax has been levied, they are not entitled to the refund. It has been submitted by the learned AAG that even assuming section 8B of the impugned Act has no application in the facts and circumstances of the case, still the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently there would not be any undue enrichment in case of refund of the tax. Referring to the stand of the State that there being provision of section 8B of the Act relating to the refund of the tax, the burden lies on the respondent/writ petitioner to prove that the tax imposed has not been passed on to the buyer of the goods, for claiming refund, it has been submitted by Mr. Ganesh that the provision of section 8B cannot be applied as the said provision is applicable to the tax paid and refund claimed under the Act, but in the instant case, the tax has been paid under the order of the court and not by accepting the provision of the Act and that too by way of bank guarantee, which has been encashed by the State on March 30, 2006 in respect of the tax paid prior to May 12, 2005. According to the learned Senior Counsel, because of the omission of section 3(4) from the Act, the bank guarantee given for payment of tax in respect of the period when such provision was in force, cannot be encashed. Mr. Ganesh in support of his contention has placed reliance on the decision of the apex court in Tata Refractories Ltd. v. Sales Tax Officer [2003] 129 STC 506; [2003] 1 SCC 65, Mafa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apex court in Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax, Indore reported in [1971] 28 STC 331. The learned Senior Counsel Mr. Joshi as well as other learned counsel appearing for the petitioners and also for the respondents in writ appeals have adopted the arguments of the learned Senior Counsel, noted above, on all the issues. Decision and reasons thereof Article 301 of the Constitution provides that subject to other provisions of Part XIII, trade, commerce and intercourse throughout the territory of India shall be free. Article 301 though is positively worded, in effect it is negative as freedom correspondingly creates general limitations on all legislative powers to ensure that trade, commerce and intercourse throughout the territory of India shall be free. Article 302 is an exception of article 301, which confers power on the Parliament to impose restrictions on trade, commerce and intercourse between one State and another or within any part of the territory of India in public interest. Article 303, which is also an exception or a proviso to article 302, which opens out with a nonobstante clause, provides that neither the Parliament nor the Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which received prior Presidential sanction, section 3, which is the charging section, provides for levy of tax on the goods specified in the schedule, on its entry into any local area for its consumption, use or sale on the rates shown against each of the items in the said schedule. The entry of goods into a local area was defined in section 2(1)(b) as entry of goods as specified in the schedule into a local area from any place outside the State (emphasis(1) laid) for consumption, use or sale therein. Entry tax has been defined in section 2(1)(c) as tax on entry of goods into a local area. Section 2(1)(d) defines importer as a person who brings the goods as specified in the schedule into a local area from any place outside the State (emphasis(1) laid), for consumption, use or sale therein including for consumption or use of such goods in works contract. Local area is defined in section 2(1)(e). It is, therefore, evident that by the charging section what have been subjected to tax are the goods brought from a place outside the State on its entry into a local area. The principal Act did not subject the similar goods specified in the schedule to tax, which are manufactured or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make law imposing any tax on goods imported from other States or Union Territories to which similar goods manufactured or produced in that State are subjected, so as not to discriminate between the goods so imported or goods so manufactured or produced. Article 304(a), therefore, requires imposition of a non-discriminatory tax so that no differentiation is made between the goods imported from other States and the goods locally manufactured or produced. It does not provide that the goods imported from other States or Union Territories cannot be subjected to tax unless such goods are manufactured or produced in the State. Such an interpretation sought to be given by Mr. Dutta, learned Senior Counsel, cannot at all be accepted, as in that case the States would be denuded of its power to impose tax on goods imported from other States or Union Territories if such goods are not manufactured or produced in the States. The requirement of article 304(a) is satisfied, when the State has subjected both locally manufactured or produced goods and goods imported from other States or Union Territories to tax without discriminating between them. However, there may be exception in respect of cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, on entry into the local area of the State and the tax levied on subsequent sale or purchase thereof under the local State Sales Tax Law are two different levies, independent of each other. Section 5 of the impugned Act as it stood after the amendment is reproduced below for better appreciation: 5. Exemption from tax. Notwithstanding anything contained in section 3 and section 4 and subject to production of documentary proof, no tax under this Act shall be levied in respect of the specified goods which are also subject to levy of taxes under the provisions of the Assam Value Added Tax Act, 2003 (Assam Act VIII of 2005). (i) if the sale of such specified goods inside the State, made by an importer are sales within the meaning of [clause (43) of section 2] of the said Act, excepting sales falling under sub-clauses (ii), (iii) and (iv) of the said clause and if he is liable to pay tax on such sales as a registered dealer under the Assam Value Added Tax Act, 2003 (Assam Act VIII of 2005); (ii) if the sale of such specified goods are made by the importer in the course of inter-State trade or commerce or in the course of export out of the territory of India or such goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om one place to another. A Constitution Bench of the apex court in Andhra Sugars Ltd. [1968] 21 STC 212; AIR 1968 SC 599, referring to the decision in Firm A.T.B. Mehtab Majid [1963] 14 STC 355 (SC); AIR 1963 SC 928 has observed that if in the charging section there is no discrimination between goods locally manufactured and produced and goods imported from outside and the same rate of tax is levied in respect of both goods it cannot be said that the provisions of article 304(a) are violated. The decision in Mahavir Oil Mills [1997] 104 STC 148 (SC); [1996] 11 SCC 39 cited by Mr. Ganesh, the learned Senior Counsel, is distinguishable as in the said case the exemption granted by the State of Jammu and Kashmir has the effect that the edible oil manufacturer in other States are required to pay sales tax on sale effected in Jammu and Kashmir, while the local manufacturers were totally exempted therefrom. In Laxmi Paper Mart [1997] 105 STC 1 (SC); [1997] 2 SCC 697 discrimination was found as the exercise books made from paper purchased within the State of U.P. were exempted from the sales tax whereas all other kinds of exercise books were liable to tax. There is no discrimination on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of their respective contentions. In Atiabari Tea Co. AIR 1961 SC 232, which has also been noticed by the apex court in all its subsequent decisions relating to Part XIII of the Constitution including in Jindal Stainless [2006] 145 STC 544 (SC); [2006] 7 SCC 241, a Constitution Bench of the apex court has observed that the intrinsic evidence furnished by some of the articles of Part XIII shows that taxing laws are not excluded from the operation of article 301, which means that tax can and do amount to restriction on freedom, which is guaranteed to trade under Part XIII. It has further been observed that if any Act imposes any direct restriction on the very movement of such goods, it attracts the provisions of article 301 and its validity can be sustained only if it satisfies the requirement of articles 302 and 304 of the Constitution. The majority view in Atiabari Tea Co. AIR 1961 SC 232 was re-examined and affirmed by a seven-judge Constitution Bench of the apex court in Automobile Transport AIR 1962 SC 1406 where, it has been observed that regulatory and compensatory measures do not impede the freedom of trade, commerce and intercourse as, such measures are to facilitate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses restriction, the same is reasonable and in public interest and as, such taxing statute has received the Presidential assent, it does not offend the provisions of Part XIII of the Constitution. The contention of the learned AAG that the decision of the apex court in Hansa Corporation [1980] 4 SCC 697 cannot be relied upon in support of the proposition that a non-discriminatory tax in order to pass the test of article 301 must also for its validity satisfy the requirement of article 304(b), as the apex court did not examine whether the levy is of compensatory character or not and that the issue as to whether the conjunction and appearing between article 304(a) and article 304(b) is to be read as or , was not considered and as such it is a decision passed sub silentio, as the said question was either not perceived by the court or present in the mind, cannot at all be accepted in view of the authoritative pronouncement of the apex court in Atiabari Tea Co. AIR 1961 SC 232, in Automobile Transport AIR 1962 SC 1406 and in Hansa Corporation [1980] 4 SCC 697. The binding precedence, which is authoritative in nature and is meant to be applied cannot be ignored on application of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary in order to maintain the roads, that could only be done after obtaining the sanction of the President as provided under article 304(b). The apex court in G.K. Krishnan case AIR 1975 SC 583; [1975] 1 SCC 375 has further observed that the decision in Atiabari Tea Co. case AIR 1961 SC 232 was affirmed in Automobile Transport case AIR 1962 SC 1406 with a clarification that regulatory measures or measures imposing compensatory tax do not come within the purview of restrictions contemplated in article 301 and that such measures need not comply with the requirement of the provisions of article 304(b). The apex court referring to the said earlier decisions has finally observed that the effect of the majority decision in the Automobile Transport case AIR 1962 SC 1406 is that a compensatory tax is not a restriction upon the movement part of trade and commerce. In paragraph 15 of (AIR) of the said judgment the apex court further opined that the collection of toll or tax for the use of roads, bridges or aerodromes, etc., though do not operate as barriers or hindrance to trade, a tax which has the effect of hindering the movement part of the trade does operate as barrier or hindrance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol devices, safety measures, improvements to old layouts which are necessarily to facilitate the trade and not to put hindrance. The contention of the learned AAG that as in G.K. Krishnan case AIR 1975 SC 583; [1975] 1 SCC 375 the apex court lays down the law that the tax simpliciter or a non-discriminatory tax is not a restriction within the meaning of article 304(b), its requirement are not required to be fulfilled, cannot be accepted. The contention of the learned AAG in so far as it relates to the some connection theory has also not been propounded by the apex court in G.K. Krishnan case AIR 1975 SC 583; [1975] 1 SCC 375. On the other hand, it has been observed by the apex court in the said case that a tax if it encumbers the movement from one State to another or from one part of the State to another part, is a restriction on the freedom of trade and commerce. A Constitution Bench of the apex court in Jindal Stainless [2006] 145 STC 544; [2006] 7 SCC 241 on which also the learned AAG has placed strong reliance in support of his contention, has in paragraph 34 of SCC (paragraph 31 of STC) observed that article 301 provides for freedom of inter-State as well as intra-S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s brought within the scope of articles 302, 304 and 305. Reading both paragraphs 34 and 48 of SCC (paragraphs 31 and 45 of STC) together, in our considered view, the apex court has opined that a non-discriminatory tax, if it imposes restriction on free movement of goods, has to comply with the requirements of article 304(b), but the levy of such a tax, if it does not impede free movement of goods, need not comply with the requirements of article 304(b). In Jindal Stainless [2006] 145 STC 544 (SC); [2006] 7 SCC 241 the Constitution bench has clearly laid down the law that discriminatory restrictions, can be imposed by a State provided the three conditions of article 304(b) are complied with. Since the restriction includes the restrictions imposed by imposition of tax, the discriminatory tax, therefore, can be imposed by the State subject to fulfilment of the three conditions contained in article 304(b). From the decisions in Atiabari Tea Co. AIR 1961 SC 232, Automobile Transport AIR 1962 SC 1406, Hansa Corporation [1980] 4 SCC 697, Laxmi Paper Mart [1997] 105 STC 1 (SC); [1997] 2 SCC 697 , Andhra Sugars Ltd. [1968] 21 STC 212 (SC); AIR 1968 SC 599, G.K. Krishnan AIR 1975 SC 58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though non-discriminatory, may directly or immediately hamper or restrict the free movement of goods and hence, the free flow of trade. In Video Electronics [1990] 77 STC 82 (SC); [1990] 3 SCC 87, the question before the apex court being whether the Act impugned therein is discriminatory or not, the question which is being presently dealt with did not arise for consideration and hence the said decision is not applicable to the present case. In Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 in which the Karnataka Tax on Entry of Goods Act, 1979 was challenged, there was no dispute that the impugned levy of tax is nondiscriminatory and it was also conceded that the imposition of such tax was regulatory or compensatory in nature. The apex court on such factual background has held that when the tax levied by the State Government is compensatory in nature, no Presidential sanction under article 304(b) is required to be taken. There is no dispute to the said proposition. In Rattanlal and Co. [1970] 25 STC 136 (SC); AIR 1970 SC 1742, the question that arose for consideration by the apex court was whether levy of tax under the State Sales Tax Act is discriminatory or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the freedom of trade and, therefore, the requirements of article 304(b) have to be complied with and hence and appearing between the clauses (a) and (b) of article 304 cannot be read as or . It is evident from the discussion of the various pronouncements of the apex court made above, that a taxing statute though may be nondiscriminatory, such levy if it impedes or obstructs free movement of trade, does attract clause (b) of article 304. The imposition of tax by the impugned Act on goods on its entry into a local area, directly impedes or obstruct the free movement of goods as mandated in article 301. Such imposition of tax can only, therefore, be saved provided the requirements of article 304(b) are complied with. The decisions of the apex court, as discussed above, indicate that while all taxing statutes may not be one impeding or obstructing the movement, like for example levy of property tax, luxury tax or tax on mining activities, levy of entry tax being directly on the very movement of goods, i.e., the taxing event occurring when the goods enters into the local area and if there is no such movement, there being no tax, the imposition of entry tax by the impugned enactme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petitioners and respondents in the writ appeals by necessary pleading of facts could prove that imposition of entry tax restricts the free movement of goods thereby impeding the freedom of trade and commerce. Hence, the burden is on the State now to prove that such restrictions were reasonable and in the public interest. The State has failed to demonstrate that restrictions imposed are reasonable and in public interest. In the case of Bharati Airtel Ltd. [W.P. (C) No. 4685 of 2006] and other similar writ petitions, it has already been held that a tax imposed by the principal Act, i.e., prior to any amendment, having been levied on the goods imported from outside only, is discriminatory in nature. The writ petitioners, therefore, discharged their burden to prove that it is violative of article 301 as it is a restriction on the freedom of trade, commerce and intercourse. The burden, therefore, shifts to the State to prove that such discriminatory restrictions were reasonable and in public interest. Admittedly before enactment of the principal Act the Presidential sanction was obtained. The State, however, has not even attempted by making necessary pleadings to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 has observed that as the State in the affidavit reflected the total expenditure on maintenance and construction of roads and the amount showed to have been spent did not include the grants made to local bodies like municipalities and Panchayat Unions for the repair and maintenance of roads within their jurisdiction and such amount not only includes the cost of construction and maintenance of roads, but also the costs relating to the erection and maintenance of traffic control devices, safety measures, improvements to old layouts and the increased establishment of enforcement staff, the impugned levy is compensatory in nature. In Kewal Krishan Puri [1980] 1 SCC 416 a Constitution Bench of the apex court while considering the principles for satisfying the test for valid levy of market fee on the agricultural produce has observed that the amount of fee realised must be earmarked for rendering services to the licensees in the notified market area and a substantial portion of it must be shown to be spent for those purposes and such service rendered to the licensees must be in relation to the transaction of purchase or sale of the agricultural produce conferring some special benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 SCC 673, and Bihar Chamber of Commerce's case [1996] 103 STC 1 (SC); [1996] 9 SCC 136 is not applicable to the concept of compensatory tax and accordingly judgments in those cases were overruled. The apex court has further held that the compensatory tax by nature is hybrid but it is more close to fees as both fees and compensatory tax are based on the principle of equivalence and on the basis of recompense/reimbursement. It has further been held that compensatory tax being a compulsory contribution levied broadly in proportion to the special benefits derived to defray the cost of regulation or to meet the outlay incurred for some special advantage to trade, commerce and intercourse which may, however, incidentally bring in net revenue to the Government but that circumstance is not an essential ingredient of compensatory tax. It has further been observed that to determine whether an impugned law is violative of article 301 of the Constitution, the court has to see whether the impugned enactment facially or patently indicates quantifiable data on the basis of which the compensatory tax is sought to be levied and such Act must indicate the benefit which is quantifiable or measu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent States, motor vehicles are purchased outside the State and then brought into the State for use. 3.. In order to curb such losses of revenue and thereby mobilise additional resources, the Government have decided to levy tax on entry of selected items, including motor vehicles, which are imported into Assam from other States for own use and consumption. It appears from the preamble of the impugned Act that it has been enacted for imposition of tax on entry of goods into any local area in Assam for consumption, use or sale therein. The Statement of Objects and Reasons of the Act reveals that the impugned Act has been enacted to curb the losses of revenue as many bulk consumers such as tea companies, oil companies take recourse to inter-State purchase of several items required for their own consumption with a view to avail benefit of lower rate of tax under the Central Sales Tax Act and also as the motor vehicles are purchased outside the State and then brought into the State due to disparity in the rate of taxes in different States and to mobilise additional resources. Thus the Preamble and Statement of Objects and Reasons of the impugned Act do not indicate that the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in Jindal Stainless [2006] 145 STC 544; [2006] 7 SCC 241. An additional affidavit in the appellate stage was also filed by the State in W.A. No. 465 of 2006 (State of Assam v. Indian Tobacco Company Ltd.) indicating the amounts spent during the period from 2001-02 to 2007-08 stated to be for infrastructure developments in local areas, without, however, disclosing the nature of the facilities made available to the taxpayers as well as some detailed break-up. The additional affidavit filed by the State merely gives the statistics with regard to the total cost towards the assistance of development of urban and rural local areas and local areas under the GMC without specifying the details in respect of which such cost has been incurred. For better appreciation the said chart is reproduced below: ANNEXURE-I Statement showing the amount spent under non-plan for infrastructure development in local areas Grant No. Head of a/c. Purpose for which given Rupees in crores Particulars Actual 2001-02 Actual 2002-03 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not provide any stipulation for providing the facilities to the taxpayers to facilitate the trade, section 8A has been inserted by the Second Amendment Act of 2005 with effect from May 12, 2005, which is reproduced below: 8A. Utilisation of the proceeds of the tax. Subject to such condition as may be prescribed, such amount of the proceeds of the tax, as may be determined by the State Government shall be spent by the State Government for the purpose of development of trading facilities, maintenance of roads and other infrastructures in the local area. From the provision of section 8A as inserted by the Second Amendment Act of 2005, it is evident that the amount collected by way of tax is proposed to be spent for maintenance of roads, for the purpose of development of trade facilities and other infrastructures. The provision of section 8A does not indicate facially the quantifiable/measurable benefit provided or to be provided to its payers. This would, however, not prevent the State to show by placing materials before the court that the amount collected by way of such entry tax is spent or to be spent for providing quantifiable/ measurable benefit to its payers. The affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court. The contention of the learned AAG supporting the some connection theory cannot be accepted. In view of the working test laid down by the apex court in Jindal Stainless Ltd. [2006] 145 STC 544; [2006] 7 SCC 241 in determining the compensatory nature of tax, and also in view of our aforesaid discussion, we do not consider it necessary to discuss the judgments of various High Courts relied upon by the learned counsel for the assessees on this issue. In view of the aforesaid discussion, we hold that the impugned enactment does not satisfy the test laid down for compensatory tax and hence cannot be held to be compensatory in nature. The judgment and order of the learned single judge, is affirmed, on this point. ISSUE No. IV Article 304(b) of the Constitution provides that notwithstanding anything contained in article 301 or article 303, the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, commerce and intercourse with or within that State as may be required in public interest provided prior Presidential sanction is obtained for such enactment or the amendment. The requirement of having Presidential sanction is fulfill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendments were found to have not gone beyond a regulation, which was fully authorised by the language of the provisions of the Act involved in that case. In Subodhaya (P) Ltd. [1991] Supp 2 SCC 131, the Presidential sanction under article 304(b) was held to be not required, as the amendments impugned therein were found to have no restrictiveness at all in the matter. In Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 the levy impugned was held to be compensatory in nature and therefore, the apex court has held that the imposition of compensatory or regulatory tax does not attract the requirement of Presidential assent under article 304(b) of the Constitution. From the discussions of the aforesaid decisions of the apex court, as cited by the learned counsel for the parties, it, therefore, appears that if the amendment made to the Principal Act, imposes additional restrictions on the freedom of trade, commerce and intercourse, such amendments must have the Presidential sanction as required under article 304(b), despite having Presidential sanction prior to the enactment of the Principal Act. In the instant case, it is evident from the communication produced befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing no dispute to the fact that no Presidential sanction/assent has been obtained for such amendments either prior to or after introduction of such amendments, the same are unconstitutional, as the previous Presidential sanction obtained prior to enactment of the Principal Act, cannot save the subsequent amendments. The said position, in fact, was known to the State as it has obtained Presidential sanction in respect of 7 items prior to the enactment of the Principal Act. The judgment and order of the learned single judge, in so far as it relates to this question, is, therefore affirmed. ISSUE NO. V The Constitution of India has created three great instrumentalities and entrusted them with certain basic powers legislative, judicative and executive. Abdication of these powers by the concerned instrumentalities, it is axiomatic, amounts to betrayal of the Constitution itself and it is intolerable in law. The Legislature cannot self-efface its personality and make over, in terms plenary, the essential legislative functions. The Legislature is responsible and responsive to the people and its representatives, the delegate may not be and that is why excessive delegation and legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of the legislation, the complexity of the problems which a modern State has to face, will have to be taken note of and if, on a liberal construction given to a statute, a legislative policy and guidelines for its execution are brought out, the statutes, even if skeletal, will be upheld to be valid, but this rule of liberal construction should not be carried on by the court to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on the executive . (Kishan Prakash Sharma v. Union of India [2001] 5 SCC 212). A Constitution Bench of the apex court in Gwalior Rayon Mills [1974] 33 STC 219; [1974] 4 SCC 98 referring to the earlier decisions on the subject of delegated legislation including the decision in Banarsi Das [1958] 9 STC 388 (SC); AIR 1958 SC 909, Liberty Cinema AIR 1965 SC 1107, B. Shama Rao [1967] 20 STC 215 (SC); AIR 1967 SC 1480, Devi Dass Gopal Krishnan [1967] 20 STC 430 (SC); AIR 1967 SC 1895, Birla Cotton AIR 1968 SC 1232 and Sitaram Bishambar Dayal [1972] 29 STC 206 (SC) while considering the question whether the Parliament in not fixing the rate itself and in adopting the rate applicable to the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature must provide guidelines for such fixation. In the Liberty Cinema AIR 1965 SC 1107 the same view has been taken by the apex court. In Birla Cotton AIR 1968 SC 1232 the apex court has held that the essential legislative functions though cannot be delegated by the Legislature and the Legislature must retain on its own those legislative functions, it can delegate the necessary power for implementing the purpose and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. In Agricultural Market Committee [1997] 5 SCC 516 the apex court has observed that the essential legislative function consists of the determination of the legislative policy and the Legislature cannot abdicate essential legislative function in favour of another, however, power to make subsidiary legislation may be entrusted by the Legislature to another body of its choice but the Legislature should, before delegating, enunciate either expressly or by implication, the policy and the principles or the guidance to the delegatee. In Consumer Action Group [2000] 7 SCC 425 the apex court has observed that in testing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the preamble, objects and reasons and the different provisions of the Act clearly lay down the legislative policy as well as the guidelines to the executive. As discussed above, when a particular enactment is tested on the ground of excessive delegation of legislative function, what is required to be seen is, whether such particular enactment has laid down any definite legislative policy and also the guideline, from the point of view of that enactment and not from the perspective of whether such enactment is compensatory in nature within the meaning of article 304(b) of the Constitution, as the question of excessive delegation of power by an enactment is one thing and whether it is compensatory in nature, another. The preamble of the impugned Act, reproduced above, reflects the clear legislative policy laid down by the Legislature by providing that the Act has been enacted for imposition of a tax on the entry of goods into any local area in Assam for consumption, use or sale therein. The objects and reasons for which the Act has been enacted, as quoted above, reflect the purpose and also the reason for such enactment. It states that the Act has been enacted to curb l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re by delegating the power has abdicated its essential legislative function and another thing to say that the delegatee has acted beyond the authority delegated to it. The petitioners have not challenged the action of the delegatee on the ground that it has acted beyond its delegated power or arbitrarily. The petitioners have challenged the provision of section 3(4) of the Act, as it stood till May 12, 2005, only on the ground of excessive delegation of legislative function. In view of the aforesaid discussion, we are of the opinion that the provision of section 3(4) of the Act, as stood prior to May 12, 2005, does not suffer from the vice of excessive delegation of legislative function and hence the finding of the learned single judge, in that regard, is set aside. ISSUE NO. VI Section 3(4) of the impugned Act, as discussed above, was omitted by the Second Amendment Act with effect from May 12, 2005. Section 3 of the Second Amendment Act, reads as follows: 3. In the principal Act, in section 3 (i) for the existing sub-section (1), the following sub-section shall be substituted, namely: '(1) There shall be levied and collected an entry tax on the entry of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act had not been passed. It is apparent from the provision of section 6 of the Assam General Clauses Act that the said provision applies to the repeal of any enactment. In the instant case admittedly the provision of section 3(4) of the 2001 Act was not repealed but was omitted from the statute. There is also no provision made in the Second Amendment Act, by which such provision was omitted, saving the actions already taken under the said omitted provisions. The apex court in Rayala Corporation [1969] 2 SCC 412 has observed that section 6 of the General Clauses Act only applies to the repeal and not to the omission and in that event, in the Amendment Act, by which such omission wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to realisation of tax by virtue of the power conferred by section 3(4) of the impugned Act, have to be declared as null and void, without, however, affecting the proceedings, which have already been finalised prior to May 12, 2005. In that view of the matter, the judgment and order of the learned single judge is set aside to the extent indicated above. ISSUE NOS. VII AND VIII Having held that imposition of entry tax under the impugned Act is illegal being unconstitutional, in so far as the issues involved in this batch of cases, the next question, which requires determination is whether the appellants/writ petitioners are entitled to the refund of the tax paid. The 9 (nine) judges Bench of the apex court in Mafatlal Industries Ltd. [1998] 111 STC 467; [1997] 5 SCC 536, upon consideration of all the earlier pronouncements on the subject of refund, has summarised the propositions in paragraph 99 (pages 546-548 of STC); paragraph 108 (pages 631 to 635 of SCC). The proposition Nos. II, III, V and VII, which are relevant for the purpose of the present batch of appeals/writ petitions, are reproduced below: (ii) Where, however, a refund is claimed on the ground that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reasons, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched. (iv) . . . (v) Article 265 of the Constitution has to be construed in the light of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making a self-serving statement that the tax burden has not been passed on to others, i.e., its consumers, have not produced any materials to substantiate such plea, which the claimant for refund is bound to substantiate in view of the decision of the apex court in Mafatlal Industries case [1998] 111 STC 467; [1997] 5 SCC 536. In the absence any such plea/materials no finding can be recorded by this court in that regard in the present proceeding. The contention of Mr. Ganesh as well as Mr. Saraf, the learned Senior Counsel, that since the earlier interim order passed by the learned single judge staying recovery of the entry tax subject to furnishing bank guarantees for the full amount of tax, has been stayed by the Writ Appellate Court in Writ Appeal No. 412 of 2005, preferred against such interim orders, on the basis of the assurance given by the learned AAG that the entire amount of entry tax collected would be refunded along with interest and such bank guarantee having been executed in terms of the interim order passed by the learned single judge, the claimants claiming refund are not required to establish that the burden of the tax has not passed on to other persons, as, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. For the same reason, the decisions of the apex court cited by Dr. Saraf in Gupta Modern Breweries [2007] 8 RC 688, Delhi Cloth and General Mills Co. Ltd. [1971] 28 STC 331 and of this court in Goalpara Roller Flour Mill Ltd. [2007] 12 VST 478; [2007] 2 GLT 952, cannot be applied in the facts and circumstances of the present case and in view of the aforesaid discussion, more particularly, in view of the 9 (nine) judges bench decision of the apex court in Mafatlal Industries case [1998] 111 STC 467; [1997] 5 SCC 536. It appears from the impugned judgment, that the learned single judge has directed the refund of the entry tax paid by the assessees solely on the basis of the interim direction passed in the writ petition as well as the interim order dated June 22, 2005 passed in W.A. No. 412 of 2005, which was filed challenging the interim direction issued by the learned single judge, as well as the final order dated January 5, 2006 passed in the said writ appeal, without considering the propositions of law laid down by the apex court in Mafatlal Industries case [1998] 111 STC 467; [1997] 5 SCC 536 relating to the refund, as the same appears to have not been brought to the notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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